ABM Industries Annual Report 2018

FY2018 Annual Report · ABM Industries

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2018 ANNUAL REPORT

Dear Shareholders,

When we began fiscal 2018 we had just closed the largest acquisition in our 109-year history, opening a new chapter
for ABM. What followed was a monumental year for our company on several fronts. In addition to adding more than
30,000 new team members from GCA and continuing our 2020 Vision transformation, we also faced one of the
toughest labor markets in American history, while keeping our clients satisfied and team members engaged. I am so
proud of our organization’s ability to navigate the challenging macroeconomic environment while executing against
our short-term plans and progressing towards our long-term goals.

Throughout the year, we were determined to deliver on our commitments. We concluded the year with record revenues
of more than $6.4 billion, driven by 4% organic growth. Income from continuing operations grew to $1.45 per diluted
share, or $1.89 on an adjusted basis. We also expanded adjusted EBITDA margin and generated more than $200 million
in operating cash flow from continuing operations.

These results were due to several key factors. First, we leveraged our scale and strength to expand relationships with
many of our large strategic customers. Second, our ability to establish a sales culture within ABM by attracting key
sales talent helped us achieve record new sales of $900 million. Third, internal cost mitigation strategies allowed us to
offset some of the labor pressures that affected the entire market. And finally, our successful integration of GCA was
also foundational to our 2018 results as we combined our teams and serviced our new, larger client portfolio, achieving
cost synergies that exceeded our original projections.

We also continued to make progress in transforming our back-office operations. Our Enterprise Shared Services
center is now fully functional and beginning to see the benefits of operational consistency. This has led to improved
cash flow, which is an important metric and a key indicator of our strong fundamentals. In fiscal 2018 we paid our 210th
consecutive quarterly cash dividend, even as we ended the year with leverage lower than we expected.

Our performance in fiscal 2018 demonstrates how ABM is a durable and resilient business with a highly diversified
model that can succeed in a variety of different economic cycles. We remain the leader in the industries and markets
we serve and have grown to become the country’s 44th largest employer according to Fortune magazine, which means
we have the scale to support our remarkable clients. While the current labor markets may present a short-term
headwind, the incredible breadth of our more than 130,000-person team remains our greatest long-term tailwind.

Our employees have also enabled us to give back to the communities we serve – which is critical to our mission of
Making a Difference. I am proud that ABM and our employees contributed nearly $2 million to charities in 2018 through
our ABMCares program as well as other affiliated programs.

2019 marks ABM’s 110th year in business and an important year on our path to fulfilling our 2020 Vision transformation.
We have initiated the implementation of several technology-based modernization efforts in human resources and
enterprise resource planning that will improve our operational efficiency, further transform our back-office support
systems, and facilitate our goal of being more data driven. Based on these initiatives, we believe 2019 will set the
stage for financial benefits in 2020 and beyond and position ABM for the next 110 years.

Our 2020 Vision transformation has impacted every area of our company, and we are stronger than we have ever been.
As always, we remain committed to creating value for our shareholders, customers, and employees.

Thank you for your continued support.

*Reconciliation of Non-GAAP to GAAP financial measures can be found in the back of this Annual Report.

Scott Salmirs
President and Chief Executive Officer

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended October 31, 2018
or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-8929

ABM INDUSTRIES INCORPORATED

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of
incorporation or organization)

94-1369354

(I.R.S. Employer
Identification No.)

__________________________
One Liberty Plaza, 7th Floor
New York, New York 10006

(Address of principal executive offices)

(212) 297-0200
(Registrant’s telephone number, including area code)

__________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Common Stock, $0.01 par value

Name of each exchange on which registered
New York Stock Exchange

__________________________

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this
chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,
smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated
filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated
filer

Accelerated
filer

Non-accelerated
filer

Smaller reporting
company

Emerging growth
company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes

Aggregate market value of the registrant’s common stock held by non-affiliates of the registrant, based upon the closing
price of a share of the registrant’s common stock on April 30, 2018 as reported on the New York Stock Exchange on
that date: $2,031,249,279

Number of shares of the registrant’s common stock outstanding as of December 20, 2018: 66,029,479

_______________________________________________

DOCUMENTS INCORPORATED BY REFERENCE
Certain parts of the registrant’s Definitive Proxy Statement relating to the registrant’s 2019 Annual Meeting of
Stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K.

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS

PART I

Item 1. Business.

Item 1A. Risk Factors.

Item 1B. Unresolved Staff Comments.

Item 2. Properties.

Item 3. Legal Proceedings.

Item 4. Mine Safety Disclosures.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Item 6. Selected Financial Data.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Item 8. Financial Statements and Supplementary Data.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Item 9A. Controls and Procedures.

Item 9B. Other Information.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Item 11. Executive Compensation.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Item 14. Principal Accounting Fees and Services.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

SIGNATURES

100

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K for ABM Industries Incorporated and its subsidiaries (collectively referred
to as “ABM,” “we,” “us,” “our,” or the “Company”) contains both historical and forward-looking statements, within the
meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. We make forward-
looking statements related to future expectations, estimates, and projections that are uncertain and often contain words
such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “outlook,” “plan,”
“predict,” “should,” “target,” or other similar words or phrases. These statements are not guarantees of future
performance and are subject to known and unknown risks, uncertainties, and assumptions that are difficult to predict.
Factors that might cause such differences include, but are not limited to, those discussed in Part 1 of this Form 10-K
under Item 1A., “Risk Factors,” and we urge readers to consider these risks and uncertainties in evaluating our forward-
looking statements. We caution readers not to place undue reliance upon any such forward-looking statements, which
speak only as of the date made. We undertake no obligation to publicly update any forward-looking statements, whether
as a result of new information, future events, or otherwise, except as required by law.

ITEM 1. BUSINESS.

General

PART I

ABM Industries Incorporated, which operates through its subsidiaries (collectively referred to as “ABM,” “we,”
“us,” “our,” or the “Company”), is a leading provider of integrated facility solutions with a mission to make a difference,
every person, every day. Our history dates back to 1909, when American Building Maintenance Company began as
a window washing company in San Francisco with one employee. In 1985, we were incorporated in Delaware under
the name American Building Maintenance Industries, Inc., as the successor to the business originally founded in 1909.
In 1994, we changed our name to ABM Industries Incorporated. Over the past ten years, we have grown into a multi-
segment facility solutions company, increasing our revenue from $3 billion to $6 billion, particularly through new service
offerings and strategic acquisitions.

The acquisition of OneSource in 2007 bolstered ABM as a leader in the janitorial market, while the Linc Group
acquisition in 2010 established ABM as a “facility solutions” company with new service offerings, including lighting,
mechanical, and electrical “technical solutions.” With demand increasing for industry-specific service providers, in 2012
we purchased Air Serv and established our first industry group, “aviation.” In recent years, we have strategically acquired
companies in the United Kingdom, particularly with the GBM and Westway acquisitions, which expanded our janitorial
and technical solutions businesses overseas. In 2017, we completed the acquisition of GCA Services Group (“GCA”),
a provider of integrated facility services to educational institutions and commercial facilities, for approximately $1.3
billion, the largest acquisition in ABM history. As a result of this acquisition, we are now a leading facility solutions
provider in the education market. In recent years, we also evaluated all of our service offerings and sold our Security
and Government Services businesses, which did not align with ABM’s long-term industry-group focus.

As a result of these strategic changes, we have strengthened our ability to offer janitorial, facilities engineering,
parking, and specialized mechanical and electrical technical solutions, on a standalone basis or in combination,
positioning ourselves as a leading integrated facilities management company. Unless otherwise indicated, all references
to years are to our fiscal year, which ends on October 31.

2020 Vision

In September 2015, we announced a comprehensive transformation initiative (“2020 Vision”) intended to drive
long-term, profitable growth through an industry-based go-to-market approach. In connection with our 2020 Vision,
we have achieved savings through the realignment of our organization by industry group, divested businesses that
were not at the core of our strategy, centralized key functional areas, strengthened our sales capabilities, initiated
investments in service delivery tools and processes, improved our employee engagement programs, and added to
our position as a leading integrated service provider through the acquisition of GCA. We continue focusing on several
key initiatives across our organization to sustain our 2020 Vision strategy and profitably deliver leading industry-based
facility solutions. For additional information on our 2020 Vision, see Item 7., “Management’s Discussion and Analysis
of Financial Condition and Results of Operations.”

Contract Types

We generate revenues under several types of contracts, as explained below. Generally, the type of contract
is determined by the nature of the services. Although many of our service agreements are cancelable on short notice,
we have historically had a high rate of client retention and expect to continue maintaining long-term relationships with
our clients.

Contract Type

Monthly Fixed-
Price

Cost-Plus

Tag Services

Transaction-
Price

Hourly

Management
Reimbursement

Leased Location

Allowance

Energy Savings
Contracts and
Fixed-Price
Repair and
Refurbishment

Description
These arrangements are contracts in which the client agrees to pay a fixed fee every month
over a specified contract term. A variation of a fixed-price arrangement is a square-foot
arrangement, under which monthly billings are based on the actual square footage serviced.
Janitorial contracts are commonly structured as fixed-price arrangements.
These arrangements are contracts in which the clients reimburse us for the agreed-upon amount
of wages and benefits, payroll taxes, insurance charges, and other expenses associated with
the contracted work, plus a profit margin. Facilities engineering, janitorial, and catering services
are commonly structured as cost-plus arrangements.
Tag work generally consists of supplemental services requested by clients outside of the standard
service specification. This contract type is commonly used in janitorial services and includes
cleanup after tenant moves, construction cleanup, flood cleanup, and snow removal.
These are agreements in which the clients are billed for each transaction performed on a monthly
basis (e.g., wheelchair passengers served or planes cleaned).
These arrangements are contracts in which the client is billed a set hourly rate for each labor
hour provided. Certain Aviation contracts are structured as hourly arrangements.
Under these parking arrangements, we manage a parking facility for a management fee and
pass through the revenue and expenses associated with the facility to the owner.
Under these parking arrangements, we generally pay to the property owner a fixed amount of
rent plus a percentage of revenues derived from monthly and transient parkers. We retain all
revenues and we are responsible for most operating expenses incurred.
Under these parking arrangements, we are paid a fixed or hourly fee to provide parking services,
and we are responsible for certain operating expenses, as specified in the contract.

Under these arrangements, we agree to develop, design, engineer, and construct a project and
guarantee that the project will satisfy agreed-upon performance standards.

Franchise

We franchise certain engineering services through individual and area franchises under the Linc
Service and TEGG brands, which are part of ABM Technical Solutions.

Segment and Geographic Financial Information

Effective November 1, 2017, we reorganized our reportable segments to reflect the integration of GCA into
our industry group model. Our reportable segments consist of Business & Industry (“B&I”), Aviation, Technology &
Manufacturing (“T&M”), Education, Technical Solutions, and Healthcare. Our principal operations are in the United
States, and in 2018 our U.S. operations generated approximately 93% of our revenues. For segment and geographic
financial information, see Note 18, “Segment and Geographic Information,” in the Notes to Consolidated Financial
Statements.

REPORTABLE SEGMENTS AND DESCRIPTIONS

B&I, our largest reportable segment, encompasses janitorial, facilities
engineering, and parking services for commercial real estate properties and
sports and entertainment venues. B&I also provides vehicle maintenance
and other services to rental car providers (“Vehicle Services Contracts”). We
typically provide services in this segment pursuant to monthly fixed-price
arrangements and cost-plus arrangements that are obtained through a
competitive bid process as well as through tag services.

Aviation supports airlines and airports with services ranging from parking and
janitorial to passenger assistance, catering logistics, air cabin maintenance,
and transportation. We typically provide services to clients in this segment
under master services agreements. These agreements are typically re-bid
upon renewal and are generally structured as fixed-price arrangements,
parking reimbursement contracts, transaction-price arrangements, and
hourly arrangements. Two clients accounted for approximately 31% of
revenues for this segment in 2018.

T&M combines our legacy Industrial & Manufacturing business, which was
previously included in our B&I segment, with our legacy High Tech industry
group, which was previously reported as part of our legacy Emerging
Industries Group. T&M provides janitorial, facilities engineering, and parking
services. We typically provide these services pursuant to monthly fixed-price
and cost-plus arrangements that are obtained through a competitive bid
process.

Education delivers janitorial, custodial, landscaping and grounds, facilities
engineering, and parking services for public school districts, private schools,
colleges, and universities. These services are typically provided pursuant to
monthly fixed-price and cost-plus arrangements that are obtained through
either a competitive bid process or re-bid upon renewal. This business was
previously reported as part of our legacy Emerging Industries Group.

Technical Solutions specializes in mechanical and electrical services. These
services can also be leveraged for cross-selling across all of our industry
groups, both domestically and internationally. Contracts for this segment are
structured as cost-plus arrangements, fixed-price arrangements, energy
savings contracts, and franchise arrangements.

Healthcare offers janitorial, facilities management, clinical engineering, food
and nutrition, laundry and linen, parking and guest services, and patient
transportation services at traditional hospitals and non-acute facilities. We
typically provide these services, which are obtained through a competitive
bid process, pursuant to monthly fixed-price and cost-plus arrangements, as
well as parking reimbursement contracts. This business was previously
reported as part of our legacy Emerging Industries Group.

Service Marks, Trademarks, and Trade Names

We hold various service marks, trademarks, and trade names, such as “ABM,” “ABM Building Value,” “ABM
Greencare,” “MPower,” “Linc Service,” “OmniServ,” and “TEGG,” which we deem important to our marketing activities,
to our business, and, in some cases, to the franchising activities conducted by our Technical Solutions segment.

Dependence on Significant Client

No client accounted for more than 10% of our consolidated revenues during 2018, 2017, or 2016.

Competition

We believe that each aspect of our business is highly competitive and that such competition is based primarily
on price, quality of service, efficiency enhancements, adapting to changing workplace conditions, and ability to anticipate
and respond to industry changes. A majority of our revenue is derived from projects requiring competitive bids; however,
an invitation to bid is often conditioned upon prior experience, industry expertise, and financial strength. The low cost
of entry in the facility services business results in a very competitive market. We mainly compete with regional and
local owner-operated companies that may have more acute vision into local markets and significantly lower labor and
overhead costs, providing them with competitive advantages in those regards. We also compete indirectly with
companies that can perform for themselves one or more of the services we provide.

Sales and Marketing

Our sales and marketing activities include digital engagement and direct interactions with prospective and
existing clients, pricing, proposal management, and customer relationship management by dedicated business
development teams, operations personnel, and management. These activities are executed by branch and regional
sales, marketing, and operations teams assigned to our industry groups and are supported by centralized sales support
teams, inside sales teams, corporate marketing personnel, and our Center of Excellence teams. These sales and
marketing teams perform lead acquisition, lead nurturing, and lead management as well as training in sales tools and
proposal systems, all governed by standard operating procedures.

Regulatory Environment and Environmental Compliance

Our operations are subject to various federal, state, and/or local laws regulating the discharge of materials
into the environment or otherwise relating to the protection of the environment, such as discharge into soil, water, and
air, and the generation, handling, storage, transportation, and disposal of waste and hazardous substances. From time
to time we are involved in environmental matters at certain of our locations or in connection with our operations.
Historically, the cost of complying with environmental laws or resolving environmental issues relating to locations or
operations in the United States or abroad has not had a material adverse effect on our financial position, results of
operations, or cash flows.

Employees

As of October 31, 2018, we employed approximately 140,000 persons, of which approximately 48,000, or

34%, were subject to various local collective bargaining agreements.

Available Information

We are required to file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K, and other information with the Securities and Exchange Commission (“SEC”). The public may read and
copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington,
D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-
SEC-0330. In addition, the SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information
statements, and other information regarding issuers that file electronically with the SEC.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy
statements, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 are also available free of charge on our Internet site at www.abm.com as soon as reasonably
practicable after such reports are electronically filed with or furnished to the SEC. We provide references to our website
for your convenience, but our website does not constitute, and should not be viewed as, a part of this Annual Report,
and our website is not incorporated into this or any of our other filings with the SEC.

Executive Officers of Registrant

Executive Officers on December 21, 2018

Name
Scott Salmirs

Age
56

D. Anthony Scaglione

Scott Giacobbe

Andrea R. Newborn

Dean A. Chin

Andrew D. Block

Rene Jacobsen

Principal Occupations and Business Experience
President and Chief Executive Officer of ABM since March 2015; Executive Vice
President of ABM from September 2014 to March 2015, with global responsibility
for ABM’s Aviation division and all international activities; Executive Vice
President of ABM’s Onsite Services division focused on the Northeast from 2003
to September 2014; Member of the Board of Directors of ABM since January
2015.

Executive Vice President and Chief Financial Officer of ABM since April 2015;
Senior Vice President, Treasurer, and Head of Mergers and Acquisitions of ABM
from January 2012 to April 2015; Vice President and Treasurer of ABM from
June 2009 to January 2012; Chairman of the Board of the Association for
Financial Professionals (AFP), the professional society that represents finance
executives across the globe, from November 2014 to October 2016.

Chief Operating Officer of ABM since November 2017; President of ABM’s U.S.
Technical Solutions from November 2010 to November 2017.

Executive Vice President, General Counsel, and Corporate Secretary of ABM
since July 2017; Executive Vice President and General Counsel for TravelClick,
Inc. from July 2014 to June 2017; Senior Vice President, General Counsel, and
Secretary of The Reader’s Digest Association, Inc. from March 2007 to February
2014.

Senior Vice President, Chief Accounting Officer, and Corporate Controller of
ABM since June 2010; Vice President and Assistant Controller of ABM from
June 2008 to June 2010.

Executive Vice President and Chief Human Resources Officer of ABM since
June 2018; Senior Vice President, Talent and Organizational Performance
(Chief HR Officer) of Buffalo Wild Wings, Inc. from April 2010 to June 2018;
Director of Human Resources of C.H. Robinson Worldwide, Inc. from December
2002 to April 2010.

President of ABM’s Business & Industry Group since February 2016; Executive
Vice President of ABM’s West Region from April 2012 to February 2016;
Executive Vice President and Chief Operating Officer of Temco Service
Industries from November 2007 to April 2012.

ITEM 1A. RISK FACTORS.

We may not realize the full extent of growth opportunities or potential synergies anticipated from the acquisition
of GCA.

The benefits that we expected to result from the acquisition of GCA will depend, in part, on our ability to realize
the full extent of the anticipated growth opportunities and to maintain synergies from the acquisition. Our success in
realizing these growth opportunities and synergies, and the timing of this realization, depends on a number of factors.
There is a significant degree of difficulty and management distraction inherent in the process of integrating an acquisition
as sizable as GCA. While we have completed a significant portion of the integration, the ongoing process of integrating
operations could cause an interruption of, or loss of momentum in, the activities of our business, including the GCA
legacy business. In addition, time and distraction relating to the integration of GCA could detract from our ability to
achieve the benefits anticipated with respect to our 2020 Vision. There can be no assurance that we will complete
the GCA integration successfully or in a cost efficient manner, and the failure to do so could have a material adverse
effect on our business, financial condition, or results of operations.

Even if we are able to complete the GCA integration successfully, this integration may not result in the full
realization of the growth opportunities and synergies we anticipated and currently expect from this integration, and we
cannot guarantee these benefits will be achieved within anticipated timeframes or at all. In addition, the overall
integration may result in unanticipated problems, expenses, liabilities, competitive responses, loss of client and other
relationships, or loss of key employees, any of which may adversely affect our results of operations and may cause
our stock price to decline.

We incurred a substantial amount of debt to complete the acquisition of GCA. To service our debt, we will
require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.
We also depend on the profitability of our subsidiaries to satisfy our cash needs. If we cannot generate the
required cash, we may not be able to make the necessary payments required to service our indebtedness or
we may be required to suspend certain discretionary payments, including our dividend.

In connection with the acquisition of GCA, we refinanced and replaced our existing credit facility with a new
syndicated secured credit facility (the “Credit Facility”) consisting of a $900 million revolving line of credit and an $800
million amortizing term loan with a five-year term. Although we have paid down portions of this indebtedness, our future
ability to make payments on our debt, fund our other liquidity needs, and make planned capital expenditures will depend
on our ability to generate cash. Our ability to generate cash, to a certain extent, is subject to general economic, financial,
competitive, and other factors that are beyond our control. We cannot guarantee that our business will generate
sufficient cash flow from our operations or that future borrowings will be available to us in an amount sufficient to enable
us to make payments on our debt, fund other liquidity needs, make planned capital expenditures, or continue our
dividend.

The degree to which we are currently leveraged could have important consequences for shareholders. For
example, it could: require us to dedicate a substantial portion of our cash flows from operations to the payment of debt
service, reducing the availability of our cash flow to fund working capital, share repurchases, capital expenditures,
acquisitions, and other general corporate purposes; limit our availability to obtain additional financing in the future to
enable us to react to changes in our business; and place us at a competitive disadvantage compared to businesses
in our industry that have less debt.

Additionally, increased borrowings increase our interest expense, which could negatively impact our profitability.
Because current interest rates on our credit facility are variable, an increase in prevailing rates would increase our
interest costs. Further, our credit facility contains both financial covenants and other covenants that limit our ability to
engage in specific transactions. Any failure to comply with covenants in the credit facility could result in an event of
default that, if not cured or waived, would have a material adverse effect on us.

Changes to our businesses, operating structure, financial reporting structure, or personnel relating to the
implementation of our 2020 Vision strategic transformation initiative, together with process and technology
initiatives following the acquisition of GCA, may not have the desired effects on our financial condition and
results of operations.

During the fourth quarter of 2015, we announced our 2020 Vision, which is intended to differentiate ABM in
the marketplace, accelerate revenue growth for certain industry groups, and improve our margin profile. While we
have made progress in implementing this initiative, we may not be able to fully execute on this strategy to the extent
expected within the anticipated timeframe as a result of numerous factors, such as client resistance to an integrated

approach, inability to deliver requested end-to-end services, and difficulty penetrating certain markets. Moreover,
although we may be able to leverage scale to manage costs more efficiently and effectively, the realignment of our
business operations may not provide us with the anticipated competitive advantage or revenue growth.

In connection with our 2020 Vision and following the acquisition of GCA, we are making significant investments
in information technology, but there can be no assurance these investments will have the desired results in improving
the delivery of our services. In addition, planned changes to our business systems and processes may not create the
operational efficiencies or cost benefits that we expect and could result in unanticipated consequences, including
substantial disruption to our back-office operations and service delivery.

In addition, the planned move of GCA’s back-office functions to the ABM enterprise service center may create
risks relating to the processing of transactions and recording of financial information. During the transition period, we
could experience a lapse in the operation of internal controls due to turnover, lack of legacy knowledge, or inappropriate
training, which could result in significant deficiencies or material weaknesses.

Our success depends on our ability to gain profitable business despite competitive pressures and on our
ability to preserve long-term client relationships.

We believe that each aspect of our business is highly competitive and that such competition is based primarily
on price, quality of service, and ability to anticipate and respond to industry changes. A majority of our revenue is
derived from projects requiring competitive bids. The low cost of entry in the facility services business results in a very
competitive market. We mainly compete with regional and local owner-operated companies that may have more acute
vision into local markets and significantly lower labor and overhead costs, providing them with a competitive advantage
in those regards. We also compete indirectly with companies that can perform for themselves one or more of the
services we provide. Additionally, many of our contracts provide that our clients pay certain costs at specified rates,
such as insurance, healthcare costs, salary and salary-related expenses, petroleum, and other costs. We may
experience higher operating costs related to changes in laws and regulations regarding employee benefits, minimum
wage, and other entitlements promulgated by federal, state, or local governments or as a result of increased local
wages necessary to attract employees due to changes in the unemployment rate. If actual costs exceed the rates
specified in the contracts, our profitability may be negatively impacted. Further, if we are unable to respond adequately
to changing technology, we may lose existing clients and fail to win future business opportunities. These strong
competitive pressures could inhibit our success in bidding for profitable business and our ability to increase prices as
costs rise, thereby reducing margins.

We primarily provide services pursuant to agreements that are cancelable by either party upon 30–90 days’
notice. As we generally incur higher initial costs on new contracts until the labor management and facilities operations
normalize, our business associated with long-term client relationships is generally more profitable than short-term
client relationships. If we lose a significant number of long-term clients, our profitability could be negatively impacted,
even if we gain equivalent revenues from new clients.

We depend to a large extent on our relationships with clients and our reputation for quality integrated facility
solutions. Maintaining our existing client relationships, including retaining GCA clients as we complete the rebranding
of the GCA entities, is an important factor contributing to our business success. Among other things, adverse publicity
stemming from an accident or other incident involving our facility operations or employees related to injury, illness,
death, or alleged criminal activity could harm our reputation, result in the cancellation of contracts or inability to retain
clients, and expose us to significant liability.

Our business success depends on our ability to attract and retain qualified personnel and senior management.

Our future performance depends on the continuing services and contributions of our senior management and
on our continued ability to attract and retain qualified personnel. Any unplanned turnover in senior management or
inability to attract and retain qualified personnel could have a negative effect on our results of operations. We employ
approximately 140,000 persons, and our operations depend on the services of a large and diverse workforce. We must
attract, train, and retain a large and growing number of qualified employees while controlling related labor costs. Our
ability to control labor and benefit costs is subject to numerous internal and external factors, including changes in the
unemployment rate, changes in immigration policy, regulatory changes, prevailing wage rates, and competition we
face from other companies for qualified employees. There is no assurance that we will be able to attract or retain
qualified employees in the future, which could have a material adverse effect on our business, financial condition, and
results of operations.

Our use of subcontractors or joint venture partners to perform work under customer contracts exposes us
to liability and financial risk.

We depend on subcontractors or other parties, such as joint venture partners, to perform work in situations in
which we are not able to self-perform the work involved. Such arrangements may involve subcontracts or joint venture
relationships where we do not have direct control over the performing party. A failure, for whatever reason, by one or
more of our subcontractors or joint venture partners to perform, or the alleged negligent performance of, the agreed-
upon services may expose us to liability. Although we have in place controls and programs to monitor the work of our
subcontractors and our joint venture partners, there can be no assurance that these controls or programs will have
the desired effect, and we may incur significant liability as a result of the actions or inactions of one or more of our
subcontractors or joint venture partners.

Our international business involves risks different from those we face in the United States that could have an
effect on our results of operations and financial condition.

We have business operations in jurisdictions outside of the United States, most significantly in the United
Kingdom (“U.K.”). Our international operations are subject to risks that are different from those we face in the United
States and subject us to complex and frequently changing laws and regulations, including differing labor laws and
regulations relating to the protection of certain information that we collect and maintain about our employees, clients,
and other third parties. Among these laws is the U.K. Modern Slavery Act, the U.K. Bribery Act, and the European
Union General Data Protection Regulation (the “GDPR”), which took effect in May 2018. The failure to comply with
these laws or regulations could subject us to significant litigation, monetary damages, regulatory enforcement actions,
or fines in one or more jurisdictions. More generally, the economic, political, monetary, and operational impacts of
Brexit, including unanticipated impacts to the U.K. real estate market and general economic conditions in the United
Kingdom, could negatively impact our U.K. business, including reducing our margins.

In addition, when we participate in joint ventures that operate outside of the United States where we are not
a controlling party, we may have limited control over the joint venture. Any improper actions by our joint venture
employees, partners, or agents, including but not limited to failure to comply with the U.S. Foreign Corrupt Practices
Act, the U.K. Bribery Act, and/or laws relating to human trafficking, could result in civil or criminal investigations,
monetary and non-monetary penalties, or other consequences, any of which could have an adverse effect on our
financial position as well as on our reputation and ability to conduct business.

Additionally, the operating results of our non-U.S. subsidiaries are translated into U.S. dollars, and those results
are affected by movements in foreign currencies relative to the U.S. dollar. There can be no assurance that the foregoing
factors will not have a material adverse effect on our international operations or on our consolidated financial condition
and results of operations.

Unfavorable developments in our class and representative actions and other lawsuits alleging various claims
could cause us to incur substantial liabilities.

Our business involves employing tens of thousands of employees, many of whom work at our clients’ facilities.
We incur risks relating to our employment of these workers, including but not limited to: claims of misconduct or
negligence on the part of our employees; claims related to the employment of unlicensed personnel; and claims by
our employees of discrimination, harassment, violations of wage and hour requirements, or violations of other federal,
state, or local laws. We also incur risks and claims related to the imposition on our employees of policies or practices
of our clients that may be different from our own. Some or all of these claims may lead to litigation, including class
action litigation, and these matters may cause us to incur negative publicity with respect to alleged claims. Additionally,
there are risks to all employers in some states, such as California, resulting from new and unanticipated judicial
interpretations of existing laws and the application of those new interpretations against employers on a retroactive
basis. It is not possible to predict the outcome of these lawsuits or any other proceeding, and our insurance may not
cover all claims that may be asserted against us. These lawsuits and other proceedings may consume substantial
amounts of our financial and managerial resources. An unfavorable outcome with respect to these lawsuits and any
future lawsuits could, individually or in the aggregate, cause us to incur substantial liabilities that could have a material
adverse effect upon our business, reputation, financial condition, or results of operations.

We insure our insurable risks through a combination of insurance and self-insurance, and we retain a
substantial portion of the risk associated with expected losses under these programs, which exposes us to
volatility associated with those risks, including the possibility that changes in estimates of ultimate insurance
losses could result in material charges against our earnings.

We use a combination of insured and self-insurance programs to cover workers’ compensation, general liability,
automobile liability, property damage, and other insurable risks. We are responsible for claims both within and in excess
of our retained limits under our insurance policies, and while we endeavor to purchase insurance coverage that is
appropriate to our assessment of risk, we are unable to predict with certainty the frequency, nature, or magnitude of
clams for direct or consequential damages. If our insurance coverage proves to be inadequate or unavailable, our
business may be negatively impacted.

The determination of required insurance reserves is dependent upon significant actuarial judgments. We use
the results of actuarial studies to estimate insurance rates and insurance reserves for future periods and to adjust
reserves, if appropriate, for prior years. Actual experience related to our insurance reserves can cause us to change
our estimates for reserves and any such changes may materially impact results, causing significant volatility in our
operating results. We have previously experienced material negative trends in our actuarial estimates and may continue
to experience these and other material negative trends in future periods.

Should we be unable to renew our excess, umbrella, or other commercial insurance policies at competitive
rates, it could have a material adverse impact on our business, as would the incurrence of catastrophic uninsured
claims or the inability or refusal of our insurance carriers to pay otherwise insured claims. Further, to the extent that
we self-insure our losses, deterioration in our loss control and/or our continuing claim management efforts could
increase the overall cost of claims within our retained limits. A material change in our insurance costs due to changes
in the frequency of claims, the severity of the claims, the costs of excess/umbrella premiums, or regulatory changes
could have a material adverse effect on our financial position, results of operations, or cash flows.

In 2015, we formed a wholly-owned captive insurance company, IFM Assurance Company (“IFM”), which we
believe has provided us with increased flexibility in the end-to-end management of our insurance program. There can
be no assurance that IFM will continue to bring about the intended benefits or the desired flexibility in the management
of our insurance programs, because we may experience unanticipated events that will reduce or eliminate expected
benefits, including anticipated savings related to coverage provided by IFM to our subsidiaries.

Our risk management and safety programs may not have the intended effect of reducing our liability for
personal injury or property loss.

We attempt to mitigate risks relating to personal injury or property loss through the implementation of company-
wide safety and loss control efforts designed to decrease the incidence of accidents or events that might increase our
liability. It is expected that any such decrease would also have the effect of reducing our insurance costs for our casualty
programs. However, incidents involving personal injury or property loss often are caused by multiple factors, a significant
number of which are beyond our control. Therefore, there can be no assurance that our risk management and safety
programs will have the desired effect of controlling costs and liability exposure.

Impairment of goodwill and long-lived assets could have a material adverse effect on our financial condition
and results of operations.

We evaluate goodwill for impairment annually, in the fourth quarter, or more often if impairment indicators exist.
We also review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying
amount of such assets may not be recoverable. If the fair value of one of our reporting units is less than its carrying
value, or if as a result of a recoverability test we conclude that the projected undiscounted cash flows are less than
the carrying amount, we would record an impairment charge related to goodwill or long-lived assets, respectively. The
assumptions used to determine impairment require significant judgment and the amount of the impairment could have
a material adverse effect on our reported financial results for the period in which the charge is taken.

Changes in general economic conditions, including changes in energy prices, government regulations, and
changing consumer preferences, could reduce the demand for facility services and, as a result, reduce our
earnings and adversely affect our financial condition.

In certain geographic areas and service lines, our most profitable revenues are related to supplemental services
requested by clients outside of the standard service specification (“tag work”). This contract type is commonly used in
janitorial services and includes cleanup after tenant moves, construction cleanup, flood cleanup, and snow removal.

A decline in occupancy rates could result in a decline in scope of work, including tag work, and depressed prices for
our services. Slow domestic and international economic growth or other negative changes in global, national, and local
economic conditions could have a negative impact on our business. Specifically, adverse economic conditions may
result in clients cutting back on discretionary spending. Additionally, since a significant portion of our aviation services
and parking revenues are tied to the number of airline passengers, hotel guests, and sports arena attendees, results
for these businesses could be adversely affected by curtailment of business, personal travel, or discretionary spending.
The use of ride sharing services and car sharing services may also lead to a decline in parking demand at airports
and in urban areas.

