What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-12-22 compared with 2020-12-17 · 2 added, 96 removed, 22 unchanged (82% of the section changed)

10 unchanged sentences

Repurchased shares are retired and returned to an authorized but unissued status.

We repurchased shares under the 2019 Share Repurchase Program during the second quarter of 2020, as summarized below.

However, due to the market and business conditions arising from the Pandemic, in March 2020 we suspended further repurchases of our common stock.

However, due to the market and business conditions arising from the Pandemic, we suspended further repurchases of our common stock in March 2020 and did not repurchase any shares of our outstanding common stock during fiscal year 2021.

At October 31, 2021, authorization for $144.9 million of repurchases remained under the 2019 Share Repurchase Program.

Repurchase Activity

(in millions, except per share amounts) October 31, 2020

Total number of shares purchased 0.2

Average price paid per share $ 36.16

Total cash paid for share repurchases $ 5.1

Performance Graph

7 unchanged sentences

S&P SmallCap 600 Index 100 127.9 135.1 139.5 128.7 204.6

This performance graph shall not be deemed to be “soliciting material” or “filed” with the Securities and Exchange Commission, or subject to Regulation 14A or 14C, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.

This performance graph shall not be deemed to be “soliciting material” or “filed” with the SEC, or subject to Regulation 14A or 14C, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.

The comparisons in the performance graph are based on historical data and are not indicative of, or intended to forecast, the possible future performance of our common stock.

SELECTED FINANCIAL DATA.

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

Years Ended October 31,

2020 2019 2018 2017 2016

(in millions, except per share amounts)

Statements of Comprehensive (Loss) Income Data

Revenues (1)(2)(3)

$ 5,987.6 $ 6,498.6 $ 6,442.2 $ 5,453.6 $ 5,144.7

Operating profit (4)

95.7 208.3 138.6 101.9 54.7

Income from continuing operations 0.2 127.5 95.9 78.1 62.3

Income (loss) from discontinued operations, net of taxes (5)

0.1 (0.1) 1.8 (74.3) (5.1)

Per Share Data

Net income per common share — Basic

Income from continuing operations $ 0.00 $ 1.92 $ 1.45 $ 1.35 $ 1.11

Net income $ 0.00 $ 1.91 $ 1.48 $ 0.07 $ 1.02

Net income per common share — Diluted

Income from continuing operations $ 0.00 $ 1.91 $ 1.45 $ 1.34 $ 1.09

Net income $ 0.00 $ 1.90 $ 1.47 $ 0.07 $ 1.01

Weighted-average common and common

equivalent shares outstanding

Basic 66.9 66.6 66.1 57.7 56.3

Diluted 67.3 66.9 66.4 58.3 56.9

Dividends declared per common share $ 0.740 $ 0.720 $ 0.700 $ 0.680 $ 0.660

Statements of Cash Flow Data

Net cash provided by operating activities of continuing

$ 457.4 $ 262.8 $ 299.7 $ 101.7 $ 110.5

Income tax payments (refunds), net (6)

82.2 20.6 (1.0) 11.8 12.6

At October 31,

(in millions) 2020 2019 2018 2017 2016

Balance Sheet Data

Total assets $ 3,776.9 $ 3,692.6 $ 3,627.5 $ 3,812.6 $ 2,278.8

Trade accounts receivable, net of allowances (7)

854.2 1,013.2 1,014.1 1,038.1 803.7

1,671.4 1,835.4 1,834.8 1,864.2 912.8

Other intangible assets, net of accumulated amortization (9)

239.7 297.2 355.7 430.1 103.8

Long-term debt, net (10)

603.0 744.2 902.0 1,161.3 268.3

Insurance claims 521.5 515.0 510.3 495.4 423.8

(1) Revenues in 2020 were negatively impacted by Pandemic-related disruptions across our businesses and the loss of certain accounts.

However, this decrease was partially offset by an increase in Pandemic-related work orders and new services, including EnhancedClean, and by the expansion of certain accounts and new business.

