ABM Industries
Annual Report 2019

Plain-text annual report

2019 ANNUAL REPORT Dear Shareholders, Fiscal 2019 represented another year of progress for ABM as we expanded our business, both organically and profitably. We reported record revenues of $6.5 billion and more than $1.0 billion in new sales. Income from continuing operations increased to $1.91 per share, or $2.05 on an adjusted basis, and adjusted EBITDA margins expanded. We also achieved another year of more than $200 million in operating cash flow. Our organization demonstrated a relentless dedication through a year of persistent labor challenges and, at times, economic uncertainty. The operating environment continued to be challenging for our industry groups as an inflection point in the current labor cycle has not yet been reached. We navigated historically low unemployment levels and limited labor supply. To mitigate these labor challenges, we instituted acute labor management practices to increase productivity and defend against margin compression, and we invested heavily in our human resources team to reinforce recruiting and onboarding. With ABM’s size and scale, these actions served us well. Our 2019 results underscored the strength of our diversified offerings beyond our traditional janitorial, parking and onsite facilities services. Our Technical Solutions segment capitalized on the demand for energy efficiency and has driven growth across a multitude of areas, including bundled energy solutions, electric vehicle charging installation and data center power testing. The entire energy and power services group experienced phenomenal growth as demand continued to shift towards sustainability. Technical Solutions has become a critical component of the ABM brand offering and we are excited about the cross-selling opportunities this segment will afford us. We are so proud of what we have accomplished since first embarking on our 2020 Vision transformational journey in 2015. At that time, our revenues were $4.9 billion, our adjusted EBITDA margins were 3.8%, and adjusted EPS was $1.62 per share. Since then, we have grown revenues by more than 30% organically and acquisitively, expanded margins by roughly 40% and increased adjusted earnings per share by nearly 30%. And our journey is not over. We continue to work on modernizing ingrained processes and systems of a 110-year-old company. The structural changes we are making to our business as part of our 2020 Vision transformation provide a springboard for these results. People, processes and systems have been the cornerstones of our demonstrated progress over this short period of time and will remain the keys to unlocking greater potential for ABM in the future. We will continue to invest in these areas to maximize our transformation over the long term in order to drive results that will benefit our stakeholders, including our employees, our clients, our communities and our shareholders. We will also prioritize our employees and clients by increasing our focus on corporate social responsibility. Through our ABMCares program we have dedicated resources that empower our employees to participate in activities related to community, philanthropy and wellness. Last year, ABM and our employees donated $2 million to charities and affiliated programs as we strive to fulfill our mission of making a difference – every person, every day. Furthermore, as a member of the United Nations Global Compact, the world’s largest corporate sustainability initiative, we are also seeking ways to align our strategies and operations with improved environmental sustainability. 2020 will mark our 55th consecutive year of dividend payments, underscoring ABM’s steadfast commitment to our shareholders and for more than a century, ABM has cared for the people, spaces and places that are important to you, our stakeholders. Our history and our financial achievements highlight the long-term fundamental strength of our business and we look forward to adding to our accomplishments as we continue towards a prosperous future. 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 This page intentionally left blank.  UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549__________________________FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended October 31, 2019orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934For the transition period from to Commission File Number: 1-8929 ABM INDUSTRIES INCORPORATED(Exact name of registrant as specified in its charter)Delaware94-1369354(State or other jurisdiction ofincorporation or organization)(I.R.S. EmployerIdentification No.)__________________________One Liberty Plaza, 7th FloorNew 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 Trading Symbol Name of each exchange on which registeredCommon Stock, $0.01 par value ABM 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 ☑ No ☐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 ☐ No ☑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 of1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days. Yes ☑ No ☐Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submitsuch files). Yes ☑ No ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company,or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerginggrowth company” in Rule 12b-2 of the Exchange Act.Large accelerated filerAcceleratedfiler☐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 anynew 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 ☐ No ☑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 theregistrant’s common stock on April 30, 2019 as reported on the New York Stock Exchange on that date: $2,498,832,469Number of shares of the registrant’s common stock outstanding as of December 17, 2019: 66,589,257_______________________________________________ DOCUMENTS INCORPORATED BY REFERENCECertain parts of the registrant’s Definitive Proxy Statement relating to the registrant’s 2020 Annual Meeting of Stockholders are incorporated byreference into Part III of this Annual Report on Form 10-K. ABM INDUSTRIES INCORPORATED AND SUBSIDIARIESTABLE OF CONTENTSFORWARD-LOOKING STATEMENTS1PART I2Item 1. Business.2Item 1A. Risk Factors.7Item 1B. Unresolved Staff Comments.13Item 2. Properties.13Item 3. Legal Proceedings.14Item 4. Mine Safety Disclosures.15PART II16Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.16Item 6. Selected Financial Data.18Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.20Item 7A. Quantitative and Qualitative Disclosures About Market Risk.45Item 8. Financial Statements and Supplementary Data.46Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.97Item 9A. Controls and Procedures.97Item 9B. Other Information.97PART III98Item 10. Directors, Executive Officers and Corporate Governance.98Item 11. Executive Compensation.98Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.98Item 13. Certain Relationships and Related Transactions, and Director Independence.98Item 14. Principal Accounting Fees and Services.98PART IV99Item 15. Exhibits, Financial Statement Schedules.99SIGNATURES105FORWARD-LOOKING STATEMENTSThis 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 of1995, that involve risks and uncertainties. We make forward-looking statements related to future expectations, estimates, and projections that areuncertain 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 knownand unknown risks, uncertainties, and assumptions that are difficult to predict. Factors that might cause such differences include, but are not limitedto, 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 inevaluating our forward-looking statements. We caution readers not to place undue reliance upon any such forward-looking statements, which speakonly 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.1PART IITEM 1. BUSINESS.GeneralABM 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 wereincorporated in Delaware under the name American Building Maintenance Industries, Inc., as the successor to the business originally founded in1909. In 1994, we changed our name to ABM Industries Incorporated. Over the past twelve years, we have grown into a multi-segment facilitysolutions company, primarily through strategic acquisitions and new service offerings, increasing our revenue from $3 billion to more than $6 billion.The acquisition of OneSource in 2007 bolstered ABM as a leader in the janitorial market, while the Linc Group acquisition in 2010established ABM as a “facility solutions” company with new service offerings, including lighting, mechanical, and electrical “technical solutions.” Withdemand increasing for industry-specific service providers, in 2012 we purchased Air Serv and established our first industry group, “aviation.” Inrecent years, we have strategically acquired companies in the United Kingdom, particularly with the GBM and Westway acquisitions, whichexpanded our janitorial and technical solutions businesses overseas. In 2017, we acquired GCA Services Group (“GCA”), a provider of integratedfacility services to educational institutions and commercial facilities, for approximately $1.3 billion, the largest acquisition in ABM history. As a resultof this acquisition, we are now a leading facility solutions provider in the education market. In recent years, we also evaluated all of our serviceofferings and sold our Security and Government Services businesses, which did not align with our long-term focus on industry groups.Additionally, in 2015 we began a comprehensive transformational initiative (“2020 Vision”) to drive long-term, profitable growth through anindustry-based go-to-market approach. As part of this initiative, we centralized key functional areas, strengthened our sales capabilities, and initiatedinvestments in service delivery tools and processes to help support standard operating practices that we believe are foundational to our long-termsuccess.As a result of these strategic changes, we have strengthened our ability to offer Janitorial, Parking, Facilities Services, Building & EnergySolutions, and Airline Services, on a standalone basis or in combination, and positioned ourselves as a leading integrated facilities managementcompany.Unless otherwise indicated, all references to years are to our fiscal year, which ends on October 31.2Contract TypesWe generate revenues under several types of contracts, as explained below. Generally, the type of contract is determined by the nature ofthe services. Although many of our service agreements are cancelable on short notice, we have historically had a high rate of client retention andexpect to continue maintaining long-term relationships with our clients. See Note 2, “Basis of Presentation and Significant Accounting Policies,” inthe Notes to Consolidated Financial Statements for additional information regarding the contract types that are most common in each of our servicelines.Contract TypeDescriptionMonthly Fixed-PriceThese arrangements are contracts in which the client agrees to pay a fixed fee every month over a specified contract term.Square-FootMonthly square-foot arrangements are contracts in which the client agrees to pay a fixed fee every month based on theactual square footage serviced over a specified contract term.Cost-PlusThese 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 ServicesTag services (work orders) generally consist of supplemental services requested by clients outside of the standard servicespecification and includes cleanup after tenant moves, construction cleanup, flood cleanup, and snow removal.Transaction-PriceThese are arrangements in which customers are billed a fixed price for each transaction performed on a monthly basis(e.g., wheelchair passengers served or airplane cabins cleaned).HourlyIn hourly arrangements, the client is billed a fixed hourly rate for each labor hour provided.ManagementReimbursementUnder these parking arrangements, we manage a parking facility for a management fee and pass through the revenue andexpenses associated with the facility to the owner.Leased LocationUnder these parking arrangements, we pay a fixed amount of rent plus a percentage of revenues derived from monthly andtransient parkers to the property owner. We retain all revenues received and are responsible for most operating expensesincurred.AllowanceUnder these parking arrangements, we are paid a fixed amount or hourly fee to provide parking services, and we areresponsible for certain operating expenses, as specified in the contract.Energy SavingsContracts and Fixed-Price Repair andRefurbishmentUnder these arrangements, we agree to develop, design, engineer, and construct a project. Additionally, as part of bundledenergy solutions arrangements, we guarantee the project will satisfy agreed-upon performance standards.FranchiseWe 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 InformationOur current reportable segments consist of Business & Industry (“B&I”), Aviation, Technology & Manufacturing (“T&M”), Education, andTechnical Solutions. Refer to Note 2, “Basis of Presentation and Significant Accounting Policies,” in the Notes to the Consolidated FinancialStatements for information related to the modification in our presentation of inter-segment revenues and the reorganization of our Healthcarebusiness into our other industry groups, primarily B&I, during 2019. For segment and geographic financial information, see Note 19, “Segment andGeographic Information,” in the Notes to Consolidated Financial Statements.3 REPORTABLE SEGMENTS AND DESCRIPTIONSB&I, our largest reportable segment, encompasses janitorial, facilities engineering, and parkingservices for commercial real estate properties, sports and entertainment venues, and traditionalhospitals and non-acute healthcare facilities. B&I also provides vehicle maintenance and otherservices to rental car providers. We typically provide services in this segment pursuant tomonthly fixed-price, square-foot, cost-plus, and parking arrangements (i.e., managementreimbursement, leased location, or allowance) that are obtained through a competitive bidprocess as well as pursuant to tag services.Aviation supports airlines and airports with services ranging from parking and janitorial topassenger assistance, catering logistics, air cabin maintenance, and transportation. We typicallyprovide services to clients in this segment under master services agreements. Theseagreements are typically re-bid upon renewal and are generally structured as monthly fixed-price,square-foot, cost-plus, parking, transaction-price, and hourly arrangements. Two clientsaccounted for approximately 27% of revenues for this segment in 2019.T&M provides janitorial, facilities engineering, and parking services to industrial and high-techmanufacturing facilities. We typically provide these services pursuant to monthly fixed-price,square-foot, cost-plus, and parking arrangements that are obtained through a competitive bidprocess as well as pursuant to tag services.Education delivers janitorial, custodial, landscaping and grounds, facilities engineering, andparking services for public school districts, private schools, colleges, and universities. Theseservices are typically provided pursuant to monthly fixed-price, square-foot, and cost-plusarrangements that are obtained through either a competitive bid process or re-bid upon renewalas well as pursuant to tag services.Technical Solutions specializes in mechanical and electrical services. These services can alsobe leveraged for cross-selling across all of our industry groups, both domestically andinternationally. Contracts for this segment are generally structured as energy savings and fixed-price repair and refurbishment contracts and franchise arrangements.4Service Marks, Trademarks, and Trade NamesWe hold various service marks, trademarks, and trade names, such as “ABM,” “ABM Building Value,” “ABM Greencare,” “Linc Service,”“MPower,” “OmniServ,” and “TEGG,” which we deem important to our marketing activities, to our business, and, in some cases, to the franchisingactivities conducted by our Technical Solutions segment.Dependence on Significant ClientNo client accounted for more than 10% of our consolidated revenues during 2019, 2018, or 2017.CompetitionWe 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 ourrevenue is derived from projects requiring competitive bids; however, an invitation to bid is often conditioned upon prior experience, industryexpertise, and financial strength. The low cost of entry in the facility services business results in a very competitive market. We mainly compete withregional 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 ormore of the services we provide.Sales and MarketingOur sales and marketing activities include digital engagement and direct interactions with prospective and existing clients, pricing, proposalmanagement, and customer relationship management by dedicated business development teams, operations personnel, and management. Theseactivities are executed by branch and regional sales, marketing, and operations teams assigned to our industry groups and are supported bycentralized sales support teams, inside sales teams, corporate marketing personnel, and our Center of Excellence teams. These sales andmarketing teams acquire, nurture, and manage leads, as well as train personnel on sales tools and proposal systems, all governed by standardoperating procedures.Regulatory Environment and Environmental ComplianceOur operations are subject to various federal, state, and/or local laws regulating the discharge of materials into the environment orotherwise 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 ourlocations or in connection with our operations. Historically, the cost of complying with environmental laws or resolving environmental issues relatingto locations or operations in the United States or abroad has not had a material adverse effect on our financial position, results of operations, orcash flows.Corporate Responsibility and SustainabilityAs a company with more than 110 years’ experience, we understand the need to embed corporate responsibility into our business practicesto create value and support the long-term success of our business, shareholders, clients, and team members.Our strategy has evolved over the years to align with our stakeholders’ expectations regarding environmental, social, and governancepolicies. Recently, we have established three strategic axes of our sustainability strategy based on the topics that are most material to our business:doing business in a responsible way and creating value for clients; improving our value chain continuously; and positively impacting the ecosystem.Since 2011, we have voluntarily published a Sustainability Report on an annual basis in alignment with the Global Reporting Initiativeframework to address our business, our team members, and the environment. More information can be found in the corporate sustainability sectionof our corporate website.EmployeesAs of October 31, 2019, we employed approximately 140,000 persons, of which approximately 45,000, or 32%, were subject to variouslocal collective bargaining agreements.5Available InformationOur corporate website is www.abm.com. The content on any website referred to in this filing does not constitute, and should not be viewedas, a part of this Annual Report, and our website is not incorporated into this or any of our other filings with the Securities and ExchangeCommission (“SEC”). We make available free of charge through our website 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 theSecurities Exchange Act of 1934 as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC.Additionally, the SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regardingissuers that file electronically with the SEC.Executive Officers of RegistrantExecutive Officers on December 20, 2019Name Age Principal Occupations and Business ExperienceScott Salmirs 57 President and Chief Executive Officer of ABM since March 2015; Executive Vice President of ABMfrom September 2014 to March 2015, with global responsibility for ABM’s Aviation division and allinternational activities; Executive Vice President of ABM’s Onsite Services division focused on theNortheast from 2003 to September 2014; Member of the Board of Directors of ABM since January2015.D. Anthony Scaglione 47 Executive Vice President and Chief Financial Officer of ABM since April 2015; Senior VicePresident, Treasurer, and Head of Mergers and Acquisitions of ABM from January 2012 to April2015; Vice President and Treasurer of ABM from June 2009 to January 2012; Chairman of theBoard of the Association for Financial Professionals (AFP), the professional society that representsfinance executives across the globe, from November 2014 to October 2016.Andrew D. Block 51 Executive Vice President and Chief Human Resources Officer of ABM since June 2018; SeniorVice 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.Joshua H. Feinberg 45 Executive Vice President, Chief Strategy and Transformation Officer of ABM since November2019; Managing Director and Partner of The Boston Consulting Group from July 2014 toNovember 2019; Principal of The Boston Consulting Group from February 2011 to July 2014;Project Leader of The Boston Consulting Group from August 2009 to February 2011.Scott Giacobbe 57 Executive Vice President and Chief Revenue Officer of ABM since October 2019; Chief OperatingOfficer of ABM from November 2017 to October 2019; President of ABM’s U.S. TechnicalSolutions from November 2010 to November 2017.Rene Jacobsen 58 Executive Vice President and Chief Facilities Services Officer of ABM since October 2019;President of ABM’s Business & Industry Group from February 2016 to October 2019; ExecutiveVice President of ABM’s West Region from April 2012 to February 2016; Executive Vice Presidentand Chief Operating Officer of Temco Service Industries from November 2007 to April 2012.Andrea R. Newborn 56 Executive Vice President, General Counsel, and Corporate Secretary of ABM since July 2017;Executive Vice President and General Counsel of 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.Dean A. Chin 51 Senior Vice President, Chief Accounting Officer, and Corporate Controller of ABM since June2010; Vice President and Assistant Controller of ABM from June 2008 to June 2010.6ITEM 1A. RISK FACTORS.Risks Relating to Our Strategy and OperationsOur success depends on our ability to gain profitable business despite competitive market pressures.Each aspect of our business is highly competitive and such competition is based primarily on price, quality of service, and ability toanticipate and respond to industry changes. A majority of our revenue is derived from services that require competitive bids. The low cost of entry inthe facility services business results in a very competitive market. We compete mainly with regional and local owner-operated companies that mayhave more acute vision into local markets and significantly lower labor and overhead costs, providing them with a competitive advantage in thoseregards. We also compete indirectly with companies that can perform for themselves one or more of the services we provide. Further, if we areunable to respond adequately to changing technology, we may lose existing clients and fail to win future business opportunities. A failure to respondeffectively to competitive pressures or failure in our ability to increase prices as costs rise could reduce margins and materially adversely affect ourfinancial performance.Our business success depends on our ability to attract and retain qualified personnel and senior management and to manage laborcosts.Our future performance depends on the continuing services and contributions of our senior management and on our continued ability toattract and retain qualified personnel. Any unplanned turnover in senior management or inability to attract and retain qualified personnel could havea negative effect on our results of operations. We employ approximately 140,000 persons, and our operations depend on the services of a large anddiverse workforce. We must attract, train, and retain a large and growing number of qualified employees while controlling related labor costs. Ourability to control labor and benefit costs is subject to numerous internal and external factors, including changes in the unemployment rate, changesin immigration policy, regulatory changes, prevailing wage rates, and competition we face from other companies for qualified employees. Further,many of our contracts provide that our clients pay certain costs at specified rates, such as insurance, healthcare costs, salary and salary-relatedexpenses, and other costs. If actual costs exceed the rates specified in the contracts, our profitability may be negatively impacted. There is noassurance that in the future we will be able to attract or retain qualified employees or effectively manage labor and benefit costs, which could have amaterial adverse effect on our business, financial condition, and results of operations.Our ability to preserve long-term client relationships is essential to our continued success.We primarily provide services pursuant to agreements that are cancelable by either party upon 30–90 days’ notice. As we generally incurhigher initial costs on new contracts until the labor management and facilities operations normalize, our business associated with long-term clientrelationships is generally more profitable than short-term client relationships. If we lose a significant number of long-term clients, our profitabilitycould 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 ourexisting client relationships is an important factor contributing to our business success. Among other things, adverse publicity stemming from anaccident or other incident involving our facility operations or employees related to injury, illness, death, or alleged criminal activity could harm ourreputation, result in the cancellation of contracts or inability to retain clients, and expose us to significant liability.Changes to our businesses, operating structure, financial reporting structure, or personnel relating to the implementation of strategictransformations, enhanced business processes, and technology initiatives may not have the desired effects on our financial conditionand results of operations.We may periodically engage in various initiatives intended to drive long-term profitable growth and increase operational efficiency. Plannedchanges to our business systems and processes may not create the operational efficiencies or cost benefits that we expect and could result inunanticipated consequences, including substantial disruption to our back-office operations and service delivery.We may not be able to fully execute on such initiatives to the extent expected within the anticipated timeframe as a result of numerousfactors, such as client resistance, inability to deliver requested end-to-end services, and difficulty penetrating certain markets. Moreover, theseinitiatives may not provide us with anticipated competitive advantage or revenue growth.7Acquisitions, divestitures, and other strategic transactions could fail to achieve financial or strategic objectives, disrupt our ongoingbusiness, and adversely impact our results of operations.In furtherance of our business strategy, we routinely evaluate opportunities and may enter into agreements for possible acquisitions,divestitures, or other strategic transactions. In the past, a significant portion of our growth has been generated by acquisitions, and we may continueto acquire businesses in the future as part of our growth strategy. However, we may encounter challenges identifying opportunities in a timelymanner or on terms acceptable to us. Furthermore, there is no assurance that any such transaction will result in synergistic benefits. A potentialacquisition, divestiture, or other strategic transaction may involve a number of risks including, but not limited to:•the transaction may not effectively advance our business strategy, and its anticipated benefits may never materialize;•our ongoing operations may be disrupted, and management time and focus may be diverted;•clients or key employees of an acquired business may not remain, which could negatively impact our ability to grow that acquired business;•integration of an acquired business’s accounting, information technology, human resources, and other administrative systems may fail topermit effective management and expense reduction;•unforeseen challenges may arise in implementing internal controls, procedures, and policies;•additional indebtedness incurred as a result of an acquisition may impact our financial position, results of operations, and cash flows; and•unanticipated or unknown liabilities may arise related to an acquired business.We manage our insurable risks through a combination of third-party purchased policies and self-insurance, and we retain a substantialportion of the risk associated with expected losses under these programs, which exposes us to volatility associated with those risks,including the possibility that adjustments to our ultimate insurance loss reserves 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, propertydamage, and other insurable risks. We are responsible for claims both within and in excess of our retained limits under our insurance policies, andwhile we endeavor to purchase insurance coverage that is appropriate to our assessment of risk, we are unable to predict with certainty thefrequency, nature, or magnitude of claims 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 actuarial judgments. We use the results of actuarial studies toestimate insurance rates and insurance reserves for future periods and to adjust reserves, if appropriate, for prior years. Actual experience related toour insurance reserves can cause us to change our estimates for reserves and any such changes may materially impact results, causing significantvolatility in our operating results. We have previously experienced material adjustments to reserves resulting from negative trends in our actuarialestimates, and we 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 materialadverse impact on our business, as would the incurrence of catastrophic uninsured claims or the inability or refusal of our insurance carriers to payotherwise insured claims. Further, to the extent that we self-insure our losses, deterioration in our loss control and/or our continuing claimmanagement efforts could increase the overall cost of claims within our retained limits. A material change in our insurance costs due to changes inthe frequency of claims, the severity of the claims, the costs of excess/umbrella premiums, or regulatory changes could have a material adverseeffect 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 withincreased flexibility in the end-to-end management of our insurance program. There can be no assurance that IFM will continue to bring about theintended benefits or the desired flexibility in the management of our insurance programs, because we may experience unanticipated events that willreduce or eliminate expected benefits, including anticipated savings related to coverage provided by IFM to our subsidiaries.8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 controlefforts designed to decrease the incidence of accidents or events that might increase our liability. It is expected that any such decrease would alsohave the effect of reducing our insurance costs for our casualty programs. However, incidents involving personal injury or property loss may becaused by multiple potential factors, a significant number of which are beyond our control. Therefore, there can be no assurance that our riskmanagement and safety programs will have the desired effect of controlling costs and liability exposure.Our international business involves risks different from those we face in the United States that could have an effect on our results ofoperations and financial condition.We have business operations in jurisdictions outside of the United States, most significantly in the United Kingdom (“U.K.”). Ourinternational operations are subject to risks that are different from those we face in the United States and subject us to complex and frequentlychanging laws and regulations, including differing labor laws and regulations relating to the protection of certain information that we collect andmaintain about our employees, clients, and other third parties. Among these laws is the U.K. Modern Slavery Act, the U.K. Bribery Act, and theEuropean Union General Data Protection Regulation (the “GDPR”), which took effect in May 2018. The failure to comply with these laws orregulations could subject us to significant litigation, monetary damages, regulatory enforcement actions, or fines in one or more jurisdictions. Moregenerally, the economic, political, monetary, and operational impacts of Brexit, including unanticipated impacts to the U.K. real estate market andgeneral 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 mayhave limited control over the joint venture. Any improper actions by our joint venture employees, partners, or agents, including but not limited tofailure 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 orcriminal investigations, monetary and non-monetary penalties, or other consequences, any of which could have an adverse effect on our financialposition 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 movementsin 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 ourinternational operations or on our consolidated 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 theperforming party. We may be exposed to liability whenever one or more of our subcontractors or joint venture partners, for whatever reason, fails toperform or allegedly negligently performs the agreed-upon services. Although we have in place controls and programs to monitor the work of oursubcontractors and our joint venture partners, there can be no assurance that these controls or programs will have the desired effect, and we mayincur significant liability as a result of the actions or inactions of one or more of our subcontractors or joint venture partners.We may experience breaches of, or disruptions to, our information technology systems or those of our third-party providers or clients, orother 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, phishing, computer viruses, malware, or other intrusions, which could result in operational disruptions or informationmisappropriation, such as theft of intellectual property or inappropriate disclosure of confidential, proprietary, or personal information. We maintainconfidential, proprietary, and personal information in our information technology systems and in systems of third-party providers relating to ourcurrent, former, and prospective employees, clients, and other third parties. We have experienced certain data and security breaches in the pastand 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 securitymeasures to protect our systems, there can be no assurance that the controls and procedures we have in place will be sufficient to protect us fromfuture security breaches.9As cyber threats are continually evolving, our controls and procedures may become inadequate and we may be required to devote additionalresources to modifying or enhancing our systems in the future. We may also be required to expend resources to remediate cyber-related incidentsor 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 couldresult in lost sales, negative publicity, litigation, violations of privacy and other laws, or business delays that could have a material adverse effect onour business. Additionally, we believe that along with the GDPR and the California Consumer Privacy Act, which goes into effect on January 1,2020, further increased regulation is likely in the area of data privacy. Compliance with this rapidly expanding area of law will require significantmanagement and financial resources, and we could be subjected to additional legal risk or financial losses if we are not in compliance.Risks Relating to Labor, Legal Proceedings, Tax, and Regulatory MattersUnfavorable developments in our class and representative actions and other lawsuits alleging various claims could cause us to incursubstantial liabilities.Our business involves employing tens of thousands of employees, many of whom work at our clients’ facilities. We incur risks relating to ouremployment of these workers, including but not limited to: claims of misconduct or negligence on the part of our employees; claims related to theemployment of unlicensed personnel; and claims by our employees of discrimination, harassment, violations of wage and hour requirements, orviolations of other federal, state, or local laws. We also incur risks and claims related to the imposition on our employees of policies or practices ofour clients that may be different from our own. Some or all of these claims may lead to litigation, including class action litigation, and these mattersmay cause us to incur negative publicity with respect to alleged claims. Additionally, there are risks to all employers in some states, such asCalifornia, resulting from new and unanticipated judicial interpretations of existing laws and the application of those new interpretations againstemployers on a retroactive basis. It is not possible to predict the outcome of these lawsuits or any other proceeding, and our insurance may notcover all claims that may be asserted against us. These lawsuits and other proceedings may consume substantial amounts of our financial andmanagerial resources. An unfavorable outcome with respect to these lawsuits and any future lawsuits may, individually