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You should carefully consider the risks described below in addition to the other information set forth in this Annual Report on Form 10-K, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) and the consolidated financial statements and accompanying notes (the “Financial Statements”).
−Removed: Risks Relating to the Novel Coronavirus (“COVID-19”) Pandemic (the “Pandemic”)
+Added: Risks Relating to the Pandemic
The Pandemic has had and is expected to continue having a negative effect on the global economy and the United States economy.
−Removed: it has disrupted and is expected to continue disrupting our operations and our clients’ operations;
−Removed: and it has adversely affected and may continue to adversely affect our business, results of operations, cash flows, and financial condition.
+Added: It has disrupted and is expected to continue disrupting our operations and our clients’ operations, which may adversely affect our business, results of operations, cash flows, and financial condition.
The Pandemic and measures taken by authorities in response to the Pandemic, such as travel bans and restrictions, shelter-in-place/stay-at-home orders, and business and school shutdowns, have disrupted and are expected to continue disrupting the economy and our business.
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• overall economic conditions, which have been and will likely continue to be adversely impacted by the Pandemic and related shutdowns;
−Removed: • our ability to maintain sufficient key personnel due to employee illness, quarantine requirements, worker absences, social-distancing requirements, and travel or other restrictions;
+Added: • our ability to maintain sufficient key personnel due to employee illness, quarantine requirements, vaccine requirements, worker absences, social-distancing requirements, and travel or other restrictions;
• reduced availability and productivity of labor;
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Any unplanned turnover in senior management or inability to attract and retain qualified personnel could have a negative effect on our results of operations.
−Removed: We employ approximat ely 114,000 persons, and our operations depend on the services of a large and diverse workforce.
+Added: We employ approximately 124,000 persons, and our operations depend on the services of a large and diverse workforce.
We must attract, train, and retain a large and growing number of qualified employees while controlling related labor costs.
Our ability to control labor and benefit costs is subject to numerous internal and external factors, including changes in the unemployment rate, changes in immigration policy, regulatory changes, prevailing wage rates, and competition we face from other companies for qualified employees.
+Added: During 2021, we experienced an overall tightening and increasingly competitive labor market.
+Added: This was attributed to, among other things, increased federal unemployment subsidies, including unemployment benefits offered in response to the ongoing Pandemic, and other government regulations.
+Added: A sustained labor shortage could lead to increased costs, such as increased overtime incurred to meet the demands of our customers and increased wage rates to attract and retain employees.
Further, many of our contracts provide that our clients pay certain costs at specified rates, such as insurance, healthcare costs, salary and salary-related expenses, and other costs.
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There is no assurance that in the future we will be able to attract or retain qualified employees or effectively manage labor and benefit costs, which could have a material adverse effect on our business, financial condition, and results of operations.
+Added: Investments in and changes to our businesses, operating structure, financial reporting structure, or personnel relating to our ELEVATE strategy, including 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.
+Added: We have made and expect to continue to make significant investments in various initiatives intended to drive long-term profitable growth and increase operational efficiency.
+Added: These investments in and changes to our business systems and processes may not create the growth, operational efficiencies, competitive advantage, or cost benefits that we expect and could result in unanticipated consequences, including substantial disruption to our back-office operations and service delivery.
+Added: Moreover, the execution of our ELEVATE strategy may result in substantial expenses in excess of what is currently forecast.
+Added: While we anticipate that certain expenses will be incurred, such expenses are difficult to estimate accurately and may exceed current estimates.
Our ability to preserve long-term client relationships is essential to our continued success.
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Among other things, adverse publicity stemming from an accident or other incident involving our facility operations or employees related to injury, illness, death, or alleged criminal activity could harm our reputation, result in the cancellation of contracts or inability to retain clients, and expose us to significant liability.
−Removed: 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.
−Removed: We may periodically engage in various initiatives intended to drive long-term profitable growth and increase operational efficiency.
−Removed: Planned changes to our business systems and processes may not create the growth, operational efficiencies or cost benefits that we expect and could result in unanticipated consequences, including substantial disruption to our back-office operations and service delivery.
