<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10 Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JANUARY 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission file Number 1-8929
ABM INDUSTRIES INCORPORATED
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 94-1369354
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
160 PACIFIC AVENUE, SUITE 222, SAN FRANCISCO, CALIFORNIA 94111
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 415/733-4000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Number of shares of Common Stock outstanding as of
March 9, 2000: 22,418,776
<PAGE> 2
ABM INDUSTRIES INCORPORATED
FORM 10-Q
FOR THE THREE MONTHS ENDED JANUARY 31, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
- ------ ----
<S> <C>
Item 1 Condensed Consolidated Financial Statements........................2
Notes to the Condensed Consolidated
Financial Statements.............................................7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations...............................9
Item 3 Qualitative and Quantitative Disclosures
About Market Risk................................................15
PART II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K..................................15
</TABLE>
1
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
<TABLE>
<CAPTION>
OCTOBER 31, JANUARY 31,
1999 2000
----------- -----------
<S> <C> <C>
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents $ 2,139 $ 2,198
Accounts receivable, net 297,596 295,766
Inventories 23,296 25,224
Deferred income taxes 14,163 15,046
Prepaid expenses and other current assets 30,395 33,963
-------- --------
Total current assets 367,589 372,197
-------- --------
INVESTMENTS AND LONG-TERM RECEIVABLES 14,290 15,068
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land and buildings 4,526 4,557
Transportation equipment 13,104 13,298
Machinery and other equipment 61,390 63,896
Leasehold improvements 14,425 14,375
-------- --------
93,445 96,126
Less accumulated depreciation and amortization 58,264 60,395
-------- --------
Property, plant and equipment, net 35,181 35,731
-------- --------
INTANGIBLE ASSETS - NET 105,583 107,909
DEFERRED INCOME TAXES 30,388 31,397
OTHER ASSETS 10,353 9,466
-------- --------
$563,384 $571,768
======== ========
</TABLE>
(Continued)
2
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ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
<TABLE>
<CAPTION>
OCTOBER 31, JANUARY 31,
1999 2000
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Current portion of long-term debt $ 898 $ 885
Bank overdraft 4,967 4,323
Trade accounts payable 45,596 42,202
Income taxes payable 7,318 14,172
Accrued Liabilities:
Compensation 45,170 44,035
Taxes - other than income 16,505 17,966
Insurance claims 35,139 35,364
Other 27,717 29,548
--------- ---------
Total current liabilities 183,310 188,495
Long-Term Debt (less current portion) 28,903 29,648
Retirement plans 19,294 20,374
Insurance claims 48,526 48,832
--------- ---------
Total Liabilities 280,033 287,349
--------- ---------
SERIES B 8% SENIOR REDEEMABLE CUMULATIVE
PREFERRED STOCK 6,400 6,400
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 500,000 _ _
shares authorized; none issued
Common stock, $.01 par value, 100,000,000
shares authorized; 22,407,000 and
22,338,000 shares issued and outstanding at October 31,
1999 and January 31, 2000, respectively 224 223
Additional capital 93,336 90,400
Accumulated other comprehensive income (635) (570)
Retained earnings 184,026 187,966
--------- ---------
Total stockholders' equity 276,951 278,019
--------- ---------
$ 563,384 $ 571,768
========= =========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
<PAGE> 5
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 2000
In thousands except per share amounts)
<TABLE>
<CAPTION>
1999 2000
-------- --------
<S> <C> <C>
REVENUES AND OTHER INCOME $391,831 $428,581
-------- --------
EXPENSES:
Operating expenses and cost of goods sold 341,676 375,698
Selling, general and administrative 37,789 39,485
Interest 554 641
-------- --------
Total expenses 380,019 415,824
-------- --------
INCOME BEFORE INCOME TAXES 11,812 12,757
INCOME TAXES 4,843 5,230
-------- --------
NET INCOME $ 6,969 $ 7,527
======== ========
NET INCOME PER COMMON SHARE
Basic $ 0.32 $ 0.33
Diluted $ 0.29 $ 0.32
AVERAGE NUMBER OF SHARES OUTSTANDING
Basic 21,717 22,261
Diluted 23,732 23,209
DIVIDENDS PER COMMON SHARE $ 0.14 $ 0.155
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements
4
<PAGE> 6
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 2000
(In thousands)
<TABLE>
<CAPTION>
1999 2000
