Company Quick10K Filing
ABM Industries
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 67 $2,432
10-Q 2020-03-05 Quarter: 2020-01-31
10-K 2019-12-20 Annual: 2019-10-31
10-Q 2019-09-06 Quarter: 2019-07-31
10-Q 2019-06-06 Quarter: 2019-04-30
10-Q 2019-03-07 Quarter: 2019-01-31
10-K 2018-12-21 Annual: 2018-10-31
10-Q 2018-09-07 Quarter: 2018-07-31
10-Q 2018-06-07 Quarter: 2018-04-30
10-Q 2018-03-07 Quarter: 2018-01-31
10-K 2017-12-22 Annual: 2017-10-31
10-Q 2017-09-07 Quarter: 2017-07-31
10-Q 2017-06-08 Quarter: 2017-04-30
10-Q 2017-03-08 Quarter: 2017-01-31
10-K 2016-12-21 Annual: 2016-10-31
10-Q 2016-09-08 Quarter: 2016-07-31
10-Q 2016-06-09 Quarter: 2016-04-30
10-Q 2016-03-09 Quarter: 2016-01-31
10-K 2015-12-17 Annual: 2015-10-31
10-Q 2015-09-03 Quarter: 2015-07-31
10-Q 2015-06-03 Quarter: 2015-04-30
10-Q 2015-03-04 Quarter: 2015-01-31
10-K 2014-12-17 Annual: 2014-10-31
10-Q 2014-09-04 Quarter: 2014-07-31
10-Q 2014-06-04 Quarter: 2014-04-30
10-Q 2014-03-05 Quarter: 2014-01-31
10-K 2013-12-18 Annual: 2013-10-31
10-Q 2013-09-05 Quarter: 2013-07-31
10-Q 2013-06-05 Quarter: 2013-04-30
10-Q 2013-03-07 Quarter: 2013-01-31
10-K 2012-12-20 Annual: 2012-10-31
10-Q 2012-09-06 Quarter: 2012-07-31
10-Q 2012-06-07 Quarter: 2012-04-30
10-Q 2012-03-06 Quarter: 2012-01-31
10-K 2011-12-23 Annual: 2011-10-31
10-Q 2011-09-09 Quarter: 2011-07-31
10-Q 2011-06-09 Quarter: 2011-04-30
10-Q 2011-03-10 Quarter: 2011-01-31
10-K 2010-12-23 Annual: 2010-10-31
10-Q 2010-09-03 Quarter: 2010-07-31
10-Q 2010-06-04 Quarter: 2010-04-30
10-Q 2010-03-04 Quarter: 2010-01-31
8-K 2020-03-04 Earnings, Regulation FD, Other Events, Exhibits
8-K 2019-12-18 Earnings, Regulation FD, Other Events, Exhibits
8-K 2019-10-01 Officers, Exhibits
8-K 2019-09-05 Earnings, Regulation FD, Other Events, Exhibits
8-K 2019-09-04 Officers, Exhibits
8-K 2019-06-05 Earnings, Regulation FD, Other Events, Exhibits
8-K 2019-03-27 Shareholder Vote
8-K 2019-03-06 Earnings, Regulation FD, Other Events, Exhibits
8-K 2019-01-03 Officers
8-K 2018-12-18 Earnings, Regulation FD, Other Events, Exhibits
8-K 2018-12-04 Amend Bylaw, Exhibits
8-K 2018-10-23 Officers, Exhibits
8-K 2018-09-06 Earnings, Regulation FD, Other Events, Exhibits
8-K 2018-09-04 Officers, Exhibits
8-K 2018-06-06 Earnings, Regulation FD, Other Events, Exhibits
8-K 2018-03-19 Other Events, Exhibits
8-K 2018-03-07 Shareholder Vote, Exhibits
8-K 2018-03-06 Earnings, Regulation FD, Other Events, Exhibits
8-K 2018-02-26 Other Events, Exhibits
8-K 2018-01-18 Regulation FD, Exhibits
ABM 2020-01-31
Part I. Financial Information
Item 1. Consolidated Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II. Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-10.1 abm1312020ex101.htm
EX-10.2 abm1312020ex102.htm
EX-31.1 abm1312020ex311.htm
EX-31.2 abm1312020ex312.htm
EX-32 abm1312020ex32.htm