−Removed: We may not be able to fully execute on such initiatives to the extent expected within the anticipated timeframe as a result of numerous factors, such as client resistance, inability to deliver requested end-to-end services, and difficulty penetrating certain markets.
−Removed: Moreover, these initiatives may not provide us with anticipated competitive advantage or revenue growth.
−Removed: 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.
−Removed: In furtherance of our business strategy, we routinely evaluate opportunities and may enter into agreements for possible acquisitions, divestitures, or other strategic transactions.
−Removed: In the past, a significant portion of our growth has been generated by acquisitions, and we may continue to acquire businesses in the future as part of our growth strategy.
−Removed: However, we may encounter challenges identifying opportunities in a timely manner or on terms acceptable to us.
−Removed: Furthermore, there is no assurance that any such transaction will result in synergistic benefits.
−Removed: A potential acquisition, divestiture, or other strategic transaction may involve a number of risks including, but not limited to:
−Removed: • the transaction may not effectively advance our business strategy, and its anticipated benefits may never materialize;
−Removed: • our ongoing operations may be disrupted, and management time and focus may be diverted;
−Removed: • clients or key employees of an acquired business may not remain, which could negatively impact our ability to grow that acquired business;
−Removed: • integration of an acquired business’s accounting, information technology, HR, and other administrative systems may fail to permit effective management and expense reduction;
−Removed: • unforeseen challenges may arise in implementing internal controls, procedures, and policies;
−Removed: • additional indebtedness incurred as a result of an acquisition may impact our financial position, results of operations, and cash flows;
−Removed: • unanticipated or unknown liabilities may arise related to an acquired business.
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.
−Removed: We have business operations in jurisdictions outside of the United States, most significantly in the United Kingdom (“U.K.”).
+Added: We have business operations in jurisdictions outside of the United States, most significantly in the United Kingdom.
Our international operations are subject to risks that are different from those we face in the United States and subject us to complex and frequently changing laws and regulations, including differing labor laws and regulations relating to the protection of certain information that we collect and maintain about our employees, clients, and other third parties.
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Bribery Act, and the European Union General Data Protection Regulation (the “GDPR”), which took effect in May 2018.
−Removed: The failure to comply with these laws or regulations could subject us to significant litigation, monetary damages, regulatory enforcement actions, or fines in one or more jurisdictions.
+Added: The failure to
+Added: comply with these laws or regulations could subject us to significant litigation, monetary damages, regulatory enforcement actions, or fines in one or more jurisdictions.
More generally, the economic, political, monetary, and operational impacts of Brexit, including unanticipated impacts to the U.K.
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Although we have in place controls and programs to monitor the work of our subcontractors and our joint venture partners, there can be no assurance that these controls or programs will have the desired effect, and we may incur significant liability as a result of the actions or inactions of one or more of our subcontractors or joint venture partners.
+Added: Risks Relating to Acquisitions, Including the Able Acquisition, and Relating to Divestitures, or Strategic Transactions
+Added: 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.
+Added: In furtherance of our business strategy, we routinely evaluate opportunities and may enter into agreements for possible acquisitions, divestitures, or other strategic transactions.
+Added: In the past, a significant portion of our growth has been generated by acquisitions, and we may continue to acquire businesses in the future as part of our growth strategy.
+Added: However, we may encounter challenges identifying opportunities in a timely manner or on terms acceptable to us.
+Added: Furthermore, there is no assurance that any such transaction will result in synergistic benefits.
+Added: A potential acquisition, divestiture, or other strategic transaction may involve a number of risks including, but not limited to:
+Added: • the transaction may not effectively advance our business strategy, and its anticipated benefits may never materialize;
+Added: • our ongoing operations may be disrupted, and management time and focus may be diverted;
+Added: • clients or key employees of an acquired business may not remain, which could negatively impact our ability to grow that acquired business;
+Added: • integration of an acquired business’s accounting, information technology, HR, and other administrative systems may fail to permit effective management and expense reduction;
+Added: • unforeseen challenges may arise in implementing internal controls, procedures, and policies;
+Added: • additional indebtedness incurred as a result of an acquisition may impact our financial position, results of operations, and cash flows;
+Added: • unanticipated or unknown liabilities may arise related to an acquired business.