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 385,472 $ 428,887
Other operating cash receipts 668 604
Interest received 197 148
Cash paid to suppliers and employees (366,978) (413,109)
Interest paid (538) (666)
Income taxes paid (585) (268)
--------- ---------
Net cash provided by operating activities 18,236 15,596
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (4,259) (3,546)
Proceeds from sale of assets 492 249
Decrease (increase) in investments and
long-term receivable 628 (778)
Intangible assets acquired (537) (3,446)
--------- ---------
Net cash used in investing activities (3,676) (7,521)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued, including tax benefit 3,639 3,872
Common stock repurchased - (8,390)
Dividends paid (3,186) (3,586)
Decrease in cash overdraft (2,475) (644)
Increase in notes payable 2 -
Long-term borrowings 4,005 35,000
Repayments of long-term borrowings (12,030) (34,268)
--------- ---------
Net cash used in financing activities (10,045) (8,016)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,515 59
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 1,844 2,139
--------- ---------
CASH AND CASH EQUIVALENTS END OF PERIOD $ 6,359 $ 2,198
========= =========
</TABLE>
(Continued)
5
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ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JANUARY 31, 1999 AND 2000
(In thousands)
<TABLE>
<CAPTION>
1999 2000
-------- --------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net Income $ 6,969 $ 7,527
Adjustments:
Depreciation and amortization 4,986 5,538
Provision for bad debts 588 682
Gain on sale of assets (3) (90)
Increase in deferred income taxes (2,755) (1,892)
(Increase) decrease in accounts receivable (5,609) 1,148
Decrease (increase) in inventories 821 (1,928)
Increase in prepaid expenses and other
current assets (984) (3,568)
(Increase) decrease in other assets (13) 887
Increase in income taxes payable 7,013 6,854
Increase in retirement plans accrual 1,010 1,080
Increase in insurance claims liability 1,020 531
Increase (decrease) in trade accounts
payable and other accrued liabilities 5,193 (1,173)
-------- --------
Total adjustments to net income 11,267 8,069
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 18,236 $ 15,596
======== ========
SUPPLEMENTAL DATA:
Non-cash investing activities:
Common stock issued for net assets of
business acquired $ 1,464 $ 1,582
======== ========
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
6
<PAGE> 8
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all material adjustments which are
necessary to present fairly ABM Industries Incorporated (the Company) financial
position as of January 31, 2000, and the results of operations and cash flows
for the three months then ended. These adjustments are of a normal, recurring
nature.
These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's Form 10-K filed for the fiscal year ended October 31,
1999 with the Securities and Exchange Commission.
2. NET INCOME PER COMMON SHARE
The Company has reported its earnings in accordance with Statement of
Financial Accounting Standards No. 128, Earnings per Share. Basic net income per
common share, after the reduction for preferred stock dividends, is based on the
weighted average number of shares actually outstanding during the period.
Diluted net income per common share, after the reduction for preferred stock
dividends, is based on the weighted average number of shares outstanding during
the period, including dilutive securities equivalents.
Three months ended January 31,
<TABLE>
<CAPTION>
1999 2000
------------ ------------
<S> <C> <C>
Net Income $ 6,969,000 $ 7,527,000
Preferred Stock Dividends (128,000) (128,000)
------------ ------------
$ 6,841,000 $ 7,399,000
============ ============
Common shares outstanding - basic 21,717,000 22,261,000
Effect of dilutive securities:
Stock options 1,869,000 825,000
Other 146,000 123,000
------------ ------------
Common shares outstanding - diluted 23,732,000 23,209,000
============ ============
</TABLE>
7
<PAGE> 9
For purposes of computing diluted net income per common share, weighted
average common share equivalents do not include stock options with an exercise
price that exceeds the average fair market value of the Company's common stock
for the period. For the three months ended January 31, 2000, options to purchase
approximately 1,237,000 shares of common stock at an average price of $30.97
were excluded from the computation. For the three months ended January 31, 1999,
options to purchase approximately 306,000 shares of common stock at an average
price of $36.67 were excluded from the computation.