Energy efficiency projects are designed to reduce a client’s overall consumption of commodities such as
electricity and natural gas. As such, downward fluctuations in commodity prices may reduce client demand for our
services. We also depend, in part, on federal and state legislation and policies that support energy efficiency projects.
If current legislation or policies are amended, eliminated, or not extended beyond their current expiration dates, or if
funding for energy incentives is reduced or delayed, it could also adversely affect our ability to obtain new business.
In some instances, we offer certain of these clients guaranteed energy savings on installed equipment. In the event
those guaranteed savings are not achieved, we may be required to pay liquidated or other damages. All of these factors
could have an adverse effect on our financial position, results of operations, and cash flows.

Our business may be materially affected by changes to fiscal and tax policies. Negative or unexpected tax
consequences could adversely affect our results of operations.

The Tax Cuts and Jobs Act of 2017 made significant changes to the U.S. Internal Revenue Code that will go
into effect over several years. Such changes include a reduction in the corporate tax rate as well as limitations on
certain corporate deductions and credits that could have a negative impact on our business. In addition, adverse
changes in the underlying profitability and financial outlook of our operations or changes in tax law could lead to
changes in our valuation allowances against deferred tax assets on our consolidated balance sheets, which could
materially affect our results of operations. Furthermore, we are subject to tax audits by governmental authorities,
primarily in the United States and United Kingdom. If we experience unfavorable results from one or more such tax
audits, there could be an adverse effect on our tax rate and therefore on our net income.

We may experience breaches of, or disruptions to, our information technology systems or those of our third-
party providers or clients, or other compromises of our data that could adversely affect our business.

Our information technology systems and those of our third-party providers or clients could be the target of
cyber attacks, hacking, unauthorized access, computer viruses, malware, or other intrusions, which could result in
operational disruptions or information misappropriation, such as theft of intellectual property or inappropriate disclosure
of confidential, proprietary, or personal information. We maintain confidential, proprietary, and personal information
relating to our current, former, and prospective employees, clients, and other third parties in our information technology
systems and in systems of third-party providers. We have experienced certain data and security breaches in the past
and could experience future data or security breaches stemming from the intentional or negligent acts of our employees
or other third parties. Furthermore, while we continue to devote significant resources to monitoring and updating our
systems and implementing information security measures to protect our systems, there can be no assurance that any
controls and procedures that we have in place will be sufficient to protect us from future security breaches. As cyber
threats are continually evolving, our controls and procedures may become inadequate and we may be required to
devote additional resources to modifying or enhancing our systems in the future. We may also be required to expend
resources to remediate cyber-related incidents or to enhance and strengthen our cyber security.

Any such disruptions to our information technology systems, breaches or compromises of data, and/or
misappropriation of information could result in lost sales, negative publicity, litigation, violation of privacy and other
laws, or business delays that could have a material adverse effect on our business.

A significant number of our employees are covered by collective bargaining agreements that could expose
us to potential liabilities in relationship to our participation in multiemployer pension plans, requirements to
make contributions to other benefit plans, and the potential for strikes, work slowdowns or similar activities,
and union-organizing drives.

We participate in various multiemployer pension plans that provide defined pension benefits to employees
covered by collective bargaining agreements. Because of the nature of multiemployer pension plans, there are risks
associated with participation in these plans that differ from single-employer plans. Assets contributed by an employer
to a multiemployer pension plan are not segregated into a separate account and are not restricted to provide benefits
only to employees of that contributing employer. In the event another participating employer in a multiemployer pension
11

plan no longer contributes to the plan, the unfunded obligations of the plan may be borne by the remaining participating
employers, including us. In the event of the termination of a multiemployer pension plan or a complete or partial
withdrawal from a multiemployer pension plan, under applicable law we could incur material withdrawal liabilities. We
further discuss our participation in multiemployer pension and postretirement plans in Note 13, “Employee Benefit
Plans,” in the Notes to Consolidated Financial Statements. In addition, the terms of collective bargaining agreements
require us to contribute to various fringe benefit plans, including health and welfare, pension, and training plans, all of
which require us to have appropriate systems in place to assure timely and accurate payment of contributions. The
failure to make timely and accurate contributions as a result of a systems failure could have a negative impact on our
financial position.

At October 31, 2018, approximately 34% of our employees were subject to various local collective bargaining
agreements, some of which will expire or become subject to renegotiation during 2019. In addition, at any given time
we may face union organizing activity. When one or more of our major collective bargaining agreements becomes
subject to renegotiation or when we face union organizing drives, we and the union may disagree on important issues
that could lead to a strike, work slowdown, or other job actions at one or more of our locations. In a market where we
are unionized but competitors are not unionized, we could lose clients to such competitors. A strike, work slowdown,
or other job action could disrupt our services, resulting in reduced revenues or contract cancellations. Moreover,
negotiating a first time collective bargaining agreement or renegotiating an existing agreement could result in a
substantial increase in labor and benefits expenses that we may be unable to pass through to clients.

If we fail to maintain proper and effective internal control over financial reporting in the future, our ability to
produce accurate and timely financial statements could be negatively impacted, which could harm our
operating results and investor perceptions of our Company and as a result may have a material adverse effect
on the value of our common stock.

Pursuant to Section 404 of the Sarbanes Oxley Act of 2002 and related rules, our management is required to
report on, and our independent registered public accounting firm is required to attest to, the effectiveness of our internal
control over financial reporting. The rules governing the standards that must be met for management to assess our
internal control over financial reporting are complex and require significant documentation, testing, and possible
remediation. We have acquired entities that had no publicly traded debt or equity and therefore were not required to
conform to the rules and regulations of the SEC, especially as it relates to internal control structure. When we acquire
such entities, they may not have in place all the necessary controls as required by the Public Company Accounting
Oversight Board. Integrating acquired entities into our internal control over financial reporting has required and will
continue to require significant time and resources from our management and other personnel and increases our
compliance costs. We are required to include our assessment of the effectiveness of the internal controls over financial
reporting of entities we acquire in our overall assessment. We plan to complete the evaluation and integration of internal
controls over financial reporting and report our assessment within the required time frame.

In addition, with the increasing frequency of cyber-related frauds perpetrated to obtain inappropriate payments,
we need to ensure our internal controls related to authorizing the transfer of funds and changing our vendor master
files are adequate. Failure to maintain an effective internal control environment could have a material adverse effect
on our ability to accurately report our financial results, the market’s perception of our business, and our stock price.

Our business may be negatively impacted by adverse weather conditions.

Weather conditions such as snow storms, heavy flooding, hurricanes, and fluctuations in temperatures can
negatively impact portions of our business. Within our Technical Solutions segment, cooler than normal temperatures
in the summer could reduce the need for servicing of air conditioning units, resulting in reduced revenues and profitability.
Within Parking and Aviation services, snow can lead to reduced travel activity, as well as increases in certain costs,
both of which negatively affect gross profit. On the other hand, the absence of snow during the winter could cause us
to experience reduced revenues in our B&I segment, as many of our contracts specify additional payments for snow-
related services.

Catastrophic events, disasters, and terrorist attacks could disrupt our services.

We may encounter disruptions involving power, communications, transportation or other utilities, or essential
services depended upon by us or by third parties with whom we conduct business. This could include disruptions as
the result of natural disasters, pandemics, weather-related or similar events (such as fires, hurricanes, blizzards,
earthquakes, and floods), political instability, labor strikes, or war (including acts of terrorism or hostilities) that could
impact our markets. If a disruption occurs in one location and persons in that location are unable to communicate with
or travel to or work from other locations, our ability to service and interact with our clients and others may suffer, and
12

we may not be able to successfully implement contingency plans that depend on communications or travel. These
events may increase the volatility of financial results due to unforeseen costs with partial or no corresponding
compensation from clients. There also can be no assurance that the disaster recovery and crisis management
procedures we employ will suffice in any particular situation to avoid a significant loss. In addition, to the extent
centralized administrative locations are disabled for a long period of time, key business processes, such as accounts
payable, information technology, payroll, and general management operations, could be interrupted.

Actions of activist investors could disrupt our business.

Public companies have been the target of activist investors. In the event that a third party, such as an activist
investor, proposes to change our governance policies, board of directors, or other aspects of our operations, our review
and consideration of such proposals may create a significant distraction for our management and employees. This
could negatively impact our ability to execute our 2020 Vision and may require management to expend significant
time and resources responding to such proposals. Such proposals may also create uncertainties with respect to our
financial position and operations and may adversely affect our ability to attract and retain key employees.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

Our principal executive office is located at One Liberty Plaza, 7th Floor, New York, New York 10006. As part

of our 2020 Vision, in 2016 we began consolidating our operations to increase efficiency and effectiveness.

Principal Properties as of October 31, 2018

Location

Character of Office

Alpharetta, Georgia

IT Datacenter and
Technical Solutions
Headquarters

Atlanta, Georgia

Operations Support

Cleveland, Ohio

New York, New York

Legacy GCA
Headquarters
Corporate
Headquarters

Sugar Land, Texas

Enterprise Services

Tustin, CA

Operations Support

(1) Approximately 10,000 square feet are sublet.

Approximate
Square Feet

Lease Expiration
Date, Unless
Owned

25,000

37,000

32,400

44,000(1)

62,500

40,000

Owned

10/31/2027

1/31/2024

Segment

All

Education, T&M, and
Corporate

1/3/2032

Corporate and B&I

3/31/2028

7/31/2029

All

B&I and
Technical Solutions

In addition to the above properties, we have other offices, warehouses, and parking facilities in various locations,
primarily in the United States. We believe that these properties are well maintained, in good operating condition, and
suitable for the purposes for which they are used.

ITEM 3. LEGAL PROCEEDINGS.

We are a party to a number of lawsuits, claims, and proceedings incident to the operation of our business,
including those pertaining to labor and employment, contracts, personal injury, and other matters, some of which allege
substantial monetary damages. Some of these actions may be brought as class actions on behalf of a class or purported
class of employees. While the results of these lawsuits, claims, and proceedings cannot be predicted with any certainty,
our management believes that the final outcome of these matters will not have a material adverse effect on our financial
position, results of operations, or cash flows.

Certain Legal Proceedings

Certain lawsuits to which we are a party are discussed below. In determining whether to include any particular
lawsuit or other proceeding, we consider both quantitative and qualitative factors. These factors include, but are not
limited to: the amount of damages and the nature of any other relief sought in the proceeding; if such damages and
other relief are specified, our view of the merits of the claims; whether the action is or purports to be a class action,
and our view of the likelihood that a class will be certified by the court; the jurisdiction in which the proceeding is
pending; and the potential impact of the proceeding on our reputation.

The Consolidated Cases of Bucio and Martinez v. ABM Janitorial Services filed on April 7, 2006, in the Superior
Court of California, County of San Francisco (the “Bucio case”)

The Bucio case is a class action pending in San Francisco Superior Court that alleges we failed to provide
legally required meal periods and make additional premium payments for such meal periods, pay split shift premiums
when owed, and reimburse janitors for travel expenses. There is also a claim for penalties under the California Labor
Code Private Attorneys General Act (“PAGA”). On April 19, 2011, the trial court held a hearing on plaintiffs’ motion to
certify the class. At the conclusion of that hearing, the trial court denied plaintiffs’ motion to certify the class. On May 11,
2011, the plaintiffs filed a motion to reconsider, which was denied. The plaintiffs appealed the class certification issues.
The trial court stayed the underlying lawsuit pending the decision in the appeal. The Court of Appeal of the State of
California, First Appellate District (the “Court of Appeal”), heard oral arguments on November 7, 2017. On December
11, 2017, the Court of Appeal reversed the trial court’s order denying class certification and remanded the matter for
certification of a meal period, travel expense reimbursement, and split shift class. The case was remitted to the trial
court for further proceedings on class certification, discovery, dispositive motions, and trial.

On September 20, 2018, the trial court entered an order defining four certified subclasses of janitors who were
employed by the legacy ABM janitorial companies in California at any time between April 7, 2002 and April 30, 2013,
on claims based on previous auto deduction practices for meal breaks, unpaid meal premiums, unpaid split shift
premiums, and unreimbursed business expenses, such as mileage reimbursement for use of personal vehicles to
travel between worksites. The period of time covered by the PAGA claim will also be considered by the court shortly.
This matter has not been set for trial. Prior to trial, we will have the opportunity to move for summary judgment, seek
decertification of the classes, or mediate, if we deem such actions appropriate.

Hussein and Hirsi v. Air Serv Corporation filed on January 20, 2016, pending in the United States District
Court for the Western District of Washington at Seattle (the “Hussein case”) and

Isse et al. v. Air Serv Corporation filed on February 7, 2017, in the Superior Court of Washington for King
County (the “Isse case”)

The Hussein case was a certified class action involving a class of certain hourly Air Serv employees at Seattle-
Tacoma International Airport in SeaTac, Washington. The plaintiffs alleged that Air Serv violated a minimum wage
requirement in an ordinance applicable to certain employers in the local city of SeaTac (the “Ordinance”). Plaintiffs
sought retroactive wages, double damages, interest, and attorneys’ fees. This matter was removed to federal court.
In a separate lawsuit brought by Filo Foods, LLC, Alaska Airlines, and several other employers at SeaTac Airport, the
King County Superior Court (the “Superior Court”) issued a decision that invalidated the Ordinance as it applied to
workers at SeaTac Airport. Subsequently, the Washington Supreme Court reversed the Superior Court’s decision. On
February 7, 2017, the Isse case was filed against Air Serv on behalf of 60 individual plaintiffs (who would otherwise
be members of the Hussein class), who alleged failure to comply with both the minimum wage provision and the sick
and safe time provision of the Ordinance. The Isse plaintiffs sought retroactive wages and sick benefits, double damages
for wages and sick benefits, interest, and attorneys’ fees. The Isse case later expanded to approximately 220 individual
plaintiffs.

In mediations on November 2 and 3, 2017, and without admitting liability in either matter, we agreed to settle
the Hussein and Isse cases for a combined total of $8.3 million, inclusive of damages, interest, attorneys’ fees, and
employer payroll taxes. Eligible employees will be able to participate in either the Hussein or Isse settlements, but
cannot recover in both settlements. The settlements in both cases require court approval because of the nature of the
claims being released. On December 8, 2017, the Superior Court approved the settlement agreement for the 220 Isse
plaintiffs, and we subsequently made a settlement payment of $4.5 million to the Isse plaintiffs in January 2018. $3.8
million remains accrued for the Hussein case.

On July 30, 2018, the United States District Court for the Western District of Washington at Seattle preliminarily
approved the settlement in the Hussein case. At the final approval hearing on December 4, 2018, the court (i) accepted
opt-out notices from 78 Hussein class members (the “opt-out members”) indicating their intent to participate in separate
lawsuits (leaving 386 class members in the Hussein class), (ii) directed the parties to recalculate the settlement amount
by deducting the settlement funds attributable to the 78 opt-out members, and (iii) requested other minor changes,
but indicated that the court intended to grant final approval of the settlement with these changes. On December 20,
2018, the court issued its order granting final approval of the class action settlement. The Hussein settlement funds
will be paid in February 2019, provided there are no appeals or requests for review of the final approval order. The
amount of the settlement funds attributable to the 78 opt-out members is approximately $0.9 million.

Castro and Marmolejo v. ABM Industries, Inc., et al., filed on October 24, 2014, pending in the United
States District Court for the Northern District of California (the “Castro case”)

On October 24, 2014, Plaintiff Marley Castro filed a class action lawsuit alleging that ABM did not reimburse
janitorial employees in California for using their personal cell phones for work-related purposes, in violation of California
Labor Code section 2802. On January 23, 2015, Plaintiff Lucia Marmolejo was added to the case as a named plaintiff.
On October 27, 2017, plaintiffs moved for class certification seeking to represent a class of all employees who were,
are, or will be employed by ABM in the State of California with the Employee Master Job Description Code
“Cleaner” (hereafter referred to as “Cleaner Employees”) beginning from October 24, 2010. ABM filed its opposition
to class certification on November 27, 2017. On January 26, 2018, the district court granted plaintiffs’ motion for class
certification. The court rejected plaintiffs’ proposed class, instead certifying three classes that the court formulated on
its own: (1) all employees who were, are, or will be employed by ABM in the State of California as Cleaner
Employees who used a personal cell phone to punch in and out of the EPAY system and who (a) worked at an ABM
facility that did not provide a biometric clock and (b) were not offered an ABM-provided cell phone during the period
beginning on January 1, 2012, through the date of notice to the Class Members that a class has been certified in this
action; (2) all employees who were, are, or will be employed by ABM in the State of California as Cleaner Employees who
used a personal cell phone to report unusual or suspicious circumstances to supervisors and were not offered (a) an
ABM-provided cell phone or (b) a two-way radio during the period beginning four years prior to the filing of the original
complaint, October 24, 2014, through the date of notice to the Class Members that a class has been certified in this
action; and (3) all employees who were, are, or will be employed by ABM in the State of California as Cleaner
Employees who used a personal cell phone to respond to communications from supervisors and were not offered (a)
an ABM-provided cell phone or (b) a two-way radio during the period beginning four years prior to the filing of the
original complaint, October 24, 2014, through the date of notice to the Class Members that a class has been certified
in this action.

On February 9, 2018, ABM filed a petition for permission to appeal the district court’s order granting class
certification with the United States Court of Appeals for the Ninth Circuit, which was denied on April 30, 2018. On March
20, 2018, ABM moved to compel arbitration of the claims of certain class members pursuant to the terms of three
collective bargaining agreements. In response to that motion, on May 14, 2018, the district court modified the class
definition to exclude all claims arising after the operative date(s) of the applicable collective bargaining agreements
(which is June 1, 2016 for one agreement and May 1, 2016 for the other two agreements). However, the district court
denied the motion to compel arbitration as to claims that arose prior to the operative date(s) of the applicable collective
bargaining agreements. ABM has appealed to the Ninth Circuit the district court’s order denying the motion to compel
arbitration with respect to the periods preceding the operative dates of the collective bargaining agreements.

After a court-ordered mediation held on October 15, 2018, the parties agreed to a class action settlement of
$5.4 million, subject to court approval. We anticipate the plaintiffs’ motion for preliminary approval will be filed with the
court in the first quarter of fiscal year 2019, and a hearing on the motion is expected in the first or second quarter of
fiscal year 2019.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.

Market Information and Dividends

Our common stock is listed on the New York Stock Exchange (NYSE: ABM). The following table sets forth the
high and low sales prices of our common stock on the New York Stock Exchange and quarterly cash dividends declared
on shares of common stock for the periods indicated.

(in dollars)
Fiscal Year 2018
Price range of common stock

High
Low

Dividends declared per share
Fiscal Year 2017
Price range of common stock

High
Low

Dividends declared per share

First

Second

Third

Fourth

Fiscal Quarter

$
$
$

44.70 $
36.61 $
0.175 $

38.37 $
31.07 $
0.175 $

32.90 $
28.17 $
0.175 $

45.03 $
38.04 $
0.170 $

44.68 $
39.41 $
0.170 $

44.93 $
40.36 $
0.170 $

35.16
29.48
0.175

45.12
37.12
0.170

We have paid cash dividends every quarter since 1965. Future dividends will be determined based on our

earnings, capital requirements, financial condition, and other factors considered relevant by our Board of Directors.

Common Stock Repurchases

On September 2, 2015, our Board of Directors authorized a program to repurchase up to $200.0 million of our
common stock. Purchases may take place on the open market or otherwise, and all or part of the repurchases may
be made pursuant to Rule 10b5-1 plans or in privately negotiated transactions. The timing of repurchases is at our
discretion and will depend upon several factors, including market and business conditions, future cash flows, share
price, and share availability. Repurchased shares are retired and returned to an authorized but unissued status. The
repurchase program may be suspended or discontinued at any time without prior notice. We did not repurchase any
shares during the fourth quarter of 2018. At October 31, 2018, authorization for $134.1 million of repurchases remained
under our share repurchase program.

Stockholders

At December 20, 2018, there were 3,053 registered holders of our common stock.

Performance Graph

The following graph compares the five-year cumulative total return for our common stock against the Standard
& Poor’s 500 Index (“S&P 500”) and the Standard & Poor’s SmallCap 600 Index (“S&P 600”). As our competitors are
principally privately held, we do not believe it is feasible to construct a peer group comparison on an industry or line-
of-business basis.

INDEXED RETURNS
Years Ended October 31,

Company / Index
ABM Industries Incorporated
S&P 500 Index
S&P SmallCap 600 Index

2013

2014

2015

2016

2017

2018

100 $
100
100

102.9 $
117.3
109.3

108.0 $
123.4
112.4

151.4 $
128.9
119.5

165.3 $
159.4
152.9

123.7
171.1
161.5

This performance graph shall not be deemed to be “soliciting material” or “filed” with the Securities and
Exchange Commission, or subject to Regulation 14A or 14C, or subject to the liabilities of Section 18 of the Securities
Exchange Act of 1934, as amended. The comparisons in the performance graph are based on historical data and are
not indicative of, or intended to forecast, the possible future performance of our common stock.

ITEM 6. SELECTED FINANCIAL DATA.

The following selected financial data should be read in conjunction with Item 7., “Management’s Discussion
and Analysis of Financial Condition and Results of Operations,” and Item 8., “Financial Statements and Supplementary
Data.” Unless otherwise indicated, all references to years are to our fiscal year, which ends on October 31.

(in millions, except per share amounts)

Statements of Comprehensive Income Data
Revenues(1)
Operating profit(2)
Income from continuing operations
Income (loss) from discontinued operations, net of taxes(3)
Per Share Data

Net income per common share — Basic

Income from continuing operations

Net income

Net income per common share — Diluted

Income from continuing operations

Net income

Weighted-average common and common

equivalent shares outstanding

Basic

Diluted

Dividends declared per common share

Statements of Cash Flow Data

Years Ended October 31,

2018

2017

2016

2015

2014

$ 6,442.2

$ 5,453.6

$ 5,144.7

$ 4,897.8

$ 4,649.7

138.6

95.9

1.8

101.9

78.1

(74.3)

54.7

62.3

(5.1)

1.45

1.48

1.45

1.47

66.1

66.4

1.35

0.07

1.34

0.07

57.7

58.3

1.11

1.02

1.09

1.01

56.3

56.9

73.6

54.1

22.2

0.95

1.35

0.94

1.33

56.7

57.4

114.8

66.9

8.7

1.19

1.35

1.17

1.32

56.1

57.1

0.700

0.680

0.660

0.640

0.620

Net cash provided by operating activities of continuing operations
Income tax (refunds) payments, net(4)

299.7

101.7

110.5

145.5

115.6

(1.0)

11.8

12.6

23.7

32.9

(in millions)

Balance Sheet Data

At October 31,

2018

2017

2016

2015

2014

Total assets
Trade accounts receivable, net of allowances(5)
Goodwill(6)
Other intangible assets, net of accumulated amortization(7)
Long-term debt, net(8)
Insurance claims

$ 3,627.5

$ 3,812.6

$ 2,278.8

$ 2,130.7

$ 2,176.5

1,014.1

1,834.8

355.7

902.0

510.3

1,038.1

1,864.2

430.1

1,161.3

495.4

803.7

912.8

103.8

268.3

423.8

742.9

867.5

111.4

158.0

387.4

687.3

854.7

127.5

319.8

349.7

(1) Revenues in 2018 included $858.1 million of incremental revenue from acquisitions, primarily $855.7 million related to the
acquisition of GCA Services Group (“GCA”). Revenues in 2017 included $208.1 million of incremental revenue from acquisitions,
including $169.7 million related to GCA.

(2) Factors affecting comparability of operating profit consisted of the following:

• Operating profit in 2018 was positively impacted by $67.6 million of incremental operating profit resulting from the GCA
acquisition and an $11.8 million lower self-insurance adjustment, partially offset by $34.4 million of higher amortization
expense and impairment charges of $26.5 million. Additionally, 2018 benefited from the absence of $24.2 million of
transaction expenses related to the GCA acquisition incurred in 2017, partially offset by a $17.4 million impairment recovery
recorded in 2017 related to our Government Services business.

• Operating profit in 2017 benefited from a $17.4 million impairment recovery, a $10.9 million lower self-insurance adjustment,
a reduction in restructuring and related expenses, and procurement and organizational savings from our 2020 Vision
initiatives, all offset by $24.2 million of transaction expenses related to the GCA acquisition.

• Operating profit in 2016 was negatively impacted by insurance expense of $49.6 million, consisting of a $32.9 million
unfavorable self-insurance adjustment related to prior year claims and $16.7 million of higher insurance expense due to
an increase in the rate used to record our insurance reserves during 2016. Operating profit was also unfavorably impacted
by $29.0 million of 2020 Vision restructuring and related charges and a $22.5 million impairment charge for our Government
Services business, consisting of both goodwill and long-lived asset charges. Operating profit in 2016 was favorably impacted
by approximately $22 million in savings from our 2020 Vision initiatives.

• Operating profit in 2015 was negatively impacted by a $35.9 million unfavorable self-insurance adjustment related to prior

year claims.

(3) We had income from discontinued operations in 2018 of $1.8 million due to an insurance reimbursement on a legal settlement
and collection of previously written off receivables, partially offset by union audit settlements. The loss from discontinued operations
in 2017 included legal settlements associated with our former Security business of $120.0 million. Income from discontinued
operations for 2015 reflected the $14.4 million after-tax gain on the sale of the Security business.

(4) Net income tax payments were lower by $19.4 million during 2018 due to a refund received for prior year legal settlements.
Additionally, we had cash tax savings of approximately $7 million for 2018 and $10 million for both 2017 and 2016 related to coverage
provided by IFM Assurance Company, our wholly-owned captive insurance company. During 2014, net income tax payments
increased as certain tax assets were substantially utilized.

(5) Trade accounts receivable, net of allowances, increased by $118.1 million on September 1, 2017 as a result of the GCA acquisition.

(6) Goodwill decreased in 2018 due to an impairment charge of $20.3 million related to the acquisition of Westway Services Holdings
(2014) Ltd. (“Westway”) and to a $7.0 million adjustment to the final GCA purchase price allocation. Goodwill increased by $933.9
million on September 1, 2017 as a result of the GCA acquisition and by $53.8 million on December 1, 2015 due to the Westway
acquisition.

(7) In 2018, other intangible assets, net of accumulated amortization, was reduced by an impairment charge of $6.2 million related
to the Westway acquisition and a $1.0 million adjustment to the final GCA purchase price allocation. During 2017, we recorded
$349.0 million of other intangible assets as a result of the GCA acquisition.

(8) On September 1, 2017, we refinanced and replaced our existing $800.0 million credit facility with a new secured $1.7 billion credit
facility, which we used to partially fund the GCA acquisition. During 2015, we used the cash proceeds from the sale of the Security
business to pay down a portion of our line of credit.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations
(“MD&A”) is intended to facilitate an understanding of the results of operations and financial condition of ABM Industries
Incorporated and its subsidiaries (collectively referred to as “ABM,” “we,” “us,” “our,” or the “Company”). This MD&A
is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the
accompanying notes (“Financial Statements”). This MD&A contains both historical and forward-looking statements,
within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. We
make forward-looking statements related to future expectations, estimates, and projections that are uncertain and
often contain words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,”
“outlook,” “plan,” “predict,” “should,” “target,” or other similar words or phrases. These statements are not guarantees
of future performance and are subject to known and unknown risks, uncertainties, and assumptions that are difficult
to predict. Factors that might cause such differences include, but are not limited to, those discussed in Part 1. of this
Form 10-K under Item 1A., “Risk Factors,” which are incorporated herein by reference. Our future results and financial
condition may be materially different from those we currently anticipate.

Throughout the MD&A, amounts and percentages may not recalculate due to rounding. In addition, we have
revised our prior period segment information to reflect changes to our operating structure following the integration of
GCA Services Group (“GCA”). These changes had no impact on our previously reported consolidated balance sheets,
statements of comprehensive income (loss), or statements of cash flows. Unless otherwise indicated, all information
in the MD&A and references to years are based on our fiscal year, which ends on October 31.

Business Overview

ABM is a leading provider of integrated facility solutions, customized by industry, with a mission to make a

difference, every person, every day.

2020 Vision

Systems and Technology Transformation

Following the acquisition and integration of GCA, we are targeting significant investments in our information
technology infrastructure. We have begun to upgrade several key platforms, including our human resources information
systems, enterprise resource planning system, and labor management system. We are also utilizing technology to
help improve processes company-wide, including account planning, labor management, payroll, and procurement. To
further improve work order management, we have also launched a “Tag Pricer” tool that allows us to capture work
orders more efficiently. We believe these improvements will help simplify our operating environment, drive productivity,
and create consistency and efficiency across our organization.

Strategic Growth

We are focused on long-term, profitable growth related to both new and existing clients across and within our
industry groups. We believe operational leverage from our strategic growth initiatives, combined with our continued
focus on operational efficiency, will increase profitability.

Cost Optimization

We continue to centralize many of our back-office functions through our Enterprise Services Center in Sugar
Land, Texas to help drive consistency in practice and support operating efficiency. In addition, by consolidating
purchasing activities we have been able to leverage our scale, increase our purchasing power, and identify preferred
suppliers, which has enabled cost saving opportunities in supplies and materials procurement.

Developments and Trends

Economic Labor Outlook

The U.S. economy continues to demonstrate positive underlying fundamentals, with expanding gross domestic
product growth and improving employment conditions, which have led to historically low levels of both unemployment
and underemployment across the country. These factors have contributed to the lower availability of qualified labor
for our business and higher turnover in certain markets, as our employees have more job opportunities both inside
and outside our industry. This in turn has caused, and may continue to cause, higher labor and related personnel costs.

United States Tax Reform

The Tax Cuts and Jobs Act (the “Tax Act”), which was enacted on December 22, 2017, represents the most
significant overhaul of the U.S. tax code in more than 30 years. Among other provisions, the Tax Act provides for a
reduction of the federal corporate income tax rate from 35% to 21% and a “transition tax” to be levied on the deemed
repatriation of indefinitely reinvested earnings of international subsidiaries. Since we have an October 31 fiscal year-
end, the lower corporate income tax rate was phased in, resulting in a U.S. statutory federal rate of 23.3% for fiscal
2018 and 21% for subsequent fiscal years. Other provisions under the Tax Act become effective for us in fiscal 2019,
including limitations on deductibility of interest and executive compensation, as well as a new minimum tax on Global
Intangible Low-Taxed Income (“GILTI”). As a result, in 2019 we expect our effective tax rate to increase from the 2018
rate. The impact of the Tax Act, as summarized below for the year ended October 31, 2018, is further described in
Note 17, “Income Taxes,” in the Financial Statements.

(in millions)
Remeasurement of U.S. deferred tax assets and liabilities

Transition tax on non-U.S. subsidiaries’ earnings

Total impact of the Tax Act on the benefit for income taxes

Year Ended

October 31, 2018

27.7

(4.5)

23.2

Due to the complexities of implementing the provisions of the Tax Act, the staff of the U.S. Securities and
Exchange Commission issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for
tax effects of the Tax Act and permits a measurement period not to exceed one year from the enactment date for
companies to complete the required analyses and accounting. As permitted under SAB 118, the adjustments we
recorded due to the Tax Act, including the remeasurement of deferred tax assets and liabilities and the transition tax,
were based on reasonable estimates and were considered provisional during the year. As of October 31, 2018, the
one-time impact of the change in tax rate on our deferred tax assets and liabilities is complete. Additionally, we have
completed our assessment of GILTI and have established a policy to account for this tax on a period basis beginning
in fiscal year 2019. We have also completed our analysis of the one-time transition tax and recorded the impact.

Acquisition of GCA during 2017

On September 1, 2017 (the “Acquisition Date”), we acquired GCA, a provider of integrated facility services to
educational institutions and commercial facilities, for approximately $1.3 billion, consisting of $837.5 million in cash
(revised during the second quarter of 2018 to reflect a post-closing purchase price adjustment related to a net working
capital settlement) and approximately 9.4 million shares of ABM common stock with a fair value of $421.3 million at
closing. Refer to Note 3, “Acquisitions,” in the Financial Statements for more information on this transaction.

Our consolidated statements of comprehensive income and statements of cash flows include GCA’s results
of operations in 2018, but exclude GCA’s results of operations in the comparative years prior to the Acquisition Date.
During the year ended October 31, 2018, we recognized total revenue from GCA of $1.0 billion, including incremental
revenues of $855.7 million, as detailed in the table below.

(in millions)
Education

Technology & Manufacturing

Business & Industry

Healthcare

Aviation

Total

Year Ended

October 31, 2018 October 31, 2017
94.9
$

571.9 $

238.5

170.3

29.3

18.1

1,028.2 $

39.6

27.4

5.0

2.8

169.7

Following this acquisition, we initiated a restructuring program to achieve cost synergies from our combined
operations. We include these costs within corporate expenses. We do not expect to incur significant severance
expenses related to GCA restructuring in the future.