+Added: We may experience difficulties integrating Able and may not realize the growth opportunities and cost synergies that are anticipated from the Able Acquisition
+Added: There is a significant degree of difficulty, management distraction, and expense inherent in the process of integrating an acquisition as sizable as Able.
+Added: The process of integrating Able could cause an interruption of, or loss of momentum in, our activities, including with respect to our ELEVATE program or the activities of the Able business.
+Added: Members of our senior management may be required to devote considerable time to this integration process, which will decrease the time they will have to manage our Company, service existing clients, and attract new clients.
+Added: If senior management is not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, our business could suffer.
+Added: Additionally, the benefits that are expected to result from the Able Acquisition will depend, in part, on our ability to realize the anticipated growth opportunities and cost synergies as a result of the Able Acquisition.
+Added: Our success in realizing these growth opportunities and cost synergies, and the timing of this realization, depends on successful integration and a number of other factors.
+Added: Even if we integrate Able successfully, this integration may not result in the realization of the full benefits of the growth opportunities and cost synergies we currently expect from the integration, and we cannot guarantee these benefits will be achieved within anticipated time frames or at all.
+Added: For example, we may not be able to eliminate duplicative costs, and while it is anticipated that certain expenses will be incurred to achieve cost synergies, such expenses are difficult to estimate accurately and may exceed current estimates.
+Added: Accordingly, the benefits from the Able Acquisition may be offset by costs incurred to integrate the business or delays in the integration process.
+Added: In addition, the overall integration of Able with ABM may result in unanticipated problems, expenses, liabilities, competitive responses, loss of client and other relationships, and loss of key employees, any of which may adversely affect our results of operations, financial condition, and cash flow, and may cause our stock price to decline.
Risks Relating to Insurance and Safety Matters
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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.
−Removed: Our information technology systems and those of our third-party providers or clients could be the target of cyber attacks, ransomware attacks, hacking, unauthorized access, phishing, computer viruses, malware, or other intrusions, which could result in operational disruptions or information misappropriation, such as theft of intellectual property or inappropriate disclosure of confidential, proprietary, or personal information.
+Added: Our information technology systems and those of our third-party providers or clients could be the target of cyberattacks, ransomware attacks, hacking, unauthorized access, phishing, computer viruses, malware, or other intrusions, which could result in operational disruptions or information misappropriation, such as theft of intellectual property or inappropriate disclosure of confidential, proprietary, or personal information.
We maintain confidential, proprietary, and personal information in our information technology systems and in systems of third-party providers relating to our current, former, and prospective employees, clients, and other third parties.
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Furthermore, while we continue to devote significant resources to monitoring and updating our systems and implementing information security measures to protect our systems, there can be no assurance that the controls and procedures we have in place will be sufficient to protect us from future security breaches.
−Removed: As cyber threats are continually evolving, our controls and procedures
−Removed: may become inadequate and we may be required to devote additional resources to modifying or enhancing our systems in the future.
−Removed: We may also be required to expend resources to remediate cyber-related incidents or to enhance and strengthen our cyber security.
+Added: As cyber threats are continually evolving, our controls and procedures may become inadequate and we may be required to devote additional resources to modifying or enhancing our systems in the future.
+Added: We may also be required to expend resources to remediate cyber-related incidents or to enhance and strengthen our cybersecurity.
Any such disruptions to our information technology systems, breaches or compromises of data, and/or misappropriation of information could result in lost sales, negative publicity, litigation, violations of privacy and other laws, or business delays that could have a material adverse effect on our business.
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The failure to make timely and accurate contributions as a result of a systems failure could have a negative impact on our financial position.