ABM Industries Earnings 2020-01-31

ABM 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
JOBS 3,731 12,238 4,420 0 0 0 0 1,757 0%
FTDR 3,989 1,217 1,436 1,066 539 134 247 4,545 51% 18.4 11%
ABM 2,432 3,693 2,151 6,499 731 127 293 3,175 11% 10.9 3%
TRTN 2,540 9,802 7,494 67 18 270 937 9,368 27% 10.0 3%
KFY 2,135 2,486 1,228 1,989 0 183 293 1,944 0% 6.6 7%
AYR 1,713 8,321 6,282 967 0 213 701 6,631 0% 9.5 3%
MGRC 1,676 1,306 690 556 260 95 184 1,674 47% 9.1 7%
RCII 1,440 1,498 1,066 2,664 1,652 135 235 1,366 62% 5.8 9%
FORR 855 598 451 436 203 -9 22 920 46% 41.2 -2%
HSII 537 777 480 732 0 48 77 360 0% 4.7 6%

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Washington, D.C. 20549
(Mark One)
For the quarterly period ended January 31, 2020
For the transition period from              to             
Commission File Number: 1-8929 
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
One Liberty Plaza, 7th Floor
New YorkNew York 10006
(Address of principal executive offices)

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

(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par valueABMNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No   

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such 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 “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes     No
Number of shares of the registrant’s common stock outstanding as of March 3, 2020: 66,630,814

Item 1. Consolidated Financial Statements
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits

This Form 10-Q contains both historical and forward-looking statements regarding ABM Industries Incorporated (“ABM”) and its subsidiaries (collectively referred to as “ABM,” “we,” “us,” “our,” or the “Company”). We make forward-looking statements related to future expectations, estimates, and projections that are uncertain and often contain words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “outlook,” “plan,” “predict,” “should,” “target,” or other similar words or phrases. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and assumptions that are difficult to predict. Particular risks and uncertainties that could cause our actual results to be materially different from those expressed in our forward-looking statements include those listed below.
Our success depends on our ability to gain profitable business despite competitive market pressures.
Our business success depends on our ability to attract and retain qualified personnel and senior management and to manage labor costs.
Our ability to preserve long-term client relationships is essential to our continued success.
Changes to our businesses, operating structure, financial reporting structure, or personnel relating to the implementation of strategic transformations, enhanced business processes, and technology initiatives may not have the desired effects on our financial condition and results of operations.
Acquisitions, divestitures, and other strategic transactions could fail to achieve financial or strategic objectives, disrupt our ongoing business, and adversely impact our results of operations.
We manage our insurable risks through a combination of third-party purchased policies and self-insurance, and we retain a substantial portion of the risk associated with expected losses under these programs, which exposes us to volatility associated with those risks, including the possibility that adjustments to our ultimate insurance loss reserves could result in material charges against our earnings.
Our risk management and safety programs may not have the intended effect of reducing our liability for personal injury or property loss.
Our international business involves risks different from those we face in the United States that could have an effect on our results of operations and financial condition.
Our use of subcontractors or joint venture partners to perform work under customer contracts exposes us to liability and financial risk.
We may experience breaches of, or disruptions to, our information technology systems or those of our third-party providers or clients, or other compromises of our data that could adversely affect our business.
Unfavorable developments in our class and representative actions and other lawsuits alleging various claims could cause us to incur substantial liabilities.
A significant number of our employees are covered by collective bargaining agreements that could expose us to potential liabilities in relationship to our participation in multiemployer pension plans, requirements to make contributions to other benefit plans, and the potential for strikes, work slowdowns or similar activities, and union organizing drives.
Our business may be materially affected by changes to fiscal and tax policies. Negative or unexpected tax consequences could adversely affect our results of operations.
Changes in general economic conditions, such as changes in energy prices, government regulations, or consumer preferences, could reduce the demand for facility services and, as a result, reduce our earnings and adversely affect our financial condition.
Future increases in the level of our borrowings or in interest rates could affect our results of operations.
Impairment of goodwill and long-lived assets could have a material adverse effect on our financial condition and results of operations.
If we fail to maintain proper and effective internal control over financial reporting in the future, our ability to produce accurate and timely financial statements could be negatively impacted, which could harm our operating results and investor perceptions of our Company and as a result may have a material adverse effect on the value of our common stock.
Our business may be negatively impacted by adverse weather conditions.
Catastrophic events, disasters, and terrorist attacks could disrupt our services.
Actions of activist investors could disrupt our business.