or in the aggregate, causeus to incur substantial liabilities that could have a material adverse effect upon our business, reputation, financial condition, or results of operations.A significant number of our employees are covered by collective bargaining agreements that could expose us to potential liabilities inrelationship to our participation in multiemployer pension plans, requirements to make contributions to other benefit plans, and thepotential 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 bargainingagreements. Because of the nature of multiemployer pension plans, there are risks to us associated with participation in these plans that differ fromsingle-employer plans. Assets contributed by an employer to a multiemployer pension plan are not segregated into a separate account and are notrestricted to provide benefits only to employees of that contributing employer. In the event another participating employer in a multiemployer pensionplan no longer contributes to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers, including us. Inthe event of the termination of a multiemployer pension plan or a complete or partial withdrawal from a multiemployer pension plan, under applicablelaw we could incur material withdrawal liabilities. We further discuss our participation in multiemployer pension and postretirement plans in Note 14,“Employee Benefit Plans,” in the Notes to Consolidated Financial Statements. In addition, the terms of collective bargaining agreements require usto contribute to various fringe benefit plans, including health and welfare, pension, and training plans, all of which require us to have appropriatesystems in place to assure timely and accurate payment of contributions. The failure to make timely and accurate contributions as a result of asystems failure could have a negative impact on our financial position.At October 31, 2019, approximately 32% of our employees were subject to various local collective bargaining agreements, some of whichwill expire or become subject to renegotiation during 2020. In addition, at any given time we may face union organizing activity. When one or moreof our major collective bargaining agreements becomes subject to renegotiation or when we face union organizing drives, any disagreementbetween us and the union on important issues may lead to a strike, work slowdown, or other job actions at one or more of our locations. In a marketwhere we are unionized but competitors are not unionized, we could lose clients to such competitors. A strike, work slowdown, or other job actioncould disrupt our services, resulting in reduced revenues or contract cancellations.10Moreover, negotiating a first time collective bargaining agreement or renegotiating an existing agreement could result in a substantial increase inlabor and benefits expenses that we may be unable to pass through to clients.Our business may be materially affected by changes to fiscal and tax policies. Negative or unexpected tax consequences couldadversely affect our results of operations.The Tax Cuts and Jobs Act of 2017 (the “Tax Act”) made significant changes to U.S. federal tax laws. Such changes include a reduction inthe corporate tax rate as well as limitations on certain corporate deductions and credits that could have a negative impact on our business. The TaxAct requires significant judgments to be made in the interpretation of the law and significant estimates in the calculation of the provision for incometaxes. However, additional guidance that may significantly differ from our interpretation of the law may be issued by the Internal Revenue Service(“IRS”), the Department of Treasury, or another governing body, which may result in a material adverse effect on our business, financial condition,results of operations, or cash flows. In addition, we are subject to tax audits by governmental authorities, primarily in the United States and UnitedKingdom. If we experience unfavorable results from one or more such tax audits, there could be an adverse effect on our tax rate and therefore onour net income.Risks Relating to Market and Economic ConditionsChanges in general economic conditions, such as changes in energy prices, government regulations, or consumer preferences, couldreduce 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 clientsoutside of the standard service specification (“tag work”). This contract type is commonly used in janitorial services and includes cleanup aftertenant 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 inclients cutting back on discretionary spending. Additionally, since a significant portion of our aviation services and parking revenues are tied to thevolume of airline passengers, hotel guests, and sports arena attendees, results for these businesses could be adversely affected by curtailment ofbusiness, personal travel, or discretionary spending. The use of ride sharing services and car sharing services may also lead to a decline in parkingdemand 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. Assuch, downward fluctuations in commodity prices may reduce client demand for those projects. We also depend, in part, on federal and statelegislation and policies that support energy efficiency projects. If current legislation or policies are amended, eliminated, or not extended beyondtheir current expiration dates, or if funding for energy incentives is reduced or delayed, it could also adversely affect our ability to obtain newbusiness. In some instances, we offer certain of these clients guaranteed energy savings on installed equipment. In the event those guaranteedsavings are not achieved, we may be required to pay liquidated or other damages. All of these factors could have an adverse effect on our financialposition, results of operations, and cash flows.Risks Relating to Financial MattersFuture increases in the level of our borrowings or in interest rates could affect our results of operations.Although we have paid down portions of our indebtedness under our syndicated secured credit facility, our future ability to make paymentson our debt, fund our other liquidity needs, and make planned capital expenditures will depend on our ability to generate cash. Our ability togenerate cash, to a certain extent, is subject to general economic, financial, competitive, and other factors that are beyond our control. We cannotguarantee that our business will generate sufficient cash flow from our operations or that future borrowings will be available to us in an amountsufficient 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 leveraged could have important consequences for shareholders. For example, it could: require us to dedicate asubstantial 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 thefuture to enable us to react to changes in our business; and place us at a competitive disadvantage compared to businesses in our industry thathave less debt.11Additionally, any future increase in the level of our indebtedness will likely increase our interest expense, which could negatively impact ourprofitability. Current interest rates on borrowings under our credit facility are variable and include the use of the London Interbank Offered Rate(“LIBOR”). In 2017, the U.K. Financial Conduct Authority announced that it intends to phase out LIBOR by the end of 2021. In addition, otherregulators have suggested reforming or replacing other benchmark rates. The discontinuation, reform, or replacement of LIBOR or any otherbenchmark rates may result in fluctuating interest rates that may have a negative impact on our interest expense and our profitability.Further, our credit facility contains both financial covenants and other covenants that limit our ability to engage in specific transactions. Anyfailure 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 adverseeffect on us.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-livedassets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If thefair 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 projectedundiscounted 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 materialadverse effect on our reported financial results for the period in which the charge is taken.If we fail to maintain proper and effective internal control over financial reporting in the future, our ability to produce accurate and timelyfinancial statements could be negatively impacted, which could harm our operating results and investor perceptions of our Company andas 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 independentregistered public accounting firm is required to attest to, the effectiveness of our internal control over financial reporting. The rules governing thestandards that must be met for management to assess our internal control over financial reporting are complex and require significantdocumentation, testing, and, in some instances, remediation. We have acquired entities that had no publicly traded debt or equity and thereforewere not previously required to conform to the rules and regulations of the SEC, especially related to their internal control structure. When weacquire 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 resourcesfrom our management and other personnel, which increases our compliance costs. We are required to include our assessment of the effectivenessof the internal controls over financial reporting of entities we acquire in our overall assessment, so we must plan to complete the evaluation andintegration 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 ourinternal controls related to authorizing the transfer of funds and changing our vendor master files are adequate. Failure to maintain an effectiveinternal control environment could have a material adverse effect on our ability to accurately report our financial results, the market’s perception ofour business, and our stock price.Other RisksOur 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 ourbusiness. Within our Technical Solutions segment, cooler than normal temperatures in the summer could reduce the need for servicing of airconditioning units, resulting in reduced revenues and profitability. Within Parking and Aviation services, snow can lead to reduced travel activity, aswell as increases in certain costs, both of which negatively affect gross profit. On the other hand, the absence of snow during the winter could causeus to experience reduced revenues in our B&I segment, as many of our contracts specify additional payments for snow-related services.12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 usor by third parties with whom we conduct business. This could include disruptions due to 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) thatcould 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 fromother locations, our ability to service and interact with our clients and others may suffer, and we may not be able to successfully implementcontingency plans that depend on communications or travel. These events may increase the volatility of financial results due to unforeseen costswith partial or no corresponding compensation from clients. There also can be no assurance that the disaster recovery and crisis managementprocedures we employ will suffice in any particular situation to avoid a significant loss. In addition, to the extent centralized administrative locationsare disabled for a long period of time, key business processes, such as accounts payable, information technology, payroll, and generalmanagement 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 changeour governance policies, board of directors, or other aspects of our operations, our review and consideration of such proposals may create asignificant distraction for our management and employees. This could negatively impact our ability to execute various strategic initiatives and mayrequire management to expend significant time and resources responding to such proposals. Such proposals may also create uncertainties withrespect 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 webegan consolidating our operations to increase efficiency and effectiveness.Principal Properties as of October 31, 2019Location Character of Office Approximate Square Feet Lease Expiration Date,Unless Owned SegmentAlpharetta, Georgia IT Datacenter and TechnicalSolutions Headquarters 25,000 Owned AllAtlanta, Georgia Operations Support 37,000 10/31/2027 AllCleveland, Ohio Legacy GCA Headquarters 32,400 1/31/2024 Education, T&M, andCorporateNew York, New York Corporate Headquarters 44,000(1) 1/3/2032 Corporate and B&ISugar Land, Texas Enterprise Services 62,500 3/31/2028 AllTustin, California Operations Support 40,000 7/31/2029 B&I and Technical Solutions(1) Approximately 10,000 square feet are sublet.In addition to the above properties, we have other offices, warehouses, and parking facilities in various locations, primarily in the United States. Webelieve that these properties are well maintained, in good operating condition, and suitable for the purposes for which they are used.13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 laborand employment, contracts, personal injury, and other matters, some of which allege substantial monetary damages. Some of these actions may bebrought as class actions on behalf of a class or purported class of employees. While the results of these lawsuits, claims, and proceedings cannotbe predicted with any certainty, our management believes that the final outcome of these matters will not have a material adverse effect on ourfinancial position, results of operations, or cash flows.Certain Legal ProceedingsCertain 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 anyother 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 orpurports 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 ispending; 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, pending 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 andmake additional premium payments for such meal periods, pay split shift premiums when owed, and reimburse janitors for travel expenses. There isalso a claim for penalties under the California Labor Code Private Attorneys General Act (“PAGA”). On April 19, 2011, the trial court held a hearingon 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 theunderlying 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 certificationand remanded the matter for certification of a meal period, travel expense reimbursement, and split shift class. The case was remitted to the trialcourt 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 legacyABM janitorial companies in California at any time between April 7, 2002 and April 30, 2013, on claims based on alleged previous automaticdeduction practices for meal breaks, unpaid meal premiums, unpaid split shift premiums, and unreimbursed business expenses, such as mileagereimbursement for use of personal vehicles to travel between worksites. On February 1, 2019, the trial court held that the discovery related to PAGAclaims allegedly arising after April 30, 2013 would be stayed until after the class and PAGA claims accruing prior to April 30, 2013 had been tried.The parties engaged in mediation in July 2019, which did not result in settlement of the case. On October 17, 2019, the plaintiffs filed a motionasking the trial court to certify additional classes based on an alleged failure to maintain time records, an alleged failure to provide accurate wagestatements, and an alleged practice of combining meal and rest breaks. Our response to this motion was filed on November 4, 2019, and the trialcourt heard the matter on December 10, 2019. This matter is currently set for trial on May 26, 2020. Prior to trial, we will have the opportunity tomove for summary judgment, seek decertification of the classes, or engage in further mediation, if we deem such actions appropriate. We expect toengage in one or more such activities in upcoming quarters.Castro and Marmolejo v. ABM Industries, Inc., et al., filed on October 24, 2014, pending in the United States District Court for the NorthernDistrict 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 inCalifornia 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 torepresent a class of all employees who were, are, or will be employed by ABM in the State of California with the Employee Master Job DescriptionCode “Cleaner” (hereafter referred to as “Cleaner Employees”) beginning from October 24, 2010. ABM filed its opposition to class certification onNovember 27, 2017. On January 26, 2018, the district court granted plaintiffs’ motion for class certification. The court rejected plaintiffs’ proposedclass, 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 Stateof 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 facilitythat did not provide a biometric clock and (b) were not offered an ABM-provided cell phone during the period14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 whowere, are, or will be employed by ABM in the State of California as Cleaner Employees who used a personal cell phone to report unusual orsuspicious circumstances to supervisors and were not offered (a) an ABM-provided cell phone or (b) a two-way radio during the period beginningfour 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 beencertified 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 apersonal cell phone to respond to communications from supervisors and were not offered (a) an ABM-provided cell phone or (b) a two-way radioduring the period beginning four years prior to the filing of the original complaint, October 24, 2014, through the date of notice to the Class Membersthat 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 StatesCourt 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 ofcertain class members pursuant to the terms of three collective bargaining agreements. In response to that motion, on May 14, 2018, the districtcourt modified the class definition to exclude all claims arising after the operative date(s) of the applicable collective bargaining agreements (whichis June 1, 2016 for one agreement and May 1, 2016 for the other two agreements). However, the district court denied the motion to compelarbitration as to claims that arose prior to the operative date(s) of the applicable collective bargaining agreements. ABM appealed to the NinthCircuit the district court’s order denying the motion to compel arbitration with respect to the periods preceding the operative dates of the collectivebargaining 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 courtapproval. The plaintiffs’ motion for preliminary approval of the settlement was filed on January 4, 2019, and the court held a hearing on the motionon February 12, 2019. On February 14, 2019, the court granted preliminary approval of the settlement. The court granted final approval of thesettlement on September 3, 2019, and the settlement was funded on September 23, 2019. In connection with the settlement, we modified ourexisting written policies for California to expressly confirm that ABM service workers are not required to use personal cell phones for work purposesand began centralizing the process and implementing technology for such employees to request reimbursement for personal cell phone use due towork. Because the settlement was finally approved, on October 31, 2019, ABM dismissed its Ninth Circuit appeal regarding the district court’s orderdenying the motion to compel arbitration.ITEM 4. MINE SAFETY DISCLOSURES.Not applicable.15PART IIITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES.Market Information, Dividends, and StockholdersOur common stock is listed on the New York Stock Exchange (NYSE: ABM). 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 ourBoard of Directors.At December 17, 2019, there were 3,127 registered holders of our common stock.Common Stock RepurchasesOn September 2, 2015, our Board of Directors authorized a program to repurchase up to $200.0 million of our common stock (the “2015Share Repurchase Program”). We did not repurchase any shares during the fourth quarter of 2019. At October 31, 2019, authorization for $134.1million of repurchases remained under our 2015 Share Repurchase Program. Effective December 18, 2019, our Board of Directors replaced the2015 Share Repurchase Program with a new share repurchase program under which we may repurchase up to $150.0 million of our common stock.These 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 plansor in privately negotiated transactions. The timing of repurchases is at our discretion and will depend upon several factors, including market andbusiness conditions, future cash flows, share price, share availability, and other factors at our discretion. Repurchased shares are retired andreturned to an authorized but unissued status. The repurchase program may be suspended or discontinued at any time without prior notice.16Performance GraphThe following graph compares the five-year cumulative total return for our common stock against the Standard & Poor’s 500 Index (“S&P500”) 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 toconstruct a peer group comparison on an industry or line-of-business basis. INDEXED RETURNSYears Ended October 31,Company / Index 2014 2015 2016 2017 2018 2019ABM Industries Incorporated $100 $104.9 $147.3 $160.8 $120.3 $145.6S&P 500 Index 100 105.2 109.9 135.9 145.9 166.8S&P SmallCap 600 Index 100 102.9 109.4 139.9 147.8 152.5This performance graph shall not be deemed to be “soliciting material” or “filed” with the Securities and Exchange Commission, or subjectto Regulation 14A or 14C, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended. The comparisons in theperformance graph are based on historical data and are not indicative of, or intended to forecast, the possible future performance of our commonstock.17ITEM 6. SELECTED FINANCIAL DATA.The following selected financial data should be read in conjunction with Item 7., “Management’s Discussion and Analysis of FinancialCondition and Results of Operations,” and Item 8., “Financial Statements and Supplementary Data.” Unless otherwise indicated, all references toyears are to our fiscal year, which ends on October 31. Years Ended October 31, 2019 2018 2017 2016 2015(in millions, except per share amounts) Statements of Comprehensive Income Data Revenues(1)(2)$6,498.6 $6,442.2 $5,453.6 $5,144.7 $4,897.8Operating profit(3)208.3 138.6 101.9 54.7 73.6Income from continuing operations127.5 95.9 78.1 62.3 54.1(Loss) income from discontinued operations, net of taxes(4)(0.1) 1.8 (74.3) (5.1) 22.2Per Share Data Net income per common share — Basic Income from continuing operations$1.92 $1.45 $1.35 $1.11 $0.95Net income$1.91 $1.48 $0.07 $1.02 $1.35Net income per common share — Diluted Income from continuing operations$1.91 $1.45 $1.34 $1.09 $0.94Net income$1.90 $1.47 $0.07 $1.01 $1.33Weighted-average common and common equivalent shares outstanding Basic66.6 66.1 57.7 56.3 56.7Diluted66.9 66.4 58.3 56.9 57.4Dividends declared per common share$0.720 $0.700 $0.680 $0.660 $0.640Statements of Cash Flow Data Net cash provided by operating activities of continuing operations$262.8 $299.7 $101.7 $110.5 $145.5Income tax payments (refunds), net(5)20.6 (1.0) 11.8 12.6 23.7 At October 31,(in millions)2019 2018 2017 2016 2015Balance Sheet Data Total assets$3,692.6 $3,627.5 $3,812.6 $2,278.8 $2,130.7Trade accounts receivable, net of allowances(6)1,013.2 1,014.1 1,038.1 803.7 742.9Goodwill(7)1,835.4 1,834.8 1,864.2 912.8 867.5Other intangible assets, net of accumulated amortization(8)297.2 355.7 430.1 103.8 111.4Long-term debt, net(9)744.2 902.0 1,161.3 268.3 158.0Insurance claims515.0 510.3 495.4 423.8 387.4(1) Revenues in 2019 reflect the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), and ASU2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services. Following the adoption of Topic 853, $48.6million of rent expense related to service concession arrangements is now presented as a reduction of revenues, but was previously presented as an operatingexpense. Refer to Note 2, “Basis of Presentation and Significant Accounting Policies,” and Note 3, “Revenues,” in the Financial Statements for additionalinformation regarding the impact of adopting these ASUs.(2) 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.18(3) Factors affecting comparability of operating profit consisted of the following:•Operating profit in 2019 was positively impacted by higher gross margin, $14.5 million lower restructuring and related expenses, and a $13.6 millionlower self-insurance adjustment related to prior year claims. Additionally, 2019 benefited from the absence of $26.5 million of impairment chargesrecognized during 2018.•Operating profit in 2018 was positively impacted by $67.6 million of incremental operating profit resulting from the GCA acquisition and an $11.8 millionlower 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 incurred in 2017 related to the GCA acquisition, but this benefit was partiallyoffset by the absence of 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 inrestructuring and related expenses, and procurement and organizational savings from our 2020 Vision initiatives, all partially offset by $24.2 million oftransaction 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-insuranceadjustment related to prior year claims and $16.7 million of higher insurance expense due to an increase in the rate used to record our insurancereserves during 2016. Operating profit was also unfavorably impacted by $29.0 million of 2020 Vision restructuring and related charges and a $22.5million impairment charge for our Government Services business, consisting of both goodwill and long-lived asset charges. Operating profit in 2016was 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 yearclaims.(4) We had income from discontinued operations in 2018 of $1.8 million due to an insurance reimbursement on a legal settlement and collection of previouslywritten off receivables, partially offset by union audit settlements. The loss from discontinued operations in 2017 included legal settlements associated with ourformer 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 Securitybusiness.(5) Net income tax payments during 2018 were impacted by a $19.4 million refund received for prior year legal settlements. Additionally, we had cash taxsavings of approximately $6 million for 2019, $7 million for 2018, and $10 million for each of 2017 and 2016 related to coverage provided by IFM AssuranceCompany, our wholly-owned captive insurance company.(6) Trade accounts receivable, net of allowances, increased by $118.1 million on September 1, 2017 as a result of the GCA acquisition.(7) Goodwill decreased in 2018 due to an impairment charge of $20.3 million related to Westway Services Holdings (2014) Ltd. (“Westway”) and to a $7.0 millionadjustment 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.(8) In 2018, other intangible assets, net of accumulated amortization, was reduced by an impairment charge of $6.2 million related to Westway and a $1.0 millionadjustment 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.(9) 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 partiallyused to 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.19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 anunderstanding 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 consolidatedfinancial 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 statementsrelated 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. Thesestatements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and assumptions that are difficultto 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 wecurrently anticipate.Throughout the MD&A, amounts and percentages may not recalculate due to rounding. Unless otherwise indicated, all information in theMD&A and references to years are based on our fiscal year, which ends on October 31.Effective November 1, 2018, we adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic606), and ASU 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services, using a modifiedretrospective approach with a cumulative-effect adjustment to retained earnings as of the beginning of 2019; prior period financial statements werenot adjusted. Refer to Note 2, “Basis of Presentation and Significant Accounting Policies,” and Note 3, “Revenues,” in the Financial Statements foradditional information regarding the impact of adoption. Additionally, refer to “Segment Information” below for information regarding the modificationof the presentation of inter-segment revenues and the reorganization of our Healthcare business during 2019.Business OverviewABM is a leading provider of integrated facility solutions, customized by industry, with a mission to make a difference, every person,every day. Our principal operations are in the United States, and in 2019 our U.S. operations generated approximately 93% of our revenues.Strategic GrowthWe remain focused on long-term, profitable growth related to both new and existing clients within our industry groups and across our manyservice lines. Our revenue strategy is predicated on pursuing new sales and targeting a favorable retention rate among existing contracts. Cross-selling and up-selling projects and services is also an integral part of our strategy. We believe operational leverage from our strategic growthinitiatives, coupled with our continued focus on efficiency, will increase profitability.Systems and Technology TransformationWe have initiated many technology-based modernization efforts that we believe will enable us to operate more efficiently and provide uswith greater data and insights to enhance our business management capabilities. We believe these new tools and systems will equip us for long-term success and position us for an even stronger and more prosperous future.Human Resources and Labor ManagementDuring 2019 we launched our new cloud-based human capital management system as well as a new time and attendance system. Theseinvestments will create a human resources (“HR”) structure that centralizes and standardizes hiring and training practices, fostering a data-drivenmodel to measure key metrics, such as employee retention and labor productivity, to help us make more informed decisions and ultimately managecertain costs. We have also introduced new tools to help our operators manage labor more efficiently and continue to invest in attracting,developing, and retaining talent.20Enterprise Resource PlanningDuring 2019 we also made progress with the multi-phased deployment of our new enterprise resource planning (“ERP”) system, and in thefuture we anticipate having a unified system where we can integrate our legacy ABM and our legacy GCA finance environments for the first time.This newly combined system will streamline the operational and financial execution of our business and lead to more effective decision making inthe future.Developments and TrendsEconomic Labor OutlookThe U.S. economy continues to demonstrate positive underlying fundamentals, with expanding gross domestic product growth andimproving employment conditions, which have led to historically low levels of both unemployment and underemployment across the country. Thesefactors have contributed to the lower availability of qualified labor for our business and higher turnover in certain markets, as our employees havemore job opportunities both inside and outside our industry. This in turn has caused, and may continue to cause, higher labor and related personnelcosts.Acquisition of GCA during 2017On September 1, 2017 (the “Acquisition Date”), we acquired GCA, a provider of integrated facility services to educational institutions andcommercial facilities. Refer to Note 4, “Acquisitions,” in the Financial Statements for more information on this transaction. Our consolidatedstatements of comprehensive income and statements of cash flows include GCA’s results of operations in 2019 and 2018, but exclude GCA’sresults of operations in 2017 prior to the Acquisition Date.Restructuring and Related CostsWe may periodically engage in various restructuring activities intended to drive long-term profitable growth and increase operationalefficiency, which can include streamlining and realigning our overall organizational structure and reallocating resources. These activities may resultin restructuring costs related to employee severance, other project fees, external support fees, lease exit costs, and asset impairment charges.During 2019, our restructuring activities primarily related to the continued integration of GCA and other initiatives, including standardizingour financial systems and streamlining our operations by migrating and upgrading several key management platforms, such as our human resourcesinformation systems, ERP system, and labor management system. We also continued consolidating our real estate leases. Severance and otherexpenses associated with our Healthcare reorganization during 2019 were immaterial. We expect to incur additional restructuring charges, primarilyrelated to some of our technology initiatives and other project fees, as we continue to consolidate our operational and financial processes. Year Ended (in millions) October 31, 2019 CumulativeEmployee severance $4.6 $18.0Other project fees 4.5 12.3External support fees 1.5 3.5Lease exit costs 0.7 0.7Total $11.2 $34.621Insurance ReservesWe use a combination of insured and self-insurance programs to cover workers’ compensation, general liability, automobile liability, propertydamage, and other insurable risks. Insurance claim liabilities represent our estimate of retained risks without regard to insurance coverage. Weretain a substantial portion of the risk related to certain workers’ compensation and medical claims. Liabilities associated with these losses includeestimates of both filed claims and incurred but not reported claims (“IBNR Claims”).With the assistance of third-party actuaries, we periodically review our estimate of ultimate losses for IBNR Claims and adjust our requiredself-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 andseverity of the claims, demographic factors, legislative matters, and case law, as appropriate. We compare actual trends to expected trends andmonitor claims developments. The specific case reserves estimated by the third-party administrators are provided to an actuary who assists us inprojecting an actuarial estimate of the overall ultimate losses for our self-insured or high deductible programs, which includes the case reserves plusan actuarial estimate of reserves required for additional developments, such as IBNR Claims. We utilize the results of actuarial studies to estimateour insurance rates and insurance reserves for future periods and to adjust reserves, if appropriate, for prior years.The actuarial reviews continue to demonstrate that the changes we have made to our risk management program are positively impactingthe frequency and severity of claims. There is some flattening of claims frequency reductions as compared to prior periods, but the claimsmanagement strategies and programs that we have implemented have resulted in better than anticipated improvements in early identification ofcertain claims that may potentially develop adversely. Furthermore, we continue to adjust our reserves consistent with known fact patterns. Basedon the results of the actuarial reviews performed, we decreased our total reserves for known claims as well as our estimate of the loss amountsassociated with IBNR Claims for prior periods by $3.4 million during 2019. In 2018, we increased our total reserves related to prior year claims by$10.2 million.Divestiture of Government Services Business During 2017On May 31, 2017, we completed the sale of our Government Services business for $35.5 million and recorded a pre-tax gain of $1.2 million,which gain is reflected in impairment loss (recovery) on our consolidated statements of comprehensive income. Prior to the sale of this business, werecorded a $17.4 million impairment recovery to adjust the fair value of certain previously impaired assets to the valuation of the assets as impliedby the agreed-upon sales price, less estimated costs to sell. The reported results for this business are through the date of sale, and future resultscould 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 itsresults for the periods in this report.Key Financial Highlights•Revenues increased by $56.4 million, or 0.9%, during 2019, as compared to 2018, primarily due to organic growth in our U.S. TechnicalSolutions business, partially offset by the loss of certain accounts across our other industry groups.•Operating profit increased by $69.7 million, or 50.3%, during 2019, as compared to 2018. The increase in operating profit is primarilyattributable to higher gross margin, the absence of $26.5 million of impairment charges recognized during 2018, $14.5 million of lowerrestructuring and related expenses, and a $13.6 million lower self-insurance adjustment related to prior year claims.•We had a provision for taxes of $32.7 million during 2019, as compared to a benefit from taxes of $8.2 million during 2018, primarily due toa net discrete tax benefit of $23.2 million in 2018 related to the Tax Cuts and Jobs Act (the “Tax Act”).•Net cash provided by operating activities of continuing operations was $262.8 million during 2019.•Dividends of $47.7 million were paid to shareholders, and dividends totaling $0.720 per common share were declared during 2019.