(in millions)
Employee Severance
Other Project Fees
External Support Fees
Total

Insurance

Year Ended

October 31, 2018

Cumulative

11.8 $

7.9
2.0

21.7 $

13.5
7.9
2.0
23.3

The adequacy of our reserves for workers’ compensation, general liability, automobile liability, and property
damage insurance claims is based upon known trends and events and the actuarial estimates of required reserves
considering the most recently completed actuarial reports. We use all available information to develop our best estimate
of insurance claims reserves as information is obtained. The results of actuarial studies are used to estimate our
insurance rates and insurance reserves for future periods and to adjust reserves, if appropriate, for prior years. The
actuarial studies indicated the changes we have made to our risk management program have reduced the frequency
of claims; however, we are experiencing adverse developments that impact claim costs relating to prior periods. Claim
management initiatives include programs to identify claims that have the potential to develop adversely earlier in the
claims cycle and ensure the establishment of reserves consistent with known fact patterns. However, with respect to
claims related to certain prior fiscal years, the actuarial studies showed unfavorable developments in our estimates of
ultimate losses related to general liability, property damage, workers’ compensation, and automobile liability claims.
Additionally, we increased our estimate of ultimate losses for workers’ compensation claims, primarily related to claims
in California, due to increases in projected costs and severity of claims in certain prior fiscal years, as well as statutory,
regulatory, and legal developments.

Based on the results of the actuarial studies performed during 2018, which included analyzing recent loss
development patterns, comparing the loss development against benchmarks, and applying actuarial projection methods
to determine the estimate of ultimate losses, we increased our total reserves for known claims as well as our estimate
of the loss amounts associated with incurred but not reported claims (“IBNR Claims”) for years prior to 2018 by $10.2
million during 2018. This adjustment was $11.8 million lower than the total adjustment of $22.0 million related to prior
year claims in 2017.

Government Services Business

At October 31, 2016, the assets and liabilities of our former Government Services business were classified
as held for sale, at which time we wrote down goodwill and long-lived assets of this business by $22.5 million to reflect
our best estimate of fair value less costs to sell, using all information available at that time. During the second quarter
of 2017, we received an offer from a strategic buyer to purchase this business for approximately $35.0 million, which
was higher than our previous estimate of fair value less costs to sell. As a result, we recorded a $17.4 million impairment
recovery to adjust the fair value of certain previously impaired assets to the valuation of the assets as implied by the
agreed-upon sales price, less estimated costs to sell. We sold this business on May 31, 2017 for $35.5 million and
recorded a pre-tax gain of $1.2 million. The reported results for this business are through the date of sale and future
results could include run-off costs. As this business has been sold and is no longer part of our ongoing operations, we
have excluded a discussion of its results for the periods in this report.

Key Financial Highlights

• Revenues increased by $988.6 million, or 18.1%, during 2018, as compared to 2017. This included $855.7

million of incremental revenues from the September 1, 2017 acquisition of GCA.

• Operating profit increased by $36.7 million, or 36.1%, during 2018, as compared to 2017. The increase in
operating profit is primarily attributable to $67.6 million of incremental operating profit resulting from the GCA
acquisition and an $11.8 million lower self-insurance adjustment, partially offset by $34.4 million of higher
amortization expense and impairment charges of $26.5 million. Additionally, 2018 benefited from the absence
of $24.2 million of transaction expenses related to the GCA acquisition incurred in 2017, partially offset by a
$17.4 million impairment recovery recorded in 2017 related to our Government Services business.

•

Interest expense increased by $34.9 million during 2018, as compared to 2017, primarily related to increased
indebtedness incurred to fund the GCA acquisition and higher relative interest rates under our credit facility,
partially offset by amortization of $2.5 million related to the gain realized on our interest rate swaps.

• Our income taxes from continuing operations for 2018 were favorably impacted by a net tax benefit of $23.2

million related to the Tax Act.

• Net cash provided by operating activities of continuing operations was $299.7 million during 2018.

• Dividends of $46.0 million were paid to shareholders, and dividends totaling $0.700 per common share were

declared during 2018.

• At October 31, 2018, total outstanding borrowings under our credit facility were $949.0 million, and we had
up to $467.3 million of borrowing capacity under our credit facility; however, covenant restrictions limited our
actual borrowing capacity to $441.3 million.

Results of Operations

The Year Ended October 31, 2018 Compared with the Year Ended October 31, 2017

Consolidated

($ in millions)

Revenues

Operating expenses

Gross margin

Selling, general and administrative expenses

Restructuring and related expenses

Amortization of intangible assets

Impairment loss (recovery)

Operating profit

Income from unconsolidated affiliates, net

Interest expense

Income from continuing operations before income taxes

Income tax benefit (provision)

Income from continuing operations

Income (loss) from discontinued operations, net of taxes

Net income

Other comprehensive income (loss)

Interest rate swaps

Foreign currency translation

Income tax provision

Comprehensive income

* Not meaningful

Revenues

Years Ended October 31,

2018

2017

Increase / (Decrease)

6,442.2

5,453.6

5,747.4

4,881.2

10.8%

438.0

25.7

66.0

26.5

138.6

3.2

(54.1)

87.7

8.2

95.9

1.8

97.8

21.9

(4.7)

(5.9)

10.5%

436.6

20.9

31.6

(18.5)

101.9

4.2

(19.2)

86.9

(8.8)

78.1

(74.3)

3.8

2.7

9.7

(1.1)

109.0

15.2

988.6

866.2

29 bps

1.4

4.8

34.4

45.0

36.7

18.1%

17.7%

0.3%

23.1%

NM*

36.1%

(1.0)

(23.9)%

(34.9)

0.8

17.0

17.8

76.1

94.0

19.2

(14.4)

(4.8)

93.8

NM*

1.0%

NM*

22.9%

NM*

Revenues increased by $988.6 million, or 18.1%, during 2018, as compared to 2017. The increase in revenues
was primarily attributable to $858.1 million of incremental revenues from acquisitions, mainly GCA, as well as organic
growth in B&I, T&M, Technical Solutions, and Aviation. This increase was partially offset by the sale of our Government
Services business on May 31, 2017.

Operating Expenses

Operating expenses increased by $866.2 million, or 17.7%, during 2018, as compared to 2017. The increase
was primarily attributable to $763.1 million of incremental operating expenses from the GCA acquisition and an increase
in wages and related personnel costs due to a tight labor market. Gross margin increased by 29 bps in 2018, as
compared to 2017. The increase in gross margin was primarily associated with a lower self-insurance adjustment
related to prior year claims as a result of actuarial studies, favorable margins in our U.S. Technical Solutions business,
and the termination of an unprofitable Aviation contract in the third quarter of 2017, all partially offset by lower profit
margins on certain B&I accounts.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $1.4 million, or 0.3%, during 2018, as compared

to 2017. The increase in selling, general and administrative expenses was primarily related to:

•

$32.9 million of incremental expenses related to the GCA acquisition;

a $6.4 million increase in technology investments and related support;

•

the absence of a $3.2 million reimbursement of previously expensed fees associated with a concluded internal
investigation into a foreign entity formerly affiliated with a joint venture during the prior year; and

•

a $3.2 million increase in expenses related to certain incentive plans due to the timing of awards.

This increase was partially offset by:

•

the absence of $24.2 million of transaction expenses related to the GCA acquisition;

a $3.4 million adjustment to decrease our medical and dental insurance reserves as a result of actuarial
evaluations performed in 2018;

a $2.7 million decrease in rental expense due to office consolidations in the prior year;

a $2.5 million decrease in travel and entertainment expenses;

a $2.1 million decrease in legal settlement costs, net of a $7.0 million reimbursement of previously expensed
legal settlement costs;

$1.9 million of lower compensation and related expenses; and

a $1.5 million decrease in bad debt expense.

Restructuring and Related Expenses

Restructuring and related expenses increased by $4.8 million, or 23.1%, during 2018, as compared to 2017,
as a result of restructuring related to the GCA acquisition, partially offset by the completion of our 2020 Vision
organizational realignment.

Amortization of Intangible Assets

Amortization of intangible assets increased by $34.4 million, during 2018, as compared to 2017, as a result

of the amortization of acquired intangible assets associated with the GCA acquisition.

Impairment Loss (Recovery)

During 2018, we recorded impairment charges on goodwill and customer relationships related to our U.K.
Technical Solutions business totaling $26.5 million. In 2018, declining operating performance of this business primarily
reflected the adverse impact of Brexit and the resulting impact on microeconomic conditions in the U.K. retail sector.

On May 31, 2017, we sold our Government Services business for $35.5 million. Based on the initial offer of
$35.0 million received during the second quarter of 2017, we recorded a $17.4 million impairment recovery to adjust
the fair value of certain previously impaired assets. In connection with the sale, during the third quarter of 2017 we
recorded a pre-tax gain of approximately $1.2 million due to a working capital settlement.

Interest Expense

Interest expense increased by $34.9 million, during 2018, as compared to 2017, primarily related to increased
indebtedness incurred to fund the GCA acquisition and higher relative interest rates under our credit facility, partially
offset by amortization of $2.5 million related to the interest rate swap gain.

Income Taxes from Continuing Operations

During 2018, we had an income tax benefit of $8.2 million, compared to a provision of $8.8 million in 2017.
Our income taxes in 2018 benefited from: a net tax benefit of $23.2 million related to the enactment of the Tax Act;
$5.8 million, including interest of $1.0 million, related to expiring statutes of limitations for uncertain tax positions; $3.4
million of excess tax benefits related to the vesting of share-based compensation awards; and $2.8 million related to
tax deductions for energy efficient government buildings. These benefits were partially offset by a $1.0 million reduction
in certain tax credits, including the prior year WOTC for new hires. Comparatively, 2017 was favorably impacted by:
a benefit of $17.8 million, including interest of $1.2 million, related to expiring statutes of limitations for uncertain tax
positions; $3.6 million of excess tax benefits related to the vesting of share-based compensation awards; $1.9 million
of tax deductions for energy efficient government buildings; and the 2017 WOTC for new hires.

Discontinued Operations, Net of Taxes

During 2018, we had income from discontinued operations, net of taxes, of $1.8 million, compared with a loss
from discontinued operations, net of taxes, of $74.3 million during 2017, a change of $76.1 million. This change was
due to an insurance reimbursement on a legal settlement and collection of previously written off receivables, partially
offset by union audit settlements during 2018, compared with a legal reserve established in the prior year in connection
with certain legal settlement agreements.

Interest Rate Swaps

During April 2018, we elected to terminate all of our interest rate swaps for cash proceeds of $25.9 million.

The resulting gain is being amortized from AOCI to interest expense over the term of our Credit Facility.

Foreign Currency Translation

During 2018, we recognized as a component of our comprehensive income a foreign currency translation loss
of $4.7 million compared to a gain of $9.7 million during 2017. This change was related to the U.S. Dollar (“USD”)
strengthening against the Great Britain Pound (“GBP”) during 2018. Future gains and losses on foreign currency
translation will be dependent upon changes in the relative value of foreign currencies to the USD and the extent of
our foreign assets and liabilities.

Segment Information

Our reportable segments consist of Business & Industry (“B&I”), Aviation, Technology & Manufacturing (“T&M”),
Education, Technical Solutions, and Healthcare. Refer to Note 2, “Basis of Presentation and Significant Accounting
Policies,” in the Notes to Consolidated Financial Statements for information related to our former Government Services
business.

Financial Information for Each Reportable Segment

($ in millions)

Revenues

Business & Industry

Aviation

Technology & Manufacturing

Education

Technical Solutions

Healthcare

Government Services

Operating profit (loss)

Business & Industry

Operating profit margin

Aviation

Operating profit margin

Technology & Manufacturing

Operating profit margin

Education

Operating profit margin

Technical Solutions

Operating profit margin

Healthcare

Operating profit margin

Government Services

Operating profit margin

Corporate

Adjustment for income from unconsolidated affiliates, net,

included in Aviation and Government Services

Adjustment for tax deductions for energy efficient

government buildings, included in Technical Solutions

* Not meaningful

Years Ended October 31,

2018

2017

Increase / (Decrease)

2,917.6

2,629.1

1,023.8

924.5

837.5

465.6

273.3

—

6,442.2

154.6

990.4

697.4

363.1

439.6

247.5

86.5

5,453.6

135.6

5.3%

23.2

2.3%

67.4

7.3%

43.8

5.2%

16.5

3.6%

8.8

3.2%

(0.8)

NM*

5.2%

25.3

2.6%

47.8

6.9%

18.0

5.0%

37.6

8.5%

10.6

4.3%

21.8

25.2%

(168.8)

(189.0)

(3.2)

(2.8)

(4.1)

(1.9)

138.6

101.9

288.5

33.4

227.1

474.4

26.0

25.8

(86.5)

988.6

19.0

14 bps

11.0%

3.4%

32.6%

NM*

5.9%

10.4%

NM*

18.1%

14.0%

(2.1)

(8.5)%

(29) bps

19.6

43 bps

25.8

27 bps

40.8%

NM*

(21.1)

(56.0)%

(499) bps

(1.8)

(17.4)%

(108) bps

(22.6)

NM*

20.2

10.7%

0.9

21.1%

(0.9)

36.7

(48.1)%

36.1%

Business & Industry

($ in millions)
Revenues
Operating profit(1)

Operating profit margin

Years Ended October 31,

2018

2017

2,917.6
154.6

5.3%

2,629.1
135.6

5.2%

Increase

288.5
19.0
14 bps

11.0%
14.0%

(1) 2018 and 2017 include $7.5 million and $1.3 million, respectively, of amortization expense related to the GCA acquisition.

B&I revenues increased by $288.5 million, or 11.0%, during 2018, as compared to 2017. The increase was
primarily attributable to incremental revenues of $143.0 million from the GCA acquisition and to organic net new
business, primarily new contract wins in the United Kingdom, as well as targeted expansion of key clients within the
United States. Management reimbursement revenues for this segment totaled $257.1 million and $234.1 million during
2018 and 2017, respectively.

Operating profit increased by $19.0 million, or 14.0%, during 2018, as compared to 2017. Operating profit
margin increased by 14 bps to 5.3% in 2018 from 5.2% in 2017. Operating profit margin was positively impacted by
the management of selling, general and administrative expenses and higher margins on certain accounts. The
improvement was partially offset by lower margins on certain accounts and an increase in amortization expense related
to the GCA acquisition. While labor challenges are present in certain areas of our B&I business, it is our most mature
business and has the highest proportion of unionized labor.

Aviation

($ in millions)
Revenues
Operating profit

Operating profit margin

Years Ended October 31,

2018

2017

1,023.8
23.2

2.3%

990.4
25.3

2.6%

Increase / (Decrease)
3.4%
(8.5)%

33.4
(2.1)
(29) bps

Aviation revenues increased by $33.4 million, or 3.4%, during 2018, as compared to 2017. The increase was
primarily attributable to higher management reimbursement revenue and organic growth in catering logistics, cabin
cleaning, and transportation services, as well as incremental revenues of $14.5 million from the GCA acquisition. This
increase was partially offset by the loss of certain passenger services, facility services, and janitorial accounts.
Management reimbursement revenues for this segment totaled $99.9 million and $80.4 million during 2018 and 2017,
respectively.

Operating profit decreased by $2.1 million, or 8.5%, during 2018, as compared to 2017. Operating profit margin
decreased by 29 bps to 2.3% in 2018 from 2.6% in 2017. This decrease in operating profit margin was primarily
attributable to lower margins and operational pressures on certain accounts and a provision for the settlement of a
union wage and benefits audit. This decrease was partially offset by the termination of an unprofitable contract in the
third quarter of 2017.

Technology & Manufacturing

($ in millions)
Revenues
Operating profit(1)

Operating profit margin

Years Ended October 31,

2018

2017

924.5
67.4

7.3%

697.4
47.8

6.9%

Increase

227.1
19.6
43 bps

32.6%
40.8%

(1) 2018 and 2017 include $10.6 million and $1.9 million, respectively, of amortization expense related to the GCA acquisition.

T&M revenues increased by $227.1 million, or 32.6%, during 2018, as compared to 2017. The increase was
primarily attributable to incremental revenues from the GCA acquisition of $198.1 million, expansion of existing
accounts, and net new business.

Operating profit increased by $19.6 million, or 40.8%, during 2018, as compared to 2017. Operating profit
margin increased by 43 bps to 7.3% in 2018 from 6.9% in 2017. Operating profit margin was positively impacted by

certain higher margin acquired contracts, partially offset by higher amortization expense related to the GCA acquisition
and an increase in wages and related personnel costs in certain markets.

Education

($ in millions)
Revenues
Operating profit(1)

Operating profit margin

Years Ended October 31,

2018

2017

837.5
43.8

5.2%

363.1
18.0

5.0%

Increase

474.4
25.8
27 bps

NM*
NM*

*Not meaningful
(1) 2018 and 2017 include $26.1 million and $4.6 million, respectively, of amortization expense related to the GCA acquisition.

Education revenues increased by $474.4 million during 2018, as compared to 2017. The increase was primarily

attributable to incremental revenues from the GCA acquisition of $475.5 million.

Operating profit increased by $25.8 million during 2018, as compared to 2017. Operating profit margin increased
by 27 bps to 5.2% in 2018 from 5.0% in 2017. The increase in operating profit margin was primarily due to certain
higher margin contracts and the reversal of certain reserves, partially offset by higher amortization expense related to
the GCA acquisition and an increase in wages and related personnel costs in certain markets.

Technical Solutions

($ in millions)
Revenues
Operating profit

Operating profit margin

Years Ended October 31,

2018

2017

465.6
16.5

3.6%

439.6
37.6

8.5%

Increase / (Decrease)
5.9%
(56.0)%

26.0
(21.1)
(499) bps

Technical Solutions revenues increased by $26.0 million, or 5.9%, during 2018, as compared to 2017. The
increase was primarily attributable to higher bundled energy solutions project revenues in our U.S. business due to
the timing of new projects.

Operating profit decreased by $21.1 million, or 56.0%, during 2018, as compared to 2017. Operating profit
margin decreased by 499 bps to 3.6% in 2018 from 8.5% in 2017. The decrease in operating profit margin was primarily
attributable to impairment charges on goodwill and customer relationships related to our U.K. business totaling $26.5
million during 2018, as well as the loss of certain higher margin contracts in our U.K. business, partially offset by
favorable margins on certain projects in our U.S. business and higher tax deductions for energy efficient government
building projects.

Healthcare

($ in millions)
Revenues
Operating profit

Operating profit margin

Years Ended October 31,

2018

2017

273.3
8.8
3.2%

247.5
10.6

4.3%

Increase / (Decrease)
10.4%
(17.4)%

25.8
(1.8)
(108) bps

Healthcare revenues increased by $25.8 million, or 10.4%, during 2018, as compared to 2017. This increase

was primarily attributable to incremental revenues from the GCA acquisition of $24.6 million and net new business.

Operating profit decreased by $1.8 million, or 17.4%, during 2018, as compared to 2017. Operating profit
margin decreased by 108 bps to 3.2% in 2018 from 4.3% in 2017. This decrease was primarily attributable to lower
margin new business, partially offset by the management of selling, general and administrative expenses and the
absence of a specific reserve for a client receivable.

Corporate

($ in millions)
Corporate expenses

Years Ended October 31,

2018

2017

168.8 $

189.0 $

Decrease
(20.2)

(10.7)%

Corporate expenses decreased by $20.2 million, or 10.7%, during 2018, as compared to 2017. The decrease

in corporate expenses was primarily related to:

•

the absence of $24.2 million of transaction expenses related to the GCA acquisition;

an $11.8 million lower adjustment to self-insurance reserves related to prior year claims;

a $3.4 million adjustment to decrease our medical and dental insurance reserves as a result of actuarial
evaluations performed in 2018; and

a $2.0 million decrease in legal settlement costs, net of a $7.0 million reimbursement of previously expensed
legal settlement costs.

This decrease was partially offset by:

•

a $6.4 million increase in technology investments and related support;

a $4.8 million increase in restructuring and related costs as a result of the GCA acquisition;

a $3.2 million increase in expenses related to certain incentive plans due to the timing of awards; and

$1.5 million higher compensation and related expenses primarily related to hiring additional personnel to
support our 2020 Vision initiatives, as well as incremental expenses related to the GCA acquisition.

The Year Ended October 31, 2017 Compared with the Year Ended October 31, 2016

Consolidated

($ in millions)

Revenues

Operating expenses

Gross margin

Selling, general and administrative expenses

Restructuring and related expenses

Amortization of intangible assets

Impairment (recovery) loss

Operating profit

Income from unconsolidated affiliates, net

Interest expense

Income from continuing operations before income taxes

Income tax (provision) benefit

Income from continuing operations

Loss from discontinued operations, net of taxes

Net income

Other comprehensive income (loss)

Interest rate swaps and other

Foreign currency translation

Income tax provision

Comprehensive income

*Not meaningful

Revenues

Years Ended October 31,

2017

2016

Increase / (Decrease)

5,453.6

5,144.7

4,881.2

10.5%

436.6

20.9

31.6

(18.5)

101.9

4.2

(19.2)

86.9

(8.8)

78.1

(74.3)

3.8

2.7

9.7

(1.1)

4,603.4

10.5%

410.1

29.0

25.0

22.5

54.7

7.6

(10.4)

51.9

10.4

62.3

(5.1)

57.2

(0.1)

(26.3)

(0.1)

308.9

277.8

—

26.5

6.0%

6.5%

(8.1)

(28.1)%

6.6

26.5%

(41.0)

47.2

(3.4)

(8.8)

35.0

(19.2)

15.8

(69.2)

(53.4)

2.8

36.0

(1.0)

NM*

86.2%

(44.6)%

(84.3)%

67.3%

NM*

25.3%

NM*

(93.3)%

NM*

15.2

30.7

(15.5)

(50.5)%

Revenues increased by $308.9 million, or 6.0%, during 2017, as compared to 2016. The increase in revenues
was primarily attributable to $208.1 million of incremental revenues from acquisitions, including GCA, and organic
growth of $120.7 million in Aviation and $39.6 million in B&I. This increase was partially offset by the sale of our
Government Services business on May 31, 2017, the loss of certain contracts in T&M, and the completion of a large
energy savings performance contract (“ESPC”).

Operating Expenses

Operating expenses increased by $277.8 million, or 6.0%, during 2017, as compared to 2016. Gross margin
remained flat at 10.5% in 2017 and 2016. Gross margin was positively impacted by a lower self-insurance adjustment
related to prior year claims and savings from our 2020 Vision initiatives. However, gross margin was negatively
impacted by a contract termination within our Aviation business and the loss of a multi-location janitorial account in
T&M.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $26.5 million, or 6.5%, during 2017, as compared

to 2016. The increase in selling, general and administrative expenses was primarily related to:

•

$24.2 million of transaction expenses related to the GCA acquisition;

an $8.1 million increase in costs associated with 2020 Vision technology investments;

•

$5.8 million of higher compensation and related expenses primarily related to hiring additional personnel to
support our 2020 Vision initiatives, which was reduced by a reversal of certain expenses related to incentive
plans;

$4.1 million of incremental selling, general and administrative expenses related to the GCA acquisition; and

a $2.3 million increase in legal expenses.

This increase was partially offset by:

•

an $8.8 million reduction in bad debt expense primarily associated with the absence of specific reserves for
certain client receivables that were recorded in 2016;

a $3.2 million reimbursement during 2017 of previously expensed fees associated with a concluded internal
investigation into a foreign entity formerly affiliated with a joint venture;

a $2.7 million decrease in sales tax reserve compared with the sales tax reserve in 2016; and

organizational savings from our 2020 Vision initiatives.

Restructuring and Related Expenses

Restructuring and related costs decreased by $8.1 million, or 28.1%, during 2017, as compared to 2016, as

a result of the completion of our 2020 Vision organizational realignment and related employee severance in 2016.

Impairment (Recovery) Loss

On May 31, 2017, we sold our Government Services business for $35.5 million. Based on the initial offer of
$35.0 million received during the second quarter of 2017, we recorded a $17.4 million impairment recovery to adjust
the fair value of certain previously impaired assets. In connection with the sale, we recorded a pre-tax gain of
approximately $1.2 million, which is reflected as part of impairment (recovery) loss in the results of operations table
above.

Interest Expense

Interest expense increased by $8.8 million, or 84.3%, during 2017, as compared to 2016, primarily related to
increased indebtedness incurred to fund the GCA acquisition and higher relative interest rates under our credit facility.

Income Taxes

During 2017, we had an income tax provision of $8.8 million, compared with an income tax benefit of $10.4
million in the prior year. In 2017 we benefited from $17.8 million related to expiring statutes of limitations for uncertain
tax positions, compared with $20.8 million in 2016. The 2017 period also benefited from $3.6 million of excess tax
benefits related to the vesting of share-based compensation awards and $1.9 million of tax deductions on energy
efficient government buildings, compared with $2.2 million and $1.2 million in 2016, respectively. Additionally, in 2016
we benefited from WOTC of $5.1 million from the retroactive reinstatement of the WOTC for calendar year 2015. Both
periods benefited from in-year WOTC.

Loss from Discontinued Operations, Net of Taxes

Loss from discontinued operations, net of taxes was $74.3 million during 2017 related to a legal reserve

established in connection with certain settlement agreements.

Foreign Currency Translation

During 2017 we recognized as a component of our comprehensive income a foreign currency translation gain
of $9.7 million compared with a loss of $26.3 million during 2016. This change was related to the USD weakening
against the GBP during 2017. Future gains and losses on foreign currency translation will be dependent upon changes
in the relative value of foreign currencies to the USD and the extent of our foreign assets and liabilities.

Segment Information

Financial Information for Each Reportable Segment

($ in millions)

Revenues

Business & Industry

Aviation

Technology & Manufacturing

Education

Technical Solutions

Healthcare

Government Services

Operating profit (loss)

Business & Industry

Operating profit margin

Aviation

Operating profit margin

Technology & Manufacturing

Operating profit margin

Education

Operating profit margin

Technical Solutions

Operating profit margin

Healthcare

Operating profit margin

Government Services

Operating profit margin

Corporate

Adjustment for income from unconsolidated affiliates, net,

included in Aviation and Government Services

Adjustment for tax deductions for energy efficient

government buildings, included in Technical Solutions

*Not meaningful

Years Ended October 31,

2017

2016

Increase / (Decrease)

2,629.1

2,557.1

851.5

679.3

272.1

425.3

242.7

116.7

5,144.7

111.6

4.4%

27.7

72.0

138.9

18.1

91.0

14.3

4.8

2.8%

16.3%

2.7%

33.5%

3.4%

2.0%

(30.2)

(25.8)%

308.9

6.0%

24.0

79 bps

21.5%

(2.4)

(8.6)%

3.3%

(70) bps

54.8

(7.0)

(12.7)%

8.1%

(121) bps

17.4

0.6

3.7%

6.4%

(143) bps

28.9

6.8%

12.7

8.7

29.9%

175 bps

(2.1)

(16.2)%

5.2%

(93) bps

(23.4)

(20.1)%

(167.2)

(6.5)

(1.2)

54.7

45.2

NM*

(21.8)

(13.0)%

2.4

37.3%

(0.7)

(52.9)%

47.2

86.2%

990.4

697.4

363.1

439.6

247.5

86.5

5,453.6

135.6

5.2%

25.3

2.6%

47.8

6.9%

18.0

5.0%

37.6

8.5%

10.6

4.3%

21.8

25.2%

(189.0)

(4.1)

(1.9)

101.9

Business & Industry

($ in millions)
Revenues
Operating profit

Operating profit margin

Years Ended October 31,

2017

2016

2,629.1
135.6

5.2%

2,557.1
111.6

4.4%

Increase
72.0
24.0
79 bps

2.8%
21.5%

B&I revenues increased by $72.0 million, or 2.8%, during 2017, as compared to 2016. The increase was
primarily attributable to new janitorial business, including new contract wins in the United Kingdom and additional tag
revenue, as well as expansion of existing facility services accounts, and $27.4 million of incremental revenues from
the GCA acquisition. Management reimbursement revenues for this segment totaled $234.1 million and $227.8 million
during 2017 and 2016, respectively.

Operating profit increased by $24.0 million, or 21.5%, during 2017, as compared to 2016. Operating profit
margin increased by 79 bps to 5.2% in 2017 from 4.4% in 2016. The increase in operating profit margin was primarily
associated with higher margin revenues, cost control savings from our 2020 Vision initiatives, and lower legal settlement
costs. This increase was partially offset by reserves recorded for multiemployer union benefit obligations from previous
years and by lower profit margins associated with certain leased location arrangements.

Aviation

($ in millions)
Revenues
Operating profit

Operating profit margin

Years Ended October 31,

2017

2016

990.4
25.3

2.6%

851.5
27.7

3.3%

Increase / (Decrease)
16.3%
(8.6)%

138.9
(2.4)
(70) bps

Aviation revenues increased by $138.9 million, or 16.3%, during 2017, as compared to 2016. The increase
was primarily attributable to organic growth in parking, transportation, passenger services, cabin cleaning, and facility
services. Management reimbursement revenues for this segment totaled $80.4 million and $78.2 million during 2017
and 2016, respectively.

Operating profit decreased by $2.4 million, or 8.6%, during 2017, as compared to 2016. Operating profit margin
decreased by 70 bps to 2.6% in 2017 from 3.3% in 2016. The decrease in operating profit margin was primarily
attributable to a contract termination during 2017 and operational issues in certain geographic markets. This decrease
was partially offset by lower allocated costs from our 2020 Vision initiatives and the absence of both a penalty imposed
by a regulatory agency and a specific reserve established for a client receivable in 2016.

Technology & Manufacturing

($ in millions)
Revenues
Operating profit

Operating profit margin

Years Ended October 31,

2017

2016

697.4
47.8

6.9%

679.3
54.8

8.1%

Increase / (Decrease)
2.7%
(12.7)%

18.1
(7.0)
(121) bps

T&M revenues increased by $18.1 million, or 2.7%, during 2017, as compared to 2016. The increase was
primarily related to incremental revenues from the GCA acquisition of $39.6 million, partially offset by the loss of certain
accounts.

Operating profit decreased by $7.0 million, or 12.7%, during 2017, as compared to 2016. Operating profit
margin decreased by 121 bps to 6.9% in 2017 from 8.1% in 2016. The decrease in operating profit margin was primarily
attributable to lower contribution margin from certain contracts, including the loss of a multi-location janitorial account,
and higher amortization expense from the GCA acquisition.

Education

($ in millions)
Revenues
Operating profit

Operating profit margin

Years Ended October 31,

2017

2016

363.1
18.0

5.0%

272.1
17.4

6.4%

Increase / (Decrease)
33.5%
3.7%

91.0
0.6
(143) bps

Education revenues increased by $91.0 million, or 33.5%, during 2017, as compared to 2016. The increase

was primarily attributable to incremental revenues from the GCA acquisition of $94.9 million.

Operating profit increased by $0.6 million, or 3.7%, during 2017, as compared to 2016. Operating profit margin
decreased by 143 bps to 5.0% in 2017 from 6.4% in 2016. The decrease in operating profit margin was primarily
attributable to the loss of certain higher margin contracts and higher amortization expense from the GCA acquisition.

Technical Solutions

($ in millions)
Revenues
Operating profit

Operating profit margin

Years Ended October 31,

2017

2016

439.6
37.6

8.5%

425.3
28.9

6.8%

Increase
14.3
8.7
175 bps

3.4%
29.9%

Technical Solutions revenues increased by $14.3 million, or 3.4%, during 2017, as compared to 2016. The
increase was primarily attributable to incremental revenues from acquisitions of $18.1 million and higher project
revenues, partially offset by the completion of a large ESPC project.

Operating profit increased by $8.7 million, or 29.9%, during 2017, as compared to 2016. Operating profit margin
increased by 175 bps to 8.5% in 2017 from 6.8% in 2016. The increase in operating profit margin was primarily
attributable to the completion of a relatively lower margin ESPC project that started in 2016, the management of our
selling, general and administrative expenses, a reduction in bad debt, and higher operational tax credits for energy
efficient government building projects.

Healthcare

($ in millions)
Revenues
Operating profit

Operating profit margin

Years Ended October 31,

2017

2016

247.5
10.6

4.3%

242.7
12.7

5.2%

Increase / (Decrease)
2.0%
(16.2)%

4.8
(2.1)
(93) bps

Healthcare revenues increased by $4.8 million, or 2.0%, during 2017, as compared to 2016. This increase

was primarily attributable to incremental revenues from the GCA acquisition of $5.0 million.

Operating profit decreased by $2.1 million, or 16.2%, during 2017, as compared to 2016. Operating profit
margin decreased by 93 bps to 4.3% in 2017 from 5.2% in 2016. This decrease was primarily attributable to lower
margin new business and a specific reserve established for a client receivable.

Corporate

($ in millions)
Corporate expenses

Years Ended October 31,

2017

2016

189.0 $

167.2 $

Increase
21.8

13.0%

Corporate expenses increased by $21.8 million, or 13.0%, during 2017, as compared to 2016. The increase

in corporate expenses was primarily related to:

•

$24.2 million of transaction expenses related to the GCA acquisition;

an $8.1 million increase in costs associated with 2020 Vision technology investments;

a $5.8 million increase in other costs to support our 2020 Vision initiatives;

a $5.1 million increase in legal settlement costs, including a settlement relating to a case alleging certain
minimum wage violations;

$4.0 million of incremental expenses related to the GCA acquisition; and

a $2.3 increase in legal expenses.

This increase was partially offset by:

•

a $10.9 million decrease in self-insurance expense related to prior year claims as a result of an actuarial
evaluation completed during 2017;

a $7.8 million decrease in restructuring and related costs as a result of the completion of our 2020 Vision
organizational realignment;

the absence of a $5.2 million specific reserve established during 2016 for a portion of a client receivable that
is the subject of ongoing litigation;

a $3.2 million reimbursement during 2017 of previously expensed fees associated with a concluded internal
investigation into a foreign entity formerly affiliated with a joint venture; and

•

a $1.9 million decrease in sales tax reserve.