The list of factors above is illustrative and by no means exhaustive. Additional information regarding these and other risks and uncertainties we face is contained in our Annual Report on Form 10-K for the year ended October 31, 2019 and in other reports we file from time to time with the Securities and Exchange Commission (including all amendments to those reports).
We urge readers to consider these risks and uncertainties in evaluating our forward-looking statements. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

(in millions, except share and per share amounts)January 31, 2020October 31, 2019
Current assets
Cash and cash equivalents$69.8  $58.5  
Trade accounts receivable, net of allowances of $25.2 and $22.4
   at January 31, 2020 and October 31, 2019, respectively
1,000.7  1,013.2  
Costs incurred in excess of amounts billed79.6  72.6  
Prepaid expenses75.3  75.7  
Other current assets59.5  55.5  
Total current assets1,284.9  1,275.4  
Other investments9.9  14.0  
Property, plant and equipment, net of accumulated depreciation of $210.4 and $199.5
    at January 31, 2020 and October 31, 2019, respectively
146.7  150.3  
Right-of-use assets163.4  —  
Other intangible assets, net of accumulated amortization of $321.8 and $309.0
    at January 31, 2020 and October 31, 2019, respectively
284.6  297.2  
Goodwill1,836.1  1,835.4  
Other noncurrent assets121.4  120.3  
Total assets$3,847.1  $3,692.6  
Current liabilities
Current portion of long-term debt, net$72.3  $57.2  
Trade accounts payable242.6  280.7  
Accrued compensation144.7  189.3  
Accrued taxes—other than income65.2  63.6  
Insurance claims150.2  149.8  
Income taxes payable6.6  3.5  
Current portion of lease liabilities36.0  —  
Other accrued liabilities153.5  158.2  
Total current liabilities871.1  902.4  
Long-term debt, net786.3  744.2  
Long-term lease liabilities150.0  —  
Deferred income tax liability, net46.4  47.7  
Noncurrent insurance claims363.8  365.2  
Other noncurrent liabilities58.1  78.8  
Noncurrent income taxes payable11.6  12.2  
Total liabilities2,287.4  2,150.6  
Commitments 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;
66,753,004 and 66,571,427 shares issued and outstanding at
January 31, 2020 and October 31, 2019, respectively
0.7  0.7  
Additional paid-in capital711.8  708.9  
Accumulated other comprehensive loss, net of taxes(24.3) (23.9) 
Retained earnings871.6  856.3  
Total stockholders’ equity1,559.7  1,542.0  
Total liabilities and stockholders’ equity$3,847.1  $3,692.6  

See accompanying notes to unaudited consolidated financial statements.

Three Months Ended January 31,
(in millions, except per share amounts)20202019
Revenues$1,612.9  $1,607.9  
Operating expenses1,433.7  1,446.0  
Selling, general and administrative expenses117.6  112.7  
Restructuring and related expenses3.1  3.8  
Amortization of intangible assets12.6  15.2  
Operating profit 45.8  30.3  
Income from unconsolidated affiliates0.9  0.9  
Interest expense(10.2) (13.5) 
Income from continuing operations before income taxes36.5  17.8  
Income tax provision(8.6) (4.7) 
Income from continuing operations27.9  13.0  
Income (loss) from discontinued operations, net of taxes0.1  (0.1) 
Net income 28.0  13.0  
Other comprehensive income (loss)
Interest rate swaps(1.1) (8.7) 
Foreign currency translation0.4  3.1  
Income tax benefit0.3  2.4  
Comprehensive income $27.6  $9.7  
Net income per common share — Basic
Income from continuing operations$0.42  $0.20  
Income from discontinued operations    
Net income$0.42  $0.20  
Net income per common share — Diluted
Income from continuing operations $0.41  $0.20  
Income from discontinued operations    
Net income$0.42  $0.19  
Weighted-average common and common equivalent shares outstanding
Basic66.9  66.4  
Diluted67.2  66.7  

See accompanying notes to unaudited consolidated financial statements.