•At October 31, 2019, total outstanding borrowings under our credit facility were $808.4 million, and we had up to $574.2 million of borrowingcapacity under our credit facility; however, covenant restrictions limited our actual borrowing capacity to $406.6 million.22Results of OperationsThe Year Ended October 31, 2019 Compared with the Year Ended October 31, 2018Consolidated Years Ended October 31, ($ in millions)2019 2018 Increase / (Decrease)Revenues$6,498.6 $6,442.2 $56.4 0.9%Operating expenses5,767.5 5,747.4 20.1 0.3%Gross margin11.2% 10.8% 46 bps Selling, general and administrative expenses452.9 438.0 14.9 3.4%Restructuring and related expenses11.2 25.7 (14.5) (56.3)%Amortization of intangible assets58.5 66.0 (7.5) (11.3)%Impairment loss— 26.5 (26.5) NM*Operating profit208.3 138.6 69.7 50.3%Income from unconsolidated affiliates3.0 3.2 (0.2) (6.8)%Interest expense(51.1) (54.1) (3.0) (5.5)%Income from continuing operations before income taxes160.2 87.7 72.5 82.6%Income tax (provision) benefit(32.7) 8.2 (40.9) NM*Income from continuing operations127.5 95.9 31.6 32.9%(Loss) income from discontinued operations, net of taxes(0.1) 1.8 (1.9) NM*Net income127.4 97.8 29.6 30.3%Other comprehensive income (loss) Interest rate swaps and other(22.4) 21.9 (44.3) NM*Foreign currency translation1.6 (4.7) 6.3 NM*Income tax benefit (provision)5.9 (5.9) 11.8 NM*Comprehensive income$112.5 $109.0 $3.5 3.2%*Not meaningfulRevenuesRevenues increased by $56.4 million, or 0.9%, during 2019, as compared to 2018. The increase in revenues was attributable to organicgrowth, primarily in our U.S. Technical Solutions business, partially offset by the loss of certain accounts across our other industry groups.Revenues in 2019 reflect the adoption of Topic 853, which required rent expense of $48.6 million, primarily within Aviation, to be presented as areduction of revenues versus the comparative period presentation of recording rent expense as an operating expense.Operating ExpensesOperating expenses increased by $20.1 million, or 0.3%, during 2019, as compared to 2018. The increase was partially offset by thereclassification of $48.6 million of rent expense related to the adoption of Topic 853, as noted above. Gross margin increased by 46 bps to 11.2% in2019 from 10.8% in 2018. The increase in gross margin was primarily associated with improved margins within our U.S. B&I business, a lower self-insurance adjustment related to prior year claims, and the impact of Topic 606 within our Technical Solutions business.Selling, General and Administrative ExpensesSelling, general and administrative expenses increased by $14.9 million, or 3.4%, during 2019, as compared to 2018. The increase inselling, general and administrative expenses was primarily related to:•an $18.1 million increase in technology investments and related support;•the absence of a $7.0 million reimbursement of previously expensed legal settlement costs received in the prior year;23•a $3.9 million reserve established for an anticipated union pension settlement;•the absence of a $3.4 million benefit in the prior year resulting from actuarial evaluations performed on our medical and dental self-insurance plans; and•a $2.5 million reserve established for a non-recurring adjustment related to a client account.This increase was partially offset by:•a $10.3 million decrease in legal settlement costs;•a $4.1 million decrease in compensation and related expenses; and•the absence of $2.2 million of acquisition costs incurred in the prior year related to the GCA acquisition.Restructuring and Related ExpensesRestructuring and related expenses decreased by $14.5 million, or 56.3%, during 2019, as compared to 2018. The decrease was due torestructuring expenses incurred in the prior year following the acquisition of GCA, primarily severance, partially offset by other restructuringexpenses incurred in the current year.Amortization of Intangible AssetsAmortization of intangible assets decreased by $7.5 million, or 11.3%, during 2019, as compared to 2018, primarily related to certainintangible assets being amortized using the sum-of-the-years’-digits method, which results in declining amortization expense over the assets’ usefullives.Impairment LossDuring 2018, we recorded impairment charges on goodwill and customer relationships related to our U.K. Technical Solutions businesstotaling $26.5 million, which primarily reflected the declining operating performance of this business due to adverse impacts of Brexit and theresulting effects on microeconomic conditions in the U.K. retail sector.Income Taxes from Continuing OperationsDuring 2019 and 2018, we had effective tax rates on income from continuing operations of 20.4% and (9.4)%, respectively, resulting in aprovision for tax of $32.7 million and a benefit from tax of $8.2 million, respectively. Our effective tax rate for 2019 was impacted by the followingdiscrete items: a $1.8 million benefit from the transition tax (including foreign tax credits); a $1.7 million benefit from state true-ups; a $1.6 millionbenefit from federal true-ups; a $1.3 million provision related to the Work Opportunity Tax Credit (“WOTC”); a $1.3 million benefit from expiringstatutes of limitations; a $1.1 million benefit from the vesting of share-based compensation awards; and a $0.9 million benefit from research anddevelopment credits. Our effective tax rate for 2018 was impacted by the following discrete items: a $23.2 million benefit related to the Tax Actenactment; a $5.8 million benefit from expiring statutes of limitations; a $3.4 million benefit from the vesting of share-based compensation awards; a$2.8 million benefit for energy efficient government buildings; and a $1.0 million provision for certain tax credits, including WOTC.Interest Rate Swaps and OtherDuring 2019, we recognized as a component of our comprehensive income a loss of $22.4 million related to our interest rate swaps,compared to a gain of $21.9 million during 2018, primarily due to underlying changes in the fair value of the interest rate swaps. Additionally, wecontinue to amortize the gain we realized in 2018 from the termination of our prior interest rate swaps from accumulated other comprehensiveincome (“AOCI”) to interest expense. During 2019 we amortized $4.1 million, net of taxes of $1.5 million, of that gain compared to $1.8 million, net oftaxes of $0.7 million, amortized during 2018.Foreign Currency TranslationDuring 2019, we recognized as a component of our comprehensive income a foreign currency translation gain of $1.6 million compared to aloss of $4.7 million during 2018. This change was due to fluctuations in the exchange rate between the U.S. Dollar (“USD”) and the Great BritainPound (“GBP”). Future gains and losses on foreign currency translation will be dependent upon changes in the relative value of foreign currencies tothe USD and the extent of our foreign assets and liabilities.24Segment InformationOur current reportable segments consist of Business & Industry (“B&I”), Aviation, Technology & Manufacturing (“T&M”), Education, andTechnical Solutions. Effective November 1, 2018, we modified the presentation of inter-segment revenues, which are recorded at cost with noassociated intercompany profit or loss and are eliminated in consolidation. Additionally, during the third quarter of 2019, we made changes to ouroperating structure to better align the services and expertise of our Healthcare business with our other industry groups, allowing us to leverage ourexisting branch network to support the long-term growth of this business. As a result, our former Healthcare portfolio is now included primarily in ourB&I segment. Our prior period segment data has been reclassified to conform with our current period presentation. These changes had no impacton our previously reported consolidated financial statements.Financial Information for Each Reportable Segment Years Ended October 31, ($ in millions)2019 2018 Increase / (Decrease)Revenues Business & Industry$3,251.4 $3,268.4 $(17.0) (0.5)%Aviation1,017.3 1,038.7 (21.4) (2.1)%Technology & Manufacturing917.0 925.4 (8.4) (0.9)%Education847.4 856.7 (9.3) (1.1)%Technical Solutions593.2 500.1 93.1 18.6%Elimination of inter-segment revenues(127.7) (147.1) 19.4 13.2% $6,498.6 $6,442.2 $56.4 0.9%Operating profit (loss) Business & Industry$182.3 $157.9 $24.4 15.5%Operating profit margin5.6% 4.8% 78 bps Aviation21.1 23.2 (2.1) (8.9)%Operating profit margin2.1% 2.2% (15) bps Technology & Manufacturing72.5 67.4 5.1 7.6%Operating profit margin7.9% 7.3% 62 bps Education39.0 44.1 (5.1) (11.4)%Operating profit margin4.6% 5.1% (54) bps Technical Solutions55.4 21.8 33.6 NM*Operating profit margin9.3% 4.4% 497 bps Government Services(0.1) (0.8) 0.7 90.1%Operating profit marginNM* NM* NM* Corporate(159.0) (168.8) 9.8 5.8%Adjustment for income from unconsolidated affiliates, included in Aviation(3.0) (3.2) 0.2 7.4%Adjustment for tax deductions for energy efficient government buildings,included in Technical Solutions0.1 (2.8) 2.9 NM* $208.3 $138.6 $69.7 50.3%*Not meaningful25Business & Industry Years Ended October 31, ($ in millions)2019 2018 (Decrease) / IncreaseRevenues$3,251.4 $3,268.4 $(17.0) (0.5)%Operating profit182.3 157.9 24.4 15.5%Operating profit margin5.6% 4.8% 78 bps B&I revenues decreased by $17.0 million, or 0.5%, during 2019, as compared to 2018. The decrease was primarily attributable to the lossof certain accounts in our U.S. business, including the exit from certain lower margin or underperforming accounts, and a negative impact fromfluctuations in foreign currency exchange rates related to our U.K. business. The decrease was partially offset by organic growth, including thetargeted expansion of certain key clients within our U.S. business and the expansion of a contract that started in 2018 in our U.K. business.Management reimbursement revenues for this segment totaled $283.1 million and $276.6 million during 2019 and 2018, respectively.Operating profit increased by $24.4 million, or 15.5%, during 2019, as compared to 2018. Operating profit margin increased by 78 bps to5.6% in 2019 from 4.8% in 2018. The increase in operating profit margin was primarily associated with the exit from certain lower margin orunderperforming accounts in our U.S. business, improvements in our labor management processes, and a decrease in unemployment taxes incertain states. This increase was partially offset by a provision for the settlement of a union health and welfare benefits audit. While labor challengesare present in certain areas of our B&I business, it is our most mature business and has the highest proportion of unionized labor.Aviation Years Ended October 31, ($ in millions)2019 2018 DecreaseRevenues$1,017.3 $1,038.7 $(21.4) (2.1)%Operating profit21.1 23.2 (2.1) (8.9)%Operating profit margin2.1% 2.2% (15) bps Aviation revenues decreased by $21.4 million, or 2.1%, during 2019, as compared to 2018. The decrease in revenues primarily related tothe adoption of Topic 853, which required rent expense of $46.8 million to be presented as a reduction of revenues versus the comparative periodpresentation of recording rent expense as an operating expense. Overall, revenues were positively impacted by organic growth, primarily newcontract wins in our U.K. business, as well as the expansion of catering logistics accounts in our U.S. business. However, this growth was partiallyoffset by the loss of certain passenger services, facility services, and cabin cleaning accounts, as well as a negative impact from fluctuations inforeign currency exchange rates related to our U.K. business. Management reimbursement revenues for this segment totaled $95.5 million and$99.9 million during 2019 and 2018, respectively.Operating profit decreased by $2.1 million, or 8.9%, during 2019, as compared to 2018. Operating profit margin decreased by 15 bps to2.1% in 2019 from 2.2% in 2018. This decrease in operating profit margin was primarily attributable to operational issues on certain accounts,including higher labor costs due to a tight labor market, partially offset by higher margins on certain new contracts, including contract wins in ourU.K. business.Technology & Manufacturing Years Ended October 31, ($ in millions)2019 2018 (Decrease) / IncreaseRevenues$917.0 $925.4 $(8.4) (0.9)%Operating profit72.5 67.4 5.1 7.6%Operating profit margin7.9% 7.3% 62 bps T&M revenues decreased by $8.4 million, or 0.9%, during 2019, as compared to 2018. The decrease was primarily attributable to the lossof certain accounts, partially offset by the expansion of existing accounts and new business.26Operating profit increased by $5.1 million, or 7.6%, during 2019, as compared to 2018. Operating profit margin increased by 62 bps to 7.9%in 2019 from 7.3% in 2018. The increase in operating profit margin was primarily attributable to improved margins on certain accounts and the lossof a low margin account in the prior year, partially offset by specific reserves established for client receivables.Education Years Ended October 31, ($ in millions)2019 2018 DecreaseRevenues$847.4 $856.7 $(9.3) (1.1)%Operating profit39.0 44.1 (5.1) (11.4)%Operating profit margin4.6% 5.1% (54) bps Education revenues decreased by $9.3 million, or 1.1%, during 2019, as compared to 2018. The decrease was attributable to the loss ofcertain accounts, partially offset by new business, including the expansion of certain accounts that primarily occurred in the current year.Operating profit decreased by $5.1 million, or 11.4%, during 2019, as compared to 2018. Operating profit margin decreased by 54 bps to4.6% in 2019 from 5.1% in 2018. The decrease in operating profit margin was primarily attributable to changes in contract mix due to the loss ofcertain accounts and an increase in direct labor and related personnel costs on certain accounts driven by a challenging labor environment. Thedecrease was partially offset by the management of overhead and selling, general and administrative expenses due to the timing of certainsynergies and lower reserves established for client receivables, including collections of previously written off receivables.Technical Solutions Years Ended October 31, ($ in millions)2019 2018 IncreaseRevenues$593.2 $500.1 $93.1 18.6%Operating profit55.4 21.8 33.6 NM*Operating profit margin9.3% 4.4% 497 bps Technical Solutions revenues increased by $93.1 million, or 18.6%, during 2019, as compared to 2018. The increase was primarilyattributable to growth in our U.S. business related to bundled energy solutions (“BES”) projects and power projects, partially offset by the contractionof certain accounts in our U.K. business and a negative impact from fluctuations in foreign currency exchange rates related to our U.K. business.Operating profit increased by $33.6 million during 2019, as compared to 2018. Operating profit margin increased by 497 bps to 9.3% in2019 from 4.4% in 2018. The increase in operating profit margin was primarily attributable to the absence of impairment charges on goodwill andcustomer relationships related to our U.K. business totaling $26.5 million during 2018. The increase in operating profit margin was also due to thecontribution of higher project revenues in our U.S. business, lower sales commission expense in the current year due to the deferral of commissionsfollowing the adoption of Topic 606, and lower amortization expense following the impairment recognized in our U.K. business at the end of 2018.The increase was partially offset by a higher volume of lower margin power projects in our U.S. business in the current year compared to highermargin BES projects in the prior year, the loss of certain higher margin contracts in our U.K. business, and the absence of tax deductions taken inthe prior year for energy efficient government buildings.27Corporate Years Ended October 31, ($ in millions)2019 2018 DecreaseCorporate expenses$159.0 $168.8 $(9.8) (5.8)%Corporate expenses decreased by $9.8 million, or 5.8%, during 2019, as compared to 2018. The decrease in corporate expenses wasprimarily related to:•a $14.5 million decrease in restructuring and related expenses as a result of restructuring expenses incurred in the prior year following theacquisition of GCA, partially offset by other restructuring expenses incurred in the current year;•a $13.6 million lower adjustment to self-insurance reserves related to prior year claims;•an $11.3 million decrease in legal settlement costs;•the absence of $2.2 million of acquisition costs related to the GCA acquisition incurred in the prior year; and•$1.1 million lower compensation and related expenses.This decrease was partially offset by:•an $18.1 million increase in technology investments and related support;•the absence of a $7.0 million reimbursement of previously expensed legal settlement costs received in the prior year;•a $3.9 million reserve established for an anticipated union pension settlement;•the absence of a $3.4 million benefit in the prior year resulting from actuarial evaluations performed on our medical and dental self-insurance plans; and•a $2.5 million reserve established for a non-recurring adjustment related to a client account.28The Year Ended October 31, 2018 Compared with the Year Ended October 31, 2017Consolidated Years Ended October 31, ($ in millions)2018 2017 Increase / (Decrease)Revenues$6,442.2 $5,453.6 $988.6 18.1%Operating expenses5,747.4 4,881.2 866.2 17.7%Gross margin10.8% 10.5% 29 bps Selling, general and administrative expenses438.0 436.6 1.4 0.3%Restructuring and related expenses25.7 20.9 4.8 23.1%Amortization of intangible assets66.0 31.6 34.4 NM*Impairment loss (recovery)26.5 (18.5) 45.0 NM*Operating profit138.6 101.9 36.7 36.1%Income from unconsolidated affiliates3.2 4.2 (1.0) (23.9)%Interest expense(54.1) (19.2) 34.9 NM*Income from continuing operations before income taxes87.7 86.9 0.8 1.0%Income tax benefit (provision)8.2 (8.8) 17.0 NM*Income from continuing operations95.9 78.1 17.8 22.9%Income (loss) from discontinued operations, net of taxes1.8 (74.3) 76.1 NM*Net income97.8 3.8 94.0 NM*Other comprehensive income (loss) Interest rate swaps and other21.9 2.7 19.2 NM*Foreign currency translation(4.7) 9.7 (14.4) NM*Income tax provision(5.9) (1.1) (4.8) NM*Comprehensive income$109.0 $15.2 $93.8 NM**Not meaningfulRevenuesRevenues 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 ExpensesOperating expenses increased by $866.2 million, or 17.7%, during 2018, as compared to 2017. The increase was primarily attributableto $763.1 million of incremental operating expenses from the GCA acquisition and an increase in wages and related personnel costs due to a tightlabor market. Gross margin increased by 29 bps in 2018, as compared to 2017. The increase in gross margin was primarily associated with a lowerself-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&Iaccounts.29Selling, General and Administrative ExpensesSelling, general and administrative expenses increased by $1.4 million, or 0.3%, during 2018, as compared to 2017. The increase inselling, 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 foreignentity 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 ExpensesRestructuring and related expenses increased by $4.8 million, or 23.1%, during 2018, as compared to 2017, as a result of restructuringrelated to the GCA acquisition, partially offset by the completion of our 2020 Vision organizational realignment.Amortization of Intangible AssetsAmortization of intangible assets increased by $34.4 million, during 2018, as compared to 2017, as a result of the amortization of acquiredintangible 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 businesstotaling $26.5 million, which primarily reflected the declining operating performance of this business due to adverse impacts of Brexit and theresulting effects 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 thesecond quarter of 2017, we recorded a $17.4 million impairment recovery to adjust the fair value of certain previously impaired assets. In connectionwith the sale, we recorded a pre-tax gain of approximately $1.2 million during the third quarter of 2017 due to a working capital settlement.Interest ExpenseInterest expense increased by $34.9 million during 2018, as compared to 2017, primarily related to increased indebtedness incurred to fundthe GCA acquisition and higher relative interest rates under our credit facility, partially offset by amortization of $2.5 million related to the interest rateswap gain.30Income Taxes from Continuing OperationsOur effective tax rates on income from continuing operations during 2018 and 2017 were (9.4)% and 10.1%, respectively. Our effective ratefor 2018 was impacted by the following discrete items: a $23.2 million benefit related to the Tax Act enactment; a $5.8 million benefit from expiringstatutes of limitations; a $3.4 million benefit from the vesting of share-based compensation awards; a $2.8 million benefit for energy efficientgovernment buildings; and a $1.0 million provision for certain tax credits, including WOTC. Our effective rate for 2017 was impacted by the followingdiscrete items: a $17.8 million benefit from expiring statutes of limitations for uncertain tax positions; a $3.6 million benefit from the vesting of share-based compensation awards; a $1.9 million benefit for energy efficient government buildings; and the 2017 WOTC for new hires.Discontinued Operations, Net of TaxesDuring 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 andcollection of previously written off receivables, partially offset by union audit settlements during 2018, compared with a legal reserve established inthe prior year in connection with certain legal settlement agreements.Interest Rate Swaps and OtherDuring April 2018, we elected to terminate all of our interest rate swaps for cash proceeds of $25.9 million. The resulting gain is beingamortized from AOCI to interest expense over the term of our Credit Facility.Foreign Currency TranslationDuring 2018, we recognized as a component of our comprehensive income a foreign currency translation loss of $4.7 million compared to again of $9.7 million during 2017. This change was related to the USD strengthening against the GBP during 2018. Future gains and losses onforeign currency translation will be dependent upon changes in the relative value of foreign currencies to the USD and the extent of our foreignassets and liabilities.31Segment InformationFinancial Information for Each Reportable Segment Years Ended October 31, ($ in millions)2018 2017 Increase / (Decrease)Revenues Business & Industry$3,268.4 $2,939.4 $329.0 11.2%Aviation1,038.7 1,003.0 35.7 3.6%Technology & Manufacturing925.4 698.1 227.3 32.6%Education856.7 368.8 487.9 NM*Technical Solutions500.1 473.4 26.7 5.6%Government Services— 86.5 (86.5) NM*Elimination of inter-segment revenue(147.1) (115.7) (31.4) (27.1)% $6,442.2 $5,453.6 $988.6 18.1%Operating profit (loss) Business & Industry$157.9 $146.6 $11.3 7.7%Operating profit margin4.8% 5.0% (16) bps Aviation23.2 23.0 0.2 0.5%Operating profit margin2.2% 2.3% (7) bps Technology & Manufacturing67.4 48.6 18.8 38.7%Operating profit margin7.3% 7.0% 32 bps Education44.1 17.4 26.7 NM*Operating profit margin5.1% 4.7% 42 bps Technical Solutions21.8 39.4 (17.6) (44.6)%Operating profit margin4.4% 8.3% (396) bps Government Services(0.8) 21.8 (22.6) NM*Operating profit marginNM* 25.2% NM* Corporate(168.8) (189.0) 20.2 10.7%Adjustment for income from unconsolidated affiliates, included in Aviationand Government Services(3.2) (4.1) 0.9 21.2%Adjustment for tax deductions for energy efficient government buildings,included in Technical Solutions(2.8) (1.9) (0.9) (48.1)% $138.6 $101.9 $36.7 36.1%*Not meaningfulBusiness & Industry Years Ended October 31, ($ in millions)2018 2017 Increase / (Decrease)Revenues$3,268.4 $2,939.4 $329.0 11.2%Operating profit(1)157.9 146.6 11.3 7.7%Operating profit margin4.8% 5.0% (16) bps (1) 2018 and 2017 include $7.9 million and $1.5 million, respectively, of amortization expense related to the GCA acquisition.B&I revenues increased by $329.0 million, or 11.2%, during 2018, as compared to 2017. The increase was primarily attributable toincremental revenues of $155.1 million from the GCA acquisition and to organic net new business, primarily new contract wins in the UnitedKingdom, as well as targeted expansion of key clients within the United States. Management reimbursement revenues for this segment totaled$276.6 million and $252.9 million during 2018 and 2017, respectively.32Operating profit increased by $11.3 million, or 7.7%, during 2018, as compared to 2017. Operating profit margin decreased by 16 bps to4.8% in 2018 from 5.0% in 2017. Operating profit margin was negatively impacted by lower margins on certain accounts and an increase inamortization expense related to the GCA acquisition, partially offset by the management of selling, general and administrative expenses and highermargins on certain accounts. While labor challenges are present in certain areas of our B&I business, it is our most mature business and has thehighest proportion of unionized labor.Aviation Years Ended October 31, ($ in millions)2018 2017 Increase / (Decrease)Revenues$1,038.7 $1,003.0 $35.7 3.6%Operating profit23.2 23.0 0.2 0.5%Operating profit margin2.2% 2.3% (7) bps Aviation revenues increased by $35.7 million, or 3.6%, during 2018, as compared to 2017. The increase was primarily attributable to highermanagement reimbursement revenue and organic growth in catering logistics, cabin cleaning, and transportation services, as well as incrementalrevenues of $14.5 million from the GCA acquisition. This increase was partially offset by the loss of certain passenger services, facility services, andjanitorial accounts. Management reimbursement revenues for this segment totaled $99.9 million and $80.4 million during 2018 and 2017,respectively.Operating profit increased by $0.2 million, or 0.5%, during 2018, as compared to 2017. Operating profit margin decreased by 7 bps to 2.2%in 2018 from 2.3% in 2017. This decrease in operating profit margin was primarily attributable to lower margins and operational pressures oncertain accounts and a provision for the settlement of a union wage and benefits audit. The decrease was mostly offset by the termination of anunprofitable contract in the third quarter of 2017.Technology & Manufacturing Years Ended October 31, ($ in millions)20182017 IncreaseRevenues$925.4 $698.1 $227.3 32.6%Operating profit(1)67.4 48.6 18.8 38.7%Operating profit margin7.3% 7.0% 32 bps (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 $227.3 million, or 32.6%, during 2018, as compared to 2017. The increase was primarily attributable toincremental revenues from the GCA acquisition of $198.1 million, expansion of existing accounts, and net new business.Operating profit increased by $18.8 million, or 38.7%, during 2018, as compared to 2017. Operating profit margin increased by 32 bps to7.3% in 2018 from 7.0% in 2017. Operating profit margin was positively impacted by certain higher margin acquired contracts, partially offset byhigher amortization expense related to the GCA acquisition and an increase in wages and related personnel costs in certain markets.Education Years Ended October 31, ($ in millions)2018 2017 IncreaseRevenues$856.7 $368.8 $487.9 NM*Operating profit(1)44.1 17.4 26.7 NM*Operating profit margin5.1% 4.7% 42 bps *Not meaningful(1) 2018 and 2017 include $26.4 million and $4.6 million, respectively, of amortization expense related to the GCA acquisition.Education revenues increased by $487.9 million during 2018, as compared to 2017. The increase was primarily attributable to incrementalrevenues from the GCA acquisition of $488.0 million.33Operating profit increased by $26.7 million during 2018, as compared to 2017. Operating profit margin increased by 42 bps to 5.1% in 2018from 4.7% in 2017. The increase in operating profit margin was primarily due to certain higher margin contracts and the reversal of certain reserves,partially offset by higher amortization expense related to the GCA acquisition and an increase in wages and related personnel costs in certainmarkets.Technical Solutions Years Ended October 31,($ in millions)20182017Increase / (Decrease)Revenues$500.1$473.4$26.75.6%Operating profit21.839.4(17.6)(44.6)%Operating profit margin4.4%8.3%(396) bpsTechnical Solutions revenues increased by $26.7 million, or 5.6%, during 2018, as compared to 2017. The increase was primarilyattributable to higher BES project revenues in our U.S. business due to the timing of new projects.Operating profit decreased by $17.6 million, or 44.6%, during 2018, as compared to 2017. Operating profit margin decreased by 396 bps to4.4% in 2018 from 8.3% in 2017. The decrease in operating profit margin was primarily attributable to impairment charges on goodwill andcustomer relationships related to our U.K. business totaling $26.5 million during 2018, as well as the loss of certain higher margin contracts in ourU.K. business, partially offset by favorable margins on certain projects in our U.S. business and higher tax deductions for energy efficientgovernment building projects.Corporate Years Ended October 31, ($ in millions)2018 2017 DecreaseCorporate expenses$168.8 $189.0 $(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 wasprimarily 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;•the absence of a $3.2 million reimbursement of previously expensed fees associated with a concluded internal investigation into a foreignentity formerly affiliated with a joint venture during the prior year;•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.34Liquidity and Capital ResourcesOur primary sources of liquidity are operating cash flows and borrowing capacity under our credit facility. We assess our liquidity in terms ofour ability to generate cash to fund our short- and long-term cash requirements. As such, we project our anticipated cash requirements as well ascash 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 legalsettlements, insurance claims, dividend payments, capital expenditures, and continued systems and technology transformation initiatives. Weanticipate 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 thenext twelve months. In the event that our plans change or our cash requirements are greater than we anticipate, we may need to access the capitalmarkets to finance future cash requirements. However, there can be no assurance that such financing will be available to us should we need it or, ifavailable, 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. Inaddition, 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 savingsrelated to coverage provided by IFM of approximately $6 million in 2019, $7 million in 2018, and $10 million in 2017. We project accelerated cashtax savings for 2020 to be approximately $6 million.Credit FacilityOn September 1, 2017, we refinanced and replaced our then-existing $800.0 million credit facility with a new senior, secured five-yearsyndicated 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 onSeptember 1, 2018. Initial borrowings under the Credit Facility were used to finance, in part, the cash portion of the purchase price related to theGCA acquisition, to refinance certain existing indebtedness of ABM, and to pay transaction costs.Our ability to draw down available capacity under the Credit Facility, as amended, is subject to, and limited by, compliance with certainfinancial covenants, including a current maximum leverage ratio of 4.00 to 1.0 that steps down by 25 basis points annually each July to 3.50 to 1.0by July 2021 and a minimum fixed charge coverage ratio of 1.50 to 1.0. Other covenants under the Credit Facility include limitations on liens,dispositions, fundamental changes, investments, and certain transactions and payments. At October 31, 2019, we were in compliance with thesecovenants and expect to be in compliance in the foreseeable future.During 2019, we made $40.0 million of principal payments under the term loan. At October 31, 2019, the total outstanding borrowings underour Credit Facility in the form of cash borrowings and standby letters of credit were $808.4 million and $149.8 million, respectively. At October 31,2019, we had up to $574.2 million of borrowing capacity under the Credit Facility; however, covenant restrictions limited our actual borrowingcapacity to $406.6 million.In July 2017, the U.K. Financial Conduct Authority, the regulator of the London Interbank Offered Rate (“LIBOR”), indicated that it will nolonger require banks to submit rates to the LIBOR administrator after 2021. This announcement signaled that the calculation of LIBOR and itscontinued use could not be guaranteed after 2021. A change away from LIBOR after 2021 may impact our Credit Facility and interest rate swaps.Our current credit agreement as well as our International Swaps and Derivatives Association, Inc. agreement provide for any changes away fromLIBOR to a successor rate to be based on prevailing or equivalent standards. We continue to monitor developments related to the LIBOR transitionand/or identification of an alternative, market-accepted rate. The impact related to any changes cannot be predicted at this time.35Reinvestment of Foreign EarningsWe plan to reinvest our foreign earnings to fund future non-U.S. growth and expansion, and we do not anticipate remitting such earnings tothe 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 federaland state income taxes or foreign withholding taxes have been recognized. We believe that our cash on hand in the United States, along with ourCredit Facility and future domestic cash flows, are sufficient to satisfy our domestic liquidity requirements.Proceeds from Federal Energy Savings Performance ContractsAs part of our Technical Solutions business, we enter into energy savings performance contracts (“ESPC”) with the federal governmentpursuant to which we agree to develop, design, engineer, and construct a project and guarantee that the project will satisfy agreed-uponperformance standards. Proceeds from ESPC projects are generally received in advance of construction through agreements to sell the ESPCreceivables to unaffiliated third parties. We use the advances from the third parties under these agreements to finance the projects, which arerecorded as cash flows from financing activities. The use of the cash received under these arrangements to pay project costs is classified asoperating cash flows.Effect of InflationThe rates of inflation experienced in recent years have not had a material impact on our financial statements. We attempt to recoverincreased costs by increasing prices for our services, to the extent permitted by contracts and competition.Regulatory Environment and Environmental ComplianceOur operations are subject to various federal, state, and/or local laws regulating the discharge of materials into the environment orotherwise 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 ofour locations or in connection with our operations. Historically, the cost of complying with environmental laws or resolving environmental issuesrelating to locations or operations in the United States or abroad has not had a material adverse effect on our financial position, results ofoperations, or cash flows. We do not believe that the resolution of matters known at this time will be material.Cash FlowsIn 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 operatingactivities of continuing operations was $262.8 million during 2019. Operating cash flows primarily depend on: revenue levels; the quality and timingof collections of accounts receivable; the timing of payments to suppliers and other vendors; the timing and amount of income tax payments; and thetiming and amount of payments on insurance claims and legal settlements. Years Ended October 31,(in millions)2019 2018 2017Net cash provided by operating activities of continuing operations$262.8 $299.7 $101.7Net cash (used in) provided by operating activities of discontinued operations(0.1) 21.2 (96.1)Net cash provided by operating activities262.7 320.9 5.6 Net cash used in investing activities(58.3) (48.1) (871.8) Net cash (used in) provided by financing activities(184.8) (295.8) 874.0Operating Activities of Continuing OperationsNet cash provided by operating activities of continuing operations decreased by $36.9 million during 2019, as compared to 2018. Thedecrease was primarily related to the timing of client receivable collections, including a one-time settlement payment received from a client in 2018,and the absence of proceeds from the termination of interest rate swaps in 2018, partially offset by the timing of vendor payments.36Net cash provided by operating activities of continuing operations increased by $198.0 million during 2018, as compared to 2017. Theincrease was primarily related to the timing of client receivable collections, including collections from acquired GCA accounts, as well as proceedsfrom the termination of interest rate swaps and a year-over-year reduction of required cash insurance deposits included in other assets. Thisincrease was partially offset by the timing of vendor payments.Operating Activities of Discontinued Operations Net cash used in operating activities of discontinued operations was $0.1 million during 2019, as compared to net cash provided byoperating activities of discontinued operations of $21.2 million during 2018, a change of $21.3 million, primarily attributable to an income tax refundreceived on a legal settlement during 2018.Net cash provided by operating activities of discontinued operations was $21.2 million during 2018, as compared to net cash used inoperating activities of discontinued operations of $96.1 million in 2017, a change of $117.3 million, primarily attributable to the payment of a $120.0million legal settlement during 2017.Investing ActivitiesNet cash used in investing activities increased by $10.2 million during 2019, as compared to 2018. The increase was primarily related tohigher additions to property, plant and equipment in 2019.Net cash used in investing activities decreased by $823.7 million during 2018, as compared to 2017. The decrease was primarily related toan $853.6 million year-over-year increase in cash paid, net of cash acquired, for acquisitions, partially offset by the absence of $35.5 million of cashproceeds from the sale of our Government Services business in 2017.Financing ActivitiesNet cash used in financing activities decreased by $111.0 million during 2019, as compared to 2018, primarily due to higher repayments ofour borrowings in 2018.Net cash used in financing activities was $295.8 million during 2018, as compared to net cash provided by financing activities of $874.0million during 2017. The change was primarily due to higher repayments of our borrowings in 2018, as compared to higher net borrowings in 2017 tofund the GCA acquisition.DividendsOn December 18, 2019, we announced a quarterly cash dividend of $0.185 per share on our common stock, payable on February 3, 2020.We declared a quarterly cash dividend on our common stock every quarter during 2019, 2018, and 2017. We paid total annual dividends of $47.7million, $46.0 million, and $39.5 million during 2019, 2018, and 2017, respectively.Contractual Obligations(in millions)Commitments Due By PeriodContractual ObligationsTotal 2020 2021-2022 2023-2024 ThereafterBorrowings under term loan(1)$740.0 $60.0 $680.0 $— $—Borrowings under line of credit(1)68.4 — 68.4 — —Fixed interest related to interest rate swaps(2)28.8 12.5 16.2 — —Operating leases and other similar commitments(3)206.5 42.8 65.8 46.0 51.8Service concession arrangements(4)105.0 20.8 31.4 30.9 21.9Capital leases(3)7.5 3.1 3.8 0.7 —Information technology service agreements(5)75.9 33.7 35.8 6.3 0.1Benefit obligations(6)27.6 5.1 5.7 4.5 12.2Total$1,259.7 $178.1 $907.1 $88.4 $86.1(1) Borrowings under our term loan and line of credit are presented at face value.37(2) Our estimates of future interest payments are calculated based on our hedged borrowings under our Credit Facility, using the fixed rates under our interestrate swap agreements for the applicable notional amounts. See Note 13, “Credit Facility,” in the Financial Statements for additional disclosure related to ourinterest rate swaps. We exclude interest payments on our remaining borrowings from this table because the cash outlay for the interest is unknown. The interestpayments on the borrowings under the Credit Facility will be determined based upon the average outstanding balance of our borrowings and the prevailinginterest rate during that time.