Liquidity and Capital Resources

Our primary sources of liquidity are operating cash flows and borrowing capacity under our credit facility. We
assess our liquidity in terms of our ability to generate cash to fund our short- and long-term cash requirements. As
such, we project our anticipated cash requirements as well as cash flows generated from operating activities to meet
those needs.

In addition to normal working capital requirements, we anticipate that our short- and long-term cash
requirements will include funding legal settlements, insurance claims, dividend payments, capital expenditures, and
integration costs related to the GCA acquisition. We anticipate long-term cash uses may also include strategic
acquisitions and share repurchases.

We believe that our operating cash flows and borrowing capacity under our credit facility are sufficient to fund
our cash requirements for the next twelve months. In the event that our plans change or our cash requirements are
greater than we anticipate, we may need to access the capital markets to finance future cash requirements. However,
there can be no assurance that such financing will be available to us should we need it or, if available, that the terms
will be satisfactory to us and not dilutive to existing shareholders.

On a long-term basis, we will continue to rely on our credit facility for any long-term funding not provided by
operating cash flows. In addition, we anticipate that future cash generated from operations will be augmented by
working capital improvements driven by our 2020 Vision, such as the management of costs through consolidated
procurement.

IFM Assurance Company (“IFM”) is a wholly-owned captive insurance company that we formed in 2015. IFM
is part of our enterprise-wide, multi-year insurance strategy that is intended to better position our risk and safety
programs and provide us with increased flexibility in the end-to-end management of our insurance programs. IFM
began providing coverage to us as of January 1, 2015. We had accelerated cash tax savings related to coverage
provided by IFM of approximately $7 million in 2018 and $10 million in both 2017 and 2016. We project accelerated
cash tax savings for 2019 to be approximately $6 million.

Credit Facility

On September 1, 2017, we refinanced and replaced our then-existing $800.0 million credit facility with a new
senior, secured five-year syndicated credit facility (the “Credit Facility”), consisting of a $900.0 million revolving line of
credit and an $800.0 million amortizing term loan, scheduled to mature on September 1, 2022. In accordance with the
terms of the Credit Facility, the line of credit was reduced to $800.0 million on September 1, 2018. Initial borrowings
under the Credit Facility were used to finance, in part, the cash portion of the purchase price related to the GCA
acquisition, to refinance certain existing indebtedness of ABM, and to pay transaction costs.

Our ability to draw down available capacity under the Credit Facility is subject to, and limited by, compliance
with certain financial covenants, which include a minimum fixed charge coverage ratio of 1.50 to 1.0 and a maximum
leverage ratio that was 4.75 to 1.0 through April 2018 and steps down to 3.50 to 1.0 by July 2020. On September 5,
2018, we amended our Credit Facility to increase the maximum leverage ratio for fiscal quarters commencing July 31,
2018 through April 30, 2021 by 25 basis points for such quarters. Other covenants under the Credit Facility include
limitations on liens, dispositions, fundamental changes, investments, and certain transactions and payments. At
October 31, 2018, we were in compliance with these covenants and expect to be in compliance in the foreseeable
future.

During the first quarter of 2018, we made $20.0 million of principal payments under the Credit Facility. At
October 31, 2018, the total outstanding borrowings under our Credit Facility in the form of cash borrowings and standby
letters of credit were $949.0 million and $152.9 million, respectively. At October 31, 2018, we had up to $467.3 million
of borrowing capacity under the Credit Facility; however, covenant restrictions limited our actual borrowing capacity
to $441.3 million.

Reinvestment of Foreign Earnings

We plan to reinvest our foreign earnings to fund future non-U.S. growth and expansion, and we do not anticipate
remitting such earnings to the United States. While U.S. federal tax expense has been recognized as a result of the
Tax Act, no deferred tax liabilities with respect to federal and state income taxes or foreign withholding taxes have
been recognized. We believe that our cash on hand in the United States, along with our Credit Facility and future
domestic cash flows, are sufficient to satisfy our domestic liquidity requirements.

Proceeds from Federal Energy Savings Performance Contracts

As part of our Technical Solutions business, we enter into ESPCs with the federal government pursuant to
which we agree to develop, design, engineer, and construct a project and guarantee that the project will satisfy agreed-
upon performance standards. Proceeds from ESPC projects are generally received in advance of construction through
agreements to sell the ESPC receivables to unaffiliated third parties. We use the advances from the third parties under
these agreements to finance the projects, which are recorded as cash flows from financing activities. The use of the
cash received under these arrangements to pay project costs is classified as operating cash flows.

Effect of Inflation

The rates of inflation experienced in recent years have not had a material impact on our financial statements.
We attempt to recover increased costs by increasing prices for our services, to the extent permitted by contracts and
competition.

Regulatory Environment and Environmental Compliance

Our operations are subject to various federal, state, and/or local laws regulating the discharge of materials
into the environment or otherwise relating to the protection of the environment, such as discharge into soil, water, and
air, and the generation, handling, storage, transportation, and disposal of waste and hazardous substances. In addition,
from time to time we are involved in environmental matters at certain of our locations or in connection with our operations.
Historically, the cost of complying with environmental laws or resolving environmental issues relating to locations or
operations in the United States or abroad has not had a material adverse effect on our financial position, results of
operations, or cash flows. We do not believe that the resolution of matters known at this time will be material.

Cash Flows

In addition to revenues and operating profit, our management views operating cash flows as a good indicator
of financial performance, because strong operating cash flows provide opportunities for growth both organically and
through acquisitions. Net cash provided by operating activities of continuing operations was $299.7 million during
2018. Operating cash flows primarily depend on: revenue levels; the quality and timing of collections of accounts
receivable; the timing of payments to suppliers and other vendors; the timing and amount of income tax payments;
and the timing and amount of payments on insurance claims and legal settlements.

(in millions)
Net cash provided by operating activities of continuing operations
Net cash provided by (used in) operating activities of discontinued operations
Net cash provided by operating activities

Net cash used in investing activities of continuing operations
Net cash used in investing activities of discontinued operations
Net cash used in investing activities

Years Ended October 31,
2017

2016

2018

299.7 $

21.2
320.9

(48.1)
—
(48.1)

101.7 $
(96.1)
5.6

110.5
(27.0)
83.5

(871.8)
—
(871.8)

(131.7)
(3.1)
(134.8)

Net cash (used in) provided by financing activities

(295.8)

874.0

52.6

Operating Activities of Continuing Operations

Net cash provided by operating activities of continuing operations increased by $198.0 million during 2018,
as compared to 2017. The increase was primarily related to the timing of client receivable collections, including
collections from acquired GCA accounts, as well as proceeds from the termination of our interest rate swaps and a
year-over-year reduction of required cash insurance deposits included in other assets. This increase was partially
offset by the timing of vendor payments.

Net cash provided by operating activities of continuing operations decreased by $8.8 million during 2017, as
compared to 2016. The decrease was primarily related to the timing of client receivable collections and income taxes
payable, but was partially offset by the timing of vendor payments.

Operating Activities of Discontinued Operations

Net cash provided by operating activities of discontinued operations was $21.2 million during 2018, as
compared to net cash used in operating activities of discontinued operations of $96.1 million in 2017, a change of
$117.3 million, primarily attributable to the payment of a $120.0 million legal settlement during 2017.

Net cash used in operating activities of discontinued operations increased by $69.1 million during 2017, as
compared to 2016. This increase was primarily attributable to $120.0 million of legal settlement payments in 2017,
compared to the $20.0 million in taxes paid related to the sale of the Security business in 2016.

Investing Activities of Continuing Operations

Net cash used in investing activities of continuing operations decreased by $823.7 million during 2018, as
compared to 2017. The decrease was primarily due to an $853.6 million year-over-year decrease in cash paid, net of
cash acquired, for acquisitions, partially offset by the absence of $35.5 million of cash proceeds from the sale of our
Government Services business in 2017.

Net cash used in investing activities of continuing operations increased by $740.1 million during 2017, as
compared to 2016. The increase was primarily related to a $757.6 million year-over-year increase in cash paid, net of
cash acquired, for acquisitions, largely due to the GCA acquisition.

Investing Activities of Discontinued Operations

Net cash used in investing activities of discontinued operations decreased by $3.1 million during 2017, as
compared to 2016, due to the absence of the final working capital adjustment from the sale of the Security business
paid in 2016.

Financing Activities

Net cash used in financing activities was $295.8 million during 2018, as compared to net cash provided by

financing activities of $874.0 million during 2017, primarily due to higher repayments of our borrowings in 2018.

Net cash provided by financing activities increased by $821.4 million during 2017, as compared to 2016,
primarily related to an increase in net borrowings in the fourth quarter of 2017 to fund the GCA acquisition and $38.7
million in lower common stock repurchases, partially offset by $18.7 million of deferred financing costs paid on the
new credit facility and $15.8 million of lower proceeds from ESPC projects during 2017.

Dividends

On December 18, 2018, we announced a quarterly cash dividend of $0.180 per share on our common stock,
payable on February 4, 2019. We declared a quarterly cash dividend on our common stock every quarter during 2018,
2017, and 2016. We paid total annual dividends of $46.0 million, $39.5 million, and $36.9 million during 2018, 2017,
and 2016, respectively.

Contractual Obligations

(in millions)

Commitments Due By Period

Contractual Obligations
Borrowings under term loan(1)
Borrowings under line of credit(1)
Fixed interest related to interest rate swaps(2)
Operating leases and other similar commitments(3)
Capital leases(3)
Information technology service agreements(4)
Benefit obligations(5)
Total

Total

2019

2020-2021

2022-2023

Thereafter

780.0

40.0

180.0

560.0

169.0

41.3

367.6

10.9

69.2

27.7

—

12.5

80.7

3.3

23.2

4.8

—

23.8

113.9

5.8

30.3

5.4

169.0

5.0

87.5

1.8

14.7

4.7

1,465.7

164.6

359.1

842.7

—

85.5

—

1.0

12.8

99.3

(1) Borrowings under our term loan and line of credit are presented at face value.

(2) Our estimates of future interest payments are calculated based on our hedged borrowings under our Credit Facility, using the
fixed rates under our interest rate swap agreements for the applicable notional amounts. See Note 12, “Credit Facility,” in the
Financial Statements for additional disclosure related to our interest rate swaps. We exclude interest payments on our remaining
borrowings from this table because the cash outlay for the interest is unknown. The interest payments on the borrowings under the
Credit Facility will be determined based upon the average outstanding balance of our borrowings and the prevailing interest rate
during that time.

(3) Reflects our contractual obligations to make future payments under non-cancelable operating leases, capital lease agreements,
and other similar commitments for various facilities, vehicles, and other equipment.

(4) Reflects our contractual obligations to make future payments for outsourced services and licensing costs pursuant to our
information technology agreements.

(5) Reflects future expected payments relating to our defined benefit, postretirement, and deferred compensation plans. These
amounts are based on expected future service and were calculated using the same assumptions used to measure our benefit
obligation at October 31, 2018.

In addition to our company sponsored plans, we participate in certain multiemployer pension and other postretirement plans. The
cost of these plans is equal to the annual required contributions determined in accordance with the provisions of negotiated collective
bargaining arrangements. During 2018, 2017, and 2016, contributions made to these plans were $339.3 million, $316.4 million,
and $290.4 million, respectively; however, our future contributions to the multiemployer plans are dependent upon a number of
factors, including the funded status of the plans, the ability of other participating companies to meet ongoing funding obligations,
and the level of our ongoing participation in these plans. As the amount of future contributions that we would be contractually
obligated to make pursuant to these plans cannot be reasonably estimated, such amounts have been excluded from the above
table. See Note 13, “Employee Benefit Plans,” in the Financial Statements for more information.

At October 31, 2018, our total liability for unrecognized tax benefits was $16.9 million. The resolution or
settlement of these tax positions with the taxing authorities is subject to significant uncertainty, and therefore we are
unable to make a reliable estimate of the amount or timing of cash that may be required to settle these matters. In
addition, certain of these matters may not require cash settlements due to the exercise of credits and net operating
loss carryforwards as well as other offsets, including the indirect benefit from other taxing jurisdictions that may be
available.

We have no off-balance sheet arrangements other than unrecorded standby letters of credit and surety bonds.
We use letters of credit and surety bonds in the ordinary course of business to ensure the performance of contractual
obligations and to collateralize self-insurance obligations in the event we are unable to meet our claim payment
obligations. As we already have reserves on our books for the claims costs, these do not represent additional liabilities.
The bonds typically remain in force for one to five years and may include optional renewal periods. As of October 31,
2018, these letters of credit and surety bonds totaled $152.9 million and $475.3 million, respectively. Included in the
total amount of surety bonds is $1.8 million of bonds with an effective date starting after October 31, 2018. Neither of
these arrangements has a material current effect, or is reasonably likely to have a material future effect, on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures,
or capital resources.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in accordance with United States generally accepted
accounting principles requires our management to make certain estimates that affect the reported amounts. We base
our estimates on historical experience, known or expected trends, independent valuations, and various other
assumptions that we believe to be reasonable under the circumstances. As future events and their effects cannot be
determined with precision, actual results could differ significantly from these estimates. We believe the following critical
accounting policies govern the more significant judgments and estimates used in the preparation of our financial
statements.

Judgments and Uncertainties

Effect if Actual Results Differ from Assumptions

Description
Customer Relationships

When we acquire a company, we
determine the fair value on the
acquisition date of assets acquired
and liabilities assumed.

We anticipate that for most
acquisitions we will exercise
significant judgment in estimating
the fair value of intangible assets.

In a typical acquisition, customer
relationships are our most
significant definite-lived intangible
asset. In valuing these
relationships, we engage a third-
party valuation expert to calculate
the fair value of these assets using
a version of the income approach
known as the “excess earnings
method.”

The customer attrition rate and
expected revenue growth are two
significant estimates used to
derive the projected revenues and
profitability in the customer
relationships valuation. Both of
these estimates are influenced by
many factors, including historical
financial information, estimated
retention rates, and management's
expectations for future customer
growth as a combined company.

Another estimate that impacts the
valuation is the contributory
charge for the acquired workforce,
which involves management
assumptions based on historical
experience, including interview
time and new hire productivity.

We have not made any changes in the accounting
methodology used to determine the fair value of
customer relationships during the last three years.

If the subsequent actual results and updated
projections of the underlying business activity
change compared with the assumptions and
projections used to develop the values of the
identifiable intangible assets, we may be required to
record material impairment losses.

With other assumptions held constant, a 10%
increase in the calculated fair value of the GCA
customer relationships would have increased the
annual amortization expense by $4.2 million in
2018.

See the “Valuation of Long-Lived Assets” critical
accounting policy, below, for information about
impairment evaluations.

This method uses a discounted
cash flow approach that is derived
from historical information, future
revenue and operating profit
margins, contributory asset
charges, and the selection of an
appropriate discount rate.

The estimated life is determined
by calculating the number of years
necessary to obtain 90% of the
value of the discounted cash flows
of the relationships and is directly
tied to the accuracy of the above
assumptions.

We consider this approach the
most appropriate valuation
technique because the inherent
value of these assets is their
ability to generate current and
future income.

Description
Valuation of Long-Lived Assets

We evaluate our fixed assets and
amortizable intangible assets for
impairment whenever events or
changes in circumstances indicate
that the carrying amount of such
assets may not be recoverable.
These events and circumstances
include, but are not limited to:
higher than expected attrition for
customer relationships; a current
expectation that a long-lived asset
will be disposed of significantly
before the end of its previously
estimated useful life, such as
when we classify a business as
held for sale; a significant adverse
change in the extent or manner in
which we use a long-lived asset;
or a change in the physical
condition of a long-lived asset.

Undiscounted cash flow analyses
are used to determine if
impairment exists; if impairment is
determined to exist, the loss is
calculated based on estimated fair
value.

Goodwill is not amortized but
rather tested at least annually for
impairment, or more often if
events or changes in
circumstances indicate it is more-
likely-than-not that the carrying
amount of the asset may not be
recoverable. Goodwill is tested for
impairment at the reporting unit
level, which represents an
operating segment or a
component of an operating
segment. Goodwill is tested for
impairment by either performing a
qualitative evaluation or a
quantitative test. The qualitative
evaluation is an assessment of
factors to determine whether it is
more-likely-than-not that the fair
value of a reporting unit is less
than its carrying amount, including
goodwill. We may elect not to
perform the qualitative
assessment for some or all of our
reporting units and instead
perform a quantitative impairment
test.

Judgments and Uncertainties

Effect if Actual Results Differ from Assumptions

During the last three years, we have not made any
changes in the accounting methodology used to
evaluate the impairment of long-lived assets or to
estimate the useful lives of our long-lived assets.

Additionally, we have not made any changes in the
accounting methodology used to evaluate
impairment of goodwill during the last three years,
other than adopting Accounting Standards Update
2017-04, Intangibles—Goodwill and Other (Topic
350): Simplifying the Test for Goodwill Impairment
in 2017.

In performing our annual goodwill impairment
analysis on August 1, 2018, we recorded an
impairment charge of $20.3 million on goodwill and
$6.2 million on customer relationships for one of our
reporting units within the Technical Solutions
segment. In 2018, this reporting unit’s performance
primarily reflected the adverse impact of Brexit and
the resulting impact on microeconomic conditions in
the U.K. retail sector and the anticipated loss of a
significant customer contract. In performing our
annual goodwill impairment analysis, we
determined there was a revised future outlook for
this business, including reduced expectations of
future sales, operating margins, and cash flows. In
analyzing our other goodwill reporting units, we
concluded that goodwill related to these other
reporting units was not impaired. A 10% decrease
in the estimated fair value of any of our reporting
units would not have resulted in a different
conclusion.

A goodwill impairment analysis was performed for
each of our reporting units on November 1, 2017
when we reorganized our reportable segments and
reporting units following the integration of GCA into
our industry group model. We performed a
qualitative goodwill impairment test immediately
before and after the segment realignment by
analyzing the results of operations and business
conditions of the reporting units and we determined
the likelihood of a goodwill impairment did not reach
the more-likely-than-not threshold specified in U.S.
GAAP. Accordingly, we concluded that goodwill
related to those reporting units was not impaired
and further quantitative testing was not required.

During 2016, when we classified our Government
Services business as held for sale, we were
required to measure that business at the lower of its
carrying value or fair value less estimated costs to
sell. As a result of significant underperformance
relative to expected operating results, we
determined the fair value of this business was less
than the carrying amount, resulting in impairment
charges of $15.3 million on long-lived assets and
$6.0 million on goodwill. During the second quarter
of 2017, we received an offer from a strategic buyer
to purchase this business for approximately $35.0
million, which was higher than our estimate of fair
value less costs to sell. As a result, we recorded a
$17.4 million impairment recovery to adjust the fair
value of certain previously impaired assets to the
valuation of the assets as implied by the agreed-
upon sales price, less estimated costs to sell. We
completed the sale for $35.5 million, therefore we
did not recognize a material gain on sale.

Our impairment evaluations
require us to apply judgment in
determining whether a triggering
event has occurred, including the
evaluation of whether it is more
likely than not that a long-lived
asset will be disposed of
significantly before the end of its
previously estimated useful life.
Incorrect estimation of useful lives
may result in inaccurate
depreciation and amortization
charges over future periods
leading to future impairment.

Our impairment loss calculations
contain uncertainties because they
require management to make
assumptions and to apply
judgment to estimate future cash
flows and asset fair values,
including forecasting useful lives of
the assets and selecting the
discount rate that reflects the risk
inherent in future cash flows.

We estimate the fair value of each
reporting unit using a combination
of the income approach and the
market approach.

The income approach incorporates
the use of a discounted cash flow
method in which the estimated
future cash flows and terminal
value are calculated for each
reporting unit and then discounted
to present value using an
appropriate discount rate.

The valuation of our reporting units
requires significant judgment in
evaluation of recent indicators of
market activity and estimated
future cash flows, discount rates,
and other factors. Our impairment
analyses contain inherent
uncertainties due to uncontrollable
events that could positively or
negatively impact anticipated
future economic and operating
conditions.

In making these estimates, the
weighted-average cost of capital is
utilized to calculate the present
value of future cash flows and
terminal value. Many variables go
into estimating future cash flows,
including estimates of our future
revenue growth and operating
results. When estimating our
projected revenue growth and
future operating results, we
consider industry trends, economic
data, and our competitive
advantage.

The market approach estimates
fair value of a reporting unit by
using market comparables for
reasonably similar public
companies.

Judgments and Uncertainties

Effect if Actual Results Differ from Assumptions

We have not made any changes in the accounting
methodology used to establish our self-insurance
liabilities during the past three years.

After analyzing the recent loss development
patterns, comparing the loss development patterns
against benchmarks, and applying actuarial
projection methods to estimate the ultimate losses,
we increased our total reserves for known claims as
well as our estimate of the loss amounts associated
with IBNR Claims for prior years by $10.2 million,
$22.0 million, and $32.9 million during 2018, 2017,
and 2016, respectively.

It is possible that actual results could differ from
recorded self-insurance liabilities. A 10% change in
our projected ultimate losses would have affected
net income by approximately $30.5 million for 2018.

Our self-insurance liabilities
contain uncertainties due to
assumptions required and
judgment used.

Costs to settle our obligations,
including legal and healthcare
costs, could fluctuate and cause
estimates of our self-insurance
liabilities to change.

Incident rates, including frequency
and severity, could fluctuate and
cause the estimates in our self-
insurance liabilities to change.

These estimates are subject to:
changes in the regulatory
environment; fluctuations in
projected exposures, including
payroll, revenues, and the number
of vehicle units; and the frequency,
lag, and severity of claims.
The full extent of certain claims,
especially workers’ compensation
and general liability claims, may
not be fully determined for several
years.

In addition, if the reserves related
to self-insurance or high
deductible programs from
acquired businesses are not
adequate to cover damages
resulting from future accidents or
other incidents, we may be
exposed to substantial losses
arising from future developments
of the claims.

Description
Insurance Reserves

We use a combination of insured
and self-insurance programs to
cover workers’ compensation,
general liability, automobile
liability, property damage, and
other insurable risks.

Insurance claim liabilities
represent our estimate of retained
risks without regard to insurance
coverage. We retain a substantial
portion of the risk related to certain
workers’ compensation and
medical claims. Liabilities
associated with these losses
include estimates of both claims
filed and IBNR Claims.

The third-party claims
administrators establish the case
reserves based upon known
factors related to the type and
severity of the claims,
demographic data, legislative
matters, and case law, as
appropriate.

We compare actual trends to
expected trends and monitor
claims developments.

The specific case reserves
estimated by the third-party
administrators are provided to an
actuary who assists us in
projecting an actuarial estimate of
the overall ultimate losses for our
self-insured or high deductible
programs, which includes the case
reserves plus an actuarial
estimate of reserves required for
additional developments, including
IBNR Claims.

We utilize the results of actuarial
studies to estimate our insurance
rates and insurance reserves for
future periods and to adjust
reserves, if appropriate, for prior
years.

Description
Contingencies and Litigation

We accrue for loss contingencies
when losses become probable
and are reasonably estimable. If
the reasonable estimate of the
loss is a range and no amount
within the range is a better
estimate, the minimum amount of
the range is recorded as a liability.

We do not accrue for contingent
losses that, in our judgment, are
considered to be reasonably
possible but not probable.

Judgments and Uncertainties

Effect if Actual Results Differ from Assumptions

Litigation outcomes are difficult to
predict and are often resolved
over long periods of time.

We have not made any changes in the accounting
methodology used to establish our loss
contingencies during the past three years.

Our management currently estimates the range of
loss for all reasonably possible losses for which a
reasonable estimate of the loss can be made is
between zero and $4 million. Factors underlying this
estimated range of loss may change from time to
time, and actual results may vary significantly from
this estimate.

Estimating probable and
reasonably possible losses
requires the analysis of multiple
possible outcomes that often
depend on judgments about
potential actions by third parties,
such as future changes in facts
and circumstances, differing
interpretations of the law,
assessments of the amount of
damages, and other factors
beyond our control. There is the
potential for a material adverse
effect on our financial statements if
one or more matters are resolved
in a particular period in an amount
materially in excess of what we
anticipated.

In addition, in some cases,
although a loss is probable or
reasonably possible, we cannot
reasonably estimate the maximum
potential losses for probable
matters or the range of losses for
reasonably possible
matters. Therefore, our accrual for
probable losses and our estimated
range of loss for reasonably
possible losses do not represent
our maximum possible exposure.

Recent Accounting Pronouncements

Accounting Standard
In November 2018, the
Financial Accounting
Standards Board (“FASB”)
issued Accounting
Standards Update (“ASU”)
2018-18—Collaborative
Arrangements (Topic 808)—
Clarifying the Interaction
between Topic 808 and
Topic 606.

In October 2018, the FASB
issued ASU 2018-17—
Consolidation (Topic 810):
Targeted Improvements to
Related Party Guidance for
Variable Interest Entities.

In October 2018, the FASB
issued ASU 2018-16—
Derivatives and Hedging
(Topic 815): Inclusion of the
Secured Overnight
Financing Rate (“SOFR”)
Overnight Index Swap
(“OIS”) Rate as a
Benchmark Interest Rate for
Hedge Accounting
Purposes.

In August 2018, the FASB
issued ASU 2018-15,
Intangibles—Goodwill and
Other—Internal-Use
Software (Topic 350).

In August 2018, the FASB
issued ASU 2018-14,
Compensation—Retirement
Benefits—General (Topic
715).

In August 2018, the FASB
issued ASU 2018-13, Fair
Value Measurement (Topic
820): Disclosure Framework.

Description
This ASU provides guidance on
whether certain transactions
between collaborative
arrangement participants should
be accounted for as revenue
under Topic 606. It specifically
addresses when the participant
is a customer in the context of a
unit of account, adds unit of
account guidance in Topic 808 to
align with guidance in Topic 606,
and precludes presenting the
collaborative arrangement
transaction together with revenue
recognized under Topic 606 if the
collaborative arrangement
participant is not a customer.

This ASU provides that indirect
interest held through related
parties in common control
arrangements should be
considered on a proportional
basis for determining whether
fees paid to decision makers and
service providers are variable
interest.

This ASU adds the OIS rate
based on SOFR (a swap rate
based on the underlying
overnight SOFR rate) as an
eligible benchmark interest rate
for purposes of applying hedge
accounting. SOFR is a volume-
weighted median interest rate
that is calculated daily based on
overnight transactions from the
prior day’s trading activity in
specified segments of the U.S.
Treasury repo market. SOFR
was selected by the Alternative
Reference Rates Committee as
its preferred alternative reference
rate to LIBOR.

This ASU aligns the
requirements for capitalizing
implementation costs incurred in
a hosting arrangement that is a
service contract with the
requirements for capitalizing
implementation costs incurred to
develop or obtain internal-use
software.

This ASU modifies the disclosure
requirements on company-
sponsored defined benefit plans.

This ASU modifies the disclosure
requirements on fair value
measurements by removing
certain disclosure requirements
related to the fair value hierarchy,
modifying existing disclosure
requirements related to
measurement uncertainty, and
adding new disclosure
requirements.

Effective Date/Method
of Adoption
November 1, 2020, applied
retrospectively.

Effect on the Financial
Statements
We are currently evaluating the
impact of implementing this
guidance on our financial
statements.

November 1, 2020

We are currently evaluating the
impact of implementing this
guidance on our financial
statements.

Since we early adopted ASU
2017-12, Derivatives and
Hedging (Topic 815):
Targeted Improvements to
Accounting for Hedging
Activities, which simplified
hedge accounting, this
update will be effective for
us on November 1, 2020 on
a prospective basis.

November 1, 2020

We are currently evaluating the
impact of implementing this
guidance on our financial
statements.

November 1, 2020

We are currently evaluating the
impact of implementing this
guidance on our financial
statements.

Accounting Standard
In March 2018, the FASB
issued ASU 2018-05,
Income Taxes (Topic 740).

In March 2018, the FASB
issued ASU 2018-04,
Investments—Debt
Securities (Topic 320) and
Regulated Operations (Topic
980): Amendments to SEC
Paragraphs Pursuant to
SAB No. 117 and SEC
Release No. 33-9273.

In February 2018, the FASB
issued ASU 2018-02,
Income Statement—
Reporting Comprehensive
Income (Topic 220):
Reclassification of Certain
Tax Effects from
Accumulated Other
Comprehensive Income.

In August 2017, the FASB
issued ASU 2017-12,
Derivatives and Hedging
(Topic 815): Targeted
Improvements to Accounting
for Hedging Activities.

In May 2017, the FASB
issued ASU 2017-10,
Service Concession
Arrangements (Topic 853):
Determining the Customer of
the Operation Services.

In May 2017, the FASB
issued ASU 2017-09,
Compensation—Stock
Compensation (Topic 718):
Scope of Modification
Accounting.

In March 2017, the FASB
issued ASU 2017-07,
Compensation—
Retirement Benefits (Topic
715): Improving the
Presentation of Net Periodic
Pension Cost and Net
Periodic Postretirement
Benefit Cost.

Description
This ASU incorporates the
provisions of SAB 118 into the
accounting standards
codification. SAB 118 provides
guidance on accounting for tax
effects of the Tax Act and permits
a measurement period not to
exceed one year from the
enactment date for companies to
complete the required analyses
and accounting.

This ASU deletes ASC 320-10-
S99-1, which had codified SAB
Topic 5.M, and also removes
special requirements in SEC
Regulation S-X Rule 3A-05 for
public utility holding companies.
In November 2017, the SEC
issued SAB 117 to bring its
existing guidance into conformity
with Topic 321, Investments—
Equity Securities. SAB 117 states
that SAB Topic 5.M, Other Than
Temporary Impairment of Certain
Investments in Equity Securities,
is no longer applicable upon
adoption of ASC 321.

This ASU permits an entity to
reclassify the income tax effects
of the Tax Act on items within
accumulated other
comprehensive income into
retained earnings.

This ASU better aligns
accounting rules with a
company’s risk management
activities; better reflects
economic results of hedging in
financial statements; and
simplifies hedge accounting
treatment.

This ASU provides clarity on
determining the customer in a
service concession arrangement.

This ASU clarifies which changes
to the terms or conditions of a
share-based payment award
require an entity to apply
modification accounting.

To align with the presentation of
compensation costs arising from
services rendered by employees,
this ASU requires classification of
the service cost component of
pension expense as an operating
expense. The other components
of pension expense, such as
interest cost, amortization of prior
service cost, and gains or losses,
are required to be presented
outside of operating expenses.
This ASU also allows the service
cost component to be eligible for
capitalization, when applicable.

Effective Date/Method
of Adoption
This standard became
effective upon issuance.

November 1, 2018

Effect on the Financial
Statements
We applied SAB 118 to our
financial statements upon its
original issuance in December
2017, prior to the codification in
ASC 740. Refer to Note 17,
“Income Taxes,” in the Financial
Statements for a discussion of the
impacts of the Tax Act on our
consolidated financial statements.

The adoption of this guidance is
not expected to have a material
impact on our consolidated
financial statements.

We anticipate adopting this
standard in the first quarter
of 2019.

We are currently evaluating the
impact of implementing this
guidance on our consolidated
financial statements.

November 1, 2019

We are currently evaluating the
impact of this guidance on our
consolidated financial statements.

November 1, 2018

We will adopt this standard
in conjunction with ASU
2014-09, as described
below.

November 1, 2018

Adoption of this standard will
be applied prospectively to
awards modified on or after
the adoption date.

November 1, 2018

Adoption of this standard will
be applied retrospectively for
the classification
requirements and
prospectively for the
capitalization of the service
cost component
requirement.

The anticipated effect of adoption
is described in Note 2, “Basis of
Presentation,” in the Financial
Statements.

The impact of this new standard
will depend on the extent and
nature of future changes to the
terms of our share-based payment
awards. Historically, we have not
had significant changes to our
share-based payment awards and
therefore do not expect adoption of
this guidance to have a material
impact on our consolidated
financial statements.

As ABM’s defined benefit and
postretirement benefit plans were
previously amended to preclude
new participants, the adoption of
this guidance will not have a
material impact on our
consolidated financial statements.

Accounting Standard
In November 2016, the
FASB issued ASU 2016-18,
Statement of Cash Flows
(Topic 230): Restricted
Cash.

Description
This ASU provides guidance on
the presentation of restricted
cash or restricted cash
equivalents in the statement of
cash flows.

In October 2016, the FASB
issued ASU 2016-16,
Income Taxes (Topic 740):
Intra-Entity Transfers of
Assets Other than Inventory.

In August 2016, the FASB
issued ASU 2016-15,
Statement of Cash Flows
(Topic 230): Classification of
Certain Cash Receipts and
Cash Payments.

In June 2016, the FASB
issued ASU 2016-13,
Financial Instruments—
Credit Losses (Topic 326):
Measurement of Credit
Losses on Financial
Statements.

This ASU requires the tax effects
of intercompany transactions,
other than sales of inventory, to
be recognized when the transfer
occurs, instead of deferred until
the transferred asset is sold to a
third party or otherwise
recovered through use of the
asset.

This ASU provides eight targeted
changes to how cash receipts
and cash payments are
presented and classified in the
statement of cash flows.

This ASU replaces the existing
incurred loss impairment model
with a methodology that
incorporates all expected credit
loss estimates, resulting in more
timely recognition of losses.