Three Months Ended January 31,
(in millions, except per share amounts)SharesAmountSharesAmount
Common Stock
Balance, beginning of period66.6  $0.7  66.0  $0.7  
Stock issued under employee stock purchase and share-based compensation plans
0.2    0.2    
Balance, end of period66.8  0.7  66.2  0.7  
Additional Paid-in Capital
Balance, beginning of period708.9  691.8  
Taxes withheld under employee stock purchase and share-based compensation plans, net
(2.0) (2.2) 
Share-based compensation expense4.9  4.5  
Balance, end of period711.8  694.1  
Accumulated Other Comprehensive Loss, Net of Taxes
Balance, beginning of period(23.9) (9.0) 
Other comprehensive loss(0.4) (3.2) 
Balance, end of period(24.3) (12.2) 
Retained Earnings
Balance, beginning of period856.3  771.2  
Net income28.0  13.0  
Common stock ($0.185 and $0.180 per share)
(12.3) (11.9) 
Stock issued under share-based compensation plans(0.4) (0.1) 
Cumulative effect adjustment for adoption of Accounting
       Standards Update 2014-09
—  6.5  
Balance, end of period871.6  778.6  
Total Stockholders’ Equity$1,559.7  $1,461.1  

See accompanying notes to unaudited consolidated financial statements.

Three Months Ended January 31,
(in millions)20202019
Cash flows from operating activities
Net income $28.0  $13.0  
(Income) loss from discontinued operations, net of taxes(0.1) 0.1  
Income from continuing operations27.9  13.0  
Adjustments to reconcile income from continuing operations to net cash used in operating activities of continuing operations
Depreciation and amortization24.4  26.7  
Deferred income taxes(1.0) (8.7) 
Share-based compensation expense4.9  4.5  
Provision for bad debt2.4  3.0  
Discount accretion on insurance claims  0.2  
Loss on sale of assets0.3    
Income from unconsolidated affiliates(0.9) (0.9) 
Distributions from unconsolidated affiliates  1.7  
Changes in operating assets and liabilities
Trade accounts receivable and costs incurred in excess of amounts billed3.0  (68.2) 
Prepaid expenses and other current assets(8.5) (8.2) 
Right-of-use assets4.1  —  
Other noncurrent assets(1.6)   
Trade accounts payable and other accrued liabilities(88.9) (32.5) 
Long-term lease liabilities(4.2) —  
Insurance claims(1.0) 11.1  
Income taxes payable7.6  13.1  
Other noncurrent liabilities(2.8) 5.9  
Total adjustments(62.3) (52.3) 
Net cash used in operating activities of continuing operations(34.5) (39.3) 
Net cash provided by (used in) operating activities of discontinued operations0.2  (0.1) 
Net cash used in operating activities(34.3) (39.3) 
Cash flows from investing activities
Additions to property, plant and equipment(11.5) (11.6) 
Proceeds from sale of assets4.2  0.2  
Proceeds from redemption of auction rate security5.0    
Net cash used in investing activities (2.3) (11.4) 
Cash flows from financing activities
Taxes withheld from issuance of share-based compensation awards, net(2.4) (2.3) 
Dividends paid(12.3) (11.9) 
Borrowings from credit facility425.0  357.6  
Repayment of borrowings from credit facility(368.6) (309.6) 
Changes in book cash overdrafts6.4  7.2  
Financing of energy savings performance contracts1.1  1.7  
Repayment of finance leases(0.8) (0.8) 
Net cash provided by financing activities48.4  42.0  
Effect of exchange rate changes on cash and cash equivalents(0.4) 0.3  
Net increase (decrease) in cash and cash equivalents11.4  (8.5) 
Cash and cash equivalents at beginning of year58.5  39.1  
Cash and cash equivalents at end of period$69.8  $30.6  

See accompanying notes to unaudited consolidated financial statements.