(3) Reflects our contractual obligations to make future payments under non-cancelable operating leases, capital lease agreements, and other similarcommitments for various facilities, vehicles, and other equipment.(4) Represents leased location parking arrangements that meet the definition of service concession arrangements under Topic 853.(5) Reflects our contractual obligations to make future payments for outsourced services and licensing costs pursuant to our information technology agreements.(6) Reflects future expected payments relating to our defined benefit, postretirement, and deferred compensation plans. These amounts are based on expectedfuture service and were calculated using the same assumptions used to measure our benefit obligation at October 31, 2019.In addition to our company sponsored plans, we participate in certain multiemployer pension and other postretirement plans. The cost of these plans is equal tothe annual required contributions determined in accordance with the provisions of negotiated collective bargaining arrangements. During 2019, 2018, and 2017,contributions made to these plans were $345.4 million, $339.3 million, and $316.4 million, respectively; however, our future contributions to the multiemployerplans are dependent upon a number of factors, including the funded status of the plans, the ability of other participating companies to meet ongoing fundingobligations, and the level of our ongoing participation in these plans. As the amount of future contributions that we would be contractually obligated to makepursuant to these plans cannot be reasonably estimated, such amounts have been excluded from the above table. See Note 14, “Employee Benefit Plans,” inthe Financial Statements for more information. At October 31, 2019, our total liability for unrecognized tax benefits was $12.2 million. The resolution or settlement of these tax positionswith the taxing authorities is subject to significant uncertainty, and therefore we are unable to make a reliable estimate of the amount or timing ofcash that may be required to settle these matters. In addition, certain of these matters may not require cash settlements due to the exercise ofcredits and net operating loss carryforwards as well as other offsets, including the indirect benefit from other taxing jurisdictions that may beavailable.Excluded from the contractual obligations table are payments we may make for exposures for which we are self-insured, including workers’compensation, general liability, automobile liability, property damage, and other insurable risks. At October 31, 2019, our self-insurance reserves,net of recoverables, were $443.3 million. In general, these amounts are recorded on an undiscounted basis and are classified on the consolidatedbalance sheets as current or long-term based on the expected settlement date. As these obligations do not have scheduled maturities, we areunable to make a reliable estimate of the amount or timing of cash that may be required to settle these matters. We have no off-balance sheet arrangements other than unrecorded standby letters of credit and surety bonds. We use letters of credit and suretybonds in the ordinary course of business to ensure the performance of contractual obligations and to collateralize self-insurance obligations in theevent we are unable to meet our claim payment obligations. As we already have reserves on our books for the claims costs, these do not representadditional liabilities. The bonds typically remain in force for one to five years and may include optional renewal periods. As of October 31, 2019,these letters of credit and surety bonds totaled $149.8 million and $596.8 million, respectively. Neither of these arrangements has a material currenteffect, or is reasonably likely to have a material future effect, on our financial condition, revenues or expenses, results of operations, liquidity, capitalexpenditures, or capital resources.38Critical Accounting Policies and EstimatesThe preparation of consolidated financial statements in accordance with United States generally accepted accounting principles requires ourmanagement to make certain estimates that affect the reported amounts. We base our estimates on historical experience, known or expectedtrends, independent valuations, and various other assumptions that we believe to be reasonable under the circumstances. As future events andtheir effects cannot be determined with precision, actual results could differ significantly from these estimates. On November 1, 2018, we adoptedASU 2014-09, Revenue from Contracts with Customers (Topic 606), and ASU 2017-10, Service Concession Arrangements (Topic 853):Determining the Customer of the Operation Services. Refer to Note 2, “Basis of Presentation and Significant Accounting Policies,” and Note 3,“Revenues,” in the Financial Statements for additional information regarding the impact of adopting these standards. Additionally, refer to Note 2,“Basis of Presentation and Significant Accounting Policies,” for other standards adopted during the first quarter of 2019, none of which had amaterial impact on our consolidated financial statements. There have been no other significant changes to our critical accounting policies andestimates. We believe the following critical accounting policies govern the more significant judgments and estimates used in the preparation of ourfinancial statements.39Description Judgments and Uncertainties Effect if Actual Results Differ from AssumptionsValuation of Long-Lived AssetsWe evaluate our fixed assets andamortizable intangible assets forimpairment whenever events or changesin circumstances indicate that the carryingamount of such assets may not berecoverable. These events andcircumstances include, but are not limitedto: higher than expected attrition forcustomer relationships; a currentexpectation that a long-lived asset will bedisposed of significantly before the end ofits previously estimated useful life, such aswhen we classify a business as held forsale; a significant adverse change in theextent or manner in which we use a long-lived asset; or a change in the physicalcondition of a long-lived asset.Undiscounted cash flow analyses areused to determine if impairment exists; ifimpairment is determined to exist, the lossis calculated based on estimated fairvalue.Goodwill is not amortized but rather testedat least annually for impairment, or moreoften if events or changes incircumstances indicate it is more-likely-than-not that the carrying amount of theasset may not be recoverable. Goodwill istested for impairment at the reporting unitlevel, which represents an operatingsegment or a component of an operatingsegment. Goodwill is tested for impairmentby either performing a qualitativeevaluation or a quantitative test. Thequalitative evaluation is an assessment offactors to determine whether it is more-likely-than-not that the fair value of areporting unit is less than its carryingamount, including goodwill. We may electnot to perform the qualitative assessmentfor some or all of our reporting units andinstead perform a quantitative impairmenttest. Our impairment evaluations require us toapply judgment in determining whether atriggering event has occurred, including theevaluation of whether it is more likely thannot that a long-lived asset will be disposed ofsignificantly before the end of its previouslyestimated useful life. Incorrect estimation ofuseful lives may result in inaccuratedepreciation and amortization charges overfuture periods leading to future impairment.Our impairment loss calculations containuncertainties because they requiremanagement to make assumptions and toapply judgment to estimate future cash flowsand asset fair values, including forecastinguseful lives of the assets and selecting thediscount rate that reflects the risk inherent infuture cash flows.We estimate the fair value of each reportingunit using a combination of the incomeapproach and the market approach.The income approach incorporates the use ofa discounted cash flow method in which theestimated future cash flows and terminalvalue are calculated for each reporting unitand then discounted to present value usingan appropriate discount rate.The valuation of our reporting units requiressignificant judgment in evaluation of recentindicators of market activity and estimatedfuture cash flows, discount rates, and otherfactors. Our impairment analyses containinherent uncertainties due to uncontrollableevents that could positively or negativelyimpact anticipated future economic andoperating conditions.In making these estimates, the weighted-average cost of capital is utilized to calculatethe present value of future cash flows andterminal value. Many variables go intoestimating future cash flows, includingestimates of our future revenue growth andoperating results. When estimating ourprojected revenue growth and futureoperating results, we consider industrytrends, economic data, and our competitiveadvantage.The market approach estimates fair value ofa reporting unit by using market comparablesfor reasonably similar public companies. During the last three years, we have not made any changes in theaccounting 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 accountingmethodology used to evaluate impairment of goodwill during thelast three years, other than adopting ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for GoodwillImpairment in 2017.During the third quarter of 2019, in connection with thereorganization of our Healthcare business, a goodwill impairmentanalysis was performed on the underlying reporting unitimmediately before the reorganization, and we concluded that theestimated fair value of the underlying reporting unit substantiallyexceeded its carrying value immediately before the reorganizationand that no further evaluation of impairment was necessary.Additionally, we performed our annual goodwill impairmentanalysis on August 1, 2019 and concluded that the implied fairvalue of each of our reporting units was substantially in excess ofits carrying value and that no further evaluation of impairment wasnecessary. A 10% decrease in the estimated fair value of any ofour reporting units would not have resulted in a differentconclusion. During 2018 we performed a qualitative goodwill impairmentanalysis for each of our reporting units on November 1, 2017when we reorganized our reportable segments and reporting unitsfollowing the integration of GCA into our industry group model. Weconcluded that goodwill related to those reporting units was notimpaired and further quantitative testing was not required.In connection with our annual goodwill impairment analysisperformed on August 1, 2018, we recorded an impairment chargeof $20.3 million on goodwill and $6.2 million on customerrelationships for one of our reporting units within the TechnicalSolutions segment. This reporting unit’s performance declinedduring 2018 primarily due to the adverse impact of Brexit and theresulting impact on microeconomic conditions in the U.K. retailsector, as well as the anticipated loss of a significant customercontract. In performing our annual goodwill impairment analysis,we determined there was a revised future outlook for thisbusiness, including reduced expectations of future sales,operating margins, and cash flows. In analyzing our other goodwillreporting units, we concluded that goodwill related to these otherreporting units was not impaired.During 2017, we recorded a $17.4 million impairment recoveryrelated to the sale of our Government Services business to adjustthe fair value of certain previously impaired assets to the valuationof the assets as implied by the agreed-upon sales price, lessestimated costs to sell.40Description Judgments and Uncertainties Effect if Actual Results Differ from AssumptionsInsurance ReservesWe use a combination of insured and self-insurance programs to cover workers’compensation, general liability, automobileliability, property damage, and otherinsurable risks.Insurance claim liabilities represent ourestimate of retained risks without regard toinsurance coverage. We retain a substantialportion of the risk related to certain workers’compensation and medical claims.Liabilities associated with these lossesinclude estimates of both claims filed andIBNR Claims.With the assistance of third-party actuaries,we periodically review our estimate ofultimate losses for IBNR Claims and adjustour required self-insurance reserves asappropriate. As part of this evaluation, wereview the status of existing and new claimreserves as established by our third-partyclaims administrators.The third-party claims administratorsestablish the case reserves based uponknown factors related to the type andseverity of the claims, demographic data,legislative matters, and case law, asappropriate. We compare actual trends to expectedtrends and monitor claims development.The specific case reserves estimated by thethird-party administrators are provided to anactuary who assists us in projecting anactuarial estimate of the overall ultimatelosses for our self-insured or high deductibleprograms, which includes the case reservesplus an actuarial estimate of reservesrequired for additional development,including IBNR Claims.We utilize the results of actuarial studies toestimate our insurance rates and insurancereserves for future periods and to adjustreserves, if appropriate, for prior years. Our self-insurance liabilities containuncertainties due to assumptions requiredand judgment used.Costs to settle our obligations, includinglegal and healthcare costs, could fluctuateand cause estimates of our self-insuranceliabilities to change.Incident rates, including frequency andseverity, could fluctuate and cause theestimates in our self-insurance liabilities tochange.These estimates are subject to: changes inthe regulatory environment; fluctuations inprojected exposures, including payroll,revenues, and the number of vehicle units;and the frequency, lag, and severity ofclaims.The full extent of certain claims, especiallyworkers’ compensation and general liabilityclaims, may not be fully determined forseveral years.In addition, if the reserves related to self-insurance or high deductible programs fromacquired businesses are not adequate tocover damages resulting from futureaccidents or other incidents, we may beexposed to substantial losses arising fromfuture development of the claims. We have not made any changes in the accounting methodologyused to establish our self-insurance liabilities during the past threeyears.After analyzing the recent loss development patterns, comparingthe loss development patterns against benchmarks, and applyingactuarial projection methods to estimate the ultimate losses, wedecreased our total reserves for known claims as well as ourestimate of the loss amounts associated with IBNR Claims forprior years by $3.4 million during 2019. During 2018 and 2017, weincreased such reserves by $10.2 million and $22.0 million,respectively.It is possible that actual results could differ from recorded self-insurance liabilities. A 10% change in our projected ultimatelosses would have affected net income by approximately $32.4million for 2019.41Description Judgments and Uncertainties Effect if Actual Results Differ from AssumptionsContingencies and LitigationWe are a party to a number of lawsuits,claims, and proceedings incident to theoperation of our business, including thosepertaining to labor and employment,contracts, personal injury, and othermatters, some of which allege substantialmonetary damages. Some of these actionsmay be brought as class actions on behalfof a class or purported class of employees.We accrue for loss contingencies whenlosses become probable and arereasonably estimable. If the reasonableestimate of the loss is a range and noamount within the range is a betterestimate, the minimum amount of the rangeis recorded as a liability.We do not accrue for contingent losses that,in our judgment, are considered to bereasonably possible but not probable. Litigation outcomes are difficult to predictand are often resolved over long periods oftime.Estimating probable and reasonablypossible losses requires the analysis ofmultiple possible outcomes that oftendepend on judgments about potentialactions by third parties, such as futurechanges in facts and circumstances,differing interpretations of the law,assessments of the amount of damages,and other factors beyond our control. Thereis the potential for a material adverse effecton our financial statements if one or morematters are resolved in a particular periodin an amount materially in excess of whatwe anticipated.In addition, in some cases, although a lossis probable or reasonably possible, wecannot reasonably estimate the maximumpotential losses for probable matters or therange of losses for reasonably possiblematters. Therefore, our accrual for probablelosses and our estimated range of loss forreasonably possible losses do not representour maximum possible exposure. We have not made any changes in the accounting methodologyused to establish our loss contingencies during the past threeyears.Our management currently estimates the range of loss for allreasonably possible losses for which a reasonable estimate of theloss can be made is between zero and $6 million. Factorsunderlying this estimated range of loss may change from time totime, and actual results may vary significantly from this estimate.42Recent Accounting PronouncementsAccountingStandardUpdate(s) Topic Summary Effective Date/Method ofAdoption2019-07 Codification Updates to SECSections—Amendments to SECParagraphs Pursuant to SECFinal Rule Releases No. 33-10532, “Disclosure Update andSimplification,” and Nos. 33-10231 and 33-10442, “InvestmentCompany ReportingModernization,” andMiscellaneous Updates. The Financial Accounting Standards Board (“FASB”) issued this ASU in July2019 to codify the SEC releases that clarify and improve the disclosure andpresentation requirements of a variety of codification topics, therebyeliminating certain disclosure requirements that were redundant,duplicative, overlapping, outdated, or superseded.We adopted the amendments under the SEC releases in the second quarterof 2019, as described in Note 2, “Basis of Presentation and SignificantAccounting Policies,” in the Financial Statements. The eliminated oramended disclosures did not have a material impact on our consolidatedfinancial statements. Effective upon issuance, appliedprospectively.2019-05 Financial Instruments—CreditLosses (Topic 326): TargetedTransition Relief. This ASU, issued in May 2019, provides targeted transition relief allowingentities to make an irrevocable one-time election upon adoption of the newcredit losses standard to measure financial assets previously measured atamortized cost (except held-to-maturity securities) using the fair valueoption.We are currently evaluating the impact of implementing this guidance on ourfinancial statements. This update will be adopted inconjunction with ASU 2016-13, asfurther described below.2019-04 Codification Improvements toTopic 326: Financial Instruments—Credit Losses;Topic 815: Derivatives andHedging; and Topic 825: FinancialInstruments. This ASU, issued in April 2019, provides narrow-scope amendmentsdesigned to assist in the application of the following updates and the relatedaccounting standards:(1) ASU 2016-13, Financial Instruments—Credit Losses (Topic 326):Measurement of Credit Losses on Financial Statements;(2) ASU 2017-12, Derivatives and Hedging (Topic 815): TargetedImprovements to Accounting for Hedging Activities; and(3) 2016-01, Financial Instruments—Overall (Subtopic 825-10): Recognitionand Measurement of Financial Assets and Financial Liabilities.We are currently evaluating the impact of implementing the guidance relatedto (1) and (3) on our financial statements. We adopted the guidance relatedto (2) effective November 1, 2019 on a prospective basis without significantimpact on our consolidated financial statements. (1) The amendments related toASU 2016-13 will be adopted inconjunction with that ASU, asfurther described below.(3) Since we already adoptedASU 2016-01, the relatedamendments are effective for uson November 1, 2020 and will beapplied using a modified-retrospective adoption approachwith a cumulative-effectadjustment to retained earnings.2018-18 Collaborative Arrangements(Topic 808): Clarifying theInteraction between Topic 808and Topic 606. This ASU, issued in November 2018, provides guidance on whether certaintransactions between collaborative arrangement participants should beaccounted for as revenue under Topic 606. It specifically addresses whenthe participant is a customer in the context of a unit of account, adds unit ofaccount guidance in Topic 808 to align with guidance in Topic 606, andprecludes presenting the collaborative arrangement transaction togetherwith revenue recognized under Topic 606 if the collaborative arrangementparticipant is not a customer.We are currently evaluating the impact of implementing this guidance on ourfinancial statements. November 1, 2020This update will be appliedretrospectively.2018-17 Consolidation (Topic 810):Targeted Improvements toRelated Party Guidance forVariable Interest Entities. This ASU, issued in October 2018, provides that indirect interests heldthrough related parties in common control arrangements should beconsidered on a proportional basis for determining whether fees paid todecision makers and service providers are variable interest.We are currently evaluating the impact of implementing this guidance on ourfinancial statements. November 1, 2020This update will be appliedretrospectively.43AccountingStandardUpdate(s) Topic Summary Effective Date/Method ofAdoption2018-16 Derivatives and Hedging (Topic815): Inclusion of the SecuredOvernight Financing Rate (SOFR)Overnight Index Swap (OIS) Rateas a Benchmark Interest Rate forHedge Accounting Purposes. This ASU, issued in October 2018, adds the Overnight Index Swap (“OIS”)rate based on the SOFR (a swap rate based on the underlying overnightSOFR rate) as an eligible benchmark interest rate for purposes of applyinghedge accounting. SOFR is a volume-weighted median interest rate that iscalculated daily based on overnight transactions from the prior day’s tradingactivity in specified segments of the U.S. Treasury repo market. SOFR wasselected by the Alternative Reference Rates Committee as its preferredalternative reference rate to LIBOR.We are currently evaluating the impact of implementing this guidance on ourfinancial statements. Since we early adopted ASU2017-12, this update will beeffective for us on November 1,2020 on a prospective basis.2018-15 Intangibles—Goodwill and Other—Internal-Use Software (Subtopic350-40): Customer’s Accountingfor Implementation Costs Incurredin a Cloud ComputingArrangement That Is a ServiceContract. This ASU, issued in August 2018, aligns the requirements for capitalizingimplementation costs incurred in a hosting arrangement that is a servicecontract with the requirements for capitalizing implementation costs incurredto develop or obtain internal-use software.We are currently evaluating the impact of implementing this guidance on ourfinancial statements. November 1, 2020This update will be applied eitherprospectively or retrospectively.2018-14 Compensation—RetirementBenefits—General (Topic 715). This ASU, issued in August 2018, modifies the disclosure requirements oncompany-sponsored defined benefit plans.We are currently evaluating the impact of implementing this guidance on ourfinancial statements. November 1, 2020This update will be appliedretrospectively.2018-13 Fair Value Measurement (Topic820): Disclosure Framework. This ASU, issued in August 2018, modifies the disclosure requirements onfair value measurements by removing certain disclosure requirementsrelated to the fair value hierarchy, modifying existing disclosurerequirements related to measurement uncertainty, and adding newdisclosure requirements.We are currently evaluating the impact of implementing this guidance on ourfinancial statements. November 1, 2020The amendments related todisclosure requirements withinthis update will be appliedprospectively and the otheramendments will be appliedretrospectively.2016-13 Financial Instruments—CreditLosses (Topic 326):Measurement of Credit Losses onFinancial Statements. This ASU, issued in June 2016, replaces the existing incurred lossimpairment model with a methodology that incorporates all expected creditloss estimates, resulting in more timely recognition of losses.We are currently evaluating the impact of implementing this guidance on ourfinancial statements. November 1, 2020This standard will be appliedusing a modified retrospectiveadoption approach with acumulative-effect adjustment toretained earnings as of thebeginning of the year of adoption,except for certain provisions thatare required to be appliedprospectively.2016-022018-102018-112019-01 Leases (Topic 842). ASU 2016-02 was issued in February 2016 to improve transparency andcomparability among organizations by requiring lessees to recognize leaseassets and lease liabilities on the balance sheet and to disclose keyinformation about leasing arrangements. Additional ASUs have since beenissued which provide amended and additional guidance for theimplementation of ASU 2016-02. All related guidance has been codifiedinto, and is now known as, ASC 842, Leases.The anticipated effect of adoption is described in Note 2, “Basis ofPresentation and Significant Accounting Policies,” in the FinancialStatements. November 1, 2019We will adopt this guidance usinga modified retrospective transitionapproach for leases existing at, orentered into after, the adoptiondate and will recognize acumulative-effect adjustment tothe opening balance of retainedearnings in the period of adoption.44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 potentialnegative impact on earnings, cash flows, or fair values resulting from a hypothetical change in interest rates or foreign currency exchange rates.Interest Rate RiskWe are primarily exposed to interest rate risk through our variable rate borrowings under our Credit Facility. At October 31, 2019, we hadtotal outstanding borrowings of $808.4 million. To limit exposure to upward movements in interest rates, we entered into interest rate swapagreements to fix the interest rates on a substantial portion of our outstanding borrowings. At October 31, 2019, we had interest rate swaps with anunderlying notional amount of $440.0 million and fixed interest rates of 2.83%, 2.84%, and 2.86%. Based on our average borrowings, interest rates,and interest rate swaps in effect at October 31, 2019, a 100 basis point increase in LIBOR would decrease our future earnings and cash flows by$4.3 million. For 2018, our market risk exposure related to interest rate fluctuations was $5.4 million. As actual interest rate movements over timeare uncertain, our interest rate swaps pose potential interest rate risks if interest rates decrease. As of October 31, 2019, the fair value of ourinterest rate swap agreements was a liability of $14.6 million.Foreign Currency Exchange Rate RiskWe are primarily exposed to the impact of foreign exchange rate risk through our U.K. operations where the functional currency is the GreatBritain Pound. As we intend to remain permanently invested in these foreign operations, we do not utilize hedging instruments to mitigate foreigncurrency exchange risks. If we change our intent with respect to such international investment, we would expect to implement strategies designed tomanage those risks in an effort to mitigate the effect of foreign currency fluctuations on our earnings and cash flows.45ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.Report of Independent Registered Public Accounting FirmTo the Stockholders and Board of DirectorsABM Industries Incorporated:Opinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of ABM Industries Incorporated and subsidiaries (the Company) as of October 31,2019 and 2018, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the years in thethree‑year period ended October 31, 2019, and the related notes and financial statement Schedule II (collectively, the consolidated financialstatements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as ofOctober 31, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the three‑year period ended October 31,2019, 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), theCompany’s internal control over financial reporting as of October 31, 2019, 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 20, 2019 expressed anunqualified opinion of the effectiveness of the Company’s internal control over financial reporting.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on theseconsolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to beindependent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of theSecurities 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 obtainreasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Ouraudits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error orfraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding theamounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significantestimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our auditsprovide a reasonable basis for our opinion.Critical Audit MatterThe critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that wascommunicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to theconsolidated financial statements and (2) involved our especially challenging, subjective, or complex judgment. The communication of a critical auditmatter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating thecritical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.Evaluation of self-insurance liabilitiesAs discussed in Notes 2 and 12 to the consolidated financial statements, the Company uses a combination of insured and self-insuranceprograms to cover workers’ compensation, general liability, automobile liability, property damage, and other insurable risks. The balance ofinsurance reserves, net of recoverables, as of October 31, 2019 amounted to $443.3 million. The Company engages actuaries to estimate itsself-insurance liabilities at least annually.46We identified the evaluation of the self-insurance liabilities as a critical audit matter because it involves a high degree of judgment and actuarialexpertise to: (1) assess the actuarial models used and (2) estimate incurred but not reported claims based on application of loss developmentfactors to historical claims experience.The primary procedures we performed to address this critical audit matter included the following. We tested certain internal controls over theCompany’s self-insurance reserve process to (1) evaluate claims information sent to the actuary, (2) estimate incurred but not reported claimsbased on the application of loss development factors to historical claims experience, and (3) evaluate the actuarial report and the externalactuarial expert’s qualifications, competency, and objectivity. We evaluated the Company’s historical ability to estimate self-insurance liabilitiesby comparing the prior year recorded amounts to the subsequent claim development. We tested a sample of the claims data utilized by theCompany’s actuaries by comparing to underlying claims details; and involved an actuarial professional with specialized skills and knowledgewho assisted in the:•Assessment of the actuarial models used by the Company for consistency with generally accepted actuarial standards, and•Development of an independent actuarial estimate of self-insurance liabilities based on the Company’s underlying historical paid andincurred loss data./s/ KPMG LLPWe have served as the Company’s auditor since 1980.New York, New YorkDecember 20, 201947Report of Independent Registered Public Accounting FirmTo the Stockholders and Board of DirectorsABM Industries Incorporated:Opinion on Internal Control Over Financial ReportingWe have audited ABM Industries Incorporated and subsidiaries’ (the Company) internal control over financial reporting as of October 31, 2019,based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of theTreadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as ofOctober 31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of SponsoringOrganizations of the Treadway Commission.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), theconsolidated balance sheets of the Company as of October 31, 2019 and 2018, 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, 2019, and the related notes and financialstatement Schedule II (collectively, the consolidated financial statements), and our report dated December 20, 2019 expressed an unqualifiedopinion on those consolidated financial statements.