In February 2016, the FASB
issued ASU 2016-02,
Leases (Topic 842). The
FASB has issued several
updates to ASU 2016-02,
including ASU 2018-11,
Leases (Topic 842):
Targeted Improvements, and
ASU 2018-10, Codification
Improvements to Topic 842,
Leases, that were issued in
July 2018.

ASU 2016-02 improves
transparency and comparability
among organizations by requiring
lessees to recognize lease
assets and lease liabilities on the
balance sheet and to disclose
key information about leasing
arrangements. ASU 2018-11 and
ASU 2018-10 amend various
aspects of Topic 842, including
an additional transition method.

In May 2014, the FASB
issued ASU 2014-09,
Revenue from Contracts
with Customers (Topic 606).

This ASU introduces a new
principles-based framework for
revenue recognition and
disclosure. The core principle of
the standard is when an entity
transfers goods or services to
customers it will recognize
revenue in an amount that
reflects the consideration the
entity expects to be entitled to for
those goods or services.

Effect on the Financial
Statements
The adoption of this guidance is
not expected to have a material
impact on our consolidated
statements of cash flows.

We are currently evaluating the
impact of implementing this
guidance on our consolidated
financial statements.

The adoption of this guidance is
not expected to have a material
impact on our consolidated
statements of cash flows.

We are currently evaluating the
impact of implementing this
guidance on our consolidated
financial statements.

The anticipated effect of adoption
is described in Note 2, “Basis of
Presentation,” in the Financial
Statements.

Effective Date/Method
of Adoption
November 1, 2018

Adoption of this standard will
be applied using a
retrospective transition
method to each period
presented.

November 1, 2018

This standard will be applied
using a modified
retrospective adoption
approach with a cumulative-
effect adjustment to retained
earnings as of the beginning
of the year of adoption.

November 1, 2018

Adoption of this standard will
be applied using a
retrospective transition
method to each period
presented.

November 1, 2020

This standard will be applied
using a modified
retrospective adoption
approach with a cumulative-
effect adjustment to retained
earnings as of the beginning
of the year of adoption,
except for certain provisions
that are required to be
applied prospectively.

November 1, 2019

This guidance may be
applied through a modified
retrospective transition
approach for leases existing
at, or entered into after, the
beginning of the earliest
comparative period
presented in the financial
statements with certain
practical expedients
available. Alternatively, this
guidance may also be
applied at the adoption date
by recognizing a cumulative-
effect adjustment to the
opening balance of retained
earnings in the period of
adoption.

November 1, 2018

This standard will be applied
using a modified
retrospective adoption
approach with a cumulative-
effect adjustment to retained
earnings as of the beginning
of the year of adoption.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We have market risk exposure related to interest rates and foreign currency exchange rates. Market risk is
measured as the potential negative impact on earnings, cash flows, or fair values resulting from a hypothetical change
in interest rates or foreign currency exchange rates.

Interest Rate Risk

We are primarily exposed to interest rate risk through our variable rate borrowings under our Credit Facility.
At October 31, 2018, we had total outstanding borrowings of $949.0 million. To limit exposure to upward movements
in interest rates, we entered into interest rate swap agreements to fix the interest rates on a substantial portion of our
outstanding borrowings. At October 31, 2017, we had interest rate swaps with an underlying notional amount of $105.0
million and a fixed interest rate of 1.05%. We entered into three additional forward-starting interest rate swap agreements
that became effective in November 2017 with an underlying aggregate notional amount of $500.0 million and fixed
interest rates of 1.65% and 1.69%. During April 2018, we elected to terminate all of our interest rate swaps then in
effect. We subsequently entered into new forward-starting interest rate swaps that became effective on November 1,
2018 with an underlying aggregate notional amount of $440.0 million and fixed interest rates of 2.83%, 2.84%, and
2.86%. There are no other material changes related to market risk from the disclosures in this Annual Report on Form
10-K for the year ended October 31, 2018.

Based on our average borrowings, interest rates, and interest rate swaps effective in November 2018, a 100
basis point increase in LIBOR would decrease our future earnings and cash flows by $5.4 million. For 2017, our market
risk exposure related to interest rate fluctuations was $6.5 million. As actual interest rate movements over time are
uncertain, our swaps pose potential interest rate risks if interest rates decrease. As of October 31, 2018, the fair value
of our interest rate swap agreements was an asset of $1.3 million.

Foreign Currency Exchange Rate Risk

We are primarily exposed to the impact of foreign exchange rate risk through our U.K. operations where the
functional currency is the Great Britain Pound. As we intend to remain permanently invested in these foreign operations,
we do not utilize hedging instruments to mitigate foreign currency exchange risks. If we change our intent with respect
to such international investment, we would expect to implement strategies designed to manage those risks in an effort
to mitigate the effect of foreign currency fluctuations on our earnings and cash flows.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
ABM Industries Incorporated:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of ABM Industries Incorporated and subsidiaries
(the “Company”) as of October 31, 2018 and 2017, the related consolidated statements of comprehensive income,
stockholders’ equity, and cash flows for each of the years in the three year period ended October 31, 2018, and the
related notes and financial statement Schedule II (collectively, the consolidated financial statements). In our opinion,
the consolidated financial statements present fairly, in all material respects, the financial position of the Company as
of October 31, 2018 and 2017, and the results of its operations and its cash flows for each of the years in the three year
period ended October 31, 2018, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the Company’s internal control over financial reporting as of October 31, 2018, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission, and our report dated December 21, 2018 expressed an unqualified opinion on the
effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these consolidated financial statements based on our audits. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks
of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ KPMG LLP

We have served as the Company’s auditor since 1980.

New York, New York
December 21, 2018

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
ABM Industries Incorporated:

Opinion on Internal Control Over Financial Reporting

We have audited ABM Industries Incorporated and subsidiaries’ (the “Company”) internal control over financial reporting
as of October 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all
material respects, effective internal control over financial reporting as of October 31, 2018, based on criteria established
in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (“PCAOB”), the consolidated balance sheets of the Company as of October 31, 2018 and 2017, the related
consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the years in the
three year period ended October 31, 2018, and the related notes and financial statement Schedule II (collectively, the
consolidated financial statements) and our report dated December 21, 2018 expressed an unqualified opinion on those
consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also
included performing such other procedures as we considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have
a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

/s/ KPMG LLP

New York, New York
December 21, 2018

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share amounts)
ASSETS
Current assets

Cash and cash equivalents
Trade accounts receivable, net of allowances of $19.2 and
$25.5 at October 31, 2018 and 2017, respectively
Prepaid expenses
Other current assets

Total current assets

Other investments
Property, plant and equipment, net of accumulated depreciation of $153.9 and

$136.4 at October 31, 2018 and 2017, respectively

Other intangible assets, net of accumulated amortization of $250.4

and $189.1 at October 31, 2018 and 2017, respectively

Goodwill
Other noncurrent assets
Total assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities

Current portion of long-term debt, net
Trade accounts payable
Accrued compensation
Accrued taxes—other than income
Insurance claims
Income taxes payable
Other accrued liabilities

Total current liabilities

Long-term debt, net
Deferred income tax liability, net
Noncurrent insurance claims
Other noncurrent liabilities
Noncurrent income taxes payable

Total liabilities

Commitments and contingencies
Stockholders’ Equity

October 31,

2018

2017

39.1 $

62.8

1,014.1
80.8
37.0
1,171.0
16.3

140.1

355.7
1,834.8
109.6
3,627.5 $

37.0 $

221.9
172.1
56.0
149.5
3.2
152.7
792.5
902.0
37.8
360.8
62.9
16.9
2,172.9

1,038.1
101.8
32.8
1,235.5
17.6

143.1

430.1
1,864.2
122.1
3,812.6

16.9
230.8
159.9
52.5
112.5
13.4
171.8
757.8
1,161.3
57.3
382.9
61.3
16.3
2,436.9

Preferred stock, $0.01 par value; 500,000 shares authorized; none issued

—

Common stock, $0.01 par value; 100,000,000 shares authorized;
66,004,361 and 65,502,568 shares issued and outstanding at
October 31, 2018 and 2017, respectively
Additional paid-in capital
Accumulated other comprehensive loss, net of taxes
Retained earnings
Total stockholders’ equity

Total liabilities and stockholders’ equity

0.7
691.8
(9.0)
771.2
1,454.6
3,627.5 $

0.7
675.2
(20.3)
720.1
1,375.7
3,812.6

See accompanying notes to consolidated financial statements.

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions, except per share amounts)
Revenues
Operating expenses
Selling, general and administrative expenses
Restructuring and related expenses

Amortization of intangible assets
Impairment loss (recovery)
Operating profit
Income from unconsolidated affiliates, net
Interest expense
Income from continuing operations before income taxes
Income tax benefit (provision)
Income from continuing operations
Income (loss) from discontinued operations, net of taxes
Net income
Other comprehensive income (loss)

Interest rate swaps
Foreign currency translation
Income tax provision
Comprehensive income
Net income per common share — Basic
Income from continuing operations
Income (loss) from discontinued operations
Net income

Net income per common share — Diluted
Income from continuing operations
Income (loss) from discontinued operations
Net income

Weighted-average common and common
equivalent shares outstanding

Basic
Diluted

Dividends declared per common share

Years Ended October 31,
2017

2016

2018

6,442.2 $
5,747.4
438.0
25.7

5,453.6 $
4,881.2
436.6
20.9

5,144.7
4,603.4
410.1
29.0

66.0
26.5
138.6
3.2
(54.1)
87.7
8.2
95.9
1.8
97.8

21.9
(4.7)
(5.9)
109.0 $

1.45 $
0.03
1.48 $

1.45 $
0.03
1.47 $

31.6
(18.5)
101.9
4.2
(19.2)
86.9
(8.8)
78.1
(74.3)
3.8

2.7
9.7
(1.1)
15.2 $

1.35 $
(1.29)
0.07 $

1.34 $
(1.27)
0.07 $

25.0
22.5
54.7
7.6
(10.4)
51.9
10.4
62.3
(5.1)
57.2

(0.1)
(26.3)
(0.1)
30.7

1.11
(0.09)
1.02

1.09
(0.09)
1.01

66.1
66.4

57.7
58.3

0.700 $

0.680 $

56.3
56.9
0.660

See accompanying notes to consolidated financial statements.

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in millions)

Common Stock

Balance, beginning of year

Stock issued in GCA acquisition, net of shares withheld for

taxes

Stock issued under employee stock purchase and share-based

compensation plans

Repurchase of common stock

Balance, end of year

Additional Paid-in Capital

Balance, beginning of year

Stock issued in GCA acquisition, net of shares withheld for

taxes

(Taxes withheld) stock issued under employee stock purchase

and share-based compensation plans, net

Share-based compensation expense

Repurchase of common stock

Balance, end of year

Accumulated Other Comprehensive Loss, Net of Taxes

Balance, beginning of year

Other comprehensive income (loss)

Balance, end of year

Retained Earnings

Balance, beginning of year

Net income

Dividends

Common stock

Stock issued under share-based compensation plans

Balance, end of year

Total Stockholders’ Equity

Years Ended October 31,

2018

2017

2016

Amount

56.1

—

0.9

(1.4)

55.6

65.5

—

0.5

—

66.0

0.7

—

0.7

675.2

—

(0.4)

17.0

—

691.8

(20.3)

11.3

(9.0)

720.1

97.8

(46.0)

(0.6)

771.2

55.6

9.4

0.7

(0.2)

65.5

0.6

0.1

—

0.7

248.6

421.2

(0.1)

13.3

(7.9)

675.2

(31.6)

11.3

(20.3)

756.4

3.8

(39.5)

(0.6)

720.1

$ 1,454.6

$ 1,375.7

0.6

—

0.6

275.5

—

5.7

14.0

(46.6)

248.6

(5.1)

(26.5)

(31.6)

736.5

57.2

(36.9)

(0.4)

756.4

974.0

See accompanying notes to consolidated financial statements.

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended October 31,

2018

2017

2016

(in millions)

Cash flows from operating activities

Net income

(Income) loss from discontinued operations, net of taxes

Income from continuing operations

Adjustments to reconcile income from continuing operations to net cash provided by operating

activities of continuing operations

Depreciation and amortization

Proceeds from termination of interest rate swaps

Impairment loss (recovery)

Deferred income taxes

Share-based compensation expense

Provision for bad debt

Discount accretion on insurance claims

Loss (gain) on sale of assets

Income from unconsolidated affiliates, net

Distributions from unconsolidated affiliates

Changes in operating assets and liabilities, net of effects of acquisitions

Trade accounts receivable

Prepaid expenses and other current assets

Other noncurrent assets

Trade accounts payable and other accrued liabilities

Insurance claims

Income taxes payable

Other noncurrent liabilities

Total adjustments

Net cash provided by operating activities of continuing operations

Net cash provided by (used in) operating activities of discontinued operations

Net cash provided by operating activities

Cash flows from investing activities

Additions to property, plant and equipment

Proceeds from sale of assets

(Adjustments to) and proceeds from sale of business

Purchase of businesses, net of cash acquired

Proceeds from redemption of auction rate security

Investments in unconsolidated affiliates

Net cash used in investing activities of continuing operations

Net cash used in investing activities of discontinued operations

Net cash used in investing activities

Cash flows from financing activities

(Taxes withheld) and proceeds from issuance of share-based compensation awards, net

Repurchases of common stock

Dividends paid

Deferred financing costs paid

Borrowings from credit facility

Repayment of borrowings from credit facility

Changes in book cash overdrafts

Financing of energy savings performance contracts

Payment of contingent consideration

Repayment of capital lease obligations

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

97.8

3.8

(1.8)

95.9

112.5

25.9

26.5

(23.7)

17.0

6.4

0.8

0.5

(3.2)

1.9

16.0

2.4

11.3

(1.5)

13.9

0.7

(3.7)

203.7

299.7

21.2

320.9

(50.9)

2.3

(1.9)

—

2.9

(0.4)

(48.1)

—

(48.1)

(1.0)

—

(46.0)

(0.1)

1,184.2

(1,426.4)

(8.5)

5.4

—

(3.3)

(295.8)

(0.7)

(23.7)

62.8

74.3

78.1

70.1

—

(18.5)

(6.1)

13.3

4.1

0.2

(2.7)

(4.2)

5.7

(115.7)

(6.4)

(7.6)

74.4

33.5

(22.5)

6.0

23.6

101.7

(96.1)

5.6

(57.2)

4.0

35.5

(853.6)

—

(0.4)

(871.8)

—

(871.8)

(0.7)

(7.9)

(39.5)

(18.7)

1,880.1

(957.2)

15.8

6.8

(3.8)

(0.9)

874.0

1.5

9.3

53.5

57.2

5.1

62.3

57.5

—

22.5

(3.7)

14.0

12.9

0.3

(0.2)

(7.6)

8.2

(80.9)

—

(29.5)

15.4

33.6

0.5

5.2

48.2

110.5

(27.0)

83.5

(44.0)

3.3

—

(96.0)

5.0

—

(131.7)

(3.1)

(134.8)

5.3

(46.6)

(36.9)

(0.1)

1,052.3

(942.0)

0.7

22.6

(1.5)

(1.2)

52.6

(3.3)

(2.0)

55.5

53.5

39.1

62.8

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(continued)

(in millions)

Supplemental cash flow information
Income tax (refunds) payments, net

Interest paid on credit facility

Non-cash investing and financing activities
Stock issued in GCA acquisition, net of shares withheld for taxes

Years Ended October 31,

2018

2017

2016

(1.0) $
49.6

11.8

8.1

12.6

4.4

—

421.3

—

See accompanying notes to consolidated financial statements.

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY AND NATURE OF OPERATIONS

Through these groups, we offer janitorial, facilities engineering, parking, and specialized mechanical and electrical
technical solutions, on a standalone basis or in combination with other services.

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The consolidated financial statements and accompanying notes (the “Financial Statements”) have been
prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and with the rules
and regulations of the Securities and Exchange Commission (“SEC”), specifically Regulation S-X and the instructions
to Form 10-K. Unless otherwise indicated, all references to years are to our fiscal year, which ends on October 31.

The Financial Statements include the accounts of ABM and all of our consolidated subsidiaries. We account
for ABM’s investments in unconsolidated affiliates under the equity method of accounting. We include the results of
acquired businesses in the consolidated statements of comprehensive income from their respective acquisition dates.
All intercompany accounts and transactions have been eliminated in consolidation.

The preparation of consolidated financial statements in accordance with U.S. GAAP requires our management
to make certain estimates that affect the reported amounts. We base our estimates on historical experience, known
or expected trends, independent valuations, and various other assumptions that we believe to be reasonable under
the circumstances. As future events and their effects cannot be determined with precision, actual results could differ
significantly from these estimates.

We round amounts in the Financial Statements to millions and calculate all percentages and per-share data
from the underlying whole-dollar amounts. Thus, certain amounts may not foot, crossfoot, or recalculate based on
reported numbers due to rounding.

Acquisition of GCA Services Group

On September 1, 2017 (the “Acquisition Date”), we completed the acquisition of GCA Services Group (“GCA”).
Accordingly, our consolidated statements of comprehensive income and statements of cash flows include GCA’s results
of operations in 2018, but exclude GCA’s results of operations in the comparative years prior to the Acquisition Date.
See Note 3, “Acquisitions,” for further information on the acquisition of GCA.

Government Services

agreed-upon sales price, less estimated costs to sell. We sold this business on May 31, 2017 for $35.5 million and
recorded a pre-tax gain of $1.2 million. The impairment charges, subsequent recovery, and gain on sale are reflected
in impairment loss (recovery) in the accompanying consolidated statements of comprehensive income. The reported
results for this business are through the date of sale and future results could include run-off costs.

Prior Year Reclassifications

Effective November 1, 2017, we made changes to our operating structure as a result of the GCA acquisition.
To reflect these changes, certain prior year amounts, including operating segment data, have been reclassified to
conform with our fiscal 2018 presentation. These changes had no impact on our previously reported consolidated
balance sheets, statements of comprehensive income, or statements of cash flows. See Note 18, “Segment and
Geographic Information,” for further details.

Cash and Cash Equivalents

We consider all highly liquid securities with an original maturity of three months or less to be cash and cash
equivalents. As part of our cash management system, we use “zero balance” accounts to fund our disbursements.
Under this system, at the end of each day the bank balance is zero, while the book balance is usually a negative
amount due to reconciling items, such as outstanding checks. We report the changes in these book cash overdrafts
as cash flows from financing activities.

Trade Accounts Receivable

Trade accounts receivable arise from services provided to our clients and are usually due and payable on
varying terms from receipt of the invoice to net ninety days, with the exception of certain Technical Solutions project
receivables that may have longer collection periods. These receivables are recorded at the invoiced amount and
normally do not bear interest. In addition, our trade accounts receivable include unbilled receivables that can include
costs and estimated earnings in excess of billings on uncompleted contracts, as well as invoices for services that have
been provided but are not yet billed.

Allowance for Doubtful Accounts

We determine the allowance for doubtful accounts based on historical write-offs, known or expected trends,
and the identification of specific balances deemed uncollectible. For the specifically identified balances, we establish
the reserve upon the earlier of a client’s inability to meet its financial obligations or after a period of twelve months,
unless our management believes such amounts will ultimately be collectible.

Sales Allowance

In connection with our service contracts, we periodically issue credit memos to our clients that are recorded
as a reduction in revenues and an increase to the allowance for billing adjustments. These credits can result from
client vacancy discounts, job cancellations, property damage, and other items. We estimate our potential future losses
on these client receivables based on an analysis of the historical rate of sales adjustments (credit memos, net of re-
bills) and known or expected trends.

Other Current Assets

At October 31, 2018 and 2017, other current assets primarily consisted of other receivables and short-term

insurance recoverables.

Other Investments

At October 31, 2018 and 2017, other investments primarily consisted of investments in unconsolidated affiliates

and in auction rate securities.

Investments in Unconsolidated Affiliates

We own non-controlling interests (generally 20% to 50%) in certain affiliated entities that predominantly provide
facility solutions to governmental and commercial clients, primarily in the United States and the Middle East. We
account for such investments under the equity method of accounting. We evaluate our equity method investments for
impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may
not be recoverable. An impairment loss is recognized to the extent that the estimated fair value of the investment is
less than its carrying amount and we determine that the impairment is other-than-temporary. At October 31, 2018,

2017, and 2016, our investments in unconsolidated affiliates were $11.3 million, $9.3 million, and $17.1 million,
respectively. At October 31, 2016, a portion of these investments were classified as held for sale, as they related to
our Government Services business. In connection with the held-for-sale classification, we recognized an impairment
charge of $5.0 million to write down these investments to their estimated fair value in 2016, which we subsequently
recovered in 2017. We did not recognize any impairment charges on these investments in 2018 or 2017.

Investments in Auction Rate Securities

Our investments in auction rate securities are classified as available-for-sale. Accordingly, auction rate
securities are presented at fair value with unrealized gains and losses recorded in accumulated other comprehensive
income (loss), net of taxes (“AOCI”). On a quarterly basis, we analyze all auction rate securities that have unrealized
losses for impairment consideration and assess the intent to sell such securities. If such intent exists, impaired securities
are considered other-than-temporarily impaired and we recognize the entire difference between the auction rate
security’s amortized cost and its fair value in earnings. We also consider if we may be required to sell the securities
prior to the recovery of amortized cost, which may trigger an impairment charge. If these securities are considered
impaired, we assess whether the amortized costs of the securities can be recovered by reviewing several factors,
including credit risks associated with the issuer. If we do not expect to recover the entire amortized cost of the security,
we consider the security to be other-than-temporarily impaired, and record the difference between the security’s
amortized costs and its recoverable amount in earnings and the difference between the security’s amortized cost and
fair value in AOCI.

Property, Plant and Equipment

We record property, plant and equipment at cost. Repairs and maintenance expenditures are expensed as
incurred. In contrast, we capitalize major renewals or replacements that substantially extend the useful life of an asset.
We determine depreciation for financial reporting purposes using the straight-line method over the following estimated
useful lives:

Category
Computer equipment and software

Machinery and other equipment

Transportation equipment

Buildings

Furniture and fixtures

Years
3–5

3–5

1.5–10

10–40

In addition, we depreciate assets under capital leases and leasehold improvements over the shorter of their estimated
useful lives or the remaining lease term. Upon retirement or sale of an asset, we remove the cost and accumulated
depreciation from our consolidated balance sheets. When applicable, we record corresponding gains or losses within
the accompanying consolidated statements of comprehensive income.

Leases

We enter into various noncancelable lease agreements for premises and equipment used in the normal course
of business. We evaluate the lease agreement at the inception of the lease to determine whether the lease is an
operating lease or capital lease.

We account for rent expense under noncancelable operating leases with escalation clauses on a straight-line
basis over the initial lease term. A deferred liability is recorded for the amount of the excess of straight-line rent expense
over scheduled payments. We do not assume renewals in our determination of the lease term unless the renewals
are deemed to be reasonably assured at lease inception. We may also be required to make additional payments to
reimburse the lessors for operating expenses such as real estate taxes, maintenance, utilities, and insurance, which
are expensed as incurred. We enter into leases of parking lots and garages that contain contingent payment provisions.
Under these provisions, we pay contingent amounts in addition to base rent, primarily based on percentages of the
gross receipts or other financial parameters attributable to the related facilities. We record contingent rent as it becomes
probable that specified targets will be met.

We record each capital lease as an asset and an obligation at an amount that is equal to the present value of

the minimum lease payments over the lease term.

Goodwill and Other Intangible Assets

Goodwill represents the excess purchase price of acquired businesses over the fair value of the assets acquired
and liabilities assumed. We have elected to make the first day of our fourth quarter, August 1st, the annual impairment
assessment date for goodwill. However, we could be required to evaluate the recoverability of goodwill more often if
impairment indicators exist. Goodwill is tested for impairment at a “reporting unit” level by performing either a qualitative
evaluation or a quantitative test. The qualitative evaluation is an assessment of factors to determine whether it is more
likely than not that the fair value of a reporting unit is less than its carrying amount. We may elect not to perform the
qualitative assessment for some or all reporting units and perform a quantitative test instead, under which fair value
is determined based on discounted cash flow analyses. The discounted estimates of future cash flows include significant
management assumptions, such as revenue growth rates, operating margins, weighted average cost of capital, and
future economic and market conditions. In 2017, we adopted Accounting Standards Update 2017-04, which allows us
to test goodwill for impairment by comparing the fair value of a reporting unit to its carrying amount. If the fair value of
a reporting unit is less than its carrying value, an impairment charge will be recorded for the difference between the
fair value and carrying value, but it is limited to the carrying value of the reporting unit’s goodwill.

Other intangible assets primarily consist of acquired customer contracts and relationships that are amortized
using the sum-of-the-years-digits method over their useful lives, consistent with the estimated useful life considerations
used in the determination of their fair values. This accelerated method of amortization reflects the pattern in which the
economic benefits from the intangible assets of customer contracts and relationships are expected to be realized. We
amortize other non-customer acquired intangibles using a straight-line method of amortization. We evaluate other
intangible assets, as well as our long-lived assets, for impairment whenever events or changes in circumstances
indicate that the carrying amount of such assets may not be recoverable. When this occurs, a recoverability test is
performed that compares the projected undiscounted cash flows from the use and eventual disposition of an asset or
asset group to its carrying amount. If the projected undiscounted cash flows are less than the carrying amount, we
calculate an impairment loss. The impairment loss calculation compares the fair value, which is based on projected
discounted cash flows, to the carrying value.

See Note 10, “Goodwill and Other Intangible Assets,” for further information on goodwill, other intangible

assets, and impairment charges.

Other Noncurrent Assets

At October 31, 2018 and 2017, other noncurrent assets primarily consisted of long-term insurance
recoverables, deferred charges, insurance and other long-term deposits, prepayments to carriers for future insurance
claims, and federal energy savings performance contract receivables.

Federal Energy Savings Performance Contract Receivables

As part of our Technical Solutions business, we enter into energy savings performance contracts (“ESPCs”)
with the federal government pursuant to which we agree to develop, design, engineer, and construct a project and
guarantee that the project will satisfy agreed-upon performance standards. ESPC receivables represent the amount
to be paid by various federal government agencies for work we have satisfactorily performed under specific ESPCs.
We assign certain of our rights to receive those payments to unaffiliated third parties that provide construction financing,
which we record as a liability, for such contracts. This construction financing is recorded as cash flows from financing
activities, while the use of the cash received under these arrangements to pay project costs is classified as operating
cash flows. The ESPC receivable is recognized as revenue as each project is constructed. Upon completion and
acceptance of the project by the government and upon satisfaction of true sale criteria, the assigned ESPC receivable
from the government and corresponding ESPC liability are eliminated from our consolidated financial statements.

Fair Value of Financial Instruments

Fair value is the price we would receive to sell an asset or pay to transfer a liability in an orderly transaction
with a market participant at the measurement date. In the absence of active markets for the identical assets or liabilities,
such measurements involve developing assumptions based on market observable data and, in the absence of such
data, internal information that is consistent with what market participants would use in a hypothetical transaction that
occurs at the measurement date.

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect
our market assumptions. Preference is given to observable inputs. These two types of inputs create the following fair
value hierarchy:

Level 1 – Quoted prices for identical instruments in active markets;

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar
instruments in markets that are not active; and model-derived valuations whose inputs are observable or
whose significant value drivers are observable; and

Level 3 – Significant inputs to the valuation model are unobservable.

We evaluate assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to
determine the appropriate level at which to classify them for each reporting period. Some non-financial assets are
measured at fair value on a non-recurring basis only in certain circumstances, including the event of impairment. See
Note 7, “Fair Value of Financial Instruments,” for the fair value hierarchy table and for details on how we measure fair
value for our assets and liabilities.

Acquisitions

We expense acquisition-related costs as incurred. On the date of the acquisition, we allocate the purchase
price to the assets acquired and liabilities assumed at their estimated fair values. Goodwill on the acquisition date is
measured as the excess of the purchase price over the fair values of assets acquired and liabilities assumed. While
we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition
date as well as contingent consideration, where applicable, our estimates are subject to refinement. As a result, during
the measurement period, which may be up to one year from the acquisition date, we record adjustments to the assets
acquired and liabilities assumed with corresponding adjustments to goodwill. We recognize subsequent changes in
the estimate of the amount to be paid under contingent consideration arrangements in the accompanying consolidated
statements of comprehensive income.

Discontinued Operations

In order to be reported within discontinued operations, our disposal of a component or a group of components
must represent a strategic shift that will have a major effect on our operations and financial results. We aggregate the
results of operations for discontinued operations within a single line item on the income statement. General corporate
overhead is not allocated to discontinued operations. We disclose any gain or loss that is recognized upon the disposition
of a discontinued operation. Prior to disposition, we aggregate the assets and liabilities of discontinued operations and
report the amounts on separate line items within the balance sheet.

Assets and Liabilities Held for Sale

Upon a business being classified as held for sale, we cease all depreciation and amortization related to the
assets of the business and record them at the lower of their carrying amount or fair value less estimated costs to sell.
The assets and related liabilities of the business are separately presented on the consolidated balance sheets. We
review all assets held for sale each reporting period to determine whether the existing carrying amounts are fully
recoverable in comparison to estimated fair values.

Insurance Reserves

We use a combination of insured and self-insurance programs to cover workers’ compensation, general liability,
automobile liability, property damage, and other insurable risks. Insurance claim liabilities represent our estimate of
retained risks without regard to insurance coverage. We retain a substantial portion of the risk related to certain workers’
compensation and medical claims. Liabilities associated with these losses include estimates of both claims filed and
claims incurred but not reported (“IBNR Claims”).

With the assistance of third-party actuaries, we periodically review our estimate of ultimate losses for IBNR
Claims and adjust our required self-insurance reserves as appropriate. As part of this evaluation, we review the status
of existing and new claim reserves as established by third-party claims administrators. The third-party claims
administrators establish the case reserves based upon known factors related to the type and severity of the claims,
demographic factors, legislative matters, and case law, as appropriate. We compare actual trends to expected trends
and monitor claims developments. The specific case reserves estimated by the third-party administrators are provided
to an actuary who assists us in projecting an actuarial estimate of the overall ultimate losses for our self-insured or
high deductible programs, which includes the case reserves plus an actuarial estimate of reserves required for additional
developments, such as IBNR Claims. We utilize the results of actuarial studies to estimate our insurance rates and
insurance reserves for future periods and to adjust reserves, if appropriate, for prior years.

In general, our insurance reserves are recorded on an undiscounted basis. We allocate current-year insurance
expense to our operating segments based upon their underlying exposures, while actuarial adjustments related to
prior year claims are recorded within Corporate expenses. We classify claims as current or long-term based on the
expected settlement date. Estimated insurance recoveries related to recorded liabilities are reflected as assets in our
consolidated balance sheets when we believe that the receipt of such amounts is probable.

Other Accrued Liabilities

At October 31, 2018 and 2017, other accrued liabilities primarily consisted of employee benefits, deferred
revenue, progress billings in excess of costs, legal fees and settlements, dividends payable, current capital leases,
insurance claims, interest, rent payable, severance, and other accrued expenses.

Other Noncurrent Liabilities

At October 31, 2018 and 2017, other noncurrent liabilities primarily consisted of deferred rent, retirement plan

liabilities, deferred compensation, long-term capital leases, and ESPC liabilities.

Revenue Recognition

We earn revenue under various types of service contracts. In all forms of service we provide, revenue is
recognized when persuasive evidence of an arrangement exists, services have been rendered, the fee is fixed or
determinable, and collectability is reasonably assured. The various types of service contracts are described below.

Contract Type

Monthly Fixed-
Price

These arrangements are contracts in which the client agrees to pay a fixed fee every month over
a specified contract term. A variation of a fixed-price arrangement is a square-foot arrangement,
under which monthly billings are based on the actual square footage serviced.

Description

Cost-Plus

These arrangements are contracts in which the clients reimburse us for the agreed-upon amount
of wages and benefits, payroll taxes, insurance charges, and other expenses associated with the
contracted work, plus a profit margin.

Tag Services

Tag work generally consists of supplemental services requested by clients outside of the standard
service specification and includes cleanup after tenant moves, construction cleanup, flood cleanup,
and snow removal.

Transaction-
Price

These are agreements in which the clients are billed for each transaction performed on a monthly
basis (e.g., wheelchair passengers served or planes cleaned).

Hourly

These arrangements are contracts in which the client is billed a set hourly rate for each labor hour
provided.

Management
Reimbursement

Under these parking arrangements, we manage a parking facility for a management fee and pass
through the revenue and expenses associated with the facility to the owner. These revenues and
expenses are reported in equal amounts as costs reimbursed from our managed locations.

Leased Location

Under these parking arrangements, we generally pay to the property owner a fixed amount of rent
plus a percentage of revenues derived from monthly and transient parkers. We retain all revenues
and we are responsible for most operating expenses incurred.

Allowance

Under these parking arrangements, we are paid a fixed or hourly fee to provide parking services,
and we are responsible for certain operating expenses, as specified in the contract.

Energy Savings
Contracts and
Fixed-Price
Repair and
Refurbishment

Under these arrangements, we agree to develop, design, engineer, and construct a project and
guarantee that the project will satisfy agreed-upon performance standards. We recognize revenue
under certain of these contracts using the percentage-of-completion method of accounting, most
often based on the cost-to-cost method, under which revenues are recognized as the work
progresses.