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 four industry groups and one Technical Solutions segment:
Through these groups, we offer janitorial, facilities engineering, parking, and specialized mechanical and electrical technical solutions, on a standalone basis or in combination with other services.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with (i) United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and (ii) the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of our management, our unaudited consolidated financial statements and accompanying notes (the “Financial Statements”) include all normal recurring adjustments that are necessary for the fair statement of the interim periods presented. Interim results of operations are not necessarily indicative of results for the full year. The Financial Statements should be read in conjunction with our audited consolidated financial statements (and notes thereto) in our Annual Report on Form 10-K for the year ended October 31, 2019 (“Annual Report”). Unless otherwise indicated, all references to years are to our fiscal years, which end on October 31.
Prior Year Reclassifications
During the third quarter of 2019, we made changes to our operating structure to better align the services and expertise of our Healthcare business with our other industry groups, allowing us to leverage our existing branch network to support the long-term growth of this business. As a result, our former Healthcare portfolio is now included primarily in our Business & Industry segment. Our prior period segment data in Note 12, “Segment Information,” has been reclassified to conform with our current period presentation. This change had no impact on our previously reported consolidated financial statements.
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.
Discontinued Operations
Following the sale of our Security business in 2015, we record all costs associated with this former business in discontinued operations. Such costs generally relate to litigation we retained and insurance reserves.

Management Reimbursement Revenue by Segment
We operate certain parking facilities under management reimbursement arrangements. Under these arrangements, we manage the parking facilities for management fees and pass through the revenues and expenses associated with the facilities to the owners. These revenues and expenses are reported in equal amounts as costs reimbursed from our managed locations:
Three Months Ended January 31,
(in millions)20202019
Business & Industry$73.7  $71.0  
Aviation25.9  24.2  
Total $99.6  $95.2  
Recently Adopted Accounting Standards
Our significant accounting policies are described in Note 2, “Basis of Presentation and Significant Accounting Policies,” in our Annual Report. There have been no material changes to our significant accounting policies during the three months ended January 31, 2020, other than as described below.
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). Since the release of ASU 2016-02, the FASB issued the following additional 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 Improvements

Topic 842 replaces existing lease accounting guidance and is intended to provide enhanced transparency and comparability by requiring lessees to record most leases on the balance sheet. Under Topic 842, lessees are required to record on the balance sheet right-of-use (“ROU”) assets (the right to use an underlying asset for the lease term) and the corresponding lease liabilities (the obligation to make lease payments arising from the lease). The new guidance requires us to continue classifying leases as either operating or financing, with classification affecting the pattern of expense recognition in the statements of comprehensive income. In addition, the new standard requires enhanced disclosures surrounding the amount, timing, and uncertainty of cash flows arising from leasing arrangements.
We adopted Topic 842 on November 1, 2019 on a modified retrospective basis using the optional transition method permitted under ASU 2018-11 and have used this effective date as the initial application date. Comparative prior period financial statements have not been restated and continue to be reported under the accounting standards in effect for those prior periods presented.
Upon adoption, we elected the package of transition practical expedients that allowed 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 elected the practical expedient of not separating lease components from non-lease components for all asset classes. We also made an accounting policy election to not record ROU assets or lease liabilities for leases with an initial term of 12 months or less and will recognize payments for such leases in the consolidated statements of comprehensive income on a straight-line basis over the lease term. We did not elect the use of hindsight for determining the reasonably certain lease term.
The adoption of Topic 842 had a significant impact on our unaudited Consolidated Balance Sheet, but did not have a significant impact on our unaudited Consolidated Statement of Comprehensive Income, our unaudited Consolidated Statement of Stockholders' Equity, our unaudited Consolidated Statement of Cash Flows, our liquidity, or our compliance with the various covenants contained within our credit facility, as further described in Note 9, “Credit Facility.” The most significant impact was the recognition of ROU assets and lease liabilities for operating