3. COMPREHENSIVE INCOME
Other comprehensive income at October 31, 1999 and January 31, 2000
consists of foreign currency translation adjustments. Comprehensive income for
the three-month period ended January 31, 2000 approximated net income.
4. ACQUISITIONS
The Company acquired the operations and selected assets of four businesses
during the quarter. These business combinations were accounted for under the
purchase method of accounting. The aggregate consideration paid for these
acquisitions was $2,785,000. The aggregate purchase price does not include
payments of contingent consideration based upon the results of operations of the
businesses acquired. As these acquisitions were not significant, pro-forma
information is not included in these financial statements.
5. SEGMENT INFORMATION
The Company's operations are grouped into nine industry segments or
divisions as defined under Statement of Financial Accounting Standards (SFAS)
No. 131. The results of operations from the Company's five operating divisions
that are reportable under SFAS 131 for the three months ended January 31, 2000,
as compared to the three months ended January 31, 1999, are more fully described
below. Included in all other divisions are ABM Facility Services, American
Commercial Security, CommAir Mechanical Services, and Easterday Janitorial
Supply Company.
8
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For the three months ended January 31,
<TABLE>
<CAPTION>
1999 2000
--------- ---------
(in thousands)
<S> <C> <C>
Revenues:
ABM Janitorial Services $ 226,544 $ 250,970
Ampco System Parking 38,583 39,876
ABM Engineering Services 38,541 39,133
Amtech Lighting Services 22,936 26,841
Amtech Elevator Services 20,936 25,492
All Other Divisions 43,948 46,181
Corporate 343 88
========= =========
Total Revenues $ 391,831 $ 428,581
========= =========
Operating Profit:
ABM Janitorial Services $ 10,496 $ 10,628
Ampco System Parking 1,633 1,700
ABM Engineering Services 1,970 1,887
Amtech Lighting Services 1,479 1,623
Amtech Elevator Services 1,086 1,136
All Other Divisions 1,594 862
Corporate (5,892) (4,438)
========= =========
Total Operating Profit $ 12,366 $ 13,398
========= =========
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL CONDITION
Funds provided from operations and bank borrowings have historically
been the sources for meeting working capital requirements, financing capital
expenditures, acquisitions and paying cash dividends, as well as funding the
Company's recent stock repurchase program. Management believes that funds from
these sources will remain available and adequately serve the Company's liquidity
needs. The Company has an unsecured revolving credit agreement with a syndicate
of U.S. banks that provides a $150 million line of credit expiring July 1, 2002.
At the Company's option, the credit facility provides interest at the prime rate
or IBOR+.35%. As of January 31, 2000, the total amount outstanding was
approximately $92 million, which was comprised of loans in the amount of $27
million and standby letters of credit of $65 million. This agreement requires
the Company to meet certain financial ratios, places some limitations on outside
borrowing and prohibits declaring or paying cash dividends exceeding 50% of the
Company's net income for any fiscal year. In addition, the Company has a loan
agreement with a major U.S. bank with a balance of $3,386,000 at January 31,
2000. This loan bears interest at a fixed rate of
9
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6.78% with annual payments of principal, in varying amounts, and interest due
each February 15 through 2003. The Company's effective interest rate for all
long-term debt borrowings for the quarter ended January 31, 2000 was 7.51%.
At January 31, 2000, working capital was $183.7 million, as compared to
$184.3 million at October 31, 1999.