Franchise

We franchise certain engineering services through individual and area franchises under the Linc
Service and TEGG brands, which are part of ABM Technical Solutions.

Impact of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2014-09, Revenue from Contracts with Customers (Topic 606). Since the release of ASU 2014-09, the FASB issued
the following additional ASUs further updating Topic 606:

•

In August 2015, ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective
Date

In March 2016, ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent
Considerations (Reporting Revenue Gross versus Net)

In April 2016, ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance
Obligations and Licensing

In May 2016, ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements
and Practical Expedients

•

In December 2016, ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from
Contracts with Customers

Additionally, in May 2017, the FASB issued ASU 2017-10, Service Concession Arrangements (Topic 853):
Determining the Customer of the Operation Services, which clarifies how operating entities should determine the
customer of operation services for transactions within the scope of this guidance. US GAAP does not currently address
how an operating entity should determine the customer of the operation services for transactions within the scope of
Topic 853. The amendment eliminates diversity in practice by clarifying that the grantor is the customer of the operation
services in all cases for those arrangements. We determined that revenue we generate from service concession
arrangements, primarily from certain parking arrangements, will be accounted for under this guidance. We adopted
the amendments in this update in conjunction with the adoption of Topic 606, as discussed below, and prior period
financial statements will not be adjusted.

Collectively these ASUs introduce a new principles-based framework for revenue recognition and disclosure.
The core principle of the standard is when an entity transfers goods or services to customers it will recognize revenue
in an amount that reflects the consideration it expects to be entitled to for those goods or services. The standard also
expands the required disclosures to include the disaggregation of revenue from contracts with customers into categories
that depict how the nature, timing, and uncertainty of revenue and cash flows are affected by economic factors. We
adopted this standard on November 1, 2018 and are using a modified retrospective adoption approach with a
cumulative-effect adjustment to retained earnings as of the beginning of 2019; prior period financial statements will
not be adjusted. The standard will be applied to contracts that have not been completed at November 1, 2018 and will
not be applied to contracts that were modified before the beginning of the earliest reporting period presented.

Effect on the Financial Statements

To assess the impact of this standard, we established a cross-functional implementation team consisting of
representatives from all of our operating segments. The implementation team has completed analyzing our contract
portfolio to identify potential differences that result from applying the requirements of this new standard. In addition,
we have identified the appropriate changes to our business processes and controls to support revenue recognition
and disclosure under this new standard. We expect adoption of this standard will have an impact on the timing of
revenue recognition related to certain lines of business and our financial statement line item reporting of certain items.
Additionally, the accounting for certain direct and incremental contract costs is significantly different from our current
capitalization policy.

Our process for implementing Topic 606 included, but was not limited to, identifying contracts within the scope
of the standard, identifying distinct performance obligations within each contract, and applying the new guidance for
measuring and recognizing revenue to each performance obligation.

We are finalizing our analysis of adopting Topics 606 and 853 and do not believe there are any remaining

significant implementation matters that have not yet been addressed.

We do not expect adopting Topic 606 will materially impact our consolidated balance sheets and do not
anticipate an impact on our consolidated statements of cash flows. We anticipate a pre-tax net increase of $9.1 million
to our opening retained earnings as a result of adopting Topic 606, primarily related to changes in accounting for
commission costs and project type contracts. Specific impacts include:

•

$15.1 million of commission costs incremental to successful sales will be deferred and recognized over the
expected customer relationship period. Currently, commission costs are expensed as incurred.

• Historically, we have recognized revenue and margin on uninstalled materials associated with project type
contracts, generally energy savings performance contracts and fixed-price repair and refurbishment projects,
consistent with other project costs under the percentage-of-completion method. Under the new standard,
uninstalled materials will be excluded from the measure of progress, revenue for uninstalled materials is
recognized at cost, and the associated margin is deferred until installation is substantially complete. Accordingly,
we expect a reduction of $4.4 million to previously recognized revenue and related margin for uninstalled
materials.

•

Initial fees from sales of franchise licenses, currently recognized in the year of sale, of $1.6 million will be
deferred and recognized over the terms of the initial franchise agreements.

In accordance with Topic 853, rent expense related to service concession arrangements of approximately

$48 million, which was previously classified as operating expenses, will be classified as a reduction of revenues.

Management Reimbursement Revenue by Segment

(in millions)
Business & Industry

Aviation

Healthcare

Total

Restructuring and Related Expenses

Years Ended October 31,

2018

2017

2016

257.1 $

234.1 $

99.9

19.5

80.4

18.7

376.4 $

333.2 $

227.8

78.2

17.6

323.4

Restructuring and related expenses include employee severance, lease exit costs, external support fees, and

other costs. Our methodology to record these costs is described below.

Severance

As we do not have a past history of consistently providing severance benefits, we recognize severance costs
for employees who do not have formal employment agreements when management has committed to a restructuring
plan and communicated those actions to impacted employees, such that the employee is able to determine the type
and amount of benefits that they will receive upon termination. In addition, if the employees are required to render
service beyond the minimum retention period until they are terminated in order to receive the benefits, a liability is
recognized ratably over the future service period. For employees with employment agreements, we accrue for these
severance liabilities when it is probable that the impacted employee will be entitled to the benefits and the amount can
be reasonably estimated.

Noncancelable Leases and Contractual Obligations

We record liabilities when we terminate a contract in accordance with the contract terms or when we exit the
leased space. The expense for noncancelable leases is determined based on the fair value of remaining lease payments
reduced by the fair value of estimated sublease income that could reasonably be obtained for the property, estimated
using a present value technique.

Other

For other costs associated with exit and disposal activities, we recognize an expense at fair value in the period

in which the liability is incurred.

Advertising

Advertising costs are expensed as incurred. During 2018, 2017, and 2016, advertising expense was $2.3

million, $2.2 million, and $2.1 million, respectively.

Share-Based Compensation

Our current share-based awards principally consist of restricted stock units (“RSUs”) and various performance
share awards. We recognize compensation costs associated with these awards in selling, general and administrative
expenses. For RSUs and certain performance share awards, the amount of compensation cost is measured based
on the grant-date fair value of the equity instruments issued. Since our total shareholder return (“TSR”) performance
share awards are performance awards with a market condition, the compensation costs associated with these awards
are determined using a Monte Carlo simulation valuation model. For RSUs and TSR awards, compensation cost is
recognized over the period that an employee provides service in exchange for the award. We recognize compensation
cost associated with other performance share awards over the requisite service period based on the probability of
achievement of performance criteria.

Taxes Collected from Clients and Remitted to Governmental Agencies

We record taxes on client transactions due to governmental agencies as receivables and liabilities on the

consolidated balance sheets.

Net Income Per Common Share

Basic net income per common share is net income divided by the weighted-average number of common shares
outstanding during the period. Diluted net income per common share is based on the weighted-average number of
common shares outstanding during the period, adjusted to include the potential dilution from the conversion of RSUs,
vesting of performance shares, and exercise of stock options.

Contingencies and Litigation

We are a party to a number of lawsuits, claims, and proceedings incident to the operation of our business,
including those pertaining to labor and employment, contracts, personal injury, and other matters, some of which allege
substantial monetary damages. Some of these actions may be brought as class actions on behalf of a class or purported
class of employees. We accrue for loss contingencies when losses become probable and are reasonably estimable.
If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum
amount of the range is recorded as a liability. We recognize legal costs as an expense in the period incurred.

Income Taxes

We account for income taxes using the asset and liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to temporary differences between the financial statement
carrying amount of existing assets and liabilities and their respective tax bases. We measure deferred tax assets and
liabilities using enacted tax rates expected to be applied to taxable income in the years in which those temporary
differences are expected to be recovered. Deferred tax assets are reviewed for recoverability on a quarterly basis. A
valuation allowance is recorded to reduce the carrying amount of a deferred tax asset to its realizable value unless it
is more likely than not that such asset will be realized. We recognize accrued interest and penalties related to
unrecognized tax benefits in income tax expense in our consolidated statements of comprehensive income.

3. ACQUISITIONS

Acquisition of GCA during 2017

On September 1, 2017, we acquired all of the outstanding stock of GCA, a provider of integrated facility services
to educational institutions and commercial facilities, for a purchase price of approximately $1.3 billion. As described
in Note 18, “Segment and Geographic Information,” we integrated GCA’s operations into our industry group model
effective November 1, 2017. As a result of the acquisition, we are now a leading facilities services provider in the
education market.

Consideration Transferred

(in millions, except per share data)
Shares of ABM common stock, net of shares withheld for taxes
ABM common stock closing market price at acquisition date
Fair value of ABM common stock at closing
Cash consideration(1)

Total consideration transferred

9.4
44.63
421.3
837.5
1,258.8

(1) Revised during the second quarter of 2018 to reflect a post-closing purchase price adjustment related to a net working capital
settlement.

Purchase Price Allocation

(in millions)
Cash and cash equivalents
Trade accounts receivable(1)
Prepaid expenses and other current assets

Property, plant and equipment
Customer relationships(2)
Trade names(2)
Goodwill(3)
Other assets

Trade accounts payable

Insurance reserves

Income taxes payable

Accrued liabilities

Deferred income tax liability, net

Other liabilities

Net assets acquired

As reported at

October 31, 2017
$

2.5 $

As reported at

Adjustments

October 31, 2018
0.2

(2.3) $

118.1

10.3

41.4
340.0

9.0
933.9

4.2

(9.1)
(35.5)
(16.5)
(36.5)
(92.6)
(8.1)

(1.8)

1.7

(4.1)

—

(1.0)

(7.0)

(0.2)

(0.4)

0.3

7.9

(2.3)

7.0

—

116.3

12.0

37.3

340.0

8.0

926.9

4.0

(9.6)

(35.2)

(8.6)

(38.8)

(85.6)

(8.1)

1,261.3 $

(2.4) $

1,258.8

(1) The gross amount of trade accounts receivable was $121.9 million, of which $5.6 million is deemed uncollectible.

(2) The amortization periods for the acquired intangible assets are 15 years for customer relationships and 2 years for trade names.

(3) Goodwill is largely attributable to value we expect to obtain from long-term business growth, the established workforce, and buyer-

specific synergies. This goodwill is not deductible for income tax purposes.

Financial Information

During the year ended October 31, 2018, we recorded revenue related to GCA of $1.0 billion and operating
profit of $33.8 million. The following table presents our unaudited pro forma results for October 31, 2017 and 2016 as
though the GCA acquisition occurred on November 1, 2015. These results include adjustments for the estimated
amortization of intangible assets, interest expense, and the income tax impact of the pro forma adjustments at the
statutory rate of 41%. These results were adjusted to exclude $24.2 million of acquisition-related costs incurred during
2017, which are included in selling, general and administrative expenses in the accompanying consolidated statements
of comprehensive income. In addition, they do not reflect the cost of integration activities or benefits from expected
revenue enhancements and synergies. Accordingly, the unaudited pro forma information is not necessarily indicative
of the results that would have been achieved if the acquisition had been effective on November 1, 2015.

(in millions)
Pro forma revenue
Pro forma income from continuing operations

Other 2017 Acquisitions

Years Ended October 31,

2017

2016

6,293.0 $
95.5

6,153.6
1.1

Effective December 1, 2016, we acquired all of the outstanding stock of Mechanical Solutions, Inc. (“MSI”), a
provider of specialized HVAC, chiller, and plumbing services, for a purchase price of $12.6 million. The purchase price
includes up to $1.0 million of undiscounted contingent consideration that is based on the expected achievement of
certain pre-established revenue goals. See Note 7, “Fair Value of Financial Instruments,” regarding our valuation of
contingent consideration liabilities. As of December 1, 2016, the operations of MSI are included in our Technical
Solutions segment.

Effective December 1, 2016, we also acquired all of the outstanding stock of OFJ Connections Ltd (“OFJ”), a
provider of airport transportation services in the United Kingdom, for a purchase price of $6.3 million. As of December
1, 2016, the operations of OFJ are included in our Aviation segment.

2016 Acquisitions

Effective September 30, 2016, we acquired all of the outstanding stock of BRBIBR Limited, a company that
held all of the outstanding shares of 8 Solutions Ltd. (“8 Solutions”), a provider of technical cleaning services to data
centers in the United Kingdom and certain other locations, for a purchase price of $16.1 million. As of September 30,
2016, the operations of 8 Solutions are included in our Business & Industry segment, and 8 Solutions has been renamed
“ABM Critical Solutions Limited.”

Effective December 1, 2015, we acquired all of the outstanding stock of Westway Services Holdings (2014)
Ltd. (“Westway”), a provider of technical services to clients in the United Kingdom, for a purchase price of $81.0 million.
This acquisition expanded the geographical reach of our technical solutions business to the United Kingdom, resulting
in the allocation of a significant portion of the purchase price to goodwill. As such, we recorded goodwill and intangible
assets of $53.8 million and $22.5 million, respectively. The goodwill associated with this acquisition is not deductible
for tax purposes. See Note 10, “Goodwill and Other Intangible Assets,” for information related to impairment charges
we recorded during 2018. As of December 1, 2015, the operations of Westway are included in our Technical Solutions
segment.

Pro Forma and Other Financial Information

Except for GCA, we do not present pro forma and other financial information for our other acquisitions, as they

are not considered material business combinations individually or on a combined basis.

4. RESTRUCTURING AND RELATED COSTS

GCA Restructuring

During the first quarter of 2018, we initiated a restructuring program to achieve cost synergies following the
acquisition of GCA. We incurred the majority of our anticipated severance expense associated with this restructuring
program in the first half of 2018. We expect to incur additional charges related to other project fees and rebranding
activities in 2019.

2020 Vision Restructuring

During the fourth quarter of 2015, our Board of Directors approved a comprehensive strategy intended to have
a positive transformative effect on ABM (the “2020 Vision”). As part of the 2020 Vision, we identified key priorities to
differentiate ABM in the marketplace, accelerate revenue growth for certain industry groups, and improve our margin
profile. We incurred additional expenses primarily related to external support fees and other project fees during 2018
relating to this strategy. We do not expect to incur significant 2020 Vision restructuring and related expenses in the
future, other than in connection with the continued consolidation of our real estate leases.

Rollforward of Restructuring and Related Liabilities

External
Support
Fees

Employee
Severance

Other
Project
Fees

Lease Exit
Costs

Asset
Impairment

Total

— $

(in millions)

Balance, October 31, 2014

Costs recognized(1)
Payments

Non-cash items

Balance, October 31, 2015

Costs recognized(1)

Payments

Non-cash items

Balance, October 31, 2016

Costs recognized(1)

Payments

Non-cash items

Balance, October 31, 2017

Costs recognized(1)

Payments

Non-cash items

4.6

(2.5)

—

2.1

11.3

(12.2)

—

1.2

12.1

(10.8)

—

2.5

4.0

(6.5)

—

4.7

(0.4)

—

4.3

8.6

(9.1)

—

3.8

2.2

(3.3)

—

2.7

11.0

(9.9)

—

0.8

(0.4)

(0.2)

0.2

3.9

(3.6)

—

0.5

5.7

(5.8)

—

0.4

8.2

(6.7)

—

2.6

—

(2.6)

— $

3.2

(0.3)

(0.4)

2.5

2.6

(3.1)

0.9

2.8

2.0

(1.5)

(0.2)

2.1

—

(2.1)

— $

—

— $

0.6

—

(0.6)

—

12.7

(3.3)

(2.8)

6.6

29.0

(25.2)

(2.5)

8.0

22.6

(23.0)

0.9

8.4

25.7

(24.7)

(0.7)

8.6

Balance, October 31, 2018
(1) We include these costs within corporate expenses.

— $

3.8

1.8

3.1

— $

Cumulative Restructuring and Related Charges

(in millions)

GCA

2020 Vision

Total

External
Support
Fees

Employee
Severance

Other
Project
Fees

Lease Exit
Costs

Asset
Impairment

Total

2.0

13.5

7.9

— $

30.0

13.0

10.7

32.0

26.5

18.5

7.7

5.2

23.3

66.5

89.9

5. DISCONTINUED OPERATIONS

On October 26, 2015, in connection with our 2020 Vision, we sold substantially all of the assets of our Security
business to Universal Protection Service, L.P. for cash proceeds of $131.0 million, subject to a working capital
adjustment. In connection with the sale, we recorded a $23.6 million gain, which was subsequently reduced by a $3.1
million working capital adjustment in 2016. Following the sale, we record all costs associated with this former business
in discontinued operations. Such costs generally relate to litigation we retained and insurance reserves. In 2017, we
incurred a net loss from discontinued operations of $74.3 million (a pretax loss of $123.7 million) primarily due to legal
settlements. In 2018, we had net income from discontinued operations of $1.8 million (pretax income of $2.6 million)
due to an insurance reimbursement on a legal settlement and collection of previously written off receivables, partially
offset by union audit settlements.

6. NET INCOME PER COMMON SHARE

Basic and Diluted Net Income Per Common Share Calculations

(in millions, except per share amounts)
Income from continuing operations
Income (loss) from discontinued operations, net of taxes
Net income

Weighted-average common and common equivalent

shares outstanding — Basic

Effect of dilutive securities

RSUs
Stock options
Performance shares

Weighted-average common and common equivalent

shares outstanding — Diluted

Net income per common share — Basic
Income from continuing operations
Income (loss) from discontinued operations
Net income

Net income per common share — Diluted
Income from continuing operations
Income (loss) from discontinued operations
Net income

Years Ended October 31,
2017

2016

2018

95.9 $

1.8

97.8 $

78.1 $
(74.3)

3.8 $

66.1

0.1
0.1
—

66.4

1.45 $
0.03
1.48 $

1.45 $
0.03
1.47 $

57.7

0.3
0.2
0.1

58.3

1.35 $
(1.29)
0.07 $

1.34 $
(1.27)
0.07 $

62.3
(5.1)
57.2

56.3

0.3
0.2
0.1

56.9

1.11
(0.09)
1.02

1.09
(0.09)
1.01

Anti-Dilutive Outstanding Stock Awards Issued Under Share-Based Compensation Plans

(in millions)
Anti-dilutive

Years Ended October 31,
2017

2016

2018

0.4

—

0.1

7. FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair Value Hierarchy of Our Financial Instruments

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

(in millions)
Cash and cash equivalents(1)
Insurance deposits(2)
Assets held in funded deferred compensation plan(3)
Credit facility(4)
Interest rate swaps(5)
Investments in auction rate securities(6)
Contingent consideration liability(7)

Fair Value
Hierarchy

As of October 31,

2018

2017

39.1 $

0.6

2.7

62.8

11.2

4.6

949.0

1,191.2

1.3

5.0

—

2.9

8.0

0.9

(1) Cash and cash equivalents are stated at nominal value, which equals fair value.

(2) Represents restricted deposits that are used to collateralize our insurance obligations and are stated at nominal value, which
equals fair value. These insurance deposits are included in “Other noncurrent assets” on the accompanying consolidated balance
sheets. See Note 11, “Insurance,” for further information.

(3) Represents investments held in a Rabbi trust associated with one of our deferred compensation plans, which we include in “Other
noncurrent assets” on the accompanying consolidated balance sheets. The fair value of the assets held in the funded deferred
compensation plan is based on quoted market prices. See Note 13, “Employee Benefit Plans,” for further information.

(4) Represents gross outstanding borrowings under our syndicated line of credit and term loan. Due to variable interest rates, the
carrying value of outstanding borrowings under our line of credit and term loan approximates the fair value. See Note 12, “Credit
Facility,” for further information.

(5) Represents interest rate swap derivatives designated as cash flow hedges. The fair values of the interest rate swaps are estimated
based on the present value of the difference between expected cash flows calculated at the contracted interest rates and the
expected cash flows at current market interest rates using observable benchmarks for LIBOR forward rates at the end of the period.
During April 2018, we elected to terminate our interest rate swaps and recognized a gain in AOCI. We subsequently entered into
new forward starting interest rate swaps. See Note 12, “Credit Facility,” for further information. Our interest rate swaps are included
in “Other noncurrent assets” on the accompanying consolidated balance sheets.

(6) The fair value of investments in auction rate securities is based on discounted cash flow valuation models, primarily utilizing
unobservable inputs, including assumptions about the underlying collateral, credit risks associated with the issuer, credit
enhancements associated with financial insurance guarantees, and the possibility of the security being re-financed by the issuer
or having a successful auction. These amounts are included in “Other investments” on the accompanying consolidated balance
sheets. See Note 8, “Auction Rate Securities,” for further information.

(7) Certain of our acquisitions involve the payment of contingent consideration. The fair value of these liabilities is based on the
expected achievement of certain pre-established revenue goals. In connection with the MSI acquisition during 2017, we recorded
one new contingent consideration liability. Based on the metrics of the underlying pre-established revenue goals, this contingent
consideration liability was reduced to a nominal value at October 31, 2018. This contingent consideration liability is included on the
accompanying consolidated balance sheets in “Other noncurrent liabilities” at October 31, 2017.

During 2018 and 2017, we had no transfers of assets or liabilities between any of the above hierarchy levels.

Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis

In addition to assets and liabilities that are measured at fair value on a recurring basis, we are also required

to measure certain items at fair value on a non-recurring basis.

During 2018, we recorded impairment charges on goodwill and customer relationships in connection with our
annual assessment of goodwill. During 2016, we recorded impairment charges on both long-lived assets and goodwill

associated with the classification of the former Government Services business as held for sale. The impairment charges
were recovered in 2017. See Note 10, “Goodwill and Other Intangible Assets,” for further information.

Fair value of these items was determined based on unobservable Level 3 inputs. The fair value of customer
relationships was determined based on discounted cash flows associated with the customer relationships that include
significant management assumptions, including expected proceeds. The fair value of goodwill was determined based
on discounted cash flow analyses that include significant management assumptions, such as revenue growth rates,
operating margins, weighted average cost of capital, and future economic and market conditions.

8. AUCTION RATE SECURITIES

At October 31, 2017, we held investments in auction rate securities from two different issuers that had an
aggregate original principal amount of $10.0 million and an amortized cost and fair value of $8.0 million. During the
third quarter of 2018, we sold one of our auction rate securities with an original par value of $5.0 million and an amortized
cost basis of $3.0 million for proceeds of $2.9 million. The resulting loss is included in “Selling, general and administrative
expenses” on the accompanying consolidated statements of comprehensive income. The total amount of other-than-
temporary impairment credit loss previously recognized on this security investment and included in our retained earnings
was $2.0 million.

At October 31, 2018, the remaining auction rate security had an aggregate original principal amount, amortized
cost, and fair value of $5.0 million. This auction rate security is a debt instrument with a stated maturity in 2050. The
interest rate for this security is designed to be reset through Dutch auctions approximately every thirty days; however,
auctions for this security have not occurred since August 2007.

At October 31, 2018 and 2017, there were no unrealized gains or losses on our auction rate securities included

in AOCI.

Significant Assumptions Used to Determine the Fair Values of Our Auction Rate Securities

Assumption
Discount rates
Yields
Average expected lives

L – One Month LIBOR

October 31, 2018
L + 0.37%
L + 2.00%
4 years

October 31, 2017
L + 0.42% and L + 0.79%
2.15%, L + 2.00%
4 – 10 years

9. PROPERTY, PLANT AND EQUIPMENT

Property, Plant and Equipment

(in millions)
Machinery and other equipment
Computer equipment and software
Leasehold improvements
Transportation equipment
Furniture and fixtures
Buildings
Land

Less: Accumulated depreciation(1)
Total

As of October 31,

2018

2017

94.0 $
71.5
54.6
49.7
14.9
8.2
1.0
294.0
153.9
140.1 $

(1) For 2018, 2017, and 2016, depreciation expense was $46.5 million, $38.5 million, and $32.6 million, respectively.

Capital Leases Included in Property, Plant and Equipment

(in millions)
Transportation equipment
Computer equipment and software
Machinery and other equipment
Furniture and fixtures

Less: Accumulated depreciation
Total

10. GOODWILL AND OTHER INTANGIBLE ASSETS

As of October 31,

2018

2017

20.7 $

0.9
0.3
0.2
22.1
9.2

12.9 $

89.5
70.2
47.1
48.0
13.6
10.0
1.2
279.5
136.4
143.1

19.4
0.1
0.3
0.2
20.0
7.6
12.4

Goodwill

(in millions)

Business &
Industry

Aviation

Technology &
Manufacturing

Education

Technical
Solutions

Healthcare

Total

Balance at October 31, 2016
Acquisitions(1)

Foreign currency translation

404.8

120.0

130.7

49.7

169.8

122.9

2.2

4.4

0.4

278.6

—

511.6

—

6.4

3.8

37.8

21.1

—

912.8

945.0

6.4

Balance at October 31, 2017

529.9

124.8

409.3

561.3

180.0

58.9

$ 1,864.2

Purchase price adjustments

Foreign currency translation
Impairment loss(2)

(0.9)

(1.1)

—

0.4

(0.2)

—

(2.1)

—

(3.8)

—

0.4

(1.5)

(20.3)

(0.2)

—

(6.2)

(2.8)

(20.3)

Balance at October 31, 2018

527.9

124.9

407.2

557.4

158.7

58.7

$ 1,834.8

(1) During 2017, goodwill primarily increased as a result of the GCA acquisition. See Note 3, “Acquisitions,” for additional information.

(2) Represents accumulated impairment charges at October 31, 2018.

During the fourth quarter of 2018, as part of our annual assessment of goodwill, we recorded a goodwill
impairment charge of $20.3 million for one of our reporting units within the Technical Solutions segment. In 2018, this
reporting unit’s performance primarily reflected the adverse impact of Brexit and the resulting impact on microeconomic
conditions in the U.K. retail sector and the anticipated loss of a significant customer contract. The impairment was also
attributable to a decline in profitability in the second half of 2018 and a revised future outlook for the business, including
reduced expectations of future sales, operating margins, and cash flows.

In addition, on November 1, 2017, we reorganized our reportable segments and goodwill reporting units. In
connection with this reorganization, we performed a qualitative goodwill impairment test immediately before and after
the segment realignment. In analyzing the results of operations and business conditions of the goodwill reporting units,
we determined the likelihood of a goodwill impairment did not reach the more-likely-than-not threshold specified in
U.S. GAAP for any of the reporting units that were evaluated. Accordingly, we concluded that goodwill related to those
reporting units was not impaired and further quantitative testing was not required.

During 2016, we recorded a goodwill impairment charge of $6.0 million when we classified our Government
Services business as held for sale, based upon the estimated fair value of the business at that time. During the second
quarter of 2017 we received an offer from a strategic buyer to purchase this business for an amount in excess of our
original estimate less costs to sell. As a result, we recorded a full impairment recovery of the aforementioned $6.0
million goodwill impairment in 2017.

Other Intangible Assets

(in millions)
Customer contracts and relationships(1) $
Trademarks and trade names

Contract rights and other
Total(2)

October 31, 2018

October 31, 2017

Accumulated
Amortization

Total

Gross
Carrying
Amount

Accumulated
Amortization

Total

Gross
Carrying
Amount

595.7

(243.6) $

352.2

607.9

(186.3) $

421.6

9.8

0.5

(6.4)

(0.4)

3.4

0.1

10.8

0.5

(2.4)

(0.4)

8.4

0.1

606.0

(250.4) $

355.7

619.2

(189.1) $

430.1

(1) Reflects a net impairment charge of $6.2 million recorded in 2018, consisting of a $10.5 million reduction in the gross carrying
amount of the underlying customer relationships less $4.3 million of accumulated amortization.

(2) These intangible assets are being amortized over the expected period of benefit, with a weighted average life of approximately
13 years.

Estimated Annual Amortization Expense For Each of the Next Five Years

(in millions)
Estimated amortization expense(1)

2019

2020

2021

2022

2023

58.5 $

49.3 $

43.8 $

38.2 $

33.6

(1) These amounts could vary as acquisitions of additional intangible assets occur in the future.

During 2018, we also recorded an impairment charge of $6.2 million on customer relationships in the same

reporting unit within the Technical Solutions segment due to the same factors discussed above.

During 2016, we recorded an impairment charge of $4.4 million on certain intangible assets when we classified
our Government Services business as held for sale, which was subsequently recovered in 2017 when we received
an offer from a strategic buyer to purchase this business that was higher than our estimate of fair value less costs to
sell.

The estimates of future cash flows used in determining the fair value of goodwill and other intangible assets
involve significant management judgment and are based upon assumptions about expected future operating
performance, economic conditions, market conditions, and cost of capital. Inherent in estimating the future cash flows
are uncertainties beyond our control, such as changes in capital markets. The actual cash flows could differ materially
from management’s estimates due to changes in business conditions, operating performance, and economic
conditions.

11. INSURANCE

We use a combination of insured and self-insurance programs to cover workers’ compensation, general liability,
automobile liability, property damage, and other insurable risks. For the majority of these insurance programs, we
retain the initial $1.0 million of exposure on a per-occurrence basis, either through deductibles or self-insured retentions.
Beyond the retained exposures, we have varying primary policy limits ranging between $1.0 million and $5.0 million
per occurrence. To cover general liability and automobile liability losses above these primary limits, we maintain
commercial umbrella insurance policies that provide aggregate limits of $200.0 million. Our insurance policies generally
cover workers’ compensation losses to the full extent of statutory requirements. Additionally, to cover property damage
risks above our retained limits, we maintain policies that provide per occurrence limits of $75.0 million. We are also
self-insured for certain employee medical and dental plans. We maintain stop-loss insurance for our self-insured
medical plan under which we retain up to $0.4 million of exposure on a per-participant, per-year basis with respect to
claims. Since September 1, 2017, GCA’s workers’ compensation, general liability, automobile liability, and other
insurable risks have been covered under the ABM insurance policies.

Insurance Reserve Adjustments

Actuarial Studies Performed During 2018

During 2018, we performed actuarial studies of our casualty insurance programs that considered changes in
claim developments and claim payment activity for the period commencing May 1, 2017 and ending April 30, 2018 for
all policy years in which open claims existed.

The actuarial studies indicated the changes we have made to our risk management program have reduced
the frequency of claims; however, we are experiencing adverse developments that impact claim costs relating to prior
periods. Claim management initiatives include programs to identify claims that have the potential to develop adversely
earlier in the claims cycle and ensure the establishment of reserves consistent with known fact patterns. However,
with respect to claims related to certain prior fiscal years, the actuarial studies showed unfavorable developments in
our estimates of ultimate losses related to general liability, property damage, workers’ compensation, and automobile
liability claims, as described below.

The actuarial studies related to our general liability program indicated the total number of claims continues to
show a pattern of decreasing losses, particularly with bodily injury claims. However, we experienced adverse
developments with respect to claims related to certain prior fiscal years that are largely attributable to adjustments for
certain alleged bodily injury claims and to losses for property damage.

Due to increases in projected costs and severity of claims in certain prior fiscal years, in 2018 we increased
our estimate of ultimate losses for workers’ compensation claims. Statutory, regulatory, and legal developments have
also contributed to the increase in our estimated losses. Our workers’ compensation estimate of ultimate losses was
primarily impacted by increases in projected costs for a significant number of prior year claims in California.

Our automobile liability program covers our fleet of passenger vehicles, service vans, and shuttle buses, which
are associated with our various transportation service contracts. Claim frequency and severity associated with our
fleet operations developed unfavorably versus actuarial expectations, consistent with insurance trends exhibited in
the broader insurance book of claims.

Based on the results of the actuarial studies performed during 2018, which included analyzing recent loss
development patterns, comparing the loss development against benchmarks, and applying actuarial projection methods
to estimate ultimate losses, we increased our total reserves for known claims as well as our estimate of the loss
amounts associated with IBNR Claims for prior periods by $10.2 million during 2018. This adjustment was $11.8 million
lower than the total adjustment related to prior year claims of $22.0 million in 2017.

Insurance Related Balances and Activity

(in millions)
Insurance claim reserves, excluding medical and dental

Medical and dental claim reserves

Insurance recoverables

October 31, 2018 October 31, 2017
485.6
$

501.4 $

8.9

73.7

9.8

73.1

At October 31, 2018 and 2017, insurance recoverables are included in both “Other current assets” and “Other

noncurrent assets” on the accompanying consolidated balance sheets.

Casualty Program Insurance Reserves Rollforward

(in millions)
Net balance at beginning of year
Change in case reserves plus IBNR Claims — current year
Change in case reserves plus IBNR Claims — prior years
Claims paid
GCA acquisition
Net balance, October 31(1)
Recoverables
Gross balance, October 31

Years Ended October 31,
2017

2016

2018

412.5 $
131.4
10.2
(126.5)
0.1
427.7
73.7

501.4 $

348.2 $
112.2
23.1
(105.2)
34.1
412.5
73.1

485.6 $

312.7
104.5
35.8
(104.8)
—
348.2
69.7
417.9

(1) Includes reserves related to discontinued operations of approximately $3 million for 2018, $10 million for 2017, and $12 million
for 2016.

Instruments Used to Collateralize Our Insurance Obligations

(in millions)
Standby letters of credit
Surety bonds
Restricted insurance deposits
Total

As of October 31,

2018

2017

144.1 $

89.2
0.6
233.9 $

137.6
77.5
11.2
226.3

12. CREDIT FACILITY

On September 1, 2017, we refinanced and replaced our then-existing $800.0 million credit facility with a new
senior, secured five-year syndicated credit facility (the “Credit Facility”), consisting of a $900.0 million revolving line of
credit and an $800.0 million amortizing term loan, scheduled to mature on September 1, 2022. In accordance with the
terms of the Credit Facility, the line of credit was reduced to $800.0 million on September 1, 2018. The Credit Facility
also provides for the issuance of up to $300.0 million for standby letters of credit and the issuance of up to $75.0 million
in swingline advances. The obligations under the Credit Facility are secured on a first-priority basis by a lien on
substantially all of our assets and properties, subject to certain exceptions.