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over FinancialReporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a publicaccounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federalsecurities 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 obtainreasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internalcontrol over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a materialweakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit alsoincluded performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonablebasis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Acompany’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance thattransactions 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 thecompany; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of thecompany’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 anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or thatthe degree of compliance with the policies or procedures may deteriorate./s/ KPMG LLPNew York, New YorkDecember 20, 201948ABM INDUSTRIES INCORPORATED AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS October 31,(in millions, except share and per share amounts)2019 2018ASSETS Current assets Cash and cash equivalents$58.5 $39.1Trade accounts receivable, net of allowances of $22.4 and $19.2 at October 31, 2019 and 2018, respectively1,013.2 1,014.1Costs incurred in excess of amounts billed72.6 —Prepaid expenses75.7 80.8Other current assets55.5 37.0Total current assets1,275.4 1,171.0Other investments14.0 16.3Property, plant and equipment, net of accumulated depreciation of $199.5 and $153.9 at October 31,2019 and 2018, respectively150.3 140.1Other intangible assets, net of accumulated amortization of $309.0 and $250.4 at October 31, 2019 and2018, respectively297.2 355.7Goodwill1,835.4 1,834.8Other noncurrent assets120.3 109.6Total assets$3,692.6 $3,627.5LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current portion of long-term debt, net$57.2 $37.0Trade accounts payable280.7 221.9Accrued compensation189.3 172.1Accrued taxes—other than income63.6 56.0Insurance claims149.8 149.5Income taxes payable3.5 3.2Other accrued liabilities158.2 152.7Total current liabilities902.4 792.5Long-term debt, net744.2 902.0Deferred income tax liability, net47.7 37.8Noncurrent insurance claims365.2 360.8Other noncurrent liabilities78.8 62.9Noncurrent income taxes payable12.2 16.9Total liabilities2,150.6 2,172.9Commitments and contingencies Stockholders’ Equity Preferred stock, $0.01 par value; 500,000 shares authorized; none issued— —Common stock, $0.01 par value; 100,000,000 shares authorized;66,571,427 and 66,004,361 shares issued and outstanding at October 31, 2019 and 2018, respectively0.7 0.7Additional paid-in capital708.9 691.8Accumulated other comprehensive loss, net of taxes(23.9) (9.0)Retained earnings856.3 771.2Total stockholders’ equity1,542.0 1,454.6Total liabilities and stockholders’ equity$3,692.6 $3,627.5See accompanying notes to consolidated financial statements.49ABM INDUSTRIES INCORPORATED AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years Ended October 31,(in millions, except per share amounts)2019 2018 2017Revenues$6,498.6 $6,442.2 $5,453.6Operating expenses5,767.5 5,747.4 4,881.2Selling, general and administrative expenses452.9 438.0 436.6Restructuring and related expenses11.2 25.7 20.9Amortization of intangible assets58.5 66.0 31.6Impairment loss (recovery)— 26.5 (18.5)Operating profit208.3 138.6 101.9Income from unconsolidated affiliates3.0 3.2 4.2Interest expense(51.1) (54.1) (19.2)Income from continuing operations before income taxes160.2 87.7 86.9Income tax (provision) benefit(32.7) 8.2 (8.8)Income from continuing operations127.5 95.9 78.1(Loss) income from discontinued operations, net of taxes(0.1) 1.8 (74.3)Net income127.4 97.8 3.8Other comprehensive income (loss) Interest rate swaps and other(22.4) 21.9 2.7Foreign currency translation1.6 (4.7) 9.7Income tax benefit (provision)5.9 (5.9) (1.1)Comprehensive income$112.5 $109.0 $15.2Net income per common share — Basic Income from continuing operations$1.92 $1.45 $1.35Income (loss) from discontinued operations— 0.03 (1.29)Net income$1.91 $1.48 $0.07Net income per common share — Diluted Income from continuing operations$1.91 $1.45 $1.34Income (loss) from discontinued operations— 0.03 (1.27)Net income$1.90 $1.47 $0.07Weighted-average common and common equivalent shares outstanding Basic66.6 66.1 57.7Diluted66.9 66.4 58.3See accompanying notes to consolidated financial statements.50ABM INDUSTRIES INCORPORATED AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Years Ended October 31, 2019 2018 2017(in millions) Shares Amount Shares Amount Shares AmountCommon Stock Balance, beginning of year 66.0 $0.7 65.5 $0.7 55.6 $0.6Stock issued under employee stock purchase and share-basedcompensation plans 0.6 — 0.5 — 0.7 —Stock issued in GCA acquisition, net of shares withheld for taxes — — — — 9.4 0.1Repurchase of common stock — — — — (0.2) —Balance, end of year 66.6 0.7 66.0 0.7 65.5 0.7Additional Paid-in Capital Balance, beginning of year 691.8 675.2 248.6Taxes withheld under employee stock purchase and share-basedcompensation plans, net (0.3) (0.4) (0.1)Share-based compensation expense 17.5 17.0 13.3Stock issued in GCA acquisition, net of shares withheld for taxes — — 421.3Repurchase of common stock — — (7.9)Balance, end of year 708.9 691.8 675.2Accumulated Other Comprehensive Loss, Net of Taxes Balance, beginning of year (9.0) (20.3) (31.6)Other comprehensive (loss) income (14.9) 11.3 11.3Balance, end of year (23.9) (9.0) (20.3)Retained Earnings Balance, beginning of year 771.2 720.1 756.4Net income 127.4 97.8 3.8Dividends Common stock ($0.720, $0.700, and $0.680 per share) (47.7) (46.0) (39.5)Stock issued under share-based compensation plans (1.0) (0.6) (0.6)Cumulative effect adjustment for adoption of AccountingStandards Update 2014-09 6.5 — — Balance, end of year 856.3 771.2 720.1Total Stockholders’ Equity $1,542.0 $1,454.6 $1,375.7See accompanying notes to consolidated financial statements.51ABM INDUSTRIES INCORPORATED AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended October 31,(in millions)2019 2018 2017Cash flows from operating activities Net income$127.4 $97.8 $3.8Loss (income) from discontinued operations, net of taxes0.1 (1.8) 74.3Income from continuing operations127.5 95.9 78.1Adjustments to reconcile income from continuing operations to net cash provided by operatingactivities of continuing operations Depreciation and amortization107.4 112.5 70.1Proceeds from termination of interest rate swaps— 25.9 —Impairment loss (recovery)— 26.5 (18.5)Deferred income taxes9.7 (23.7) (6.1)Share-based compensation expense17.5 17.0 13.3Provision for bad debt6.7 6.4 4.1Discount accretion on insurance claims0.8 0.8 0.2(Gain) loss on sale of assets(0.6) 0.5 (2.7)Income from unconsolidated affiliates(3.0) (3.2) (4.2)Distributions from unconsolidated affiliates5.4 1.9 5.7Changes in operating assets and liabilities, net of effects of acquisitions Trade accounts receivable and costs incurred in excess of amounts billed(78.3) 16.0 (115.7)Prepaid expenses and other current assets(13.2) 2.4 (6.4)Other noncurrent assets4.5 11.3 (7.6)Trade accounts payable and other accrued liabilities85.8 (1.5) 74.4Insurance claims3.9 13.9 33.5Income taxes payable3.2 0.7 (22.5)Other noncurrent liabilities(14.4) (3.7) 6.0Total adjustments135.3 203.7 23.6Net cash provided by operating activities of continuing operations262.8 299.7 101.7Net cash (used in) provided by operating activities of discontinued operations(0.1) 21.2 (96.1)Net cash provided by operating activities262.7 320.9 5.6Cash flows from investing activities Additions to property, plant and equipment(59.6) (50.9) (57.2)Proceeds from sale of assets1.3 2.3 4.0(Adjustments to) and proceeds from sale of business— (1.9) 35.5Purchase of businesses, net of cash acquired— — (853.6)Proceeds from redemption of auction rate security— 2.9 —Investments in unconsolidated affiliates— (0.4) (0.4)Net cash used in investing activities(58.3) (48.1) (871.8)Cash flows from financing activities Taxes withheld from issuance of share-based compensation awards, net(1.3) (1.0) (0.7)Repurchases of common stock— — (7.9)Dividends paid(47.7) (46.0) (39.5)Deferred financing costs paid— (0.1) (18.7)Borrowings from credit facility1,755.9 1,184.2 1,880.1Repayment of borrowings from credit facility(1,896.5) (1,426.4) (957.2)Changes in book cash overdrafts(0.2) (8.5) 15.8Financing of energy savings performance contracts8.1 5.4 6.8Repayment of capital lease obligations(3.1) (3.3) (0.9)Payment of contingent consideration— — (3.8)Net cash (used in) provided by financing activities(184.8) (295.8) 874.0Effect of exchange rate changes on cash and cash equivalents(0.2) (0.7) 1.5Net increase (decrease) in cash and cash equivalents19.4 (23.7) 9.3Cash and cash equivalents at beginning of year39.1 62.8 53.5Cash and cash equivalents at end of year$58.5 $39.1 $62.852ABM INDUSTRIES INCORPORATED AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(continued) Years Ended October 31,(in millions)2019 2018 2017Supplemental cash flow information Income tax payments (refunds), net$20.6 $(1.0) $11.8Interest paid on credit facility39.9 49.6 8.1 Non-cash investing and financing activities Stock issued in GCA acquisition, net of shares withheld for taxes— — 421.3See accompanying notes to consolidated financial statements.53ABM INDUSTRIES INCORPORATED AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. THE COMPANY AND NATURE OF OPERATIONS 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 services with a mission to make a difference, every person, every day. We are organized into fourindustry groups and one Technical Solutions segment:Through these groups, we offer janitorial, facilities engineering, parking, and specialized mechanical and electrical technical solutions, on astandalone basis or in combination with other services.2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of ConsolidationThe consolidated financial statements and accompanying notes (the “Financial Statements”) have been prepared in accordance with UnitedStates 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 inunconsolidated affiliates under the equity method of accounting. We include the results of acquired businesses in the consolidated statements ofcomprehensive 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 estimatesthat affect the reported amounts. We base our estimates on historical experience, known or expected trends, independent valuations, and variousother assumptions that we believe to be reasonable under the circumstances. As future events and their effects cannot be determined withprecision, 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 GroupOn September 1, 2017 (the “Acquisition Date”), we completed the acquisition of GCA Services Group (“GCA”). Accordingly, ourconsolidated statements of comprehensive income and statements of cash flows include GCA’s results of operations in 2019 and 2018, but excludeGCA’s results of operations in 2017 prior to the Acquisition Date. See Note 4, “Acquisitions,” for further information on the acquisition of GCA.54Government ServicesAt October 31, 2016, the assets and liabilities of our former Government Services business were classified as held for sale, at which timewe 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 allinformation available at that time. During the second quarter of 2017, we received an offer from a strategic buyer to purchase this business forapproximately $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 millionimpairment recovery to adjust the fair value of certain previously impaired assets to the valuation of the assets as implied by the agreed-upon salesprice, 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. Theimpairment charges, subsequent recovery, and gain on sale are reflected in impairment loss (recovery) in the accompanying consolidatedstatements of comprehensive income. The reported results for this business are through the date of sale and future results could include run-offcosts.Prior Year ReclassificationsEffective November 1, 2018, we have modified the presentation of inter-segment revenues, which are recorded at cost with no associatedintercompany profit or loss and are eliminated in consolidation. Additionally, during the third quarter of 2019, we made changes to our operatingstructure to better align the services and expertise of our Healthcare business with our other industry groups, allowing us to leverage our existingbranch network to support the long-term growth of this business. As a result, our former Healthcare portfolio is now included primarily in ourBusiness & Industry segment. Our prior period segment data in Note 19, “Segment and Geographic Information,” has been reclassified to conformwith our current period presentation. These changes had no impact on our previously reported consolidated financial statements.Cash and Cash EquivalentsWe consider all highly liquid securities with an original maturity of three months or less to be cash and cash equivalents. As part of our cashmanagement system, we use “zero balance” accounts to fund our disbursements. Under this system, at the end of each day the bank balance iszero, while the book balance is usually a negative amount due to reconciling items, such as outstanding checks. We report the changes in thesebook cash overdrafts as cash flows from financing activities.Trade Accounts Receivable and Costs Incurred in Excess of Amounts BilledTrade accounts receivable arise from services provided to our clients and are usually due and payable on varying terms from receipt of theinvoice to net ninety days, with the exception of certain Technical Solutions project receivables that may have longer collection periods. Thesereceivables are recorded at the invoiced amount and normally do not bear interest. In addition, our trade accounts receivable include unbilledreceivables, such as invoices for services that have been provided but are not yet billed.Costs incurred in excess of amounts billed arise from Technical Solutions project contracts that typically provide for a schedule of billings orinvoices to the client based on our performance to date of specific tasks inherent in the fulfillment of our performance obligation(s). The schedulesfor such billings usually do not precisely match the schedule on which costs are incurred. As a result, revenues generally differ from amounts thatcan billed or invoices to the client at any point during the contract.Allowance for Doubtful AccountsWe determine the allowance for doubtful accounts based on historical write-offs, known or expected trends, and the identification of specificbalances deemed uncollectible. For the specifically identified balances, we establish the reserve upon the earlier of a client’s inability to meet itsfinancial obligations or after a period of twelve months, unless our management believes such amounts will ultimately be collectible.Sales AllowanceIn connection with our service contracts, we periodically issue credit memos to our clients that are recorded as a reduction in revenues andan increase to the allowance for billing adjustments. These credits can result from client vacancy discounts, job cancellations, property damage, andother 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.55Other Current AssetsAt October 31, 2019 and 2018, other current assets primarily consisted of other receivables, short-term insurance recoverables, andcapitalized commissions.Other InvestmentsAt October 31, 2019 and 2018, other investments primarily consisted of investments in unconsolidated affiliates and in auction ratesecurities.Investments in Unconsolidated AffiliatesWe own non-controlling interests (generally 20% to 50%) in certain affiliated entities that predominantly provide facility solutions togovernmental and commercial clients, primarily in the United States and the Middle East. We account for such investments under the equity methodof accounting. We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carryingamounts of such investments may not be recoverable. An impairment loss is recognized to the extent that the estimated fair value of the investmentis less than its carrying amount and we determine that the impairment is other-than-temporary. At October 31, 2019, 2018, and 2017, ourinvestments in unconsolidated affiliates were $8.9 million, $11.3 million, and $9.3 million, respectively. We did not recognize any impairmentcharges on these investments in 2019, 2018, or 2017.Investments in Auction Rate SecuritiesOur investments in auction rate securities are classified as available-for-sale. Accordingly, auction rate securities are presented at fair valuewith unrealized gains and losses recorded in accumulated other comprehensive income (loss), net of taxes (“AOCI”). On a quarterly basis, weanalyze all auction rate securities that have unrealized losses for impairment consideration and assess the intent to sell such securities. If suchintent exists, impaired securities are considered other-than-temporarily impaired and we recognize the entire difference between the auction ratesecurity’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 ofamortized cost, which may trigger an impairment charge. If these securities are considered impaired, we assess whether the amortized costs of thesecurities can be recovered by reviewing several factors, including credit risks associated with the issuer. If we do not expect to recover the entireamortized cost of the security, we consider the security to be other-than-temporarily impaired, and record the difference between the security’samortized costs and its recoverable amount in earnings and the difference between the security’s amortized cost and fair value in AOCI.Property, Plant and EquipmentWe record property, plant and equipment at cost. Repairs and maintenance expenditures are expensed as incurred. In contrast, wecapitalize major renewals or replacements that substantially extend the useful life of an asset. We determine depreciation for financial reportingpurposes using the straight-line method over the following estimated useful lives:CategoryYearsComputer equipment and software3–5Machinery and other equipment3–5Transportation equipment1.5–10Buildings10–40Furniture and fixtures5In addition, we depreciate assets under capital leases and leasehold improvements over the shorter of their estimated useful lives or the remaininglease term. Upon retirement or sale of an asset, we remove the cost and accumulated depreciation from our consolidated balance sheets. Whenapplicable, we record corresponding gains or losses within the accompanying consolidated statements of comprehensive income.56LeasesWe enter into various noncancelable lease agreements for premises and equipment used in the normal course of business. We evaluatethe 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 leaseterm. A deferred liability is recorded for the amount of the excess of straight-line rent expense over scheduled payments. We do not assumerenewals in our determination of the lease term unless the renewals are deemed to be reasonably assured at lease inception. We may also berequired to make additional payments to reimburse the lessors for operating expenses such as real estate taxes, maintenance, utilities, andinsurance, which are expensed as incurred. We enter into leases of parking lots and garages that contain contingent payment provisions. Underthese provisions, we pay contingent amounts in addition to base rent, primarily based on percentages of the gross receipts or other financialparameters 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 paymentsover the lease term.Goodwill and Other Intangible AssetsGoodwill 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 berequired 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 whetherit 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 qualitativeassessment for some or all reporting units and perform a quantitative test instead, under which fair value is determined based on discounted cashflow analyses. The discounted estimates of future cash flows include significant management assumptions, such as revenue growth rates, operatingmargins, weighted average cost of capital, and future economic and market conditions. In 2017, we adopted Accounting Standards Update (“ASU”)2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which allows us to test goodwill for impairmentby 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 impairmentcharge 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’sgoodwill.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. Thisaccelerated method of amortization reflects the pattern in which the economic benefits from the intangible assets of customer contracts andrelationships are expected to be realized. We amortize other non-customer acquired intangibles using a straight-line method of amortization. Weevaluate other intangible assets, as well as our long-lived assets, for impairment whenever events or changes in circumstances indicate that thecarrying amount of such assets may not be recoverable. When this occurs, a recoverability test is performed that compares the projectedundiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying amount. If the projected undiscounted cashflows are less than the carrying amount, we calculate an impairment loss. The impairment loss calculation compares the fair value, which is basedon projected discounted cash flows, to the carrying value.See Note 11, “Goodwill and Other Intangible Assets,” for further information on goodwill, other intangible assets, and impairment charges.Other Noncurrent AssetsAt October 31, 2019 and 2018, other noncurrent assets primarily consisted of long-term insurance recoverables, deferred charges,insurance and other long-term deposits, federal energy savings performance contract receivables, capitalized commissions, and prepayments tocarriers for future insurance claims.57Federal Energy Savings Performance Contract ReceivablesAs part of our Technical Solutions business, we enter into energy savings performance contracts (“ESPCs”) with the federal governmentpursuant to which we agree to develop, design, engineer, and construct a project and to guarantee that the project will satisfy agreed-uponperformance standards. ESPC receivables represent the amount to be paid by various federal government agencies for work we have satisfactorilyperformed under specific ESPCs. We assign certain of our rights to receive those payments to unaffiliated third parties that provide constructionfinancing, which we record as a liability, for such contracts. This construction financing is recorded as cash flows from financing activities, while theuse of the cash received to pay project costs under these arrangements is classified as operating cash flows. The ESPC receivable is recognizedas revenue as each project is constructed. Upon completion and acceptance of the project by the government and upon satisfaction of true salecriteria, the assigned ESPC receivable from the government and corresponding ESPC liability are eliminated from our consolidated financialstatements.Fair Value of Financial InstrumentsFair 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 themeasurement date. In the absence of active markets for the identical assets or liabilities, such measurements involve developing assumptionsbased on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use ina 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 notactive; and model-derived valuations whose inputs are observable or whose significant value drivers are observable; andLevel 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 atwhich to classify them for each reporting period. Some non-financial assets are measured at fair value on a non-recurring basis only in certaincircumstances, including the event of impairment. See Note 8, “Fair Value of Financial Instruments,” for the fair value hierarchy table and for detailson how we measure fair value for our assets and liabilities.AcquisitionsWe expense acquisition-related costs as incurred. On the date of the acquisition, we allocate the purchase price to the assets acquired andliabilities assumed at their estimated fair values. Goodwill on the acquisition date is measured as the excess of the purchase price over the fairvalues of assets acquired and liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired andliabilities 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 liabilitiesassumed with corresponding adjustments to goodwill. We recognize subsequent changes in the estimate of the amount to be paid under contingentconsideration arrangements in the accompanying consolidated statements of comprehensive income.Discontinued OperationsIn order to be reported within discontinued operations, our disposal of a component or a group of components must represent a strategicshift that will have a major effect on our operations and financial results. We aggregate the results of operations for discontinued operations within asingle line item on the income statement. General corporate overhead is not allocated to discontinued operations. We disclose any gain or loss thatis recognized upon the disposition of a discontinued operation. Prior to disposition, we aggregate the assets and liabilities of discontinued operationsand report the amounts on separate line items within the balance sheet.58Assets and Liabilities Held for SaleUpon a business being classified as held for sale, we cease all depreciation and amortization related to the assets of the business andrecord them at the lower of their carrying amount or fair value less estimated costs to sell. The assets and related liabilities of the business areseparately presented on the consolidated balance sheets. We review all assets held for sale each reporting period to determine whether the existingcarrying amounts are fully recoverable in comparison to estimated fair values.Insurance ReservesWe use a combination of insured and self-insurance programs to cover workers’ compensation, general liability, automobile liability, propertydamage, and other insurable risks. Insurance claim liabilities represent our estimate of retained risks without regard to insurance coverage. Weretain a substantial portion of the risk related to certain workers’ compensation and medical claims. Liabilities associated with these losses includeestimates of both filed claims and incurred but not reported claims (“IBNR Claims”).With the assistance of third-party actuaries, we periodically review our estimate of ultimate losses for IBNR Claims and adjust our requiredself-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 andseverity of the claims, demographic factors, legislative matters, and case law, as appropriate. We compare actual trends to expected trends andmonitor claims developments. The specific case reserves estimated by the third-party administrators are provided to an actuary who assists us inprojecting an actuarial estimate of the overall ultimate losses for our self-insured or high deductible programs, which includes the case reserves plusan actuarial estimate of reserves required for additional developments, such as IBNR Claims. We utilize the results of actuarial studies to estimateour 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 operatingsegments 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 arereflected as assets in our consolidated balance sheets when we believe that the receipt of such amounts is probable.Other Accrued LiabilitiesAt October 31, 2019 and 2018, other accrued liabilities primarily consisted of employee benefits, contract liabilities (which include deferredrevenue and progress billings in excess of costs), legal fees and settlements, dividends payable, current capital leases, interest, insurance claims,severance, rent payable, and other accrued expenses.Other Noncurrent LiabilitiesAt October 31, 2019 and 2018, other noncurrent liabilities primarily consisted of ESPC liabilities, deferred rent, retirement plan liabilities,deferred compensation, and long-term capital leases. Other noncurrent liabilities at October 31, 2019 also includes our interest rate swaps.Revenue RecognitionBeginning in fiscal 2019, we adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and ASU 2017-10, ServiceConcession Arrangements (Topic 853): Determining the Customer of the Operation Services. Prior period amounts have not been restated andcontinue to be reported in accordance with our historical accounting policies. Our revenue recognition policies under Topic 606 and Topic 853 aredescribed in the following paragraphs and references to prior period policies are included below where they are substantially different. See Note 3,“Revenues,” for further information on our revenues, including the impact of adopting Topic 606 and Topic 853 on our consolidated financialstatements.Contracts with CustomersWe account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment termsare identified, the contract has commercial substance, and collectability of consideration is probable. Once a contract is identified, we evaluatewhether it is a combined or single contract and whether it should be accounted for as more than one performance obligation. Generally, most of ourcontracts are cancelable by either59party without a substantive penalty, and the majority of our contracts have a notification period of 30 to 60 days. If a contract includes a cancellationclause, the remaining contract term is limited to the required termination notice period.At contract inception, we assess the services promised to our customers and identify a performance obligation for each promise to transferto the customer a service, or a bundle of services, that is distinct. To identify the performance obligation, we consider all of our services promised inthe contract, regardless of whether they are explicitly stated or are implied by customary business practices.The majority of our contracts contain multiple promises that represent an integrated bundle of services comprised of activities that may varyover time; however, these activities fulfill a single integrated performance obligation since we perform a continuous service that is substantially thesame and has the same pattern of transfer to the customer. Our performance obligations are primarily satisfied over time as we provide the relatedservices. We allocate the contract transaction price to this single performance obligation and recognize revenue as the services are performed, asfurther described in “Contract Types” below.Certain arrangements involve variable consideration (primarily per transaction fees, reimbursable expenses, and sales-based royalties). Wedo not estimate the variable consideration for these arrangements; rather, we recognize these variable fees in the period they are earned. Some ofour contracts, often related to Airline Services, may also include performance incentives based on variable performance measures that areascertained exclusively by future performance and therefore cannot be estimated at contract inception and are recognized as revenue once knownand mutually agreed upon. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulativerevenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variableconsideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of ouranticipated performance and all information (historical, current, and forecasted) that is reasonably available to us.We primarily account for our performance obligations under the series guidance, using the as-invoiced practical expedient when applicable.We apply the as-invoiced practical expedient to record revenue as the services are provided, given the nature of the services provided and thefrequency of billing under the customer contracts. Under this practical expedient, we recognize revenue in an amount that corresponds directly withthe value to the customer of our performance completed to date and for which we have the right to invoice the customer.We typically bill customers on a monthly basis and have the right to consideration from customers in an amount that corresponds directlywith the performance obligation satisfied to date. The time between completion of the performance obligation and collection of cash is generally 30to 60 days. Sales-based taxes are excluded from revenue.Contracts generally can be modified to account for changes in specifications and requirements. We consider contract modifications to existwhen the modification either changes the consideration, creates new performance obligations, or changes the existing scope of the contract andrelated performance obligations. Historically, contract modifications have been for services that are not distinct from the existing contract, since weare providing a bundle of services that are highly inter-related, and are therefore treated as if they were part of that existing contract. Suchmodifications are generally accounted for prospectively as part of the existing contract.Contract TypesWe have arrangements under various contract types, as described below.Monthly Fixed-PriceMonthly fixed-price arrangements are contracts in which the client agrees to pay a fixed fee every month over a specified contract term. Wemeasure progress toward satisfaction of the performance obligation as the services are provided, and revenue is recognized at the agreed-uponcontractual amount over time because the customer simultaneously receives and consumes the benefits of the services as they are performed.Square-FootMonthly square-foot arrangements are contracts in which the client agrees to pay a fixed fee every month based on the actual squarefootage serviced over a specified contract term. We measure progress toward satisfaction of the performance obligation as the services areprovided, and revenue is recognized at the agreed-upon contractual amount over time because the customer simultaneously receives andconsumes the benefits of the services as they are performed.60Cost-PlusCost-plus 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. We measure progress toward satisfaction of theperformance obligation as the services are provided, and revenue is recognized at the agreed-upon contractual amount over time because thecustomer simultaneously receives and consumes the benefits of the services as they are performed.Tag ServicesTag services (work orders) generally consist of supplemental services requested by clients outside of the standard service specification andinclude cleanup after tenant moves, construction cleanup, flood cleanup, and snow removal. Because the nature of these short-term contractsinvolves performing one-off type services, revenue is recognized at the agreed-upon contractual amount over time as the services are provided,because the customer simultaneously receives and consumes the benefits of the services as they are performed.Transaction-PriceTransaction-price contracts are arrangements in which customers are billed a fixed price for each transaction performed on a monthly basis(e.g., wheelchair passengers served, airplane cabins cleaned). We measure progress toward satisfaction of the performance obligation as theservices are provided, and revenue is recognized at the agreed-upon contractual amount over time because the customer simultaneously receivesand consumes the benefits of the services as they are performed.HourlyHourly arrangements are contracts in which the client is billed a fixed hourly rate for each labor hour provided. We measure progresstoward satisfaction of the performance obligation as the services are provided, and revenue is recognized at the agreed-upon contractual amountover time because the customer simultaneously receives and consumes the benefits of the services as they are performed.Management ReimbursementUnder management reimbursement arrangements we manage a parking facility for a management fee and pass through the revenue andexpenses associated with the facility to the owner. We measure progress toward satisfaction of the performance obligation over time as theservices are provided. Under these contracts we recognize both revenues and expenses, in equal amounts, that are directly reimbursed from theproperty owner for operating expenses, as such expenses are incurred. Such revenues do not include gross customer collections at the managedlocations because they belong to the property owners. We have determined we are the principal in these transactions, because the nature of ourperformance obligation is for us to provide the services on behalf of the customer and we have control of the promised services before they aretransferred to the customer.Leased LocationUnder leased location parking arrangements we pay a fixed amount of rent, plus a percentage of revenues derived from monthly andtransient parkers, to the property owner. We retain all revenues received and we are responsible for most operating expenses incurred. Wemeasure progress toward satisfaction of the performance obligation as the services are provided, and revenue is recognized over time because thecustomer simultaneously receives and consumes the benefits of the services as they are performed.In accordance with Topic 853, rental expense and certain other expenses under contracts that meet the definition of service concessionarrangements are now recorded as a reduction of revenue. Prior to November 1, 2018, such amounts were recorded as operating expenses.AllowanceUnder allowance parking arrangements we are paid a fixed amount or hourly rate to provide parking services, and we are responsible forcertain operating expenses that are specified in the contract. We measure progress toward satisfaction of the performance obligation as theservices are provided, and revenue is recognized at the agreed-upon contractual rate over time because the customer simultaneously receives andconsumes the benefits of the services as they are performed.61Energy Savings Contracts and Fixed-Price Repair and RefurbishmentUnder energy savings contracts and fixed-price repair and refurbishment arrangements we agree to develop, design, engineer, andconstruct a project. Additionally, as part of bundled energy solutions arrangements, we guarantee the project will satisfy agreed-upon performancestandards.We use the cost-to-cost method, which compares the actual costs incurred to date with the current estimate of total costs to complete, tomeasure the satisfaction of the performance obligation and recognize revenue as work progresses and we incur costs on our contracts; we believethis method best reflects the transfer of control to the customer. This measurement and comparison process requires updates to the estimate oftotal costs to complete the contract, and these updates may include subjective assessments and judgments. Equipment purchased for theseprojects is project-specific and considered a value-added element to our work. Equipment costs are incurred when title is transferred to us, typicallyupon delivery to the work site. Revenue for uninstalled equipment is recognized at cost and the associated margin is deferred until installation issubstantially complete. Prior to November 1, 2018, we recognized revenue and margin on uninstalled equipment consistent with other project costsunder the percentage-of-completion method.We recognize revenue over time for all of our services as we perform them, because (i) control continuously transfers to the customer aswork progresses or (ii) we have the right to bill the customer as costs are incurred. The customer typically controls the work in process as evidencedeither by contractual termination clauses or by our rights to payment for work performed to date plus a reasonable profit to deliver products orservices that do not have an alternative use to us.Certain project contracts include a schedule of billings or invoices to the customer based on our job-to-date percentage of completion ofspecific tasks inherent in the fulfillment of our performance obligation(s) or in accordance with a fixed billing schedule. Fixed billing schedules maynot precisely match the actual costs incurred. Therefore, revenue recognized may differ from amounts that can be billed or invoiced to the customerat any point during the contract, resulting in balances that are considered revenue recognized in excess of cumulative billings or cumulative billingsin excess of revenue recognized. Advanced payments from our customers generally do not represent a significant financing component as thepayments are used to meet working capital demands that can be higher in the early stages of a contract, as well as to protect us from our customerfailing to meet its obligations under the contract.Certain projects include service maintenance agreements under which existing systems are repaired and maintained for a specific period oftime. We generally recognize revenue under these arrangements over time. Our service maintenance agreements are generally one-yearrenewable agreements.FranchiseWe franchise certain engineering services through individual and area franchises under the Linc Service and TEGG brands, which are partof ABM Technical Solutions. Initial franchise fees result from the sale of a franchise license and include the use of the name, trademarks, andproprietary methods. The franchise license is considered symbolic intellectual property, and revenue related to the sale of this right is recognized atthe agreed-upon contractual amount over the term of the initial franchise agreement. Prior to November 1, 2018, initial fees from sales of franchiselicenses were recognized in the year of sale.Royalty fee revenue consists of sales-based royalties received as part of the consideration for the franchise right, which is calculated as apercentage of the franchisees’ revenue. We recognize royalty fee revenue at the agreed-upon contractual rates over time as the customer revenueis generated by the franchisees. A receivable is recognized for an estimate of the unreported royalty fees, which are reported and remitted to us inarrears.Costs to Obtain a Contract With a CustomerWe capitalize the incremental costs of obtaining a contract with a customer, primarily commissions, as contract assets and recognize theexpense on a straight-line basis over a weighted average expected customer relationship period. Capitalized commissions are classified as currentor noncurrent based on the timing of when we expect to recognize the expense. Prior to November 1, 2018, such incremental costs were expensedas incurred.62Contract BalancesThe timing of revenue recognition, billings, and cash collections results in contract assets and contract liabilities, as further explained below.The timing of revenue recognition may differ from the timing of invoicing to customers. If a contract includes a cancellation clause that allows for thetermination of the contract by either party without a substantive penalty, the contract term is limited to the termination notice period.Contract assets consist of billed trade receivables, unbilled trade receivables, and costs incurred in excess of amounts billed. Billed andunbilled trade receivables represent amounts from work completed in which we have an unconditional right to bill our customer. Costs incurred inexcess of amounts billed typically arise when the revenue recognized on projects exceeds the amount billed to the customer. These amounts aretransferred to billed trade receivables when the rights become unconditional. Contract liabilities consist of deferred revenue and advance paymentsand billings in excess of revenue recognized. We generally classify contract liabilities as current since the related contracts are generally for aperiod of one year or less. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation.Management Reimbursement Revenue by Segment Years Ended October 31,(in millions)2019 2018 2017Business & Industry$283.1 $276.6 $252.9Aviation95.5 99.9 80.4Total$378.7 $376.4 $333.2Restructuring and Related ExpensesRestructuring and related expenses include employee severance, external support fees, lease exit costs, and other costs. Our methodologyto record these costs is described below.SeveranceAs we do not have a past history of consistently providing severance benefits, we recognize severance costs for employees who do nothave formal employment agreements when management has committed to a restructuring plan and communicated those actions to impactedemployees, such that the employee is able to determine the type and amount of benefits that they will receive upon termination. In addition, if theemployees are required to render service beyond the minimum retention period until they are terminated in order to receive the benefits, a liability isrecognized ratably over the future service period. For employees with employment agreements, we accrue for these severance liabilities when it isprobable that the impacted employee will be entitled to the benefits and the amount can be reasonably estimated.Noncancelable Leases and Contractual ObligationsWe record liabilities when we terminate a contract in accordance with the contract terms or when we exit the leased space. The expensefor noncancelable leases is determined based on the fair value of remaining lease payments reduced by the fair value of estimated subleaseincome that could reasonably be obtained for the property, estimated using a present value technique.OtherFor other costs associated with exit and disposal activities, we recognize an expense at fair value in the period in which the liability isincurred.AdvertisingAdvertising costs are expensed as incurred. During 2019, 2018, and 2017, advertising expense was $1.7 million, $2.3 million, and $2.2million, respectively.63Share-Based CompensationOur current share-based awards principally consist of restricted stock units (“RSUs”) and various performance share awards. We recognizecompensation costs associated with these awards in selling, general and administrative expenses. For RSUs and certain performance shareawards, the amount of compensation cost is measured based on the grant-date fair value of the equity instruments issued. Since our totalshareholder return (“TSR”) performance share awards are performance awards with a market condition, the compensation costs associated withthese awards are determined using a Monte Carlo simulation valuation model. For RSUs and TSR awards, compensation cost is recognized overthe period that an employee provides service in exchange for the award. We recognize compensation cost associated with other performance shareawards over the requisite service period based on the probability of achievement of performance criteria.Taxes Collected from Clients and Remitted to Governmental AgenciesWe record taxes on client transactions due to governmental agencies as receivables and liabilities on the consolidated balance sheets.Net Income Per Common ShareBasic net income per common share is net income divided by the weighted-average number of common shares outstanding during theperiod. Diluted net income per common share is based on the weighted-average number of common shares outstanding during the period, adjustedto include the potential dilution from the conversion of RSUs, vesting of performance shares, and exercise of stock options.Contingencies and LitigationWe are a party to a number of lawsuits, claims, and proceedings incident to the operation of our business, including those pertaining to laborand employment, contracts, personal injury, and other matters, some of which allege substantial monetary damages. Some of these actions may bebrought as class actions on behalf of a class or purported class of employees. We accrue for loss contingencies when losses become probable andare reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimumamount of the range is recorded as a liability. We recognize legal costs as an expense in the period incurred.Income TaxesWe account for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future taxconsequences attributable to temporary differences between the financial statement carrying amount of existing assets and liabilities and theirrespective tax bases. We measure deferred tax assets and liabilities using enacted tax rates expected to be applied to taxable income in the yearsin which those temporary differences are expected to be recovered. Deferred tax assets are reviewed for recoverability on a quarterly basis. Avaluation allowance is recorded to reduce the carrying amount of a deferred tax asset to its realizable value unless it is more likely than not thatsuch asset will be realized. We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense in ourconsolidated statements of comprehensive income.Recently Adopted Accounting StandardsRevenue from Contracts with CustomersIn May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (Topic606), and subsequently issued several ASUs further updating Topic 606.Additionally, in May 2017, the FASB issued ASU 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of theOperation Services, to clarify how operating entities should determine the customer of operation services for transactions within the scope of thisguidance, which U.S. GAAP did not address prior to this ASU. The amendment eliminates diversity in practice by clarifying that the grantor is thecustomer of the operation services in all cases for those arrangements. We determined that revenue we generate from service concessionarrangements, primarily from certain parking arrangements, will be accounted for under this guidance. We adopted the amendments in this updatein conjunction with the adoption of Topic 606, as discussed below.Collectively these ASUs introduce a new principles-based framework for revenue recognition and disclosure. The core principle of thestandard is when an entity transfers goods or services to customers it will recognize revenue in an amount that reflects the consideration it expectsto be entitled to for those goods or services. The standard also64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 Topic 606 and Topic 853 on November 1, 2018 using a modified retrospective approach with a cumulative-effect adjustment toretained earnings as of the beginning of 2019; prior period financial statements were not adjusted. We applied the standards to contracts that hadnot been completed at November 1, 2018 and did not apply them to contracts that were modified before the beginning of the earliest reportingperiod presented. See Note 3, “Revenues,” for additional details regarding the impact of adopting Topic 606 and Topic 853 on our consolidatedfinancial statements.Other Recently Adopted Accounting StandardsDuring the first quarter of 2019, we also adopted the following ASUs with no material impact on our consolidated financial statements:ASU Topic Method of Adoption2016-01 Financial Instruments Modified retrospective2016-15 Statement of Cash Flows — Classification of Certain CashReceipts and Cash Payments Retrospective2016-16 Income Taxes — Intra-Entity Transfers of Assets Other ThanInventory Modified retrospective2016-18 Statement of Cash Flows — Restricted Cash Retrospective2017-07 Compensation — Retirement Benefits Retrospective2017-09 Compensation — Stock Compensation Prospective2018-02 Income Statement — Reporting Comprehensive Income:Reclassification of Certain Tax Effects from AccumulatedOther Comprehensive Income Early adopted; we elected not to reclassify any stranded taxeffects of the Tax Cuts and Jobs Act (the “Tax Act”) due tothe insignificance of the amount remaining in AOCI.2018-04 Investments — Debt Securities Adopted in conjunction with ASU 2016-01Recently Issued Accounting StandardsLeasesIn February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Since the release of ASU 2016-02, the FASB issued the followingadditional ASUs further updating Topic 842:•In January 2018, ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842•In July 2018, ASU 2018-10, Codification Improvements to Topic 842•In July 2018, ASU 2018-11, Leases (Topic 842): Targeted Improvements•In March 2019, ASU 2019-01, Leases (Topic 842): Codification ImprovementsTopic 842 replaces existing lease accounting guidance and is intended to provide enhanced transparency and comparability by requiring lessees torecord most leases on the balance sheet. Under Topic 842, lessees are required to record on the balance sheet right-of-use (“ROU”) assets, whichrepresent the right to use an underlying asset for the lease term, and the corresponding lease liabilities, which represent the obligation to makelease payments arising from the lease. The new guidance requires us to continue classifying leases as either operating or financing, withclassification affecting the pattern of expense recognition in the statements of comprehensive income. In addition, the new standard requiresenhanced disclosures surrounding the amount, timing, and uncertainty of cash flows arising from leasing arrangements. We will adopt Topic 842effective November 1, 2019 on a modified retrospective basis using the optional transition method permitted under ASU 2018-11, and we willrecognize a cumulative-effect adjustment to the opening balance of retained earnings as of the beginning of 2020. Comparative prior period financialstatements will not be restated.65We expect to elect certain practical expedients upon adoption for existing leases as of the effective date. We will elect the package ofpractical expedients that allows us to carry forward prior conclusions related to: (i) whether any expired or existing contracts are or contain leases;(ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for existing leases. Additionally, we will elect the practicalexpedient of not separating lease components from non-lease components for all asset classes. We will make an accounting policy election to notrecord ROU assets or lease liabilities for leases with an initial term of 12 months or less and will recognize payments for such leases in theconsolidated statements of comprehensive income on a straight-line basis over the lease term. We will not elect the use of hindsight for determiningthe reasonably certain lease term.We have substantially completed our plan for the adoption and implementation of this new accounting standard, including assessing ourlease arrangements and implementing software to meet the reporting and disclosure requirements of this standard. We continue to finalize ourimplementation efforts and currently estimate that the adoption of this standard will result in the recognition of approximately $130 million to $200million of ROU assets and approximately $152 million to $222 million of lease liabilities, subject to the completion of our assessment. We do notbelieve the new standard will have a material impact on our consolidated statements of comprehensive income or consolidated statements of cashflows, our liquidity, or our compliance with the various covenants contained within our credit facility, as further described in Note 13, “Credit Facility.”No other recently issued accounting standards are expected to have a significant impact on our fiscal 2020 consolidated financialstatements.3. REVENUES Impact of Adopting Topic 606 and Topic 853 on the Consolidated Financial StatementsOn November 1, 2018, we recorded a pre-tax increase of $9.1 million to our opening retained earnings as a result of adopting Topic 606.These changes primarily related to: (i) the capitalization of certain commission costs that were previously expensed as incurred; (ii) the deferral ofrevenue, and the associated margin, on uninstalled materials associated with certain project type contracts that will now be recognized wheninstallation is substantially complete; and (iii) the deferral of initial franchise license fees that were previously recognized when the franchise licenseterm began but will now be recognized over the term of the initial franchise arrangement. Changes to our consolidated balance sheets include theseparate presentation of costs incurred in excess of amounts billed, which were previously included in trade accounts receivable, net. Additionally,in accordance with Topic 853, rent expense related to service concession arrangements, which was previously classified as an operating expense,is now classified as a reduction of revenues.(in millions) Balance at October31, 2018 Adjustments Due toAdoption of Topic 606 Balance at November1, 2018ASSETS Current assets Trade accounts receivable, net $1,014.1 $(40.1) $974.0Costs incurred in excess of amounts billed — 40.1 40.1Other current assets 37.0 3.6 40.6Other noncurrent assets 109.6 11.5 121.1 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Other accrued liabilities $152.7 $6.0 $158.9Deferred income tax liability, net 37.8 2.6 40.3Retained earnings 771.2 6.5 777.666The impact of adopting Topic 606 on our consolidated balance sheet as of October 31, 2019 was as follows: As of October 31, 2019(in millions) Under HistoricalGuidance Effect of Adoption As ReportedASSETS Current assets Other current assets $46.3 $9.2 $55.5Other noncurrent assets 107.7 12.7 120.3 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Other accrued liabilities $153.1 $5.1 $158.2Deferred income tax liability, net 47.3 0.5 47.7Retained earnings 840.1 16.2 856.3The impact of adopting Topic 606 and Topic 853 on our consolidated statements of comprehensive income for the year ended October 31,2019 was as follows: Year Ended October 31, 2019(in millions, except per share amounts) Under HistoricalGuidance Effect of Adoption As ReportedRevenues $6,546.2 $(47.6) $6,498.6Operating expenses 5,816.2 (48.6) 5,767.5Selling, general and administrative expenses 459.7 (6.7) 452.9Income tax provision 30.7 2.0 32.7Net income 121.6 5.8 127.4 Net income per common share — Basic $1.83 $0.09 $1.91Net income per common share — Diluted $1.82 $0.09 $1.90There were no significant impacts on our consolidated statements of cash flows other than offsetting shifts in net cash provided by operatingactivities between net income and various changes in working capital line items.Disaggregation of RevenuesWe generate revenues under several types of contracts, which are further described in Note 2, “Basis of Presentation and SignificantAccounting Policies.” Generally, the type of contract is determined by the nature of the services provided by each of our major service linesthroughout our reportable segments; therefore, we disaggregate revenue from contracts with customers into major service lines. We havedetermined that disaggregating revenue into these categories best depicts how the nature, amount, timing, and uncertainty of revenue and cashflows are affected by economic factors. Our reportable segments are Business & Industry (“B&I”), Aviation, Technology and Manufacturing (“T&M”),Education, and Technical Solutions, as described in Note 19, “Segment and Geographic Information.” Year Ended October 31, 2019(in millions) B&I Aviation T&M Education TechnicalSolutions TotalMajor Service Line Janitorial(1) $2,316.1 $125.8 $739.7 $756.3 $— $3,937.9Parking(2) 511.5 335.3 25.9 3.1 — 875.8Facility Services(3) 423.1 72.1 151.4 88.0 — 734.6Building & Energy Solutions(4) — — — — 593.2 593.2Airline Services(5) 0.6 484.1 0.1 — — 484.8 $3,251.4 $1,017.3 $917.0 $847.4 $593.2 $6,626.3Elimination of inter-segment revenues (127.7)Total $6,498.667(1) Janitorial arrangements provide a wide range of essential cleaning services for commercial office buildings, airports and other transportation centers,educational institutions, government buildings, health facilities, industrial buildings, retail stores, and stadiums and arenas. These arrangements are oftenstructured as monthly fixed-price, square-foot, cost-plus, and tag services contracts.(2) Parking arrangements provide parking and transportation services for clients at various locations, including airports and other transportation centers,commercial office buildings, educational institutions, health facilities, hotels, and stadiums and arenas. Certain of our management reimbursement, leasedlocation, and allowance arrangements are considered service concession agreements and are accounted for under the guidance of Topic 853. For the yearended October 31, 2019, rent expense related to service concession arrangements, previously recorded within operating expenses, has been recorded as areduction of the related parking service revenues. These arrangements are structured as management reimbursement, leased location, and allowancecontracts.(3) Facility Services arrangements provide onsite mechanical engineering and technical services and solutions relating to a broad range of facilities andinfrastructure systems that are designed to extend the useful life of facility fixed assets, improve equipment operating efficiencies, reduce energy consumption,lower overall operational costs for clients, and enhance the sustainability of client locations. These arrangements are generally structured as monthly fixed-price,cost-plus, and tag services contracts.(4) Building & Energy Solutions arrangements provide custom energy solutions, electrical, HVAC, lighting, and other general maintenance and repair services forclients in the public and private sectors and are generally structured as Energy Savings and Fixed-Price Repair and Refurbishment contracts. We also franchisecertain operations under franchise agreements relating to our Linc Network and TEGG brands, pursuant to franchise contracts.(5) Airline Services arrangements support airlines and airports with services such as passenger assistance, catering logistics, and airplane cabin maintenance.These arrangements are often structured as monthly fixed-price, cost-plus, transaction price, and hourly contracts.Remaining Performance ObligationsAt October 31, 2019, performance obligations that were unsatisfied or partially unsatisfied for which we expect to recognize revenue totaled$207.8 million. We expect to recognize revenue on approximately 79% of the remaining performance obligations over the next 12 months, with theremainder recognized thereafter.These amounts exclude variable consideration primarily related to: (i) contracts where we have determined that the contract consists of aseries of distinct service periods and revenues are based on future performance that cannot be estimated at contract inception; (ii) parking contractswhere we and the customer share the gross revenues or operating profit for the location; and (iii) contracts where transaction prices includeperformance incentives that are based on future performance and therefore cannot be estimated at contract inception. We apply the practicalexpedient that permits exclusion of information about the remaining performance obligations with original expected durations of one year or less.68Contract BalancesThe following tables present the balances in our contract assets and contract liabilities:(in millions) October 31, 2019 November 1, 2018Contract assets Billed trade receivables(1) $978.7 $918.9Unbilled trade receivables(1) 56.9 74.3Costs incurred in excess of amounts billed(2) 72.6 40.1Capitalized commissions(3) 21.8 15.1(1) Included in trade accounts receivable, net, on the consolidated balance sheets. The fluctuation correlates directly to the execution of new customer contractsand to invoicing and collections from customers in the normal course of business.(2) Increase is primarily due to the timing of payments on our contracts measured using the cost-to-cost method of revenue recognition.(3) Included in other current assets and other noncurrent assets on the consolidated balance sheets. During the year ended October 31, 2019, we capitalized$16.4 million of new costs and amortized $9.7 million of previously capitalized costs. There was no impairment loss recorded on the costs capitalized.(in millions) Year EndedOctober 31, 2019Contract liabilities(1) Balance at beginning of year $41.7Additional contract liabilities 250.8Recognition of deferred revenue (254.5)Balance at end of year $38.0(1) Included in other accrued liabilities on the consolidated balance sheets.694. ACQUISITIONS Acquisition of GCA during 2017On September 1, 2017, we acquired all of the outstanding stock of GCA, a provider of integrated facility services to educational institutionsand commercial facilities, for a purchase price of approximately $1.3 billion. As a result of the acquisition, we are now a leading facilities servicesprovider in the education market.Consideration Transferred(in millions, except per share data) Shares of ABM common stock, net of shares withheld for taxes 9.4ABM common stock closing market price at acquisition date $44.63Fair value of ABM common stock at closing 421.3Cash consideration(1) 837.5Total consideration transferred $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 As reported at October 31, 2018(in millions) (finalized)Cash and cash equivalents $0.2Trade accounts receivable(1) 116.3Prepaid expenses and other current assets 12.0Property, plant and equipment 37.3Customer relationships(2) 340.0Trade names(2) 8.0Goodwill(3) 926.9Other assets 4.0Trade accounts payable (9.6)Insurance reserves (35.2)Income taxes payable (8.6)Accrued liabilities (38.8)Deferred income tax liability, net (85.6)Other liabilities (8.1)Net assets acquired $1,258.8(1) The gross amount of trade accounts receivable was $121.9 million, of which $5.6 million was deemed uncollectible at October 31, 2018.(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. Thisgoodwill is not deductible for income tax purposes.70Financial InformationThe following table presents our unaudited pro forma results for the year ended October 31, 2017 as though the GCA acquisition occurredon November 1, 2015. These results include adjustments for the estimated amortization of intangible assets, interest expense, and the income taximpact of the pro forma adjustments at the statutory rate of 41%. These results were adjusted to exclude $24.2 million of acquisition-related costsincurred during 2017, which are included in selling, general and administrative expenses in the accompanying consolidated statements ofcomprehensive income. In addition, they do not reflect the cost of integration activities or benefits from expected revenue enhancements andsynergies. Accordingly, the unaudited pro forma information is not necessarily indicative of the results that would have been achieved if theacquisition had been effective on November 1, 2015.(in millions)Year EndedOctober 31, 2017Pro forma revenue$6,293.0Pro forma income from continuing operations95.5Other 2017 AcquisitionsEffective 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 included up to $1.0 million of undiscounted contingentconsideration that was based on the expected achievement of certain pre-established revenue goals. Based on the metrics of these revenue goals,this contingent consideration was reduced to a nominal value at October 31, 2018. As of December 1, 2016, the operations of MSI are included inour Technical Solutions segment.Effective December 1, 2016, we also acquired all of the outstanding stock of OFJ Connections Ltd (“OFJ”), a provider of airporttransportation services in the United Kingdom, for a purchase price of $6.3 million. As of December 1, 2016, the operations of OFJ are included inour Aviation segment.Pro Forma and Other Financial InformationExcept for GCA, we do not present pro forma and other financial information for our other acquisitions, as they are not considered materialbusiness combinations individually or on a combined basis.5. RESTRUCTURING AND RELATED COSTS We may periodically engage in various restructuring activities intended to drive long-term profitable growth and increase operationalefficiency, which can include streamlining and realigning our overall organizational structure and reallocating resources. These activities may resultin restructuring costs related to employee severance, other project fees, external support fees, lease exit costs, and asset impairment charges.Recently, our significant restructuring activities have been primarily associated with integrating our acquisition of GCA and implementing our 2020Vision initiative, as described below.GCA and Other RestructuringDuring the first quarter of 2018, we initiated a restructuring program to achieve cost synergies following the acquisition of GCA. We incurredthe majority of our severance expense associated with this restructuring program in the first half of 2018. During 2019, our restructuring activitiesprimarily related to the continued integration of GCA and other initiatives, including standardizing our financial systems and streamlining ouroperations by migrating and upgrading several key management platforms, such as our human resources information systems, enterprise resourceplanning system, and labor management system. We also continue consolidating our real estate leases. Severance and other expenses associatedwith our Healthcare reorganization during 2019 were immaterial. We expect to incur additional restructuring charges, primarily related to some of ourtechnology initiatives and other project fees, as we continue to consolidate our operational and financial processes.712020 Vision RestructuringDuring the fourth quarter of 2015, our Board of Directors approved a comprehensive strategy intended to have a positive transformativeeffect on ABM (the “2020 Vision”). As part of the 2020 Vision, we identified key priorities to differentiate ABM in the marketplace, acceleraterevenue growth for certain industry groups, and improve our margin profile. We do not expect to incur significant 2020 Vision restructuring andrelated expenses in the future.Rollforward of Restructuring and Related Liabilities(in millions) External SupportFees EmployeeSeverance Other ProjectFees Lease Exit Costs Asset Impairment TotalBalance, October 31, 2014 $— $— $— $— $— $—Costs recognized(1) 4.6 4.7 0.8 — 2.6 12.7Payments (2.5) (0.4) (0.4) — — (3.3)Non-cash items — — (0.2) — (2.6) (2.8)Balance, October 31, 2015 $2.1 $4.3 $0.2 $— $— $6.6Costs recognized(1) 11.3 8.6 3.9 3.2 2.1 29.0Payments (12.2) (9.1) (3.6) (0.3) — (25.2)Non-cash items — — — (0.4) (2.1) (2.5)Balance, October 31, 2016 $1.2 $3.8 $0.5 $2.5 $— $8.0Costs recognized(1) 12.1 2.2 5.7 2.6 — 22.6Payments (10.8) (3.3) (5.8) (3.1) — (23.0)Non-cash items — — — 0.9 — 0.9Balance, October 31, 2017 $2.5 $2.7 $0.4 $2.8 $— $8.4Costs recognized(1) 4.0 11.0 8.2 2.0 0.6 25.7Payments (6.5) (9.9) (6.7) (1.5) — (24.7)Non-cash items — — — (0.2) (0.6) (0.7)Balance, October 31, 2018 $— $3.8 $1.8 $3.1 $— $8.6Costs recognized(1) 1.5 4.6 4.5 0.7 — 11.2Payments (1.0) (5.3) (5.6) (1.1) — (12.9)Balance, October 31, 2019 $0.5 $3.0 $0.7 $2.7 $— $7.0(1) We include these costs within corporate expenses.Cumulative Restructuring and Related Charges(in millions) External SupportFees EmployeeSeverance Other Project Fees Lease Exit Costs Asset Impairment TotalGCA and Other $3.5 $18.0 $12.3 $0.7 $— $34.62020 Vision 30.0 13.0 10.7 7.7 5.2 66.5Total $33.5 $31.0 $23.0 $8.4 $5.2 $101.1726. DISCONTINUED OPERATIONS On October 26, 2015, in connection with our 2020 Vision, we sold substantially all of the assets of our Security business for cash proceedsof $131.0 million and recorded a pre-tax gain on sale of $23.6 million, which was subsequently reduced by a $3.1 million working capital adjustmentin 2016. Following the sale, we record all costs associated with this former business in discontinued operations. Such costs generally relate tolitigation we retained and insurance reserves. In 2017, we incurred a net loss from discontinued operations of $74.3 million (a pre-tax loss of $123.7million) primarily due to legal settlements. In 2018, we had net income from discontinued operations of $1.8 million (pre-tax 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 auditsettlements. In 2019, net loss from discontinued operations was de minimis.7. NET INCOME PER COMMON SHARE Basic and Diluted Net Income Per Common Share Calculations Years Ended October 31,(in millions, except per share amounts)2019 2018 2017Income from continuing operations$127.5 $95.9 $78.1(Loss) income from discontinued operations, net of taxes(0.1) 1.8 (74.3)Net income$127.4 $97.8 $3.8 Weighted-average common and common equivalent sharesoutstanding — Basic66.6 66.1 57.7Effect of dilutive securities RSUs0.2 0.1 0.3Stock options0.1 0.1 0.2Performance shares0.1 — 0.1Weighted-average common and common equivalent sharesoutstanding — Diluted66.9 66.4 58.3 Net income per common share — Basic Income from continuing operations$1.92 $1.45 $1.35Income (loss) from discontinued operations— 0.03 (1.29)Net income$1.91 $1.48 $0.07 Net income per common share — Diluted Income from continuing operations$1.91 $1.45 $1.34Income (loss) from discontinued operations— 0.03 (1.27)Net income$1.90 $1.47 $0.07Anti-Dilutive Outstanding Stock Awards Issued Under Share-Based Compensation Plans Years Ended October 31,(in millions)2019 2018 2017Anti-dilutive0.3 0.4 —738. FAIR VALUE OF FINANCIAL INSTRUMENTS Fair Value Hierarchy of Our Financial InstrumentsFinancial Assets and Liabilities Measured at Fair Value on a Recurring Basis As of October 31,(in millions)Fair ValueHierarchy 2019 2018Cash and cash equivalents(1)1 $58.5 $39.1Insurance deposits(2)1 0.8 0.6Assets held in funded deferred compensation plan(3)1 2.5 2.7Credit facility(4)2 808.4 949.0Interest rate swap (liabilities) assets(5)2 (14.6) 1.3Investments in auction rate securities(6)3 5.0 5.0(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. Theseinsurance deposits are included in “Other noncurrent assets” on the accompanying consolidated balance sheets. See Note 12, “Insurance,” for furtherinformation.(3) Represents investments held in a Rabbi trust associated with one of our deferred compensation plans, which we include in “Other noncurrent assets” on theaccompanying consolidated balance sheets. The fair value of the assets held in the funded deferred compensation plan is based on quoted market prices. SeeNote 14, “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 outstandingborrowings under our line of credit and term loan approximates the fair value. See Note 13, “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 presentvalue of the difference between expected cash flows calculated at the contracted interest rates and the expected cash flows at current market interest ratesusing observable benchmarks for the London Interbank Offered Rate (“LIBOR”) forward rates at the end of the period. At October 31, 2019 and 2018, ourinterest rate swaps are included in “Other noncurrent liabilities” and “Other noncurrent assets,” respectively, on the accompanying consolidated balance sheets.See Note 13, “Credit Facility,” for further information.(6) The fair value of investments in auction rate securities is based on discounted cash flow valuation models, primarily utilizing unobservable inputs, includingassumptions about the underlying collateral, credit risks associated with the issuer, credit enhancements associated with financial insurance guarantees, andthe possibility of the security being re-financed by the issuer or having a successful auction. These amounts are included in “Other investments” on theaccompanying consolidated balance sheets. See Note 9, “Auction Rate Securities,” for further information.During 2019 and 2018, 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 BasisIn addition to assets and liabilities that are measured at fair value on a recurring basis, we are also required to measure certain non-financial assets at fair value on a non-recurring basis that are subject to fair value adjustments in specific circumstances. These assets can include:goodwill; intangible assets; property, plant and equipment; and long-lived assets that have been reduced to fair value when they are held for sale.We estimate the fair value of these assets using primarily unobservable Level 3 inputs.In connection with the reorganization of our Healthcare business, in the third quarter of 2019 we performed a goodwill impairment test onthe underlying reporting unit immediately before the reorganization. We estimated the fair value of goodwill using the income and marketapproaches, which utilize expected cash flows using Level 3 inputs. This analysis required the exercise of significant judgments, including theidentification of reporting units as well as the evaluation of recent indicators of market activity, future cash flow estimates, discount rates, and otherfactors. As a result of this analysis, we concluded that the estimated fair value of the Healthcare reporting unit substantially74exceeded its carrying value immediately before the reorganization and that no further evaluation of impairment was necessary.During 2018, we recorded impairment charges on goodwill and customer relationships in connection with our annual assessment ofgoodwill. See Note 11, “Goodwill and Other Intangible Assets,” for further information. The fair value of these items was determined based onunobservable Level 3 inputs. The fair value of goodwill was determined based on discounted cash flow analyses that include significantmanagement assumptions, such as revenue growth rates, operating margins, weighted average cost of capital, and future economic and marketconditions. The fair value of customer relationships was determined based on discounted cash flows associated with the customer relationships thatinclude significant management assumptions, including expected proceeds.9. AUCTION RATE SECURITIES At October 31, 2019 and 2018, we held an investment in one auction rate security that 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 thissecurity is designed to be reset through Dutch auctions approximately every thirty days; however, auctions for this security have not occurred sinceAugust 2007.At October 31, 2019 and 2018, there were no unrealized gains or losses on our auction rate security included in AOCI.Significant Assumptions Used to Determine the Fair Value of Our Auction Rate SecurityAssumption October 31, 2019 October 31, 2018Discount rates L + 0.34% L + 0.37%Yields L + 2.00% L + 2.00%Average expected lives 4 years 4 yearsL – One Month LIBOR10. PROPERTY, PLANT AND EQUIPMENT Property, Plant and Equipment As of October 31,(in millions)2019 2018Machinery and other equipment$118.8 $94.0Computer equipment and software91.7 71.5Leasehold improvements59.5 54.6Transportation equipment57.4 49.7Furniture and fixtures13.1 14.9Buildings8.2 8.2Land1.0 1.0 349.8 294.0Less: Accumulated depreciation(1)199.5 153.9Total$150.3 $140.1(1) For 2019, 2018, and 2017, depreciation expense was $48.9 million, $46.5 million, and $38.5 million, respectively.75Capital Leases Included in Property, Plant and Equipment As of October 31,(in millions)2019 2018Transportation equipment$20.0 $20.7Machinery and other equipment0.3 0.3Furniture and fixtures0.2 0.2Computer equipment and software0.1 0.9 20.6 22.1Less: Accumulated depreciation10.7 9.2Total$9.9 $12.911. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill(in millions)Business &Industry Aviation Technology &Manufacturing Education TechnicalSolutions Healthcare TotalBalance at October 31, 2017$529.9 $124.8 $409.3 $561.3 $180.0 $58.9 $1,864.2Purchase price adjustments(0.9) 0.4 (2.1) (3.8) 0.4 (0.2) (6.2)Foreign currency translation(1.1) (0.2) — — (1.5) — (2.8)Impairment loss(1)— — — — (20.3) — (20.3)Balance at October 31, 2018$527.9 $124.9 $407.2 $557.4 $158.7 $58.7 $1,834.8Reallocation(2)45.7 — — 1.2 11.8 (58.7) —Foreign currency translation0.3 0.1 — — 0.3 — 0.6Balance at October 31, 2019$573.9 $125.0 $407.2 $558.6 $170.7 $— $1,835.4(1) Represents accumulated impairment charges at October 31, 2019.(2) Goodwill associated with our Healthcare business was reallocated in connection with the reorganization of this business during the third quarter of 2019.During the fourth quarter of 2018, as part of our annual assessment of goodwill, we recorded a goodwill impairment charge of $20.3 millionfor one of our reporting units within the Technical Solutions segment. In 2018, this reporting unit’s performance primarily reflected the adverseimpact of Brexit and the resulting impact on microeconomic conditions in the U.K. retail sector and the anticipated loss of a significant customercontract. 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. We did not record goodwill impairment charges during 2019 or2017.Other Intangible Assets October 31, 2019 October 31, 2018(in millions)GrossCarryingAmount AccumulatedAmortization Total GrossCarryingAmount AccumulatedAmortization TotalCustomer contracts and relationships(1)$595.9 $(298.9) $297.0 $595.7 $(243.6) $352.2Trademarks and trade names9.8 (9.8) 0.1 9.8 (6.4) 3.4Contract rights and other0.5 (0.4) 0.1 0.5 (0.4) 0.1Total(2)$606.2 $(309.0) $297.2 $606.0 $(250.4) $355.7(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 underlyingcustomer 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 12 years.76Estimated Annual Amortization Expense For Each of the Next Five Years(in millions)2020 2021 2022 2023 2024Estimated amortization expense(1)$49.4 $43.8 $38.2 $33.6 $29.1(1) These amounts could vary as acquisitions of additional intangible assets occur in the future.During 2018, we recorded an impairment charge of $6.2 million on customer relationships in the same reporting unit within the TechnicalSolutions segment due to the same factors discussed above. We did not record impairment charges on other intangible assets during 2019 or 2017.The estimates of future cash flows used in determining the fair value of goodwill and other intangible assets involve significant managementjudgment and are based upon assumptions about expected future operating performance, economic conditions, market conditions, and cost ofcapital. Inherent in estimating the future cash flows are uncertainties beyond our control, such as changes in capital markets. The actual cash flowscould differ materially from management’s estimates due to changes in business conditions, operating performance, and economic conditions.12. INSURANCE We use a combination of insured and self-insurance programs to cover workers’ compensation, general liability, automobile liability, propertydamage, and other insurable risks. For the majority of these insurance programs, we retain the initial $1.0 million of exposure on a per-occurrencebasis, 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 maintaincommercial 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 maintainpolicies that provide per occurrence limits of $75.0 million. We are also self-insured for certain employee medical and dental plans. We maintainstop-loss insurance for our self-insured medical plan under which we retain up to $0.5 million of exposure on a per-participant, per-year basis withrespect to claims.The adequacy of our reserves for workers’ compensation, general liability, automobile liability, and property damage insurance claims isbased 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 actuarialreviews are used to estimate our insurance rates and insurance reserves for future periods and to adjust reserves, if appropriate, for prior years.Insurance Reserve AdjustmentsActuarial Reviews and Updates Performed During 2019We review our self-insurance liabilities on a regular basis and adjust our accruals accordingly. Actual claims activity or development mayvary from our assumptions and estimates, which may result in material losses or gains. As we obtain additional information that affects theassumptions and estimates used in our reserve liability calculations, we adjust our self-insurance rates and reserves for future periods and, ifappropriate, adjust our reserves for claims incurred in prior accounting periods.During the first and third quarters of 2019, we performed comprehensive actuarial reviews of the majority of our casualty insuranceprograms, which evaluated all changes made to claims reserves and claims payment activity for the periods of May 1, 2018 through October 31,2018 and November 1, 2018 through April 30, 2019, respectively (the “Actuarial Reviews”). The Actuarial Reviews were comprehensive in natureand were based on loss development patterns, trend assumptions, and underlying expected loss costs during the periods analyzed.During the second and fourth quarters of 2019, we performed interim actuarial updates of the majority of our casualty insurance programsthat considered changes in claims development and claims payment activity for the respective periods analyzed (the “Interim Updates”). TheseInterim Updates were abbreviated in nature based on77actual versus expected development during the periods analyzed and relied on the key assumptions in the Actuarial Reviews (most notably lossdevelopment patterns, trend assumptions, and underlying expected loss costs).Based on the results of the Actuarial Reviews and Interim Updates, we decreased our total reserves for known claims as well as ourestimate of the loss amounts associated with IBNR Claims for prior periods by $3.4 million during 2019. In 2018, we increased our total reservesrelated to prior year claims by $10.2 million.Insurance Related Balances and Activity(in millions)October 31, 2019 October 31, 2018Insurance claim reserves, excluding medical and dental$507.8 $501.4Medical and dental claim reserves7.2 8.9Insurance recoverables64.5 73.7At October 31, 2019 and 2018, insurance recoverables are included in both “Other current assets” and “Other noncurrent assets” on theaccompanying consolidated balance sheets.Casualty Program Insurance Reserves Rollforward Years Ended October 31,(in millions) 2019 2018 2017Net balance at beginning of year $427.7 $412.5 $348.2Change in case reserves plus IBNR Claims — current year 137.9 131.4 112.2Change in case reserves plus IBNR Claims — prior years (3.4) 10.2 23.1Claims paid (119.1) (126.5) (105.2)GCA acquisition — 0.1 34.1Net balance, October 31(1) 443.3 427.7 412.5Recoverables 64.5 73.7 73.1Gross balance, October 31 $507.8 $501.4 $485.6(1) Includes reserves related to discontinued operations of approximately $1 million for 2019, $3 million for 2018, and $10 million for 2017.Instruments Used to Collateralize Our Insurance Obligations As of October 31,(in millions)2019 2018Standby letters of credit$141.0 $144.1Surety bonds90.8 89.2Restricted insurance deposits0.8 0.6Total$232.6 $233.97813. CREDIT FACILITY On September 1, 2017, we refinanced and replaced our then-existing $800.0 million credit facility with a new senior, secured five-yearsyndicated 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 onSeptember 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 ourassets 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. Thespread ranges from 1.00% to 2.25% for Eurocurrency loans and 0.00% to 1.25% for base rate loans. At October 31, 2019, the weighted averageinterest rate on our outstanding borrowings was 4.05%. We also pay a commitment fee, based on our leverage ratio, ranging from 0.200% to0.350% on the average daily unused portion of the line of credit that is paid quarterly in arrears. For purposes of this calculation, irrevocable standbyletters of credit, which are issued primarily in conjunction with our insurance programs, and cash borrowings are included as outstanding under theline of credit.The Credit Facility, as amended, contains certain covenants, including a current maximum leverage ratio of 4.00 to 1.0 that steps down by25 basis points annually each July to 3.50 to 1.0 by July 2021 and a minimum fixed charge coverage ratio of 1.50 to 1.0, as well as other financialand non-financial covenants. In the event of a material acquisition, as defined in the Credit Facility, we may elect to increase the leverage ratio to3.75 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 subjectto, and limited by, compliance with the covenants described above. At October 31, 2019, 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 complywith covenants, the occurrence of certain material judgments, or a change in control of the Company. If certain events of default occur, includingcertain cross-defaults, insolvency, change in control, or violation of specific covenants, the lenders can terminate or suspend our access to theCredit Facility, declare all amounts outstanding (including all accrued interest and unpaid fees) to be immediately due and payable, and require thatwe 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 $5.2million 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)October 31, 2019 October 31, 2018Current portion of long-term debt Gross term loan$60.0 $40.0Unamortized deferred financing costs(2.8) (3.0)Current portion of term loan$57.2 $37.0 Long-term debt Gross term loan$680.0 $740.0Unamortized deferred financing costs(4.1) (6.9)Total noncurrent portion of term loan675.9 733.1Line of credit(1)(2)68.4 169.0Long-term debt$744.2 $902.0(1) Standby letters of credit amounted to $149.8 million at October 31, 2019.(2) At October 31, 2019, we had borrowing capacity of $574.2 million; however, covenant restrictions limited our borrowing capacity to $406.6 million.79Term Loan MaturitiesDuring 2019, we made principal payments under the term loan of $40.0 million. As of October 31, 2019, the following principal paymentsare required under the term loan.(in millions) 2020 2021 2022Debt maturities $60.0 $120.0 $560.0Interest Rate SwapsWe enter into interest rate swaps to manage the interest rate risk associated with our floating-rate, LIBOR-based borrowings. Under thesearrangements, we typically pay a fixed interest rate in exchange for LIBOR-based variable interest throughout the life of the agreement. We initiallyreport 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 thehedged transactions occur and affect earnings. Interest payables and receivables under the swap agreements are accrued and recorded asadjustments to interest expense. All of our interest rate swaps have been designated and accounted for as cash flow hedges from inception. SeeNote 8, “Fair Value of Financial Instruments,” regarding the valuation of our interest rate swaps.In April 2018, we elected to terminate our interest rate swaps then in effect and received cash proceeds of $25.9 million from the swapcounterparties upon termination. We subsequently entered into new forward-starting interest rate swaps, as summarized below.Notional Amount Fixed Interest Rate Effective Date Maturity Date$ 90.0 million 2.83% November 1, 2018 April 30, 2021$ 90.0 million 2.84% November 1, 2018 October 31, 2021$ 130.0 million 2.86% November 1, 2018 April 30, 2022$ 130.0 million 2.84% November 1, 2018 September 1, 2022At October 31, 2019 and 2018, amounts recorded in AOCI for interest rate swaps were $2.2 million, net of taxes of $1.2 million, and $17.8million, net of taxes of $7.1 million, respectively. These amounts included the gain associated with the interest rate swaps we terminated in 2018,which is being amortized to interest expense as interest payments are made over the term of our Credit Facility. During 2019, we amortized $4.1million, net of taxes of $1.5 million, of that gain and we amortized $1.8 million, net of taxes of $0.7 million, during 2018. At October 31, 2019, thetotal amount expected to be reclassified from AOCI to earnings during the next twelve months was $0.2 million, net of taxes of $0.2 million.8014. EMPLOYEE BENEFIT PLANS Defined Benefit PlansWe provide benefits to certain employees under various defined benefit and postretirement benefit plans (collectively, the “Plans”). ThePlans were previously amended to preclude new participants. All but one of the Plans are unfunded.Information for the Plans As of October 31,(in millions)2019 2018Net obligations$8.4 $7.4Projected benefit obligations16.1 15.0Fair value of assets7.8 7.6At October 31, 2019, assets of the Plans were invested 49% in equities, 49% in fixed income, and 2% in cash. The expected return onassets was $0.4 million during each of 2019, 2018, and 2017. The aggregate net periodic benefit cost for all Plans was $0.6 million for 2019 and$0.2 million during each of 2018 and 2017. Future benefit payments in the aggregate are expected to be $14.2 million.Deferred Compensation PlansWe maintain deferred compensation plans that permit eligible employees and directors to defer a portion of their compensation. AtOctober 31, 2019 and 2018, the total liability of all deferred compensation was $13.2 million and $13.9 million, respectively, and these amounts areincluded in “Other accrued liabilities” and “Other noncurrent liabilities” on the accompanying consolidated balance sheets. Under one of our deferredcompensation plans, a Rabbi trust was created to fund the obligations, and we are required to contribute a portion of the deferred compensationcontributions for eligible participants. The assets held in the Rabbi trust are not available for general corporate purposes. At October 31, 2019 and2018, the fair value of these assets was $2.5 million and $2.7 million, respectively, and these amounts are included in “Other noncurrent assets” onthe accompanying consolidated balance sheets. Aggregate expense recognized under these deferred compensation plans was $0.3 million for2019 and $0.4 million for each of 2018 and 2017.Defined Contribution PlansWe sponsor four defined contribution plans covering certain employees that are subject to the applicable provisions of the EmployeeRetirement Income Security Act of 1974 and the Internal Revenue Code (“IRC”). Certain plans permit a company match of a portion of theparticipant’s contributions or a discretionary contribution after the participant has met the eligibility requirements set forth in the plan. During 2019,2018, and 2017, we made matching contributions required by the plans of $24.3 million, $21.6 million, and $13.7 million, respectively.Multiemployer Pension and Postretirement PlansWe participate in various multiemployer pension plans under union and industry-wide agreements that provide defined pension benefits toemployees covered by collective bargaining agreements. Because of the nature of multiemployer plans, there are risks associated with participationin these plans that differ from single-employer plans. Assets contributed by an employer to a multiemployer plan are not segregated into a separateaccount and are not restricted to provide benefits only to employees of that contributing employer. In the event another participating employer in amultiemployer plan no longer contributes to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers,including us. In the event of the termination of a multiemployer pension plan or a withdrawal from a multiemployer pension plan, we could incurmaterial liabilities under applicable law.81Key Information for Individually Significant Multiemployer Defined Benefit Pension Plans(1)($ in millions) Pension Protection ActZone Status(3) FIP/RPStatus(4) Contributions by ABM SurchargeImposed(5) ExpirationDates ofCollectiveBargainingAgreementsPension Fund EIN/PN(2) 2019 2018 Pending/Implemented 2019 2018 2017Building Service 32BJ Pension Fund 13-1879376 / 001 Red6/30/2018 Red6/30/2017 Implemented $19.3 $19.9 $20.1 No 12/31/2019Central Pension Fund of the IUOE &Participating Employers 36-6052390 / 001 Green1/31/2019 Green1/31/2018 N/A* 11.7 11.0 10.7 N/A* 4/30/2020 –12/31/2022S.E.I.U. National Industry Pension Fund 52-6148540 / 001 Red12/31/2018 Red12/31/2017 Implemented 10.6 8.7 7.2 Yes 4/30/2020 –1/31/2023SEIU Local 1 & Participating EmployersPension Trust 36-6486542 / 001 Green9/30/2018 Green9/30/2017 N/A* 5.1 5.8 6.0 N/A* 4/4/2021IUOE Stationary Engineers Local 39Pension Plan 94-6118939 / 001 Green12/31/2018 Green12/31/2017 N/A* 4.6 5.2 4.8 N/A* 11/30/2020 –8/31/2023Local 68 Engineers Union Pension Plan 51-0176618 / 001 Yellow6/30/2018 Red6/30/2017 Implemented 3.2 3.0 2.8 No 4/30/2020 – 8/31/2022Western Conference of Teamsters PensionPlan 91-6145047 / 001 Green12/31/2018 Green12/31/2017 N/A* 3.1 3.1 3.5 N/A* 5/31/2020 –12/31/2022All Other Plans: 9.0 8.5 8.0 Total Contributions $66.6 $65.3 $63.1 *Not applicable(1) To determine individually significant plans, we evaluated several factors, including our total contributions to the plan, our significance to the plan in terms ofparticipating 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 zonestatus 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 redzone 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 2019 included an amount as imposed by a plan in the red zone in addition to the contribution rate specified in theapplicable collective bargaining agreement.82Multiemployer Pension Plans for which ABM is a Significant ContributorPension Fund Contributions to the plan exceeded more than 5% of total contributionsper most currently available Forms 5500(as of the plan’s year end)Arizona Sheet Metal Pension Trust Fund* 6/30/2018, 6/30/2016Building Service 32BJ Pension Fund 6/30/2018, 6/30/2017, and 6/30/2016Building Service Pension Plan* 4/30/2018, 4/30/2017, and 4/30/2016Contract Cleaners Service Employees’ Pension Plan* 12/31/2018, 12/31/2017, and 12/31/2016Firemen & Oilers Pension Plan of SEIU Local 1* 7/31/2018 and 7/31/2017SEIU Local 1 & Participating Employers Pension Trust 9/30/2018, 9/30/2017, and 9/30/2016Massachusetts Service Employees Pension Plan* 12/31/2018, 12/31/2017, and 12/31/2016S.E.I.U. National Industry Pension Fund 12/31/2018, 12/31/2017, and 12/31/2016Service Employees International Union Local 1 Cleveland Pension Plan* 12/31/2018, 12/31/2017, and 12/31/2016Service Employees International Union Local 32BJ, District 36 Building Operators PensionTrust Fund* 12/31/2018, 12/31/2017, and 12/31/2016Teamsters Local 617 Pension Fund* 2/28/2019, 2/28/2018, and 2/28/2017Teamsters Local Union No. 727 Pension Plan* 2/28/2019, 2/28/2018, and 2/28/2017* 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 PlansIn addition to contributions noted above, we also make contributions to multiemployer defined contribution plans. During 2019, 2018, and2017, our contributions to the defined contribution plans were $9.0 million, $10.6 million, and $5.4 million, respectively.Other Multiemployer Benefit PlansWe also contribute to several multiemployer postretirement health and welfare plans based on obligations arising under collectivebargaining agreements covering union-represented employees. These plans may provide medical, pharmacy, dental, vision, mental health, andother 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 postretirementbenefit plans from contribution amounts paid to benefit active employees, we categorize all such amounts as contributions to postretirement benefitplans. During 2019, 2018, and 2017, our contributions to such plans were $269.8 million, $263.4 million, and $247.9 million, respectively. Therehave been no significant changes that affect the comparability of total contributions for any of the periods presented.8315. COMMITMENTS AND CONTINGENCIES Lease and Other Similar CommitmentsFuture Minimum Payments(in millions)Capital Operating andOther(1) Service ConcessionArrangementsOctober 31, 2020$3.1 $42.8 $20.8October 31, 20212.5 35.5 16.0October 31, 20221.3 30.3 15.4October 31, 20230.6 25.6 15.4October 31, 2024— 20.5 15.4Thereafter— 51.8 21.9Total$7.5 $206.5 $105.0(1) Includes total estimated sublease rental income of $15.8 million.Rental and Other Expense Years Ended October 31,(in millions)2019 2018 2017Minimum rental and other$101.6 $133.3 $121.5Contingent rental and other9.9 26.8 34.3Total(1)$111.6 $160.1 $155.8(1) 2018 and 2017 include $47.8 million and $48.0 million, respectively, related to service concession arrangements. In 2019, following the adoption of Topic 853,rent expense related to service concession arrangements is now recorded as a reduction of revenues.Letters of Credit and Surety BondsWe use letters of credit and surety bonds to secure certain commitments related to insurance programs and for other purposes. As ofOctober 31, 2019, these letters of credit and surety bonds totaled $149.8 million and $596.8 million, respectively.GuaranteesIn some instances, we offer clients guaranteed energy savings under certain energy savings contracts. At October 31, 2019 and 2018, totalguarantees were $174.8 million and $171.7 million, respectively, and these guarantees extend through 2038 for both periods. We accrue for theestimated cost of guarantees when it is probable that a liability has been incurred and the amount can be reasonably estimated. Historically, wehave 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 theother joint venture partners have each jointly and severally guaranteed the obligations of the joint venture to perform under certain contractsextending through 2024. Annual revenues relating to the underlying contracts are approximately $41 million. Should the joint venture be unable toperform under these contracts, the joint venture partners would be jointly and severally liable for any losses incurred by the client due to the failureto perform.IndemnificationsWe are party to a variety of agreements under which we may be obligated to indemnify the other party for certain matters. Theseagreements 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, generallyour clients, in connection with any claims arising out of the services that we provide. We also incur costs to defend lawsuits or settle claims related84to these indemnification arrangements, and in most cases these costs are paid from our insurance program. Although we attempt to place limits onsuch indemnification arrangements related to the size of the contract, the maximum obligation may not be explicitly stated and, as a result, we areunable to determine the maximum potential amount of future payments we could be required to make under these arrangements.Our certificate of incorporation and bylaws may require us to indemnify our directors and officers for certain liabilities that were incurred as aresult of their status or service to ABM as a director or officer. The amount of these obligations cannot be reasonably estimated.Unclaimed Property AuditsWe routinely remit escheat payments to states in compliance with applicable escheat laws, and we are subject to unclaimed property auditsby states in the ordinary course of business. The property subject to review in the audit process may include unclaimed wages, vendor payments,or customer refunds. State escheat laws generally require entities to report and remit abandoned or unclaimed property to the state, and failure todo so can result in assessments that could include interest and penalties in addition to the payment of the escheat liability.Sales Tax AuditsWe collect sales tax from clients and remit those collections to the applicable states. When clients fail to pay their invoices, including theamount 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 applicablestate.Sales tax laws and regulations enacted by the various states are subject to interpretation, and our compliance with such laws is routinelysubject to audit and review by such states. Audit risk is concentrated in several states, and these states are conducting ongoing audits. Theoutcomes of ongoing and any future audits and changes in the states’ interpretation of the sales tax laws and regulations could materially adverselyimpact our results of operations.Legal MattersWe are a party to a number of lawsuits, claims, and proceedings incident to the operation of our business, including those pertaining to laborand employment, contracts, personal injury, and other matters, some of which allege substantial monetary damages. Some of these actions may bebrought as class actions on behalf of a class or purported class of employees.At October 31, 2019, the total amount accrued for all probable litigation losses where a reasonable estimate of the loss could be made was$6.5 million.Litigation outcomes are difficult to predict and the estimation of probable losses requires the analysis of multiple possible outcomes thatoften depend on judgments about potential actions by third parties. If one or more matters are resolved in a particular period in an amount in excessof, or in a manner different than, what we anticipated, this could have a material adverse effect on our financial position, results of operations, orcash flows.We do not accrue for contingent losses that, in our judgment, are considered to be reasonably possible but not probable. The estimation ofreasonably possible losses also requires the analysis of multiple possible outcomes that often depend on judgments about potential actions by thirdparties. Our management currently estimates the range of loss for all reasonably possible losses for which a reasonable estimate of the loss can bemade is between zero and $6 million. Factors underlying this estimated range of loss may change from time to time, and actual results may varysignificantly from this estimate.In some cases, although a loss is probable or reasonably possible, we cannot reasonably estimate the maximum potential losses forprobable matters or the range of losses for reasonably possible matters. Therefore, our accrual for probable losses and our estimated range of lossfor 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 finaloutcome of these matters will not have a material adverse effect on our financial position, results of operations, or cash flows.85Certain Legal ProceedingsCertain 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 anyother 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 orpurports 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 ispending; 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, pending 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 andmake additional premium payments for such meal periods, pay split shift premiums when owed, and reimburse janitors for travel expenses. There isalso a claim for penalties under the California Labor Code Private Attorneys General Act (“PAGA”). On April 19, 2011, the trial court held a hearingon 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 theunderlying 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 certificationand remanded the matter for certification of a meal period, travel expense reimbursement, and split shift class. The case was remitted to the trialcourt 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 legacyABM janitorial companies in California at any time between April 7, 2002 and April 30, 2013, on claims based on alleged previous automaticdeduction practices for meal breaks, unpaid meal premiums, unpaid split shift premiums, and unreimbursed business expenses, such as mileagereimbursement for use of personal vehicles to travel between worksites. On February 1, 2019, the trial court held that the discovery related to PAGAclaims allegedly arising after April 30, 2013 would be stayed until after the class and PAGA claims accruing prior to April 30, 2013 had been tried.The parties engaged in mediation in July 2019, which did not result in settlement of the case. On October 17, 2019, the plaintiffs filed a motionasking the trial court to certify additional classes based on an alleged failure to maintain time records, an alleged failure to provide accurate wagestatements, and an alleged practice of combining meal and rest breaks. Our response to this motion was filed on November 4, 2019, and the trialcourt heard the matter on December 10, 2019. This matter is currently set for trial on May 26, 2020. Prior to trial, we will have the opportunity tomove for summary judgment, seek decertification of the classes, or engage in further mediation, if we deem such actions appropriate. We expect toengage in one or more such activities in upcoming quarters.Castro and Marmolejo v. ABM Industries, Inc., et al., filed on October 24, 2014, pending in the United States District Court for the NorthernDistrict 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 inCalifornia 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 torepresent a class of all employees who were, are, or will be employed by ABM in the State of California with the Employee Master Job DescriptionCode “Cleaner” (hereafter referred to as “Cleaner Employees”) beginning from October 24, 2010. ABM filed its opposition to class certification onNovember 27, 2017. On January 26, 2018, the district court granted plaintiffs’ motion for class certification. The court rejected plaintiffs’ proposedclass, 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 Stateof 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 facilitythat did not provide a biometric clock and (b) were not offered an ABM-provided cell phone during the period beginning on January 1, 2012, throughthe 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 ABMin the State of California as Cleaner Employees who used a personal cell phone to report unusual or suspicious circumstances to supervisors andwere 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 originalcomplaint, October 24, 2014, through the date of notice to the Class Members that a class has been certified in this action; and (3) all employeeswho were, are, or will be employed by ABM in the State of California as Cleaner Employees who used a personal cell phone to respond tocommunications from supervisors and were not offered (a) an ABM-provided cell phone or (b) a two-way radio during the period beginning fouryears prior to the filing of the86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 StatesCourt 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 ofcertain class members pursuant to the terms of three collective bargaining agreements. In response to that motion, on May 14, 2018, the districtcourt modified the class definition to exclude all claims arising after the operative date(s) of the applicable collective bargaining agreements (whichis June 1, 2016 for one agreement and May 1, 2016 for the other two agreements). However, the district court denied the motion to compelarbitration as to claims that arose prior to the operative date(s) of the applicable collective bargaining agreements. ABM appealed to the NinthCircuit the district court’s order denying the motion to compel arbitration with respect to the periods preceding the operative dates of the collectivebargaining 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 courtapproval. The plaintiffs’ motion for preliminary approval of the settlement was filed on January 4, 2019, and the court held a hearing on the motionon February 12, 2019. On February 14, 2019, the court granted preliminary approval of the settlement. The court granted final approval of thesettlement on September 3, 2019, and the settlement was funded on September 23, 2019. In connection with the settlement, we modified ourexisting written policies for California to expressly confirm that ABM service workers are not required to use personal cell phones for work purposesand began centralizing the process and implementing technology for such employees to request reimbursement for personal cell phone use due towork. Because the settlement was finally approved, on October 31, 2019, ABM dismissed its Ninth Circuit appeal regarding the district court’s orderdenying the motion to compel arbitration.16. PREFERRED AND COMMON STOCK Preferred StockWe are authorized to issue 500,000 shares of preferred stock. None of these preferred shares are issued.Common StockOn September 2, 2015, our Board of Directors authorized a program to repurchase up to $200.0 million of our common stock (the “2015Share Repurchase Program”). At October 31, 2019, authorization for $134.1 million of repurchases remained under our 2015 Share RepurchaseProgram. Effective December 18, 2019, our Board of Directors replaced the 2015 Share Repurchase Program with a new share repurchaseprogram under which we may repurchase up to $150.0 million of our common stock. These purchases may take place on the open market orotherwise, and all or part of the repurchases may be made pursuant to Rule 10b5-1 plans or in privately negotiated transactions. The timing ofrepurchases is at our discretion and will depend upon several factors, including market and business conditions, future cash flows, share price,share availability, and other factors at our discretion. Repurchased shares are retired and returned to an authorized but unissued status. Therepurchase program may be suspended or discontinued at any time without prior notice.Repurchase ActivityThere were no share repurchases during 2019 or 2018. During 2017, we repurchased 0.2 million shares at an average price paid per shareof $40.07 for total cash paid of $7.9 million.8717. SHARE-BASED COMPENSATION PLANS We use various share-based compensation plans to provide incentives for our key employees and directors. Currently, these incentivesprimarily 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 omnibusplan that provides for a variety of equity and equity-based award vehicles, including stock options, stock appreciation rights, RSUs, performanceshares, and other share-based awards. Shares subject to awards that terminate without vesting or exercise are available for future awards underthe 2006 Equity Plan. Certain of the awards under the 2006 Equity Plan may qualify as “performance-based” compensation under the IRC.As amended, there are 13,475,265 total shares of common stock authorized for issuance under the 2006 Equity Plan, and at October 31,2019, there were 2,793,556 shares of common stock available for grant for future equity-based compensation awards. In addition, there are certainplans 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 StockPurchase Plan”). As amended, there are 4,000,000 total shares of common stock authorized for issuance under the 2004 Employee Stock PurchasePlan. Effective May 1, 2006, the 2004 Employee Stock Purchase Plan is no longer considered compensatory and the values of the awards are nolonger treated as share-based compensation expense. Additionally, as of that date, the purchase price became 95% of the fair value of our commonstock 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, 2019,there were 705,213 remaining unissued shares under the 2004 Employee Stock Purchase Plan.Compensation Expense by Type of Award and Related Income Tax Benefit Years Ended October 31,(in millions)2019 2018 2017RSUs$9.5 $9.3 $7.2Performance shares8.0 7.7 6.1Share-based compensation expense before income taxes17.5 17.0 13.3Income tax benefit(4.9) (5.1) (5.4)Share-based compensation expense, net of taxes$12.5 $11.8 $7.9RSUs and Dividend Equivalent RightsWe award RSUs to eligible employees and our directors (each, a “Grantee”) that entitle the Grantee to receive shares of our common stockas the units vest. RSUs granted to eligible employees generally vest with respect to 50% of the underlying award on the second and fourthanniversary of the award. RSUs granted to directors vest over three years. In general, the receipt of RSUs is subject to the Grantee’s continuingemployment 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 thedividend payments are made and are subject to the same terms and conditions as the underlying award.88RSU Activity Number of Shares (inmillions) Weighted-Average GrantDate Fair Value perShareOutstanding at October 31, 20180.8 $36.61Granted0.3 34.48Vested (including 0.1 shares withheld for income taxes)(0.3) 33.69Forfeited(0.1) 36.27Outstanding at October 31, 20190.7 $36.92At October 31, 2019, total unrecognized compensation cost, net of estimated forfeitures, related to RSUs was $16.0 million, which isexpected to be recognized ratably over a weighted-average vesting period of 2.4 years. In 2019, 2018, and 2017, the weighted-average grant datefair value per share of awards granted was $34.48, $37.98, and $41.79, respectively. In 2019, 2018, and 2017, the total grant date fair value ofRSUs vested and converted to shares of ABM common stock was $10.7 million, $7.4 million, and $9.4 million, respectively.Performance Shares, Including TSR Performance SharesPerformance shares consist of a contingent right to receive shares of our common stock based on performance targets adopted by ourCompensation Committee. Performance shares are credited with dividend equivalent rights that will be converted to performance shares at the fairmarket value of our common stock beginning after the performance targets have been satisfied and are subject to the same terms and conditions asthe underlying award.For certain performance share awards, the number of performance shares that will vest is based on pre-established internal financialperformance targets and typically a three-year service and performance period. The number of TSR awards and TSR-modified awards that will vestover the respective three-year performance period is based on our total shareholder return relative to the S&P 600 Small Cap Index for awards thatwere granted in 2016, 2017, or 2018, and is based on the S&P 1500 Commercial Services & Supplies Index for awards that were granted in 2019.