−Removed: At October 31, 2020, approximatel y 32% o f our employees were subject to various local collective bargaining agreements, some of which will expire or become subject to renegotiation during 2021.
+Added: At October 31, 2021, approximatel y 35% of our employees were subject to various local collective bargaining agreements, some of which will expire or become subject to renegotiation during 2022.
In addition, at any given time we may face union organizing activity.
−Removed: When one or more of our major collective bargaining agreements becomes subject to renegotiation or when we face union organizing drives, any disagreement between us and the union on important issues may lead to a strike, work slowdown, or other job actions at one or more of our
+Added: When one or more of our major collective bargaining agreements becomes subject to renegotiation or when we face union organizing drives, any disagreement between 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 market where we are unionized but competitors are not unionized, we could lose clients to such competitors.
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Specifically, adverse economic conditions may result in clients cutting back on discretionary spending.
−Removed: Additionally, since a significant portion of our aviation services and parking revenues are tied to the volume of airline passengers, hotel guests, and sports arena attendees, results for these businesses could be adversely affected by continued curtailment of business, personal travel, or discretionary spending.
+Added: Additionally, since a significant portion of our aviation services and parking revenues are tied to the volume of airline passengers,
+Added: hotel guests, and sports arena attendees, results for these businesses could be adversely affected by continued curtailment of business, personal travel, or discretionary spending.
The use of ride sharing services and car sharing services may also lead to a decline in parking demand at airports and in urban areas.
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Current interest rates on borrowings under our credit facility are variable and include the use of the London Interbank Offered Rate (“LIBOR”).
−Removed: In 2017, the U.K.
−Removed: Financial Conduct Authority announced that it intends to phase out LIBOR by the end of 2021.
−Removed: In addition, other regulators have suggested reforming or replacing other benchmark rates.
−Removed: The discontinuation, reform, or replacement of LIBOR or any other benchmark rates may result in fluctuating interest rates that may have a negative impact on our interest expense and our profitability.
+Added: On March 5, 2021, the U.K.
+Added: Financial Conduct Authority, the regulator of LIBOR, announced that the USD LIBOR rates will no longer be published after June 30, 2023.
+Added: While we expect LIBOR to be available in substantially its current form until at least the end of June 30, 2023, it is possible that LIBOR will become unavailable prior to that point which may impact our credit facility and interest rate swaps.
+Added: Our current credit agreement as well as our International Swaps and Derivatives Association, Inc.
+Added: agreement provide for any changes away from LIBOR to a successor rate to be based on prevailing or equivalent standards, however, the discontinuation, reform, or replacement of LIBOR or any other benchmark 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.
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If the fair value of one of our reporting units is less than its carrying value, or if as a result of a recoverability test we conclude that the projected undiscounted cash flows are less than the carrying amount, we would record an impairment charge related to goodwill or long-lived assets, respectively.
−Removed: (For example, during the second quarter of 2020, given the general deterioration in economic and market conditions arising from the Pandemic, we identified a triggering event that resulted in the impairment of goodwill and intangible assets.) The assumptions used to determine impairment require significant judgment, and the amount of the impairment could have a material adverse effect on our reported financial results for the period in which the charge is taken.
+Added: (For example, during the second quarter of 2020, given the general deterioration in economic and market conditions arising from the Pandemic, we identified a triggering event that resulted in the impairment of goodwill and intangible assets.) The assumptions used to determine impairment require significant judgment, and
+Added: the amount of the impairment could have a material adverse effect on our reported financial results for the period in which the charge is taken.
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.
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Public companies have been the target of activist investors.
−Removed: In the event that a third party, such as an activist investor, proposes to change our governance policies, board of directors, or other aspects of our operations, our review and consideration of such proposals may create a significant distraction for our management and employees.
+Added: In the event that a third party, such as an activist investor, proposes to change our governance policies, board of directors, or other aspects of our operations,
+Added: our review and consideration of such proposals may create a significant distraction for our management and employees.
This could negatively impact our ability to execute various strategic initiatives and may require management to expend significant time and resources responding to such proposals.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.