ENVIRONMENTAL MATTERS
The nature of the Company's operations, primarily services, would not
ordinarily involve it in environmental contamination. However, the Company's
operations are subject to various federal, state and/or local laws regulating
the discharge of materials into the environment or otherwise relating to the
protection of the environment, such as discharge into soil, water and air, and
the generation, handling, storage, transportation and disposal of waste and
hazardous substances. These laws generally have the effect of increasing costs
and potential liabilities associated with the conduct of the Company's
operations, although historically they have not had a material adverse effect on
the Company's financial position, cash flows or its results of operations.
The Company is currently involved in four proceedings relating to
environmental matters: one involving alleged potential soil and groundwater
contamination at a Company facility in Florida; one involving alleged potential
soil contamination at a former Company facility in Arizona; one involving
alleged potential soil and groundwater contamination of a parking garage
previously operated by the Company in Washington; and, one involving alleged
potential soil and groundwater contamination at a former dry-cleaning facility
leased by the Company in Nevada. While it is difficult to predict the ultimate
outcome of these matters, based on information currently available, management
believes that none of these matters, individually or in the aggregate, are
reasonably likely to have a material adverse effect on the Company's financial
position, cash flows, or its results of operations.
YEAR 2000
The Company so far has experienced no disruptions in the operations of
its internal information systems during its transition to the year 2000. The
Company is not aware that any of its vendors or customers experienced any
disruptions during their transition to the year 2000. The Company will continue
to monitor the transition to year 2000 and will act promptly to resolve any
problems that occur. If the Company or any third parties with which it has
business relationships experience problems related to the year
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2000 transition that have not yet been discovered, it could have a material
adverse impact on the Company.
ACQUISITIONS
The operating results of businesses acquired have been included in the
accompanying condensed consolidated financial statements from their respective
dates of acquisition.
Effective November 1, 1999, the Company acquired the operations and
selected assets of NPS Corporation, a janitorial services company, with
customers located in Anchorage, Fairbanks and Juneau, Alaska. The terms for the
purchase of this acquisition were a cash downpayment made at closing plus annual
contingent payments based on operating profits to be made over five years.
Effective December 1, 1999, the Company acquired the operations and
selected assets of Centre City Parking, with customers located in Miami,
Florida. The terms for the purchase of this acquisition were a cash downpayment
made at closing plus annual contingent payments based on operating profits to be
made over five years.
Effective January 1, 2000, the Company acquired the operations and
selected assets of United Building Services, a janitorial services company, with
customers located in Long Beach, California. The terms for the purchase of this
acquisition were a cash downpayment made at closing plus a final payment based
on operating profits to be made after one year.
Effective January 1, 2000, the Company acquired the operations and
selected assets of Dixie Lighting & Electrical, Inc., with customers located in
the greater Southeastern United States from Louisiana to Florida. The terms of
the purchase of this acquisition were a cash downpayment made at closing plus
annual contingent payments based on operating profits to be made over five
years.
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RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
condensed consolidated financial statements of the Company. All information in
the discussion and references to the years and quarters are based on the
Company's fiscal year and first quarter which end on October 31 and January 31,
respectively.
THREE MONTHS ENDED JANUARY 31, 2000 VS. THREE MONTHS ENDED JANUARY 31, 1999
Revenues and other income (hereafter called revenues) for the first
quarter of 2000 were $428.6 million compared to $391.8 million in 1999, a 9.4%
increase over the same quarter of the prior year. Higher Janitorial Division
revenues contributed nearly $24 million of the increase. For the quarter ended
January 31, 2000, the increase in revenues relating to acquisitions made during
fiscal 1999 was approximately $6.4 million, approximately 17.4% of the total
revenue increase of $36.8 million.
As a percentage of revenues, operating expenses and cost of goods sold
were 87.7% for the first quarter of 2000, compared to 87.2% in 1999.