Borrowings under the Credit Facility bear interest at a rate equal to 1-month LIBOR plus a spread that is based
upon our leverage ratio. The spread ranges from 1.00% to 2.25% for Eurocurrency loans and 0.00% to 1.25% for base
rate loans. At October 31, 2018, the weighted average interest rate on our outstanding borrowings was 4.34%. We
also pay a commitment fee, based on our leverage ratio and payable quarterly in arrears, ranging from 0.200% to
0.350% on the average daily unused portion of the line of credit. For purposes of this calculation, irrevocable standby
letters of credit, which are issued primarily in conjunction with our insurance programs, and cash borrowings are
included as outstanding under the line of credit.

The Credit Facility contains certain covenants, including a minimum fixed charge coverage ratio of 1.50 to 1.0,
a maximum leverage ratio, as well as other financial and non-financial covenants. The maximum leverage ratio was
4.75 to 1.0 through April 2018 and steps down to 3.50 to 1.0 by July 2020. On September 5, 2018, we amended our
Credit Facility to increase the maximum leverage ratio for fiscal quarters commencing July 31, 2018 through April 30,
2021 by 25 basis points for such quarters. In the event of a material acquisition, as defined in the Credit Facility, we
may elect to increase the leverage ratio to 3.75 to 1.0 for a total of four fiscal quarters, provided the leverage ratio had
already been reduced to 3.50 to 1.0. Our borrowing capacity is subject to, and limited by, compliance with the covenants
described above. At October 31, 2018, we were in compliance with these covenants.

The Credit Facility also includes customary events of default, including failure to pay principal, interest, or fees
when due, failure to comply with covenants, the occurrence of certain material judgments, or a change in control of
the Company. If certain events of default occur, including certain cross-defaults, insolvency, change in control, or
violation of specific covenants, the lenders can terminate or suspend our access to the Credit Facility and declare all
amounts outstanding (including all accrued interest and unpaid fees) to be immediately due and payable, and require
that we cash collateralize the outstanding standby letters of credit.

Total deferred financing costs related to the Credit Facility were $18.7 million, consisting of $13.4 million related
to the term loan and $5.2 million related to the line of credit, which are being amortized to interest expense over the
term of the Credit Facility.

Credit Facility Information

(in millions)
Current portion of long-term debt

Gross term loan

Unamortized deferred financing costs

Current portion of term loan

Long-term debt

Gross term loan

Unamortized deferred financing costs

Total noncurrent portion of term loan

Line of credit(1)(2)
Long-term debt

October 31, 2018 October 31, 2017

40.0 $

(3.0)

37.0 $

740.0 $

(6.9)

733.1

169.0

20.0

(3.1)

16.9

780.0

(9.9)

770.1

391.2

902.0 $

1,161.3

(1) Standby letters of credit amounted to $152.9 million at October 31, 2018.

(2) At October 31, 2018, we had borrowing capacity of $467.3 million; however, covenant restrictions limited our borrowing capacity

to $441.3 million.

Term Loan Maturities

During the first quarter of 2018, we made $20.0 million of principal payments. At October 31, 2018, the following

principal payments are required under the term loan.

(in millions)
Debt maturities

Interest Rate Swaps

2019

2020

2021

2022

40.0 $

60.0 $

120.0 $

560.0

We enter into interest rate swaps to manage the interest rate risk associated with our floating-rate, LIBOR-
based borrowings under the Credit Facility. Under these arrangements, we typically pay a fixed interest rate in exchange
for LIBOR-based variable interest throughout the life of the agreement. We initially report the mark-to-market gain or
loss on a derivative as a component of AOCI and subsequently reclassify the gain or loss into earnings when the
hedged transactions occur and affect earnings. Interest payables and receivables under the swap agreements are
accrued and recorded as adjustments to interest expense. All of our interest rate swaps have been designated and
accounted for as cash flow hedges from inception. See Note 7, “Fair Value of Financial Instruments,” regarding the
valuation of our interest rate swaps.

During April 2018, we elected to terminate all of our interest rate swaps and received cash proceeds of $25.9
million from the swap counterparties upon termination. We classified the cash proceeds as an operating activity on
our consolidated statements of cash flows. We subsequently entered into new forward-starting interest rate swaps, as
summarized below.

Notional Amount
$ 90.0 million

$ 90.0 million

$ 130.0 million

Fixed Interest Rate
2.83%

2.84%

2.86%

2.84%

Effective Date
November 1, 2018

November 1, 2018

Maturity Date
April 30, 2021

October 31, 2021

April 30, 2022

September 1, 2022

At October 31, 2018, the amount recorded in AOCI for interest rate swaps was $17.8 million, net of taxes of
$7.1 million. This amount included the gain realized upon termination, which will be amortized to interest expense as
interest payments are made over the term of our Credit Facility. During 2018, we amortized $1.8 million of this gain,
net of taxes of $0.7 million, to interest expense. Additionally, at October 31, 2018, the amount expected to be reclassified
from AOCI to earnings during the next twelve months, including amounts from our new interest rate swaps, was $4.4
million, net of taxes of $1.7 million. At October 31, 2017, amounts recorded in AOCI were $1.7 million, net of taxes of
$1.2 million.

13. EMPLOYEE BENEFIT PLANS

Defined Benefit Plans

We provide benefits to certain employees under various defined benefit and postretirement benefit plans
(collectively, the “Plans”). The Plans were previously amended to preclude new participants. All but one of the Plans
are unfunded.

Information for the Plans

(in millions)
Net obligations
Projected benefit obligations
Fair value of assets

As of October 31,

2018

2017

7.4 $

15.0
7.6

7.5
15.7
8.2

At October 31, 2018, assets of the Plans were invested 48% in equities, 47% in fixed income, and 5% in cash.
The expected return on assets was $0.4 million during each of 2018 and 2017 and $0.5 million during 2016. The
aggregate net periodic benefit cost for all Plans was $0.2 million for each of 2018, 2017, and 2016. Future benefit
payments in the aggregate are expected to be $13.8 million.

Deferred Compensation Plans

We maintain deferred compensation plans that permit eligible employees and directors to defer a portion of
their compensation. At October 31, 2018 and 2017, the total liability of all deferred compensation was $13.9 million
and $17.6 million, respectively, and these amounts are included in “Other accrued liabilities” and “Other noncurrent
liabilities” on the accompanying consolidated balance sheets. Under one of our deferred compensation plans, a Rabbi
trust was created to fund the obligations, and we are required to contribute a portion of the deferred compensation
contributions for eligible participants. The assets held in the Rabbi trust are not available for general corporate purposes.
At October 31, 2018 and 2017, the fair value of these assets was $2.7 million and $4.6 million, respectively, and these
amounts are included in “Other noncurrent assets” on the accompanying consolidated balance sheets. Aggregate
expense recognized under these deferred compensation plans was $0.4 million for each of 2018, 2017, and 2016.

Defined Contribution Plans

We sponsor four defined contribution plans covering certain employees that are subject to the applicable
provisions of the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code (“IRC”). Certain
plans permit a company match of a portion of the participant’s contributions or a discretionary contribution after the
participant has met the eligibility requirements set forth in the plan. During 2018, 2017, and 2016, we made matching
contributions required by the plans of $21.6 million, $13.7 million, and $11.7 million, respectively.

Multiemployer Pension and Postretirement Plans

We participate in various multiemployer pension plans under union and industry-wide agreements that provide
defined pension benefits to employees covered by collective bargaining agreements. Because of the nature of
multiemployer plans, there are risks associated with participation in these plans that differ from single-employer plans.
Assets contributed by an employer to a multiemployer plan are not segregated into a separate account and are not
restricted to provide benefits only to employees of that contributing employer. In the event another participating employer
in a multiemployer plan no longer contributes to the plan, the unfunded obligations of the plan may be borne by the
remaining participating employers, including us. In the event of the termination of a multiemployer pension plan or a
withdrawal from a multiemployer pension plan, we could incur material liabilities under applicable law.

Key Information for Individually Significant Multiemployer Defined Benefit Pension Plans(1)

(in millions)

Pension Protection Act
Zone Status(3)

FIP/RP
Status(4)

Contributions by ABM

Pension Fund

Building Service 32BJ Pension Fund

EIN/PN(2)

13-1879376 /
001

Central Pension Fund of the IUOE &
Participating Employers

36-6052390 /
001

2018

2017

Red
6/30/2017

Green
1/31/2018

Red
6/30/2016

Green
1/31/2017

Pending/
Implemented

2018

2017

2016

Implemented

$ 19.9

$ 20.1

$ 17.0

12/31/2019

Expiration
Dates of
Collective
Bargaining
Agreements

Surcharge
Imposed(5)

N/A*

11.0

10.7

11.0

N/A*

S.E.I.U. National Industry Pension
Fund

52-6148540 /
001

Red
12/31/2017

Red
12/31/2016

Implemented

Local 25 SEIU & Participating
Employers Pension Trust

36-6486542 /
001

Green
9/30/2017

Green
9/30/2016

IUOE Stationary Engineers Local 39
Pension Plan

94-6118939 /
001

Green
12/31/2017

Green
12/31/2016

Western Conference of Teamsters
Pension Plan

91-6145047 /
001

Green
12/31/2017

Green
12/31/2016

N/A*

Local 68 Engineers Union Pension
Plan

51-0176618 /
001

Red
6/30/2017

Green
6/30/2016

Implemented

All Other Plans:

Total Contributions

* Not applicable

8.7

5.8

5.2

3.1

3.0

8.5

7.2

6.0

4.8

3.5

2.8

8.0

6.8

6.2

5.2

0.9

2.8

9.4

Yes

N/A*

$ 65.3

$ 63.1

$ 59.3

12/31/2018 -
12/31/2021

2/14/2019 -
1/31/2023

4/4/2021

2/28/2019 -
8/31/2023

11/30/2018 -
12/31/2021

4/30/2019 -
9/30/2021

(1) To determine individually significant plans, we evaluated several factors, including our total contributions to the plan, our significance
to the plan in terms of participating employees and contributions, and the funded status of the plan.

(2) The “EIN/PN” column provides the Employer Identification Number and the three-digit plan number assigned to the plan by the Internal
Revenue Service (“IRS”).

(3) The Pension Protection Act Zone Status columns provide the two most recently available Pension Protection Act zone statuses from
each plan. The zone status is based on information provided to us and other participating employers and is certified by each plan’s
actuary. Among other factors, plans in the red zone are generally less than 65% funded, plans in the yellow zone are less than 80%
funded, and plans in the green zone are at least 80% funded.

(4) Indicates whether a Financial Improvement Plan (“FIP”) for yellow zone plans or a Rehabilitation Plan (“RP”) for red zone plans is
pending or implemented.

(5) Indicates whether our contribution in 2018 included an amount in addition to the contribution rate specified in the applicable collective
bargaining agreement as imposed by a plan in the red zone.

Multiemployer Pension Plans for which ABM is a Significant Contributor

Pension Fund

Building Service 32BJ Pension Fund

Building Service Pension Plan*

Contributions to the plan exceeded more than 5% of total
contributions per most currently available Forms 5500

(as of the plan’s year end)

6/30/2017, 6/30/2016, and 6/30/2015

4/30/2017, 4/30/2016, and 4/30/2015

Contract Cleaners Service Employees’ Pension Plan*

12/31/2017, 12/31/2016, and 12/31/2015

Firemen & Oilers Pension Plan of SEIU Local 1*

IUOE Stationary Engineers Local 39 Pension Plan

Local 25 SEIU & Participating Employers Pension Trust

Massachusetts Service Employees Pension Plan*

S.E.I.U. National Industry Pension Fund

7/31/2017

12/31/2017 and 12/31/2016

9/30/2017, 9/30/2016, and 9/30/2015

12/31/2017, 12/31/2016, and 12/31/2015

Service Employees International Union Local 1 Cleveland Pension Plan*

12/31/2017, 12/31/2016, and 12/31/2015

Service Employees International Union Local 32BJ, District 36 Building
Operators Pension Trust Fund*

Teamsters Local 617 Pension Fund*

Teamsters Local Union No. 727 Pension Plan*

12/31/2017, 12/31/2016, and 12/31/2015

2/28/2018, 2/28/2017, and 2/29/2016

* These plans are not separately listed in our multiemployer table as they represent an insignificant portion of our total multiemployer
pension plan contributions.

There have been no significant changes that affect the comparability of total contributions for any of the periods presented.

Multiemployer Defined Contribution Plans

In addition to contributions noted above, we also make contributions to multiemployer defined contribution plans.
During 2018, 2017, and 2016, our contributions to the defined contribution plans were $10.6 million, $5.4 million, and $6.6
million, respectively.

Other Multiemployer Postretirement Benefit Plans

We also contribute to several multiemployer postretirement health and welfare plans based on obligations arising
under collective bargaining agreements covering union-represented employees. These plans may provide medical,
pharmacy, dental, vision, mental health, and other benefits to employees as determined by the trustees of each plan. The
majority of our contributions benefit active employees and, as such, may not constitute contributions to a postretirement
benefit plan. However, since we are unable to separate contribution amounts to postretirement benefit plans from
contribution amounts paid to benefit active employees, we categorize all such amounts as contributions to postretirement
benefit plans. During 2018, 2017, and 2016, our contributions to such plans were $263.4 million, $247.9 million, and $224.5
million, respectively. There have been no significant changes that affect the comparability of total contributions for any of
the periods presented.

14. COMMITMENTS AND CONTINGENCIES

Lease and Other Similar Commitments

Future Minimum Payments

(in millions)
October 31, 2019
October 31, 2020
October 31, 2021
October 31, 2022
October 31, 2023
Thereafter
Total

Capital

Operating and
Other(1)

3.3 $
3.2
2.6
1.2
0.5
—
10.9 $

80.7
59.7
54.2
49.0
38.5
85.5
367.6

(1) Includes total estimated sublease rental income of $19.5 million.

Rental and Other Expense

(in millions)
Minimum rental and other
Contingent rental and other
Total

Letters of Credit and Surety Bonds

Years Ended October 31,
2017

2016

2018

133.3 $

121.5 $

26.8

34.3

160.1 $

155.8 $

118.0
31.3
149.3

We use letters of credit and surety bonds to secure certain commitments related to insurance programs and
for other purposes. As of October 31, 2018, these letters of credit and surety bonds totaled $152.9 million and $475.3
million, respectively. Included in the total amount of surety bonds is $1.8 million of bonds with an effective date starting
after October 31, 2018.

Guarantees

In some instances, we offer clients guaranteed energy savings under certain energy savings contracts. At
October 31, 2018 and 2017, total guarantees were $171.7 million and $157.9 million, respectively, and these guarantees
extend through 2038 for both periods. We accrue for the estimated cost of guarantees when it is probable that a liability
has been incurred and the amount can be reasonably estimated. Historically, we have not incurred any material losses
in connection with these guarantees.

In connection with an unconsolidated joint venture in which one of our subsidiaries has a 33% ownership
interest, that subsidiary and the other joint venture partners have each jointly and severally guaranteed the obligations
of the joint venture to perform under certain contracts extending through 2019. Annual revenues relating to the
underlying contracts are approximately $35 million. Should the joint venture be unable to perform under these contracts,
the joint venture partners would be jointly and severally liable for any losses incurred by the client due to the failure to
perform.

Indemnifications

We are party to a variety of agreements under which we may be obligated to indemnify the other party for
certain matters. These agreements are primarily standard indemnification arrangements entered into in our ordinary
course of business. Pursuant to these arrangements, we may agree to indemnify, hold harmless, and reimburse the
indemnified parties for losses suffered or incurred by the indemnified party, generally our clients, in connection with
any claims arising out of the services that we provide. We also incur costs to defend lawsuits or settle claims related
to these indemnification arrangements, and in most cases these costs are paid from our insurance program. Although
we attempt to place limits on such indemnification arrangements related to the size of the contract, the maximum

obligation may not be explicitly stated and, as a result, the maximum potential amount of future payments we could
be required to make under these arrangements is not determinable.

Our certificate of incorporation and bylaws may require us to indemnify our directors and officers for certain
liabilities that were incurred as a result of their status or service to ABM as a director or officer. The amount of these
obligations cannot be reasonably estimated.

Sales Tax Audits

We collect sales tax from clients and remit those collections to the applicable states. When clients fail to pay
their invoices, including the amount of any sales tax that we paid on their behalf, in some cases we are entitled to seek
a refund of that amount of sales tax from the applicable state. Sales tax laws and regulations enacted by the various
states are subject to interpretation, and our compliance with such laws is routinely subject to audit and review by such
states. Audit risk is concentrated in several states, and these states are conducting ongoing audits. The outcomes of
ongoing and any future audits and changes in the states’ interpretation of the sales tax laws and regulations could
materially adversely impact our results of operations.

Legal Matters

At October 31, 2018, the total amount accrued for all probable litigation losses where a reasonable estimate
of the loss could be made was $12.6 million. This $12.6 million includes accruals of $3.8 million in connection with the
Hussein case and $5.4 million in connection with the Castro case, which are discussed below.

Litigation outcomes are difficult to predict and the estimation of probable losses requires the analysis of multiple
possible outcomes that often depend on judgments about potential actions by third parties. If one or more matters are
resolved in a particular period in an amount in excess of, or in a manner different than, what we anticipated, this could
have a material adverse effect on our financial position, results of operations, or cash flows.

We do not accrue for contingent losses that, in our judgment, are considered to be reasonably possible but
not probable. The estimation of reasonably possible losses also requires the analysis of multiple possible outcomes
that often depend on judgments about potential actions by third parties. Our management currently estimates the
range of loss for all reasonably possible losses for which a reasonable estimate of the loss can be made is between
zero and $4 million. Factors underlying this estimated range of loss may change from time to time, and actual results
may vary significantly from this estimate.

In some cases, although a loss is probable or reasonably possible, we cannot reasonably estimate the maximum
potential losses for probable matters or the range of losses for reasonably possible matters. Therefore, our accrual
for probable losses and our estimated range of loss for reasonably possible losses do not represent our maximum
possible exposure.

While the results of these lawsuits, claims, and proceedings cannot be predicted with any certainty, our
management believes that the final outcome of these matters will not have a material adverse effect on our financial
position, results of operations, or cash flows.

Certain Legal Proceedings

The Consolidated Cases of Bucio and Martinez v. ABM Janitorial Services filed on April 7, 2006, in the Superior
Court of California, County of San Francisco (the “Bucio case”)

Hussein and Hirsi v. Air Serv Corporation filed on January 20, 2016, pending in the United States District Court
for the Western District of Washington at Seattle (the “Hussein case”) and

Isse et al. v. Air Serv Corporation filed on February 7, 2017, in the Superior Court of Washington for King
County (the “Isse case”)

Castro and Marmolejo v. ABM Industries, Inc., et al., filed on October 24, 2014, pending in the United States
District Court for the Northern District of California (the “Castro case”)

15. PREFERRED AND COMMON STOCK

Preferred Stock

We are authorized to issue 500,000 shares of preferred stock. None of these preferred shares are issued.

Common Stock

On September 2, 2015, our Board of Directors authorized a program to repurchase up to $200.0 million of our
common stock. Purchases may take place on the open market or otherwise, and all or part of the repurchases may
be made pursuant to Rule 10b5-1 plans or in privately negotiated transactions. The timing of repurchases is at our
discretion and will depend upon several factors, including market and business conditions, future cash flows, share
price, and share availability. Repurchased shares are retired and returned to an authorized but unissued status. The
repurchase program may be suspended or discontinued at any time without prior notice. At October 31, 2018,
authorization for $134.1 million of repurchases remained under our share repurchase program.

Repurchase Activity

(in millions, except per share amounts)
Total number of shares purchased
Average price paid per share
Total cash paid for share repurchases

16. SHARE-BASED COMPENSATION PLANS

Years Ended October 31,
2017

2016

2018

$
$

—
— $
— $

0.2
40.07 $
7.9 $

1.4
33.48
46.6

We use various share-based compensation plans to provide incentives for our key employees and directors.

Currently, these incentives primarily consist of RSUs, performance shares, and stock options.

On May 2, 2006, our stockholders approved the 2006 Equity Incentive Plan (the “2006 Equity Plan”). The 2006
Equity Plan is an omnibus plan that provides for a variety of equity and equity-based award vehicles, including stock
options, stock appreciation rights, RSUs, performance shares, and other share-based awards. Shares subject to
awards that terminate without vesting or exercise are available for future awards under the 2006 Equity Plan. Certain
of the awards under the 2006 Equity Plan may qualify as “performance-based” compensation under the IRC.

The 2006 Equity Plan was amended in March 2018 to increase the total shares of common stock authorized
for issuance from 11,679,265 to 13,475,265, and at October 31, 2018, there were 3,288,635 shares of common stock
available for grant for future equity-based compensation awards. In addition, there are certain plans under which we
can no longer issue awards, although awards outstanding under these plans may still vest and be exercised.

We also maintain an employee stock purchase plan, which our stockholders approved on March 9, 2004 (the
“2004 Employee Stock Purchase Plan”). The 2004 Employee Stock Purchase Plan was amended in March 2016 to
increase the total shares of common stock authorized for issuance to 4,000,000. Effective May 1, 2006, the 2004
Employee Stock Purchase Plan is no longer considered compensatory and the values of the awards are no longer
treated as share-based compensation expense. Additionally, as of that date, the purchase price became 95% of the
fair value of our common stock price on the last trading day of the month. Employees may designate up to 10% of
their compensation for the purchase of stock, subject to a $25,000 annual limit. Employees are required to hold their
shares for a minimum of six months from the date of purchase. At October 31, 2018, there were 827,304 remaining
unissued shares under the 2004 Employee Stock Purchase Plan.

Compensation Expense by Type of Award and Related Income Tax Benefit

(in millions)
RSUs
Performance shares
Stock options
Share-based compensation expense before income taxes
Income tax benefit
Share-based compensation expense, net of taxes

RSUs and Dividend Equivalent Rights

Years Ended October 31,
2017

2016

2018

9.3 $
7.7
—
17.0
(5.1)
11.8 $

7.2 $
6.1
—
13.3
(5.4)
7.9 $

7.1
6.7
0.3
14.0
(6.0)
8.0

We award RSUs to eligible employees and our directors (each, a “Grantee”) that entitle the Grantee to receive
shares of our common stock as the units vest. RSUs granted to eligible employees generally vest with respect to 50%
of the underlying award on the second and fourth anniversary of the award. RSUs granted to directors vest over three
years. In general, the receipt of RSUs is subject to the Grantee’s continuing employment or service as a director.

RSUs are credited with dividend equivalent rights that are converted to RSUs at the fair market value of our
common stock on the dates the dividend payments are made and are subject to the same terms and conditions as
the underlying award.

RSU Activity

Outstanding at October 31, 2017
Granted
Vested (including 0.1 shares withheld for income taxes)
Forfeited
Outstanding at October 31, 2018

Number of
Shares
(in millions)

Weighted-
Average
Grant Date
Fair Value per
Share

0.9 $
0.3
(0.3)
(0.1)
0.8 $

34.18
37.98
29.10
37.16
36.61

At October 31, 2018, total unrecognized compensation cost, net of estimated forfeitures, related to RSUs was
$17.3 million, which is expected to be recognized ratably over a weighted-average vesting period of 2.6 years. In 2018,
2017, and 2016, the weighted-average grant date fair value per share of awards granted was $37.98, $41.79, and
$35.62, respectively. In 2018, 2017, and 2016, the total grant date fair value of RSUs vested and converted to shares
of ABM common stock was $7.4 million, $9.4 million, and $7.2 million, respectively.

Performance Shares, Including TSR Performance Shares

Performance shares consist of a contingent right to receive shares of our common stock based on performance
targets adopted by our Compensation Committee. Performance shares are credited with dividend equivalent rights
that will be converted to performance shares at the fair market value of our common stock beginning after the
performance targets have been satisfied and are subject to the same terms and conditions as the underlying award.

For certain performance share awards, the number of performance shares that will vest is based on pre-
established internal financial performance targets and typically a three-year service and performance period. The
number of TSR awards that will vest is based on our total shareholder return relative to the S&P 600 at the time of
grant over the respective three-year performance period. Vesting of 0% to 150% of the awards originally granted may
occur depending on the respective performance metrics under both award types.

Performance Share Activity

Outstanding at October 31, 2017
Granted
Vested (including 0.1 shares withheld for income taxes)

Performance adjustments
Forfeited
Outstanding at October 31, 2018

Number of

(in millions)

Weighted-
Average
Grant Date

Fair Value per
Share

0.8 $
0.4
(0.2)
—
(0.1)
0.8 $

32.83
38.53
30.38
37.93
36.74
35.96

At October 31, 2018, total unrecognized compensation cost related to performance share awards was $13.7
million, which is expected to be recognized ratably over a weighted-average vesting period of 1.9 years. Except for
TSR performance shares, these costs are based on estimated achievement of performance targets and estimated
costs are periodically reevaluated. For our TSR performance shares, these costs are based on the fair value of awards
at the grant date and are recognized on a straight-line basis over the service period of three years.

In 2018, 2017, and 2016, the weighted-average grant date fair value per share of awards granted was $38.53,
$39.21, and $28.99, respectively. In 2018, 2017, and 2016, the total grant date fair value of performance shares vested
and converted to shares of ABM common stock was $7.3 million, $7.0 million, and $6.6 million, respectively.

In 2018, 2017, and 2016, we used the Monte Carlo simulation valuation technique to estimate the fair value

of TSR performance share grants, which used the assumptions in the table below.

Monte Carlo Assumptions

Expected life(1)
Expected stock price volatility(2)
Risk-free interest rate(3)
Stock price(4)

2018
2.81 years

2017
2.14 years

2016
2.13 years

21.6%

2.0%

21.4%

1.3%

19.0%

0.8%

39.02

40.21

38.65

(1) The expected life represents the remaining performance period of the awards.

(2) The expected volatility for each grant is determined based on the historical volatility of our common stock over a period equal to
the remaining term of the performance period from the date of grant for all awards.

(3) The risk-free interest rate is based on the continuous compounded yield on U.S. Treasury Constant Maturity Rates with varying
remaining terms; the yield is determined over a time period commensurate with the performance period from the grant date.

(4) The stock price is the closing price of our common stock on the valuation date.

Stock Options

Typically, stock options vest and become exercisable at a rate of 25% per year beginning one year after the
date of grant. However, terms of stock options can vary, and certain stock options granted on January 10, 2011 vested
on the fifth anniversary of the award. During 2018, 2017, and 2016, no stock options were granted, and we have not
granted stock options since 2013. All option grants provide for an option exercise price equal to the closing market
value of the common stock on the date of grant. Options typically expire 7 years after the date of grant.

Stock Option Activity

Number of
Shares
(in millions)

Weighted-
Average
Exercise Price
per Share

Weighted-
Average
Remaining
Contractual Term
(in years)(1)

Aggregate
Intrinsic Value
(in millions)(2)

Outstanding at October 31, 2017

Forfeited or expired

Exercised

Outstanding at October 31, 2018

Exercisable at October 31, 2018

0.2 $

—

(0.1)

0.2 $

0.1 $

16.29

14.19

18.71

16.09

18.41

1.4 $

2.5

1.2

(1) Excludes contractual terms associated with plans prior to the 2006 Equity Plan due to the uncertainty of expiration.

(2) Amount by which the current market price of our common stock on October 31, 2018 exceeds the exercise price.

At October 31, 2018, we had no unrecognized compensation cost related to stock option grants. For 2018,
2017, and 2016, the total intrinsic value of stock options exercised was $0.6 million, $2.6 million, and $3.4 million,
respectively. In 2018 no stock options vested. In 2017 and 2016, the total grant date fair value of stock options vested
was $0.2 million and $1.7 million, respectively.

Employee Stock Purchase Plan

Years Ended October 31,
2017

2016

2018

$
$

1.70 $

0.1
32.34 $
4.7 $

2.11 $

0.1
40.07 $
4.7 $

1.63
0.2
30.94
4.7

(in millions, except per share amounts)
Weighted-average fair value of granted purchase rights per share
Common stock issued
Fair value of common stock issued per share
Aggregate purchases

17. INCOME TAXES

Geographic Sources of Income from Continuing Operations Before Income Taxes

(in millions)
United States
Foreign
Income from continuing operations before income taxes

Components of Income Tax Benefit (Provision)

(in millions)
Current:
Federal
State
Foreign
Deferred:
Federal
State
Foreign

Income tax benefit (provision)

Years Ended October 31,
2017

2016

2018

94.8 $
(7.1)
87.7 $

76.1 $
10.8
86.9 $

45.1
6.8
51.9

Years Ended October 31,
2017

2016

2018

(4.3) $
(7.3)
(3.9)

21.8
0.2
1.7
8.2 $

(5.9) $
(6.0)
(3.0)

5.0
0.3
0.8
(8.8) $

17.5
(9.3)
(1.5)

3.6
(0.5)
0.6
10.4

Reconciliation of the U.S. Statutory Tax Rate to Annual Effective Tax (Benefit) Rate

Years Ended October 31,
2017

2016

2018

U.S. statutory rate

State and local income taxes, net of federal tax benefit
Federal and state tax credits
Impact of foreign operations
Changes in uncertain tax positions
Incremental tax benefit from share-based compensation awards
Tax credits for energy efficient government buildings
Impact from goodwill impairment
Transition tax on foreign earnings
Remeasurement of U.S. deferred taxes
Nondeductible expenses
Other, net

Effective tax (benefit) rate

23.3%
6.9
(7.8)
1.3
(6.7)
(3.9)
(3.2)
4.4
5.1
(31.5)
2.4
0.3
(9.4)%

35.0%
5.5
(7.5)
(2.7)
(19.7)
(4.2)
(2.2)
—
—
—
5.7
0.1
10.1%

35.0%
7.8
(22.7)
(5.0)
(40.0)
(4.2)
(2.4)
—
—
—
7.7
3.8
(20.0)%

The Tax Cuts and Jobs Act (the “Tax Act”), which was enacted on December 22, 2017, provides for a reduction
of the federal corporate income tax rate from 35% to 21% and a “transition tax” to be levied on the deemed repatriation
of indefinitely reinvested earnings of international subsidiaries. Since we have an October 31 fiscal year-end, the lower
corporate income tax rate was phased in, resulting in a U.S. statutory federal rate of 23.3% for fiscal 2018 and 21%
for subsequent fiscal years. Other provisions under the Tax Act become effective for us in fiscal 2019, including
limitations on deductibility of interest and executive compensation, as well as a new minimum tax on Global Intangible
Low-Taxed Income (“GILTI”).

During 2018 we remeasured certain deferred tax assets and liabilities based on the new tax rates at which
they are expected to reverse in the future and recorded a one-time tax benefit of $29.6 million. In addition, we recorded
an expense of $4.5 million for the one-time transition tax on the deemed repatriation of indefinitely reinvested earnings
of our international subsidiaries. We plan to reinvest our foreign earnings to fund future non-U.S. growth and expansion,

and we do not anticipate remitting such earnings to the United States. While U.S. federal tax expense has been
recognized as a result of the Tax Act, no deferred tax liabilities with respect to federal and state income taxes or foreign
withholding taxes have been recognized.

Our income taxes for 2018 were favorably impacted by: a net tax benefit of $23.2 million related to the impact
of the Tax Act, including $1.9 million of adjustments that subsequently reduced the amounts discussed above; $5.8
million, including interest of $1.0 million, related to the expiring statutes of limitations for uncertain tax positions; $3.4
million of excess tax benefits related to the vesting of share-based compensation awards; and $2.8 million related to
tax deductions for energy efficient government buildings. These benefits were partially offset by a $1.0 million reduction
in certain tax credits, including prior year Work Opportunity Tax Credits (“WOTC”) for new hires.

Our income taxes for 2017 were favorably impacted by a benefit of $17.8 million, including interest of $1.2
million, related to expiring statutes of limitations for uncertain tax positions. In addition, in 2017 we also benefited from
$3.6 million of excess tax benefits related to the vesting of share-based compensation awards, $1.9 million of tax
credits for energy efficient government buildings, and the 2017 WOTC.

Components of Deferred Tax Assets and Liabilities

(in millions)
Deferred tax assets attributable to:

Self-insurance claims (net of recoverables)
Deferred and other compensation
Accounts receivable allowances
Settlement liabilities
Other accruals
Other comprehensive income
State taxes
State net operating loss carryforwards
Federal net operating loss carryforwards
Tax credits
Unrecognized tax benefits
Other

Gross deferred tax assets
Valuation allowance
Total deferred tax assets

Deferred tax liabilities attributable to:

Property, plant and equipment
Goodwill and other acquired intangibles
Equity in earnings of foreign investments

Total deferred tax liabilities

As of October 31,

2018

2017

83.5 $
22.7
6.5
3.3
(0.3)
(5.7)
0.5
15.9
5.4
21.7
2.4
1.7
157.6
(12.0)
145.7

(4.2)
(179.2)
—
(183.4)

Net deferred tax liabilities

(37.8) $

124.4
34.7
8.9
6.5
3.5
0.4
0.8
12.3
19.9
19.9
7.2
3.1
241.5
(7.7)
233.8

(5.9)
(282.0)
(3.2)
(291.1)

(57.3)

Tax Loss Carryforwards and Tax Credits

State tax loss carryforwards totaling $255.0 million at October 31, 2018 are being carried forward in several
state jurisdictions where we are permitted to use tax losses from prior periods to reduce future taxable income. These
losses will expire between 2019 and 2038. Federal loss carryforwards totaling $25.7 million at October 31, 2018 are
available to reduce future taxable income and will expire in 2037. Federal and state tax credits totaling $24.6 million
are available to reduce future cash taxes and will expire between 2021 and 2038.