leases, while our accounting for finance leases remained substantially unchanged. See Note 4, “Leases,” for additional information on our lease arrangements.
The impact of adoption of Topic 842 on our unaudited Consolidated Balance Sheet was as follows:
(in millions)Balance at
October 31, 2019
Adjustments Due to Adoption of Topic 842Balance at
November 1, 2019
Right-of-use assets(1)
$—  $167.5  $167.5  
Current portion of lease liabilities(2)
$—  $36.3  $36.3  
Other accrued liabilities(3)
158.2  (3.0) 155.2  
Long-term lease liabilities(4)
—  154.2  154.2  
Other noncurrent liabilities(5)
78.8  (20.0) 58.8  
(1) Represents capitalization of operating lease assets and reclassification of prepaid rent, deferred rent, lease exit impairment liabilities, and lease incentives and tenant improvements on operating leases.
(2) Represents the recognition of short-term operating lease liabilities.
(3) Represents short-term deferred rent reclassified to ROU assets.
(4) Represents the recognition of long-term operating lease liabilities.
(5) Represents long-term deferred rent, lease incentives and tenant improvements, and lease exit impairment liabilities reclassified to ROU assets.
No recently issued accounting pronouncements that we have not yet adopted are expected to have a significant impact on our fiscal 2021 consolidated financial statements.

Disaggregation of Revenues
We generate revenues under several types of contracts, as further explained below. The type of contract is determined by the nature of the services provided by each of our major service lines throughout our reportable segments; therefore, we disaggregate revenues from contracts with customers into major service lines. We have determined that disaggregating revenues into these categories best depicts how the nature, amount, timing, and uncertainty of revenues and cash flows 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 12, “Segment Information.”
Three Months Ended January 31, 2020
(in millions)B&IAviationT&M  Education  Technical SolutionsTotal
Major Service Line
$593.5  $34.6  $185.6  $186.2  $  $1,000.0  
125.9  84.9  8.1  0.7    219.6  
Facility Services(3)
101.4  11.7  40.2  21.0    174.3  
Building & Energy Solutions(4)
        142.0  142.0  
Airline Services(5)
0.1  107.5        107.6  
$820.9  $238.7  $233.9  $208.0  $142.0  $1,643.6  
Elimination of inter-segment revenues