Consequently, as a percentage of revenues, the Company's gross profit (revenue
minus operating expenses and cost of goods sold) of 12.3% in the first quarter
of 2000 was slightly lower than the gross profit of 12.8% for the first quarter
of 1999. The gross profit percentage declined mostly due to higher labor and
related costs including insurance. The Company is and will continue to actively
pursue price increases from its customers for the balance of the year to help
offset these cost increases. In addition, fixed price contracts were less
profitable in the first quarter of 2000 than in the first quarter of 1999
because the 2000 quarter included an extra workday for which the Company paid
hourly employees. Finally, a number of the Company's segments experienced stiff
competition and reduced their prices to maintain market share despite incurring
higher labor costs.
Selling, general and administrative expenses for the first quarter of
2000 were $39.5 million compared to $37.8 million for the corresponding three
months of 1999. As a percentage of revenues, selling, general and administrative
expenses decreased to 9.2% for the three months ended January 31, 2000, from
9.6% for the same period in 1999, primarily as a result of certain corporate
expenses recorded during the first quarter of fiscal 1999. The $1.7 million
increase in selling, general and administrative expenses for the three months
ended January 31, 2000, compared to the same period in 1999, is primarily due to
expenses related to growth, including the amortization of goodwill, and other
expenses associated with acquisitions.
Interest expense was $641,000 for the first quarter of 2000 compared to
$554,000 for the same period in 1999, an increase of $87,000. This
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increase was primarily due to higher average interest rates during the first
quarter of 2000.
The pre-tax income for the first quarter of 2000 was $12.8 million
compared to $11.8 million, an increase of 8.0% over the same quarter of 1999.
The estimated effective income tax rate for both the first quarter of
2000 and the first quarter of 1999 was 41.0%.
Net income for the first quarter of 2000 was $7.5 million, an increase
of 8.0% compared to the net income of $7.0 million for the first quarter of
1999. Diluted net income per common share rose 10.3% to 32 cents for the first
quarter of 2000 compared to 29 cents for the same period in 1999. Diluted net
income per share rose more than net income due to a 2.2% decrease in diluted
shares outstanding. The reduction in diluted shares outstanding reflected the
repurchase of shares and the effect of lower dilutive securities equivalents.
SEGMENT INFORMATION
Revenues for ABM Janitorial Services (also known as American Building
Maintenance) increased by 10.8% during the first quarter of 2000 as compared to
the same quarter of 1999 as a result of increased business nationwide but
particularly in the Mid-Atlantic, Midwest, Northwest and Southeast regions. This
Division's operating profits increased 1.3% when compared to the same period
last year. The increase in operating profits is principally due to increased
revenues. Operating profits increased at a lower rate than revenues due
primarily to higher labor and labor related costs including insurance. This
Division's profits were also adversely affected by an additional workday during
the current quarter than the first quarter of the prior year. One extra day of
labor expense on the Division's fixed price contracts compared to the first
quarter of 1999 resulted in additional cost estimated to be in excess of $1
million.
Ampco System Parking (also knows as Ampco System Airport Parking and
Ampco Express Airport Parking) revenues increased by 3.4%, while its operating
profits increased 4.1% during the first quarter of 2000 compared to the first
quarter of 1999. The increase in both revenues and operating profits was
primarily due to newly acquired parking contracts in its California and Texas
operations.
ABM Engineering Services' revenues increased by 1.5% while its operating
profits decreased 4.2% for the first quarter of 2000 compared to the same period
in 1999. The small revenue increase was due primarily to strong competition
which held down price increases and a loss of work in
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Northern California and the Northeast. The decrease in operating profits is due
to increased general and administrative expense.
Amtech Lighting Services (also known as Sica Lighting & Electrical
Services in the Northeast) reported a 17.3% revenue increase, and operating
profits increased by 9.7% during the first quarter of 2000 compared to the same
quarter of the prior year. The increase in revenues and operating profits was
primarily due to obtaining a significant contract in New York City, which
started November 1, 1999.