The valuation allowance represents the amount of tax benefits related to state net operating loss carryforwards
that are not likely to be realized. We believe the remaining net deferred tax assets are more likely than not to be
realizable based on estimates of future taxable income.

Changes to the Deferred Tax Asset Valuation Allowance

(in millions)
Valuation allowance at beginning of year

GCA acquisition
Other, net

Valuation allowance at end of year

Unrecognized Tax Benefits

Years Ended October 31,
2017

2016

2018

7.7 $
2.4
1.8

12.0 $

5.4 $
4.1
(1.8)
7.7 $

5.5
—
(0.1)
5.4

At October 31, 2018, 2017, and 2016, there were $35.8 million, $50.5 million, and $52.0 million, respectively,
of unrecognized tax benefits that if recognized in the future would impact our effective tax rate. We estimate that a
decrease in unrecognized tax benefits of up to approximately $5.6 million is reasonably possible over the next twelve
months due to the resolution of certain tax matters. At October 31, 2018 and 2017, accrued interest and penalties
were $1.0 million and $1.9 million, respectively. For interest and penalties, we recognized a benefit of $1.0 million,
$0.5 million, and $0.9 million in 2018, 2017, and 2016, respectively.

Reconciliation of Total Unrecognized Tax Benefits

(in millions)
Balance at beginning of year

Additions for tax positions related to the current year
Additions for tax positions related to prior years
Reductions for tax positions related to prior years
Reductions for lapse of statute of limitations
Settlements

Balance at end of year

Jurisdictions

Years Ended October 31,
2017

2016

2018

53.4 $

0.2
—
(9.0)
(8.7)
(0.1)
35.8 $

57.2 $
—
16.4
(0.1)
(19.7)
(0.3)
53.4 $

82.5
—
—
(3.2)
(21.9)
(0.2)
57.2

We conduct business in all 50 states, significantly in California, Texas, and New York, as well as in various

foreign jurisdictions. Our most significant income tax jurisdiction is the United States.

Tax Years Open for Examination, by Entity

Entity
ABM state tax returns(1)
ABM federal tax returns
GCA state tax returns
GCA federal tax returns

Open by Statute

10/31/2014 – 10/31/2018
10/31/2015 – 10/31/2018
12/31/2014 – 9/1/2017
12/31/2015 – 9/1/2017

(1) We are currently being examined by the state tax authorities of California, Florida, Massachusetts, New Jersey, New York, and
North Carolina.

Reinvestment of Foreign Earnings

We plan to reinvest our foreign earnings to fund future non-U.S. growth and expansion. As a result, we do not
anticipate remitting such earnings to the United States and have not provided for federal and state income taxes or
foreign withholding taxes that may result if such earnings of our foreign subsidiaries are remitted to the United States.

18. SEGMENT AND GEOGRAPHIC INFORMATION

Segment Information

Effective November 1, 2017, we reorganized our reportable segments to reflect the integration of GCA into
our industry group model. Our reportable segments consist of Business & Industry (“B&I”), Aviation, Technology &
Manufacturing (“T&M”), Education, Technical Solutions, and Healthcare, as further described below. Refer to Note 2,
“Basis of Presentation and Significant Accounting Policies,” for information related to our former Government Services
business.

B&I

Aviation

T&M

Education

Technical Solutions

Healthcare

REPORTABLE SEGMENTS AND DESCRIPTIONS

Aviation supports airlines and airports with services ranging from parking and
janitorial to passenger assistance, catering logistics, air cabin maintenance, and
transportation.

Technical Solutions specializes in mechanical and electrical services. These
services can also be leveraged for cross-selling across all of our industry groups,
both domestically and internationally.

Healthcare offers janitorial, facilities management, clinical engineering, food and
nutrition, laundry and linen, parking and guest services, and patient transportation
services at traditional hospitals and non-acute facilities. This business was
previously reported as part of our legacy Emerging Industries Group.

The accounting policies for our segments are the same as those disclosed within our significant accounting
policies in Note 2, “Basis of Presentation and Significant Accounting Policies.” Our management evaluates the
performance of each reportable segment based on its respective operating profit results, which include the allocation
of certain centrally incurred costs. Corporate expenses not allocated to segments include certain CEO and other
finance and human resource departmental expenses, certain information technology costs, share-based
compensation, certain legal costs and settlements, restructuring and related costs, certain adjustments resulting from
actuarial developments of self-insurance reserves, and direct acquisition costs. Management does not review asset
information by segment, therefore we do not present assets in this note.

Financial Information by Reportable Segment

(in millions)
Revenues
Business & Industry
Aviation
Technology & Manufacturing
Education
Technical Solutions
Healthcare
Government Services

Operating profit (loss)
Business & Industry
Aviation
Technology & Manufacturing
Education
Technical Solutions
Healthcare
Government Services
Corporate
Adjustment for income from unconsolidated affiliates, net,

included in Aviation and Government Services

Adjustment for tax deductions for energy efficient government

buildings, included in Technical Solutions

Income from unconsolidated affiliates, net
Interest expense
Income from continuing operations before income taxes

Depreciation and amortization(1)
Business & Industry
Aviation
Technology & Manufacturing
Education
Technical Solutions
Healthcare
Government Services
Corporate

Years Ended October 31,

2018

2017

2016

2,917.6 $
1,023.8
924.5
837.5
465.6
273.3
—
6,442.2 $

2,629.1 $
990.4
697.4
363.1
439.6
247.5
86.5
5,453.6 $

154.6 $

135.6 $

23.2
67.4
43.8
16.5
8.8
(0.8)
(168.8)

(3.2)

(2.8)
138.6
3.2
(54.1)
87.7 $

21.3 $
13.1
15.6
37.1
10.2
2.8
—
12.4

25.3
47.8
18.0
37.6
10.6
21.8
(189.0)

(4.1)

(1.9)
101.9
4.2
(19.2)
86.9 $

14.5 $
13.4
7.0
8.4
12.5
2.3
—
11.8
70.1 $

2,557.1
851.5
679.3
272.1
425.3
242.7
116.7
5,144.7

111.6
27.7
54.8
17.4
28.9
12.7
(23.4)
(167.2)

(6.5)

(1.2)
54.7
7.6
(10.4)
51.9

14.4
12.2
4.2
2.1
12.3
2.5
1.6
8.2
57.5

112.5 $

(1) Excludes amortization related to income from unconsolidated affiliates.

Geographic Information Based on the Country in Which the Sale Originated(1)

(in millions)
Revenues
United States
All other countries

Years Ended October 31,
2017

2016

2018

5,997.4 $
444.8
6,442.2 $

5,126.8 $
326.8
5,453.6 $

4,845.3
299.4
5,144.7

(1) Substantially all of our long-lived assets are related to United States operations.

19. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

(in millions, except per share amounts)
Year ended October 31, 2018
Revenues
Gross profit
Income from continuing operations
(Loss) income from discontinued operations, net of taxes
Net income

Net income per common share — Basic

Income from continuing operations
Income from discontinued operations
Net income

Net income per common share — Diluted
Income from continuing operations
Income from discontinued operations
Net income

Year ended October 31, 2017
Revenues
Gross profit
Income (loss) from continuing operations
Loss from discontinued operations, net of taxes
Net (loss) income

Net (loss) income per common share — Basic

Income (loss) from continuing operations
Loss from discontinued operations
Net (loss) income

Net (loss) income per common share — Diluted
Income (loss) from continuing operations
Loss from discontinued operations
Net (loss) income

Fiscal Quarter

First

Second

Third

Fourth

$ 1,588.3
159.0
28.0
(0.1)
27.8 (1) $

$1,580.8
175.0
25.4
1.2
26.6

$1,624.3
177.6
33.7
(0.1)
33.6

$1,648.8
183.1
8.9
0.8
9.7 (2)

0.42
—
0.42

0.42
—

0.42 (1) $

0.38
0.02
0.40

0.51
—
0.51

0.13
0.01
0.15

0.13
0.01
0.15 (2)

$ 1,326.7
131.6
16.1
(72.9)
(56.8)

$1,310.5
145.9
31.6
(0.4)
31.3

$1,318.4
134.0
32.9
—
32.9

$1,497.9
160.9
(2.5)
(1.1)
(3.6) (3)

0.29
(1.30)
(1.01)

0.28
(1.28)
(1.00)

0.56
(0.01)
0.56

0.56
(0.01)
0.55

0.59
—
0.59

0.58
—
0.58

(0.04)
(0.02)
(0.06)

(0.04)
(0.02)
(0.06) (3)

(1) Includes a one-time net tax benefit of $22.6 million, or $0.34 per diluted share, related to the Tax Act.

(2) Includes goodwill and asset impairment charges of $26.5 million, or $0.40 per diluted share.

(3) Includes transaction expenses of $22.0 million, or $0.38 per diluted share, related to the GCA acquisition.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

a. Disclosure Controls and Procedures.

As of the end of the period covered by this report, our Principal Executive Officer and Principal Financial Officer
evaluated our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the
Exchange Act. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded
that as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure
that information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded,
processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and
Exchange Commission, and (2) accumulated and communicated to our management, including our Principal Executive
Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure.

b. Management’s Report on Internal Control Over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and
with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we
conducted an evaluation of the effectiveness of our internal control over financial reporting based upon the framework
in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on that evaluation, our management concluded that our internal control over financial
reporting was effective as of October 31, 2018.

Audit Report on Internal Controls over Financial Reporting of the Registered Public Accounting Firm

KPMG LLP, an independent registered public accounting firm, has audited the consolidated financial statements
included in this Annual Report on Form 10-K and, as part of their audit, has issued their report, included herein, on
the effectiveness of our internal control over financial reporting.

c. Changes in Internal Control Over Financial Reporting.

We continue to migrate many of our financial reporting and other processes to the ABM enterprise service
center along with integrating GCA. These are enhancements of ongoing activities to support the growth of our financial
shared service capabilities and standardize our financial systems. We also continue to update several key platforms,
including our human resources information systems, enterprise resource planning system, and labor management
system. Both the migration of GCA’s back-office functions to the ABM enterprise service center and the implementation
of several key platforms involves changes in the systems that include internal controls. Although the transitions have
proceeded to date without material adverse effects, the possibility exists that it could adversely affect our internal
controls over financial reporting and procedures.

There were no changes in our internal control over financial reporting during the fourth fiscal quarter of 2018
identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that has
materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

New Form of Indemnification Agreement for Directors

On December 18, 2018, each of our directors entered into a new indemnification agreement with ABM that
replaces the existing indemnification agreement for directors, which form agreement had been put in place in September
of 2015.

In general, the director indemnification agreement provides that, subject to the procedures, limitations, and
exceptions set forth therein, ABM will indemnify and hold harmless the applicable director indemnitee against all
expenses, damages, losses, liabilities, judgments, fines, penalties, and other charges relating to, arising out of, or
resulting from: (1) any actual, alleged, or suspected act or failure to act by the indemnitee in his or her capacity as a
director, officer, employee, or agent of ABM or as a director, officer, employee, member, manager, trustee, or agent of
any other entity as to which the indemnitee is or was serving at the request of the Company; (2) any actual, alleged,
or suspected act or failure to act by the indemnitee in respect of any business, transaction, communication, filing,
disclosure, or other activity of ABM or any other entity referred to in clause (1) of this sentence; or (3) the indemnitee’s
status as a current or former director, officer, employee, or agent of ABM or as a current or former director, officer,
employee, member, manager, trust, or agent of ABM or any other entity referred to in clause (1) of this sentence or
any actual, alleged, or suspected act or failure to act by the indemnitee in connection with any obligation or restriction
imposed upon the indemnitee by reason of such status.

Each director indemnitee will also have the right to advancement by ABM of any and all reasonable expenses
relating to, arising out of, or resulting from any claim covered by the director indemnification agreement paid or incurred
by the indemnitee or which the indemnitee determines in good faith are reasonably likely to be paid or incurred.

The foregoing description of the director indemnification agreement does not purport to be complete and is
qualified in its entirety by reference to the form director indemnification agreement, which is filed as Exhibit 10.9 hereto
and incorporated herein by reference.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Information about our executive officers is found in Part I, Item 1 of this Annual Report on Form 10-K under
“Executive Officers of Registrant.” Additional information required by this Item will be set forth under the captions
“Proposal No. 1—Election of Directors,” “Corporate Governance and Board Matters,” “Audit-Related Matters,” and
“Section 16(a) Beneficial Ownership Reporting Compliance” in our Definitive Proxy Statement for our 2019 Annual
Meeting of Stockholders (the “2019 Proxy Statement”). Such information is incorporated herein by reference. Our 2019
Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the conclusion of
our fiscal year ended October 31, 2018.

On March 28, 2018, we filed our Annual CEO Certification as required by Section 303A.12 of the NYSE Listed

Company Manual.

Code of Business Conduct

We have adopted and posted on our website (www.abm.com) the ABM Code of Business Conduct. Our Code
of Business Conduct qualifies as a “code of ethics” within the meaning of Item 406 of Regulation S-K. Our Code of
Business Conduct applies to all of our directors, officers, and employees, including our Principal Executive Officer,
Principal Financial Officer, and Principal Accounting Officer. If any amendments are made to the Code of Business
Conduct or if any waiver, including any implicit waiver, from a provision of the Code of Business Conduct is granted
to our Principal Executive Officer, Principal Financial Officer, or Principal Accounting Officer, we will disclose the nature
of such amendment or waiver on our website at the address specified above.

ITEM 11. EXECUTIVE COMPENSATION.

Information with respect to executive compensation required by this Item will be set forth under the captions
“Director Compensation for Fiscal Year 2018,” “Executive Compensation,” and “Corporate Governance and Board
Matters—Compensation Committee Interlocks and Insider Participation” in our 2019 Proxy Statement and is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.

Information with respect to security ownership of certain beneficial owners and management and equity
compensation plan information and related stockholder matters required by this Item will be set forth under the captions
“General Information—Security Ownership of Certain Beneficial Owners,” “General Information—Security Ownership
of Directors and Executive Officers,” and “General Information—Equity Compensation Plan Information” in our 2019
Proxy Statement and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Information with respect to certain relationships and related transactions and with respect to director
independence required by this Item will be set forth under the captions “General Information—Certain Relationships
and Transactions with Related Persons” and “Corporate Governance and Board Matters” in our 2019 Proxy Statement
and is incorporated herein by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

Information with respect to our Audit Committee’s pre-approval policy for audit services and our principal
accounting fees and services required by this Item will be set forth under the caption “Audit-Related Matters” in our
2019 Proxy Statement and is incorporated herein by reference.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) The following documents are filed as part of this report:

PART IV

1. Financial Statements: Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets at October 31, 2018 and 2017
Consolidated Statements of Comprehensive Income for the Years Ended October 31, 2018, 2017, and 2016
Consolidated Statements of Stockholders’ Equity for the Years Ended October 31, 2018, 2017, and 2016
Consolidated Statements of Cash Flows for the Years Ended October 31, 2018, 2017, and 2016

2. Exhibits
See Exhibit Index immediately following the signature page of this Annual Report on Form 10-K.

3. Financial Statement Schedule
Valuation and Qualifying Accounts for the Years Ended October 31, 2018, 2017, and 2016

50
52
53
54
55

101

105

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has

duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

ABM Industries Incorporated

By:

/s/ Scott Salmirs
Scott Salmirs
President and Chief Executive Officer and Director
December 21, 2018

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by

the following persons on behalf of ABM Industries and in the capacities and on the dates indicated.

By:

/s/ Scott Salmirs
Scott Salmirs
President and Chief Executive Officer and Director
(Principal Executive Officer)
December 21, 2018

/s/ Dean A. Chin
Dean A. Chin
Senior Vice President, Chief Accounting Officer,
and Corporate Controller
(Principal Accounting Officer)
December 21, 2018

/s/ LeighAnne G. Baker
LeighAnne G. Baker, Director
December 21, 2018

/s/ Donald F. Colleran
Donald F. Colleran, Director
December 21, 2018

/s/ Anthony G. Fernandes
Anthony G. Fernandes, Director
December 21, 2018

/s/ Thomas M. Gartland
Thomas M. Gartland, Director
December 21, 2018

/s/ Filippo Passerini
Filippo Passerini, Director
December 21, 2018

/s/ D. Anthony Scaglione
D. Anthony Scaglione
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
December 21, 2018

/s/ Sudhakar Kesavan
Sudhakar Kesavan
Chairman of the Board and Director
December 21, 2018

/s/ Linda Chavez
Linda Chavez, Director
December 21, 2018

/s/ J. Philip Ferguson
J. Philip Ferguson, Director
December 21, 2018

/s/ Art A. Garcia
Art A. Garcia, Director
December 21, 2018

/s/ Lauralee E. Martin
Lauralee E. Martin, Director
December 21, 2018

/s/ Winifred M. Webb
Winifred M. Webb, Director
December 21, 2018

100

Exhibit Description

Incorporated by Reference

Form
8-K

File No.
001-08929

Exhibit
1.1

Filing Date
March 19, 2018

8-K

001-08929

2.1

July 14, 2017

10-K

001-08929

3.1

January 14, 2004

8-K

001-08929

3.1

December 10, 2018

8-K

001-08929

10.1

September 8, 2017

8-K

001-08929

10.2

September 8, 2017

10-K

001-08929

10.3

December 22, 2017

10-Q 001-08929

10.1

September 7, 2018

EXHIBIT INDEX

Exhibit

No.

1.1

2.1

3.1

3.2

10.1

10.2

10.3

10.4

Underwriting Agreement, dated March 14,
2018, among ABM Industries Incorporated,
Goldman Sachs & Co LLC, and UBS
Securities LLC

Agreement and Plan of Merger, dated July
11, 2017, among GCA Holding Corp., ABM
Industries Incorporated, Grade Sub One,
Inc., Grade Sub Two, LLC and Thomas H.
Lee Equity Fund VII, L.P. and Broad Street
Principal Investments Holdings, L.P., acting
jointly as the Securityholder Representative

Restated Certificate of Incorporation of ABM
Industries Incorporated, dated November 25,
2003

Amended and Restated Bylaws of ABM
Industries Incorporated, dated December 4,
2018
Shareholders’ Agreement, dated September
1, 2017, among ABM Industries Incorporated,
Thomas H. Lee Equity Fund VII, L.P.,
Thomas H. Lee Parallel Fund VII, L.P.,
Thomas H. Lee Parallel (Cayman) Fund VII,
L.P., THL Executive Fund VII, L.P., THL Fund
VII Coinvestment Partners, L.P., Broad Street
Principal Investments Holdings, L.P., Bridge
Street 2015, L.P., MBD 2015, L.P., Stone
Street 2015, L.P., 2015 Employee Offshore
Aggregator, L.P., and Goldman Sachs & Co.
LLC

Credit Agreement, dated as of September 1,
2017, by and among ABM Industries
Incorporated, a Delaware corporation, certain
subsidiaries of ABM Industries Incorporated
from time to time party thereto, the lenders
from time to time party thereto and Bank of
America, N.A., as administrative agent

Letter Agreement, dated November 6, 2017,
between ABM Industries Incorporated and
Bank of America, N.A., as Swingline Lender
with respect to the Credit Agreement dated
as of September 1, 2017, among ABM
Industries Incorporated, the Designated
Borrowers party thereto, the Lenders party
thereto and Bank of America, N.A., as
administrative agent

First Amendment, dated as of July 3, 2018, to
the Credit Agreement dated September 1,
2017, by and among ABM Industries
Incorporated, a Delaware corporation, the
Designated Borrowers identified on the
signature pages thereto, the Guarantors
identified on the signature pages thereto, the
Lenders identified on the signature pages
thereto, and Bank of America, N.A., as
administrative agent

101

10.5

10.6*

10.7*

10.8*

10.9*‡

10.10*

10.11*

10.12*

10.13*

10.14*

10.15*

10.16*

10.17*

10.18*

10.19*

10.20*

Second Amendment, dated as of September
5, 2018, to the Credit Agreement dated
September 1, 2017, by and among ABM
Industries Incorporated, a Delaware
corporation, the Designated Borrowers
identified on the signature pages thereto, the
Guarantors identified on the signature pages
thereto, the Lenders identified on the
signature pages thereto, and Bank of
America, N.A., as administrative agent

ABM Executive Retiree Healthcare and
Dental Plan

Director Retirement Plan Distribution Election
Form, as revised June 16, 2006

Deferred Compensation Plan for Non-
Employee Directors, as amended and
restated December 13, 2010

Form of Director’s Indemnification Agreement

ABM Executive Officer Incentive Plan, as
amended and restated June 3, 2008

2006 Equity Incentive Plan, as amended and
restated March 7, 2018

Statement of Terms and Conditions
Applicable to Options, Restricted Stock and
Restricted Stock Units and Performance
Shares Granted to Employees Pursuant to
the 2006 Equity Incentive Plan, as amended
and restated December 9, 2013

Statement of Terms and Conditions
Applicable to Options, Restricted Stock and
Restricted Stock Units Granted to Directors
Pursuant to the 2006 Equity Incentive Plan,
as amended and restated December 9, 2013

Statement of Terms and Conditions
Applicable to Options, Restricted Stock and
Restricted Stock Units Granted to Directors
Pursuant to the 2006 Equity Incentive Plan,
for Awards Granted on or after March 4, 2015

Statement of Terms and Conditions
Applicable to Restricted Stock Units Granted
Pursuant to the 2006 Equity Incentive Plan to
Directors Who Elect to Relinquish Their
Benefits Effective November 1, 2006, as
amended and restated September 8, 2010

Form of Non-Qualified Stock Option
Agreement - 2006 Equity Plan

Form of Restricted Stock Unit Agreement -
2006 Equity Plan

Form of Performance Share Agreement -
2006 Equity Plan

Form of Performance Share Agreement for
Awards to Certain Executive Officers

102

10-Q 001-08929

10.2

September 7, 2018

10-K

001-08929

10.17

January 14, 2005

10-Q 001-08929

10.1

September 8, 2006

10-K

001-08929

10.7

December 23, 2010

10-Q 001-08929

10.6

September 8, 2008

8-K

001-08929

10.1

March 8, 2018

8-K

001-08929

10.1

December 12, 2013

10-Q 001-08929

10.2

June 3, 2015

10-K

001-08929

10.16

December 18, 2013

10-Q 001-08929

10.3

June 3, 2015

10-K

001-08929

10.13

December 23, 2010

10-Q 001-08929

10.4

June 4, 2010

10-Q 001-08929

10.5

June 4, 2010

10-K

001-08929

10.20

December 18, 2013

8-K

001-08929

10.5

January 16, 2015

10.21*

10.22*

10.23*

10.24*

10.25*

10.26*

10.27*

10.28*

10.29*

10.30*

10.31*

10.32*

10.33*

10.34*

10.35*

10.36*

10.37*

10.38*

10.39*

Executive Stock Option Plan (aka Age-
Vested Career Stock Option Plan), as
amended and restated June 4, 2012

Deferred Compensation Plan for Executives,
amended and restated October 25, 2010

Form of Stock Option Agreement dated
March 31, 2010 for Awards to Certain
Executive Officers

Supplemental Executive Retirement Plan, as
amended and restated June 3, 2008

Service Award Benefit Plan, as amended and
restated June 3, 2008

Executive Severance Pay Policy, as
amended and restated March 7, 2011

Form of Executive Employment Agreement
(with term)

Form of Executive Employment Agreement
(without term)

Form of Amended and Restated Executive
Change in Control Agreement with James P.
McClure

Form of Amended Executive Employment
Agreement with James P. McClure

Amended and Restated Executive
Employment Agreement, dated as of
September 22, 2017, by and between ABM
Industries Incorporated and Scott Salmirs

Amended and Restated Change in Control
Agreement, dated as of September 22, 2017,
by and between ABM Industries Incorporated
and Scott Salmirs

Amended Executive Employment Agreement,
dated as of January 13, 2015, by and
between ABM Industries Incorporated and
James P. McClure

Retirement and Release Agreement, dated
as of September 1, 2017, by and between
ABM Industries Incorporated and James P.
McClure
Executive Employment Agreement, dated as
of November 1, 2017, by and between ABM
Industries Incorporated and Scott Giacobbe

Change in Control Agreement, dated as of
November 1, 2017, by and between ABM
Industries Incorporated and Scott Giacobbe

Amended and Restated Executive
Employment Agreement, dated as of
September 22, 2017, by and between ABM
Industries Incorporated and D. Anthony
Scaglione

Amended and Restated Change in Control
Agreement, dated as of September 22, 2017,
by and between ABM Industries Incorporated
and D. Anthony Scaglione
Executive Employment Agreement, dated as
of January 1, 2018, by and between ABM
Industries Incorporated and Rene Jacobsen

103

10-Q 001-08929

10.1

September 6, 2012

10-K

001-08929

10.22

December 23, 2010

8-K

001-08929

10.3

April 2, 2010

10-Q 001-08929

10.4

September 8, 2008

10-Q 001-08929

10.5

September 8, 2008

10-Q 001-08929

10.1

March 10, 2011

8-K

001-08929

10.1

October 22, 2014

10-K

001-08929

10.34

December 20, 2012

8-K

001-08929

10.1

December 31, 2008

8-K

001-08929

10.4

January 16, 2015

10-K

001-08929

10.28

December 22, 2017

10-K

001-08929

10.29

December 22, 2017

10-Q 001-08929

10.2

March 4, 2015

10-K

001-08929

10.32

December 22, 2017

10-Q 001-08929

10.1

March 7, 2018

10-Q 001-08929

10.2

March 7, 2018

10-K

001-08929

10.33

December 22, 2017

10-K

001-08929

10.34

December 22, 2017

10-Q 001-08929

10.3

March 7, 2018

10-Q 001-08929

10.4

March 7, 2018

10.40*

21.1‡

23.1‡

31.1‡

31.2‡

32.1†

Change in Control Agreement, dated as of
January 1, 2018, by and between ABM
Industries Incorporated and Rene Jacobsen
Subsidiaries of the Registrant

Consent of Independent Registered Public
Accounting Firm

Certification of Chief Executive Officer
pursuant to Securities Exchange Act of 1934
Rule 13a-14(a) or 15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002

Certification of Chief Financial Officer
pursuant to Securities Exchange Act of 1934
Rule 13a-14(a) or 15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002

Certifications pursuant to Securities
Exchange Act of 1934 Rule 13a-14(b) or
15d-14(b) and 18 U.S.C. Section 1350, as
adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002

101.INS ‡

XBRL Report Instance Document

101.SCH ‡ XBRL Taxonomy Extension Schema

Document

101.CAL‡

XBRL Taxonomy Calculation Linkbase
Document

101.LAB ‡

XBRL Taxonomy Label Linkbase Document

101.PRE ‡ XBRL Presentation Linkbase Document

101.DEF ‡ XBRL Taxonomy Extension Definition

Linkbase Document

‡

†

Indicates management contract or compensatory plan, contract, or arrangement

Indicates filed herewith

Indicates furnished herewith

104

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

(in millions)

Accounts receivable and sales allowances

2018

2017

2016

Balance
Beginning of
Year

Charges to
Costs and
Expenses

Write-offs(1)/
Allowance
Taken

Balance
End of Year

25.5
18.1 (2)

8.6

57.4

47.4

29.1

(63.6) $

(40.0)

(19.6)

19.2

25.5
18.1 (2)

(1) Write-offs are net of recoveries.

(2) Includes amounts that were classified as held for sale.

105

This page intentionally left blank.

ABM Industries Incorporated and Subsidiaries
Reconciliation of Non-GAAP Financial Measure (Unaudited)

(in millions, except per share amounts)

Reconciliation of Income from Continuing Operations per Diluted Share to
Adjusted Income from Continuing Operations per Diluted Share

Income from continuing operations per diluted share

Items impacting comparability, net of taxes*

Adjusted Income from continuing operations per diluted share

Diluted shares

Years Ended October 31,

2018

2017

$1.45

0.44

$1.89

66.4

$1.34

0.41

$1.75

58.3

*Please refer to the Company’s Fourth Quarter and Full Year 2018 Financial Results press release for a full list of Items Impacting Comparability.

BOARD OF DIRECTORS

Sudhakar Kesavan [ C ]
Non-Executive Chairman of the Board, ABM Industries Incorporated
Chairman and Chief Executive Officer, ICF International, Inc.

EXECUTIVE OFFICERS

Scott Salmirs
President and Chief Executive Officer

LeighAnne G. Baker
Senior Vice President and Cheif Human Resources Officer,
Cargill, Inc.

Linda Chavez [ A , C ]
President, Becoming American Institute

Donald F. Colleran
Executive Vice President and Chief Sales Officer,
FedEx Corporation

J. Philip Ferguson [ B, C ]
Former Vice Chairman, University of Texas Investment
Management Company

D. Anthony Scaglione
Executive Vice President and Chief Financial Officer

Scott Giacobbe
Executive Vice President and Chief Operating Officer

Andrea Newborn
Executive Vice President, General Counsel and
Corporate Secretary

Andrew Block
Executive Vice President and Chief Human Resources Officer

Rene Jacobsen
Executive Vice President and President, Business & Industry

Anthony G. Fernandes [ B, D ]
Former Chairman, Chief Executive Officer and President,
Philip Services Corporation

Dean A. Chin
Senior Vice President, Chief Accounting Officer and
Corporate Controller

Art A. Garcia [ B, D ]
Executive Vice President and Chief Financial Officer,
Ryder System, Inc.

Thomas M. Gartland [ A, C ]
Former President, North America, Avis Budget Group, Inc.

Lauralee E. Martin [ A, B ]
Former President and Chief Executive Officer, HCP, Inc.

Filippo Passerini [ A, D ]
Operating Executive, Carlyle Group

Scott Salmirs
President and Chief Executive Officer, ABM Industries Incorporated

Wendy M. Webb [ B, D ]
Chief Executive Officer, Kestrel Corporate Advisors

[ A ] Compensation Committee
[ B ] Audit Committee
[ C ] Governance Committee
[ D ] Strategy and Enterprise Risk Committee

As of February 5, 2019

Forward-Looking Statements
This 2018 ABM Annual Report contains both historical and forward-looking statements. Forward-looking
statements are not based on historical facts but instead reflect our current expectations, estimates
or projections concerning future results or events. These statements generally can be identified by the
use of forward-looking words or phrases such as “believe,” “expect,” “anticipate,” “may,” “could,” “intend,”
“forecast,” “outlook,” or other similar words or phrases. These statements are not guarantees of future
performance and are inherently subject to known and unknown risks, uncertainties and assumptions
that are difficult to predict and could cause our actual results to differ materially from those indicated
by those statements. Forward-looking statements in this 2018 ABM Annual Report include, but are
not limited to, statements regarding our future financial and operating performance and statements
regarding the adoption and expected benefits of our strategy and transformation initiatives. These
statements involve a number of risks and uncertainties that could cause actual results to differ materially
from those contemplated by the relevant forward-looking statement, including but not limited to the risks
and uncertainties contained in the Company’s Annual Report on Form 10-K for the year ended October 31,
2018, which is included in this 2018 ABM Annual Report. The Company urges readers to consider these
risks and uncertainties in evaluating its forward-looking statements. The Company cautions readers not
to place undue reliance upon any such forward- looking statements, which speak only as of the date made.
The Company disclaims any obligation or undertaking to publicly release any updates or revisions to
any forward-looking statements contained herein (or elsewhere) to reflect any change in the Company’s
expectations with regard thereto, or any change in events, conditions or circumstances on which any
such statement is made, whether as a result of new information, future events or otherwise, except as
otherwise required by the federal securities laws.

As of February 5, 2019

CORPORATE INFORMATION

Listing

New York Stock Exchange

Ticker Symbol

ABM

Registrar and Transfer Agent

Computershare
P.O. Box 505000
Louisville, KY 40233-5000
Phone 800.850.3292
Web Address: computershare.com/investor
eMail: www-us.computershare.com/investor/contact

Auditors

KPMG LLP
345 Park Avenue
New York, NY 10154

Annual Report on Form 10-K

Additional copies available to stockholders at no charge upon request to:
ABM Investor Relations
One Liberty Plaza, 7th Floor
New York, NY 10006 or Investor.ABM.com

Annual Meeting
The 2019 Annual Meeting of Stockholders of ABM Industries will be
held on Wednesday, March 27, 2019 at 10:00 a.m. Eastern Time at ABM
Industries Incorporated, Worldwide Corporate Headquarters, One
Liberty Plaza, 7th Floor, New York, NY 10006.

Dividends

The Company has paid quarterly cash dividends on its Common Stock
without interruption since 1965. The Board of Directors considers
the payment of cash dividends on a quarterly basis, subject to the
Company’s earnings, financial condition and other factors.

ABM Corporate Headquarters
One Liberty Plaza, 7th Floor
New York, NY 10006
212.297.0200
ABM.com