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 Number of Shares (inmillions) Weighted-Average GrantDate Fair Value perShareOutstanding at October 31, 20180.8 $35.96Granted0.4 35.44Vested (including 0.1 shares withheld for income taxes)(0.2) 27.58Performance adjustments(0.1) 39.69Forfeited(0.1) 37.38Outstanding at October 31, 20190.8 $38.06At October 31, 2019, total unrecognized compensation cost related to performance share awards was $14.2 million, which is expected to berecognized ratably over a weighted-average vesting period of 1.8 years. Except for TSR performance shares, these costs are based on estimatedachievement of performance targets and estimated costs are periodically reevaluated. For our TSR performance shares, these costs are based onthe fair value of awards at the grant date and are recognized on a straight-line basis over the service period of three years.In 2019, 2018, and 2017, the weighted-average grant date fair value per share of awards granted was $35.44, $38.53, and $39.21,respectively. In 2019, 2018, and 2017, the total grant date fair value of performance shares vested and converted to shares of ABM common stockwas $6.8 million, $7.3 million, and $7.0 million, respectively.89In 2019, 2018, and 2017, we used the Monte Carlo simulation valuation technique to estimate the fair value of TSR performance sharegrants, which used the assumptions in the table below.Monte Carlo Assumptions 2019 2018 2017Expected life(1)2.81 years 2.81 years 2.14 yearsExpected stock price volatility(2)27.7% 21.6% 21.4%Risk-free interest rate(3)2.5% 2.0% 1.3%Stock price(4)$34.92 $39.02 $40.21(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 theperformance 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 isdetermined 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 OptionsTypically, stock options vest and become exercisable at a rate of 25% per year beginning one year after the date of grant. However, termsof stock options can vary, and certain stock options granted on January 10, 2011 vested on the fifth anniversary of the award. We have not grantedstock 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 ofgrant. Options typically expire 7 years after the date of grant.Stock Option Activity Number of Shares(in millions) Weighted-AverageExercise Price perShare Weighted-AverageRemainingContractual Term (inyears)(1) Aggregate IntrinsicValue (in millions)(2) Outstanding at October 31, 20180.2 $16.09 Forfeited or expired— 15.94 Exercised(0.1) 18.03 Outstanding at October 31, 20190.1 $14.82 0.9 $2.2Exercisable at October 31, 2019— $18.85 0.9 $0.5(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, 2019 exceeds the exercise price.At October 31, 2019, we had no unrecognized compensation cost related to stock option grants. For 2019, 2018, and 2017, the totalintrinsic value of stock options exercised was $1.4 million, $0.6 million, and $2.6 million, respectively. In 2019 and 2018 no stock options vested. In2017, the total grant date fair value of stock options vested was $0.2 million.Employee Stock Purchase Plan Years Ended October 31,(in millions, except per share amounts)2019 2018 2017Weighted-average fair value of granted purchase rights per share$1.77 $1.70 $2.11Common stock issued0.1 0.1 0.1Fair value of common stock issued per share$33.60 $32.34 $40.07Aggregate purchases$4.1 $4.7 $4.79018. INCOME TAXES Geographic Sources of Income from Continuing Operations Before Income Taxes Years Ended October 31,(in millions)2019 2018 2017United States$137.1 $94.8 $76.1Foreign23.1 (7.1) 10.8Income from continuing operations before income taxes$160.2 $87.7 $86.9Components of Income Tax (Provision) Benefit Years Ended October 31,(in millions)2019 2018 2017Current: Federal$(6.4) $(4.3) $(5.9)State(10.7) (7.3) (6.0)Foreign(5.9) (3.9) (3.0)Deferred: Federal(8.5) 21.8 5.0State(1.6) 0.2 0.3Foreign0.4 1.7 0.8Income tax (provision) benefit$(32.7) $8.2 $(8.8)Reconciliation of the U.S. Statutory Tax Rate to Annual Effective Tax Rate Years Ended October 31, 2019 2018 2017U.S. statutory rate21.0% 23.3% 35.0%State and local income taxes, net of federal tax benefit5.9 6.9 5.5Federal and state tax credits(3.9) (7.8) (7.5)Impact of foreign operations(1.0) 1.3 (2.7)Changes in uncertain tax positions(0.8) (6.7) (19.7)Incremental tax benefit from share-based compensation awards(0.7) (3.9) (4.2)Tax credits for energy efficient government buildings— (3.2) (2.2)Impact from goodwill impairment— 4.4 —Transition tax on foreign earnings(1.1) 5.1 —Remeasurement of U.S. deferred taxes(0.3) (31.5) —Nondeductible expenses2.1 2.4 5.7Other, net(0.8) 0.3 0.1Effective tax rate20.4 % (9.4)% 10.1 %On December 22, 2017, the Tax Act was enacted into law. Among other provisions, it reduced the federal corporate income tax rate from35% to 21% and required companies to pay a one-time transition tax on the deemed repatriation of indefinitely reinvested earnings of internationalsubsidiaries. Our U.S. statutory federal tax rate for fiscal 2019 and future years was reduced to 21% from our blended rate of 23.3% in fiscal 2018.Other provisions under the Tax Act became effective for us in fiscal 2019, including limitations on deductibility of interest and executivecompensation, as well as a new minimum tax on Global Intangible Low-Taxed Income (“GILTI”), which we have elected to account for as a periodcost.During 2018, we finalized our analysis of the transitional impacts of the Tax Act. As a result, we recorded a one-time tax benefit of $29.6million from the remeasurement of certain deferred tax assets and liabilities based on the new tax rates at which they are expected to reverse in thefuture. In addition, we recorded an expense of $4.5 million for the one-time transition tax on the deemed repatriation of indefinitely reinvestedearnings of our international91subsidiaries. Upon finalizing our tax filings, the impact of the transition tax was ultimately an expense of $2.7 million, which resulted in a benefit of$1.8 million that was recorded in the fourth quarter of 2019. 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 TaxAct, no deferred tax liabilities with respect to federal and state income taxes or foreign withholding taxes have been recognized.During 2019 and 2018, we had effective tax rates of 20.4% and (9.4)%, respectively, resulting in a provision for tax of $32.7 million and abenefit from tax of $8.2 million, respectively. Our effective tax rate for 2019 was impacted by the following discrete items: a $1.8 million benefit fromthe transition tax (including foreign tax credits); a $1.7 million benefit from state true-ups; a $1.6 million benefit from federal true-ups; a $1.3 millionprovision related to the Work Opportunity Tax Credit (“WOTC”); a $1.3 million benefit from expiring statutes of limitations; a $1.1 million benefit fromthe vesting of share-based compensation awards; and a $0.9 million benefit from research and development credits. Our effective tax rate for 2018was impacted by the following discrete items: a $23.2 million benefit related to the Tax Act enactment; a $5.8 million benefit from expiring statutes oflimitations; a $3.4 million benefit from the vesting of share-based compensation awards; a $2.8 million benefit for energy efficient governmentbuildings; and a $1.0 million provision for certain tax credits, including WOTC.Components of Deferred Tax Assets and Liabilities As of October 31,(in millions)2019 2018Deferred tax assets attributable to: Self-insurance claims (net of recoverables)$83.6 $83.5Deferred and other compensation25.6 22.7Accounts receivable allowances5.6 6.5Settlement liabilities3.1 3.3Other accruals1.8 (0.3)Other comprehensive income0.5 (5.7)State taxes0.4 0.5State net operating loss carryforwards11.2 15.9Federal net operating loss carryforwards— 5.4Tax credits6.3 21.7Unrecognized tax benefits3.0 2.4Other— 1.7Gross deferred tax assets141.2 157.6Valuation allowance(8.4) (12.0)Total deferred tax assets132.8 145.7 Deferred tax liabilities attributable to: Property, plant and equipment(4.8) (4.2)Goodwill and other acquired intangibles(170.6) (179.2)Other(5.2) —Total deferred tax liabilities(180.6) (183.4) Net deferred tax liabilities$(47.7) $(37.8)Net Operating Loss Carryforwards and CreditsState net operating loss carryforwards totaling $144.8 million at October 31, 2019 are being carried forward in several state jurisdictionswhere we are permitted to use net operating losses from prior periods to reduce future taxable income. These losses will expire between 2020 and2039. Federal net operating loss carryforwards were fully utilized during 2019. Federal and state tax credit carryforwards totaling $7.6 million areavailable to reduce future cash taxes and will expire between 2022 and 2039.92The valuation allowance represents the amount of tax benefits related to state net operating loss carryforwards that are not likely to berealized. We believe the remaining deferred tax assets are more likely than not to be realizable based on estimates of future taxable income.Changes to the Valuation Allowance Years Ended October 31,(in millions)2019 2018 2017Valuation allowance at beginning of year$12.0 $7.7 $5.4GCA acquisition— 2.4 4.1Other, net(3.6) 1.8 (1.8)Valuation allowance at end of year$8.4 $12.0 $7.7Unrecognized Tax BenefitsAt October 31, 2019, 2018, and 2017, there were $35.3 million, $35.8 million, and $50.5 million, respectively, of unrecognized tax benefitsthat if recognized in the future would impact our effective tax rate. We estimate that a decrease in unrecognized tax benefits of up to approximately$4.7 million is reasonably possible over the next twelve months due to lapses of applicable statutes of limitations. At October 31, 2019 and 2018,accrued interest and penalties were $1.2 million and $1.0 million, respectively. For interest and penalties, we recognized an expense of $0.2 millionin 2019 and benefits of $1.0 million and $0.5 million in 2018 and 2017, respectively.Reconciliation of Total Unrecognized Tax Benefits Years Ended October 31,(in millions)2019 2018 2017Balance at beginning of year$35.8 $53.4 $57.2Additions for tax positions related to the current year— 0.2 —Additions for tax positions related to prior years3.6 — 16.4Reductions for tax positions related to prior years— (9.0) (0.1)Reductions for lapse of statute of limitations(3.9) (8.7) (19.7)Settlements(0.3) (0.1) (0.3)Balance at end of year$35.3 $35.8 $53.4JurisdictionsWe conduct business in all 50 states, significantly in California, Texas, and New York, as well as in various foreign jurisdictions. Our mostsignificant income tax jurisdiction is the United States. Due to expired statutes and closed audits, our federal income tax returns for years prior tofiscal 2016 are no longer subject to examination by the U.S. Internal Revenue Service. Generally, for the majority of state and foreign jurisdictionswhere we do business, periods prior to fiscal 2015 are no longer subject to examination. We are currently being examined by the IRS and state taxauthorities of California, Illinois, Massachusetts, and Wisconsin.9319. SEGMENT AND GEOGRAPHIC INFORMATION Segment InformationOur current reportable segments consist of B&I, Aviation, T&M, Education, and Technical Solutions, as further described below. Refer toNote 2, “Basis of Presentation and Significant Accounting Policies,” for information related to the modification in our presentation of inter-segmentrevenues and the reorganization of our Healthcare business into our other industry groups, primarily B&I, during 2019, as well as information relatedto our former Government Services business that we sold during 2017. REPORTABLE SEGMENTS AND DESCRIPTIONSB&IB&I, our largest reportable segment, encompasses janitorial, facilities services, and parking services forcommercial real estate properties, sports and entertainment venues, and traditional hospitals and non-acute healthcare facilities. B&I also provides vehicle maintenance and other services to rental carproviders.AviationAviation supports airlines and airports with services ranging from parking and janitorial to passengerassistance, catering logistics, air cabin maintenance, and transportation.T&MT&M provides janitorial, facilities services, and parking services to industrial and high-techmanufacturing facilities.EducationEducation delivers janitorial, custodial, landscaping and grounds, facilities engineering, and parkingservices for public school districts, private schools, colleges, and universities.Technical SolutionsTechnical Solutions specializes in mechanical and electrical services. These services can also beleveraged for cross-selling across all of our industry groups, both domestically and internationally.The accounting policies for our segments are the same as those disclosed within our significant accounting policies in Note 2, “Basis ofPresentation and Significant Accounting Policies.” Our management evaluates the performance of each reportable segment based on its respectiveoperating profit results, which include the allocation of certain centrally incurred costs. Corporate expenses not allocated to segments includecertain 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 actuarial adjustments to self-insurance reserves, and direct acquisitioncosts. Management does not review asset information by segment, therefore we do not present assets in this note.94Financial Information by Reportable Segment Years Ended October 31,(in millions)2019 2018 2017Revenues Business & Industry$3,251.4 $3,268.4 $2,939.4Aviation1,017.3 1,038.7 1,003.0Technology & Manufacturing917.0 925.4 698.1Education847.4 856.7 368.8Technical Solutions593.2 500.1 473.4Government Services— — 86.5Elimination of inter-segment revenues(127.7) (147.1) (115.7) $6,498.6 $6,442.2 $5,453.6Operating profit (loss) Business & Industry$182.3 $157.9 $146.6Aviation21.1 23.2 23.0Technology & Manufacturing72.5 67.4 48.6Education39.0 44.1 17.4Technical Solutions55.4 21.8 39.4Government Services(0.1) (0.8) 21.8Corporate(159.0) (168.8) (189.0)Adjustment for income from unconsolidated affiliates, included in Aviation andGovernment Services(3.0) (3.2) (4.1)Adjustment for tax deductions for energy efficient government buildings, includedin Technical Solutions0.1 (2.8) (1.9) 208.3 138.6 101.9Income from unconsolidated affiliates3.0 3.2 4.2Interest expense(51.1) (54.1) (19.2)Income from continuing operations before income taxes$160.2 $87.7 $86.9 Depreciation and amortization(1) Business & Industry$21.3 $23.6 $17.4Aviation11.9 13.1 13.4Technology & Manufacturing14.3 15.6 6.4Education37.3 37.5 8.4Technical Solutions8.6 10.2 12.5Corporate13.9 12.4 11.8 $107.4 $112.5 $70.1(1) Excludes amortization related to income from unconsolidated affiliates.Geographic Information Based on the Country in Which the Sale Originated(1) Years Ended October 31,(in millions)2019 2018 2017Revenues United States$6,025.2 $5,997.4 $5,126.8All other countries473.3 444.8 326.8 $6,498.6 $6,442.2 $5,453.6(1) Substantially all of our long-lived assets are related to United States operations.9520. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) Fiscal Quarter (in millions, except per share amounts)First Second Third Fourth Year ended October 31, 2019 Revenues$1,607.9 $1,594.7 $1,647.9 $1,648.0 Gross profit162.0 180.5 193.9 194.7 Income from continuing operations13.0 29.9 36.5 48.1 (Loss) income from discontinued operations, net of taxes(0.1) (0.2) 0.2 (0.1) Net income$13.0 $29.7 $36.8 $47.9 Net income per common share — Basic Income from continuing operations$0.20 $0.45 $0.55 $0.72 Income from discontinued operations— — — — Net income$0.20 $0.45 $0.55 $0.72 Net income per common share — Diluted Income from continuing operations$0.20 $0.45 $0.55 $0.71 Income from discontinued operations— — — — Net income$0.19 $0.45 $0.55 $0.71 Year ended October 31, 2018 Revenues$1,588.3 $1,580.8 $1,624.3 $1,648.8 Gross profit159.0 175.0 177.6 183.1 Income from continuing operations28.0 25.4 33.7 8.9 (Loss) income from discontinued operations, net of taxes(0.1) 1.2 (0.1) 0.8 Net income$27.8(1) $26.6 $33.6 $9.7(2) Net income per common share — Basic Income from continuing operations$0.42 $0.38 $0.51 $0.13 Income from discontinued operations— 0.02 — 0.01 Net income$0.42 $0.40 $0.51 $0.15 Net income per common share — Diluted Income from continuing operations$0.42 $0.38 $0.51 $0.13 Income from discontinued operations— 0.02 — 0.01 Net income$0.42(1) $0.40 $0.51 $0.15(2) (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.96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 disclosurecontrols 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 PrincipalExecutive Officer and Principal Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls andprocedures 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 ExchangeCommission, 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 definedin Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our PrincipalExecutive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reportingbased upon the framework in Internal Control – Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of theTreadway Commission. Based on that evaluation, our management concluded that our internal control over financial reporting was effective as ofOctober 31, 2019.Audit Report on Internal Controls over Financial Reporting of the Registered Public Accounting FirmKPMG LLP, an independent registered public accounting firm, has audited the consolidated financial statements included in this AnnualReport on Form 10-K and, as part of their audit, has issued their report, included herein, on the effectiveness of our internal control over financialreporting.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 integratingGCA. These are enhancements of ongoing activities to support the growth of our financial shared service capabilities and standardize our financialsystems. We also continue to update several key platforms, including our human resources information systems, enterprise resource planningsystem, and labor management system. Both the migration of GCA’s back-office functions to the ABM enterprise service center and theimplementation of several key platforms involve changes in the systems that include internal controls. Although the transitions have proceeded todate without material adverse effects, the possibility exists that such transitions could adversely affect our internal controls over financial reportingand procedures.There were no changes in our internal control over financial reporting during the fourth fiscal quarter of 2019 identified in connection withthe evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that has materially affected, or is reasonably likely to materiallyaffect, our internal control over financial reporting.ITEM 9B. OTHER INFORMATION.Not applicable.97PART IIIITEM 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 ofRegistrant.” Additional information required by this Item will be set forth under the captions “Proposal No. 1—Election of Directors,” “CorporateGovernance and Board Matters,” “Audit-Related Matters,” and “Delinquent Section 16(a) Reports” in our Definitive Proxy Statement for our 2020Annual Meeting of Stockholders (the “2020 Proxy Statement”). Such information is incorporated herein by reference. Our 2020 Proxy Statement willbe filed with the Securities and Exchange Commission within 120 days after the conclusion of our fiscal year ended October 31, 2019.On April 22, 2019, we filed our Annual CEO Certification as required by Section 303A.12 of the NYSE Listed Company Manual.Code of Business ConductWe have adopted and posted on our website (www.abm.com) the ABM Code of Business Conduct. Our Code of Business Conductqualifies 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 amendmentsare made to the Code of Business Conduct or if any waiver, including any implicit waiver, from a provision of the Code of Business Conduct isgranted to our Principal Executive Officer, Principal Financial Officer, or Principal Accounting Officer, we will disclose the nature of such amendmentor 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 forFiscal Year 2019,” “Executive Compensation,” and “Corporate Governance and Board Matters—Compensation Committee Interlocks and InsiderParticipation” in our 2020 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 andrelated stockholder matters required by this Item will be set forth under the captions “General Information—Security Ownership of Certain BeneficialOwners,” “General Information—Security Ownership of Directors and Executive Officers,” and “General Information—Equity Compensation PlanInformation” in our 2020 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 willbe set forth under the captions “General Information—Certain Relationships and Transactions with Related Persons” and “Corporate Governanceand Board Matters” in our 2020 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 servicesrequired by this Item will be set forth under the caption “Audit-Related Matters” in our 2020 Proxy Statement and is incorporated herein byreference.98PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.(a)The following documents are filed as part of this report:1. Financial Statements: Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm46Consolidated Balance Sheets at October 31, 2019 and 201849Consolidated Statements of Comprehensive Income for the Years Ended October 31, 2019, 2018, and 201750Consolidated Statements of Stockholders’ Equity for the Years Ended October 31, 2019, 2018, and 201751Consolidated Statements of Cash Flows for the Years Ended October 31, 2019, 2018, and 201752 2. Financial Statement Schedule Valuation and Qualifying Accounts for the Years Ended October 31, 2019, 2018, and 2017100 3. Exhibits Exhibit Index10199ABM INDUSTRIES INCORPORATED AND SUBSIDIARIESSCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS(in millions)BalanceBeginning of Year Charges toCosts andExpenses Write-offs(1)/Allowance Taken BalanceEnd of YearAccounts receivable and sales allowances 2019$19.2 87.7 (84.6) $22.4201825.5 57.4 (63.6) 19.2201718.1(2) 47.4 (40.0) 25.5(1) Write-offs are net of recoveries.(2) Includes amounts that were classified as held for sale.100EXHIBIT INDEXExhibit Exhibit Description Incorporated by ReferenceNo. Form File No. Exhibit Filing Date1.1 Underwriting Agreement, dated March 14, 2018, amongABM Industries Incorporated, Goldman Sachs & Co LLC,and UBS Securities LLC 8-K 001-08929 1.1 March 19, 20182.1 Agreement and Plan of Merger, dated July 11, 2017, amongGCA Holding Corp., ABM Industries Incorporated, GradeSub One, Inc., Grade Sub Two, LLC and Thomas H. LeeEquity Fund VII, L.P. and Broad Street PrincipalInvestments Holdings, L.P., acting jointly as theSecurityholder Representative 8-K 001-08929 2.1 July 14, 20173.1 Restated Certificate of Incorporation of ABM IndustriesIncorporated, dated November 25, 2003 10-K 001-08929 3.1 January 14, 20043.2 Amended and Restated Bylaws of ABM IndustriesIncorporated, dated December 4, 2018 8-K 001-08929 3.1 December 10, 201810.1 Shareholders’ Agreement, dated September 1, 2017,among ABM Industries Incorporated, Thomas H. Lee EquityFund VII, L.P., Thomas H. Lee Parallel Fund VII, L.P.,Thomas H. Lee Parallel (Cayman) Fund VII, L.P., THLExecutive Fund VII, L.P., THL Fund VII CoinvestmentPartners, L.P., Broad Street Principal Investments Holdings,L.P., Bridge Street 2015, L.P., MBD 2015, L.P., StoneStreet 2015, L.P., 2015 Employee Offshore Aggregator,L.P., and Goldman Sachs & Co. LLC 8-K 001-08929 10.1 September 8, 201710.2 Credit Agreement, dated as of September 1, 2017, by andamong ABM Industries Incorporated, a Delawarecorporation, certain subsidiaries of ABM IndustriesIncorporated from time to time party thereto, the lendersfrom time to time party thereto and Bank of America, N.A.,as administrative agent 8-K 001-08929 10.2 September 8, 201710.3 Letter Agreement, dated November 6, 2017, between ABMIndustries Incorporated and Bank of America, N.A., asSwingline Lender with respect to the Credit Agreementdated as of September 1, 2017, among ABM IndustriesIncorporated, the Designated Borrowers party thereto, theLenders party thereto and Bank of America, N.A., asadministrative agent 10-K 001-08929 10.3 December 22, 201710.4 First Amendment, dated as of July 3, 2018, to the CreditAgreement dated September 1, 2017, by and among ABMIndustries Incorporated, a Delaware corporation, theDesignated Borrowers identified on the signature pagesthereto, the Guarantors identified on the signature pagesthereto, the Lenders identified on the signature pagesthereto, and Bank of America, N.A., as administrative agent 10-Q 001-08929 10.1 September 7, 201810110.5 Second Amendment, dated as of September 5, 2018, to theCredit Agreement dated September 1, 2017, by and amongABM Industries Incorporated, a Delaware corporation, theDesignated Borrowers identified on the signature pagesthereto, the Guarantors identified on the signature pagesthereto, the Lenders identified on the signature pagesthereto, and Bank of America, N.A., as administrative agent 10-Q 001-08929 10.2 September 7, 201810.6* ABM Executive Retiree Healthcare and Dental Plan 10-K 001-08929 10.17 January 14, 200510.7* Director Retirement Plan Distribution Election Form, asrevised June 16, 2006 10-Q 001-08929 10.1 September 8, 200610.8* Deferred Compensation Plan for Non-Employee Directors,as amended and restated December 13, 2010 10-K 001-08929 10.7 December 23, 201010.9* Form of Director’s Indemnification Agreement 10-K 001-08929 10.9 December 21, 201810.10* ABM Executive Officer Incentive Plan, as amended andrestated June 3, 2008 10-Q 001-08929 10.6 September 8, 200810.11* 2006 Equity Incentive Plan, as amended and restatedMarch 7, 2018 8-K 001-08929 10.1 March 8, 201810.12* Statement of Terms and Conditions Applicable to Options,Restricted Stock and Restricted Stock Units andPerformance Shares Granted to Employees Pursuant to the2006 Equity Incentive Plan, as amended and restatedDecember 9, 2013 8-K 001-08929 10.1 December 12, 201310.13* Statement of Terms and Conditions Applicable to Options,Restricted Stock and Restricted Stock Units andPerformance Shares Granted to Employees Pursuant to the2006 Equity Incentive Plan, for Awards Granted on or afterMarch 4, 2015 10-Q 001-08929 10.2 June 3, 201510.14* Statement of Terms and Conditions Applicable to Options,Restricted Stock and Restricted Stock Units Granted toDirectors Pursuant to the 2006 Equity Incentive Plan, asamended and restated December 9, 2013 10-K 001-08929 10.16 December 18, 201310.15* Statement of Terms and Conditions Applicable to Options,Restricted Stock and Restricted Stock Units Granted toDirectors Pursuant to the 2006 Equity Incentive Plan, forAwards Granted on or after March 4, 2015 10-Q 001-08929 10.3 June 3, 201510.16* Statement of Terms and Conditions Applicable to RestrictedStock Units Granted Pursuant to the 2006 Equity IncentivePlan to Directors Who Elect to Relinquish Their BenefitsEffective November 1, 2006, as amended and restatedSeptember 8, 2010 10-K 001-08929 10.13 December 23, 201010.17* Form of Non-Qualified Stock Option Agreement - 2006Equity Plan 10-Q 001-08929 10.4 June 4, 201010.18*‡ Form of Restricted Stock Unit Agreement - 2006 EquityPlan 10.19*‡ Form of Performance Share Agreement - 2006 Equity Plan 10.20* Executive Stock Option Plan (aka Age-Vested Career StockOption Plan), as amended and restated June 4, 2012 10-Q 001-08929 10.1 September 6, 201210.21* Deferred Compensation Plan for Executives, amended andrestated October 25, 2010 10-K 001-08929 10.22 December 23, 201010210.22* Supplemental Executive Retirement Plan, as amended andrestated June 3, 2008 10-Q 001-08929 10.4 September 8, 200810.23* Service Award Benefit Plan, as amended and restated June3, 2008 10-Q 001-08929 10.5 September 8, 200810.24* Executive Severance Pay Policy, as amended and restatedMarch 7, 2011 10-Q 001-08929 10.1 March 10, 201110.25* Amended and Restated Executive Employment Agreement,dated as of September 22, 2017, by and between ABMIndustries Incorporated and Scott Salmirs 10-K 001-08929 10.28 December 22, 201710.26* Amended and Restated Change in Control Agreement,dated as of September 22, 2017, by and between ABMIndustries Incorporated and Scott Salmirs 10-K 001-08929 10.29 December 22, 201710.27* Executive Employment Agreement, dated as of November1, 2017, by and between ABM Industries Incorporated andScott Giacobbe 10-Q 001-08929 10.1 March 7, 201810.28* Change in Control Agreement, dated as of November 1,2017, by and between ABM Industries Incorporated andScott Giacobbe 10-Q 001-08929 10.2 March 7, 201810.29* Amended and Restated Executive Employment Agreement,dated as of September 22, 2017, by and between ABMIndustries Incorporated and D. Anthony Scaglione 10-K 001-08929 10.33 December 22, 201710.30* Amended and Restated Change in Control Agreement,dated as of September 22, 2017, by and between ABMIndustries Incorporated and D. Anthony Scaglione 10-K 001-08929 10.34 December 22, 201710.31* Executive Employment Agreement, dated as of January 1,2018, by and between ABM Industries Incorporated andRene Jacobsen 10-Q 001-08929 10.3 March 7, 201810.32* Change in Control Agreement, dated as of January 1, 2018,by and between ABM Industries Incorporated and ReneJacobsen 10-Q 001-08929 10.4 March 7, 201810.33* Executive Employment Agreement, dated as of March 1,2018, by and between ABM Industries Incorporated andAndrea Newborn 10-Q 001-08929 10.1 March 7, 201910.34* Change in Control Agreement, dated as of March 1, 2018,by and between ABM Industries Incorporated and AndreaNewborn 10-Q 001-08929 10.2 March 7, 201910.35*‡ Executive Employment Agreement, dated as of October 28,2019, by and between ABM Industries Incorporated andJoshua H. Feinberg 21.1‡ Subsidiaries of the Registrant 23.1‡ Consent of Independent Registered Public Accounting Firm 31.1‡ Certification of Chief Executive Officer pursuant toSecurities 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 31.2‡ Certification of Chief Financial Officer pursuant to SecuritiesExchange Act of 1934 Rule 13a-14(a) or 15d-14(a), asadopted pursuant to Section 302 of the Sarbanes-Oxley Actof 2002 10332.1† Certifications pursuant to Securities Exchange Act of 1934Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350,as adopted pursuant to Section 302 of the Sarbanes-OxleyAct of 2002 101.INS ‡ Inline XBRL Instance Document (the instance documentdoes not appear in the Interactive Data File because itsXBRL tags are embedded within the Inline XBRLdocument) 101.SCH ‡ Inline XBRL Taxonomy Extension Schema Document 101.CAL‡ Inline XBRL Taxonomy Calculation Linkbase Document 101.LAB ‡ Inline XBRL Taxonomy Label Linkbase Document 101.PRE ‡ Inline XBRL Presentation Linkbase Document 101.DEF ‡ Inline XBRL Taxonomy Extension Definition LinkbaseDocument 104† Cover Page Interactive Data File (formatted as InlineXBRL and contained in Exhibit 101) *Indicates management contract or compensatory plan, contract, or arrangement‡Indicates filed herewith†Indicates furnished herewith104SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to besigned on its behalf by the undersigned, thereunto duly authorized.ABM Industries IncorporatedBy:/s/ Scott Salmirs Scott SalmirsPresident and Chief Executive Officer and Director December 20, 2019 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalfof ABM Industries and in the capacities and on the dates indicated.By:/s/ Scott Salmirs Scott SalmirsPresident and Chief Executive Officer and Director(Principal Executive Officer) December 20, 2019 /s/ D. Anthony Scaglione /s/ Dean A. ChinD. Anthony ScaglioneExecutive Vice President andChief Financial Officer Dean A. ChinSenior Vice President, Chief Accounting Officer,and Corporate Controller(Principal Financial Officer) (Principal Accounting Officer)December 20, 2019 December 20, 2019 /s/ Sudhakar Kesavan /s/ LeighAnne G. BakerSudhakar Kesavan LeighAnne G. Baker, DirectorChairman of the Board and Director December 20, 2019December 20, 2019 /s/ Linda Chavez /s/ Donald F. ColleranLinda Chavez, Director Donald F. Colleran, DirectorDecember 20, 2019 December 20, 2019 /s/ Art A. Garcia /s/ Thomas M. GartlandArt A. Garcia, Director Thomas M. Gartland, DirectorDecember 20, 2019 December 20, 2019 /s/ Jill M. Golder /s/ Filippo PasseriniJill M. Golder, Director Filippo Passerini, DirectorDecember 20, 2019 December 20, 2019 /s/ Winifred M. Webb Winifred M. Webb, Director December 20, 2019 105This page intentionally left blank. ABM Industries Incorporated and Subsidiaries Reconciliation of Non-GAAP Financial Measures (Unaudited) (in millions) Reconciliation of Net Income to Adjusted EBITDA Year Ended October 31, 2019 Net income $ 127.4 Items impacting comparability Loss from discontinued operations Income tax provision Interest expense Depreciation and amortization Adjusted EBITDA (in millions) Revenues Adjusted EBITDA Adjusted EBITDA margin 20.8 0.1 32.7 51.1 107.4 $ 339.5 Year Ended October 31, 2019 $ 6,498.6 $ 339.5 5.2% (in millions, except for per share amounts) Reconciliation of Income from Continuing Operations per Diluted Share to Adjusted Income from Continuing Operations per Diluted Share Year Ended October 31, 2019 2015 Income from continuing operations per diluted share $ 1.91 $ 0.94 Items impacting comparability, net of taxes 0.14 0.68 Adjusted income from continuing operations per diluted share $ 2.05 $ 1.62 BOARD OF DIRECTORS Sudhakar Kesavan [ C ] Non-Executive Chairman of the Board, ABM Industries Incorporated Executive Chairman, ICF International EXECUTIVE OFFICERS Scott Salmirs President and Chief Executive Officer LeighAnne G. Baker [ A ] Senior Vice President and Chief Human Resources Officer, Cargill, Inc. Linda Chavez [ A, C ] President, Becoming American Institute Donald F. Colleran [ A, D ] President and Chief Executive Officer of FedEx Express, a subsidiary of FedEx Corporation Art A. Garcia [ B, D ] Former Executive Vice President and Chief Financial Officer, Ryder System, Inc. Thomas M. Gartland [ A, C ] Executive Chairman, SGL TransGroup; Former President, North America, Avis Budget Group, Inc. Jill M. Golder [ B ] Senior Vice President and Chief Financial Officer, Cracker Barrel Old Country Store, Inc. Filippo Passerini [ B, D ] Former Group President, Procter & Gamble Company D. Anthony Scaglione Executive Vice President and Chief Financial Officer Rene Jacobsen Executive Vice President, Chief Facilities Services Officer Scott Giacobbe Executive Vice President, Chief Revenue Officer Andrea Newborn Executive Vice President, General Counsel, and Corporate Secretary Andrew Block Executive Vice President, Chief Human Resources Officer Josh Feinberg Executive Vice President, Chief Strategy and Transformation Officer Dean A. Chin Senior Vice President, Chief Accounting Officer and Corporate Controller As of February 5, 2020 ADDITIONAL COMPANY INFORMATION Scott Salmirs President and Chief Executive Officer, ABM Industries Incorporated Listing New York Stock Exchange Wendy M. Webb [ B, D ] Chief Executive Officer, Kestrel Corporate Advisors; Former Senior Executive at Ticketmaster and The Walt Disney Company Ticker Symbol ABM [ A ] Compensation Committee [ B ] Audit Committee [ C ] Governance Committee [ D ] Strategy and Enterprise Risk Committee As of February 5, 2020 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 Forward-Looking Statements This 2019 ABM Annual Report contains both historical and forward-looking statements. For¬ward- looking statements are not based on historical facts but instead reflect our current expecta¬tions, 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 2019 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, 2019, which is included in this 2019 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. 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 2020 Annual Meeting of Stockholders will be held on Wednesday, March 25, 2020 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 ©2020 ABM Industries Inc. All rights reserved. ABM-09013-0120 

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