Revenues for Amtech Elevator Services increased by 21.8% in the first
quarter of 2000 compared to the same period in 1999 primarily due to new work
secured in Chicago and Northern California. The Division reported a 4.6%
increase in operating profit for the first quarter compared to the corresponding
quarter of 1999. This proportionally smaller increase in operating profits can
be attributed primarily to higher operating expenses including insurance and
computer related expenses.
SAFE HARBOR STATEMENT
Cautionary Safe Harbor Disclosure for Forward Looking Statements under
the Private Securities Litigation Reform Act of 1995: Because of the factors set
forth below, as well as other variables affecting the Company's operating
results, past financial performance, should not be considered a reliable
indicator of future performance, and investors should not use historical trends
to anticipate results or trends in future periods. The statements contained
herein which are not historical facts are forward-looking statements that are
subject to meaningful risks and uncertainties, including but not limited to: (1)
significant decreases in commercial real estate occupancy, resulting in reduced
demand and prices for building maintenance and other facility services in the
Company's major markets, (2) loss or bankruptcy of one or more of the Company's
major customers, which could adversely affect the Company's ability to collect
its accounts receivable or recover its deferred costs, (3) major collective
bargaining issues that may cause loss of revenues or cost increases that
non-union companies can use to their advantage in gaining market share, (4)
significant shortfalls in adding additional customers in existing and new
territories and markets, (5) a protracted slowdown in the Company's acquisition
program, (6) legislation or other governmental action that severely impacts one
or more of the Company's lines of business, such as price controls that could
restrict price increases, or the unrecovered cost of any universal employer-paid
health insurance, as well as government investigations that adversely affect the
Company, (7) reduction or revocation of the Company's line of credit, which
would increase interest expense or the cost of capital, (8) cancellation or
nonrenewal of the Company's primary insurance policies, as many customers
contract out services based on the contractor's ability to provide adequate
insurance
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coverage and limits, (9) catastrophic uninsured or underinsured claims against
the Company, the inability of the Company's insurance carriers to pay otherwise
insured claims, or inadequacy in the Company's reserve for self-insured claims,
(10) inability to employ entry level personnel due to labor shortages, (11)
resignation, termination, death or disability of one or more of the Company's
key executives, which could adversely affect customer retention and day-to-day
management of the Company, and (12) other material factors that are disclosed
from time to time in the Company's public filings with the United States
Securities and Exchange Commission, such as reports on Forms 8-K, 10-K and 10-Q.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not issue or invest in financial instruments or their
derivatives for trading or speculative purposes. The operations of the Company
are conducted primarily in the United States, and, as such, are not subject to
material foreign currency exchange rate risk. Although the Company has
outstanding debt and related interest expense, market risk in interest rate
exposure in the United States is currently not material.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27.1 - Financial Data Schedule
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter
ended January 31, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ABM Industries Incorporated
March 15, 2000 /s/ David H. Hebble
- -------------- --------------------------------------
Senior Vice President,
Principal Financial Officer
16
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
Exhibit 27.1 Financial Data Schedule
17
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-2000
<PERIOD-END> JAN-31-2000
<CASH> 2,198
<SECURITIES> 0
<RECEIVABLES> 295,766
<ALLOWANCES> 0
<INVENTORY> 25,224
<CURRENT-ASSETS> 372,197
<PP&E> 96,126
<DEPRECIATION> 60,395
<TOTAL-ASSETS> 571,768
<CURRENT-LIABILITIES> 188,495
<BONDS> 29,648
0
6,400
<COMMON> 223
<OTHER-SE> 278,019
<TOTAL-LIABILITY-AND-EQUITY> 571,768
<SALES> 428,581
<TOTAL-REVENUES> 428,581
<CGS> 375,698
<TOTAL-COSTS> 375,698
<OTHER-EXPENSES> 39,485
<LOSS-PROVISION> 0
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<INCOME-TAX> 5,230
<INCOME-CONTINUING> 7,527
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> 7,527
<EPS-BASIC> 0.33
<EPS-DILUTED> 0.32
</TABLE>