Three Months Ended January 31, 2019
(in millions)B&IAviationT&M  Education  Technical SolutionsTotal
Major Service Line
$584.0  $31.1  $187.2  $187.5  $  $989.8  
128.1  85.8  7.4  0.8    222.1  
Facility Services(3)
116.6  18.0  41.4  20.7    196.7  
Building & Energy Solutions(4)
        116.1  116.1  
Airline Services(5)
0.2  117.5        117.7  
$828.8  $252.4  $236.1  $208.9  $116.1  $1,642.3  
Elimination of inter-segment revenues(34.4) 
(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 often structured 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. These arrangements are structured as management reimbursement, leased location, and allowance contracts. Certain of these arrangements are considered service concession agreements and are accounted for under the guidance of Topic 853; accordingly, rent expense related to these arrangements is recorded as a reduction of the related parking service revenues.
(3) Facility Services arrangements provide onsite mechanical engineering and technical services and solutions relating to a broad range of facilities and infrastructure 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 for clients in the public and private sectors and are generally structured as Energy Savings and Fixed-Price Repair and Refurbishment contracts. We also franchise certain 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.
Contract Types
We have arrangements under various contract types, as described in Note 2, “Basis of Presentation and Significant Accounting Policies,” in our Annual Report.
Certain arrangements involve variable consideration (primarily per transaction fees, reimbursable expenses, and sales-based royalties). We do not estimate the variable consideration for these arrangements; rather, we recognize these variable fees as they are earned.
The majority of our contracts include performance obligations that are primarily satisfied over time as we provide the related services; these contract types include: monthly fixed-price; square-foot; cost-plus; tag services; transaction-price; hourly; management reimbursement; leased location; allowance; energy savings contracts; and fixed-price repair and refurbishment contracts, as well as our franchise and royalty fee arrangements. We recognize revenue as the services are performed using a measure of progress that is determined by the contract type. Generally, most of our contracts are cancelable by either party without a substantive penalty, and the majority have a notification period of 30 to 60 days.
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 the frequency of billing under the customer contracts. Under this practical expedient, we recognize revenue in an amount that corresponds directly with the value to the customer of our performance completed to date and for which we have the right to invoice the customer.
Remaining Performance Obligations
At January 31, 2020, performance obligations that were unsatisfied or partially unsatisfied for which we expect to recognize revenue totaled $178.4 million. We expect to recognize revenue on approximately 77% of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter.
These amounts exclude variable consideration primarily related to: (i) contracts where we have determined that the contract consists of a series of distinct service periods and revenues are based on future performance that cannot be estimated at contract inception; (ii) parking contracts where we and the customer share the gross revenues or operating profit for the location; and (iii) contracts where transaction prices include performance incentives that are based on future performance and therefore cannot be estimated at contract inception. We apply the practical expedient that permits exclusion of information about the remaining performance obligations with original expected durations of one year or less.
Contract Balances
The 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.
Contract assets primarily consist of billed trade receivables, unbilled trade receivables, and costs incurred in excess of amounts billed. Billed and unbilled trade receivables represent amounts from work completed in which we have an unconditional right to bill our customer. Costs incurred in excess of amounts billed typically arise when the revenue recognized on a project exceeds the amount billed to the customer. These amounts are transferred to billed trade receivables when the rights become unconditional. Contract assets also include the capitalization of incremental costs of obtaining a contract with a customer, primarily commissions. Commissions expense is recognized on a straight-line basis over a weighted average expected customer relationship period.
Contract liabilities consist of deferred revenue and advance payments and billings in excess of revenue recognized. We generally classify contract liabilities as current since the related contracts are generally for a period of one year or less. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation.

The following tables present the balances in our contract assets and contract liabilities:
(in millions)January 31, 2020October 31, 2019
Contract assets
Billed trade receivables(1)
$962.5  $978.7  
Unbilled trade receivables(1)
63.4  56.9  
Costs incurred in excess of amounts billed(2)
79.6  72.6  
Capitalized commissions(3)
21.6  21.8  
(1) Included in trade accounts receivable, net, on the consolidated balance sheets. The fluctuations correlate directly to the execution of new customer contracts and to invoicing and collections from customers in the normal course of business.
(2) The 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 three months ended January 31, 2020, we capitalized $3.5 million of new costs and amortized $3.7 million of previously capitalized costs. There was no impairment loss recorded on the costs capitalized.
(in millions)Three Months Ended
January 31, 2020
Contract liabilities(1)
Balance at beginning of period$38.0  
Additional contract liabilities73.5  
Recognition of deferred revenue
Balance at end of period
(1) Included in other accrued liabilities on the consolidated balance sheets.

We primarily lease office space, parking facilities, warehouses, vehicles, and equipment. We determine if an arrangement is a lease at inception and begin recording lease activity at the commencement date, which is generally the date in which we take possession of or control the physical use of the asset. ROU assets and lease liabilities are recognized based on the present value of lease payments over the lease term with lease expense recognized on a straight-line basis. We use our incremental borrowing rate to determine the present value of future lease payments unless the implicit rate is readily determinable. Our incremental borrowing rate is the rate of interest we would have to pay to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. This incremental borrowing rate is applied to the minimum lease payments within each lease agreement to determine the amounts of our ROU assets and lease liabilities. Our incremental borrowing rate as of November 1, 2019 was utilized for the initial measurement of operating lease liabilities upon adoption of Topic 842, as described in Note 2, “Basis of Presentation and Significant Accounting Policies,” and for new leases entered into during the quarter ended January 31, 2020.
Our lease terms range from 1 to 30 years. Some leases include one or more options to renew, with renewal terms that can extend the lease term. We typically include options to extend the lease in a lease term when it is reasonably certain that we will exercise that option and when doing so is at our sole discretion. Certain equipment and vehicle leases may also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term unless there is a transfer of title or purchase option reasonably certain of exercise. Typically, if we decide to cancel or terminate a lease before the end of its term, we would owe the lessor the remaining lease payments under the term of such lease. Our lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. We may rent or sublease to third parties certain real estate assets that we no longer use.
Lease agreements may contain rent escalation clauses, rent holidays, or certain landlord incentives, including tenant improvement allowances. Prior to November 1, 2019, we recognized lease expense related to operating leases on a straight-line basis over the terms of the leases and, accordingly, recorded the difference between cash rent payments and recognition of rent expense as a deferred rent liability or prepaid rent. Landlord-funded leasehold improvements were also recorded as deferred rent liabilities and were amortized as a reduction of rent expense over the noncancelable term of the related operating lease. The ROU assets recognized upon adoption of Topic 842 include cumulative prepaid or accrued rent on the adoption date, unamortized lease incentives, and unamortized initial direct costs initially recognized prior to adoption of Topic 842. Following adoption of Topic 842, ROU assets include amounts for scheduled rent increases and are reduced by lease incentive amounts.
Certain of our lease agreements include variable rent payments, consisting primarily of rental payments adjusted periodically for inflation and amounts paid to the lessor based on cost or consumption, such as maintenance and utilities. Certain of our parking arrangements also contain variable rent payments that are a percentage of parking services revenue based on contractual levels. Variable rent lease components are not included in the lease liability.
Service concession arrangements within the scope of ASU No. 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the Operation Services, are excluded from the scope of Topic 842. Lease costs associated with these arrangements are recorded as a reduction of revenues. See Note 3, “Revenues,” for further discussion.

The components of lease assets and liabilities and their classification on our unaudited Consolidated Balance Sheets as of January 31, 2020 were as follows:
Balance at
(in millions)ClassificationJanuary 31, 2020
Lease assets
Operating leasesRight-of-use assets$163.4  
Finance leases
Property, plant and equipment, net(1)
Total lease assets$172.5  
Lease liabilities
Current liabilities
Operating leasesCurrent portion of lease liabilities$36.0  
Finance leasesOther accrued liabilities4.5  
Noncurrent liabilities
Operating leasesLong-term lease liabilities150.0  
Finance leasesOther noncurrent liabilities2.2  
Total lease liabilities$192.7  
(1) Finance lease assets are recorded net of accumulated amortization of $11.1 million as of January 31, 2020.

Total lease costs for the three months ended January 31, 2020 was $27.8 million, including operating leases of $26.6 million and finance leases of $1.2 million. The components of lease costs and classification within the unaudited Consolidated Statements of Comprehensive Income were as follows:

Three Months Ended
(in millions)January 31, 2020
Operating lease costs:
Operating expenses(1)(2)
Selling, general and administrative expenses(3)
Finance lease costs:
Operating expenses(4)
Interest expense(5)
Total lease costs$27.8  
(1) Related to certain parking arrangements.
(2) Includes short-term lease costs and variable lease costs.
(3) Includes short-term lease costs.
(4) Represents amortization of leased assets.
(5) Interest on lease liabilities.
The following table presents information on short-term and variable lease costs:
Three Months Ended
(in millions)January 31, 2020
Short-term lease costs$14.5  
Variable lease costs2.0  
Total short-term and variable lease costs$16.5  

Sublease income generated during the three months ended January 31, 2020 was immaterial.

The amounts of future undiscounted cash flows related to the lease payments over the lease terms and the reconciliation to the present value of the lease liabilities as recorded on our unaudited Consolidated Balance Sheets as of January 31, 2020 are as follows:
(in millions)Operating
Lease Liabilities
Lease Liabilities
Remainder of fiscal 2020$32.6  $2.6  $35.2  
Fiscal 202138.9  2.9  41.8  
Fiscal 202232.9  1.5  34.4  
Fiscal 202327.8  0.8  28.6  
Fiscal 202422.7    22.7  
Thereafter58.3 </