(2) Revenues in 2020 and 2019 reflect the adoption of Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606), and ASU 2017-10, Service Concession Arrangements (Topic 853):

Determining the Customer of the Operation Services .

Following the adoption of Topic 853, for the years ended October 31, 2020 and 2019, rent expenses of $29.8 million and $48.6 million, respectively, related to service concession arrangements are now presented as reductions of revenues, but were previously presented as operating expenses.

Refer to Note 2, “Basis of Presentation and Significant Accounting Policies,” and Note 3, “Revenues,” in the Financial Statements for additional information regarding service concessions.

(3) Revenues in 2018 included $858.1 million of incremental revenue from acquisitions, primarily $855.7 million related to the acquisition of GCA.

Revenues in 2017 included $208.1 million of incremental revenue from acquisitions, including $169.7 million related to GCA.

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

• Operating profit in 2020 was negatively impacted by impairment charges recorded on goodwill and intangible assets totaling $172.8 million due to the adverse impact of market and business conditions resulting from the Pandemic.

Operating profit was also negatively impacted by:

account compression resulting from Pandemic-related disruptions in certain markets;

a $17.6 million reserve on notes receivable related to a unique, entertainment-related project within Technical Solutions, mainly associated with increasing credit risk resulting from the Pandemic;

$13.1 million of investments in EnhancedClean, other Pandemic-related projects, and certain corporate initiatives;

and a $12.9 million increase in bad debt expense primarily due to specific reserves established for client receivables associated with increasing credit risk in certain industries (including for clients with deteriorating credit ratings and resulting bankruptcies) arising from the Pandemic.

The decrease was partially offset by:

the management of direct labor and related personnel costs during the Pandemic;

various human capital management cost reduction measures;

higher margins on work orders and new services, including EnhancedClean, relating to the Pandemic;

the loss of certain lower margin accounts;

and a $26.8 million decrease in self-insurance reserves, related to adjustments for prior years.

• Operating profit in 2019 was positively impacted by higher gross margin, $14.5 million lower restructuring and related expenses, and a $13.6 million lower self-insurance adjustment related to prior year claims.

Additionally, 2019 benefited from the absence of $26.5 million of impairment charges recognized during 2018.

• Operating profit in 2018 was positively impacted by $67.6 million of incremental operating profit resulting from the GCA acquisition and an $11.8 million lower self-insurance adjustment, partially offset by $34.4 million of higher amortization expense and impairment charges of $26.5 million.

Additionally, 2018 benefited from the absence of $24.2 million of transaction expenses incurred in 2017 related to the GCA acquisition, but this benefit was partially offset by the absence of a $17.4 million impairment recovery recorded in 2017 related to our Government Services business.

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

• Operating profit in 2016 was negatively impacted by insurance expense of $49.6 million, consisting of a $32.9 million unfavorable self-insurance adjustment related to prior year claims and $16.7 million of higher insurance expense due to an increase in the rate used to record our insurance reserves during 2016.

Operating profit was also unfavorably impacted by $29.0 million of 2020 Vision restructuring and related charges and a $22.5 million impairment charge for our Government Services business, consisting of both goodwill and long-lived asset charges.

Operating profit in 2016 was favorably impacted by approximately $22 million in savings from our 2020 Vision initiatives.

(5) We had income from discontinued operations in 2018 of $1.8 million due to an insurance reimbursement on a legal settlement and collection of previously written off receivables, partially offset by union audit settlements.

The loss from discontinued operations in 2017 included legal settlements associated with our former Security business of $120.0 million.

(6) Net income tax payments during 2018 were impacted by a $19.4 million refund received for prior year legal settlements.

Additionally, we had cash tax savings of approximately $8 million for 2020, $6 million for 2019, and $7 million for 2018 and $10 million for each of 2017 and 2016 related to coverage provided by IFM Assurance Company, our wholly-owned captive insurance company.

(7) Trade accounts receivable, net of allowances, decreased by $159.0 million as of October 31, 2020.

This decrease was driven by a decrease in revenue relating to the Pandemic and our focus on collection of client receivables.

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

(8) In 2020, goodwill decreased due to an impairment charge totaling $163.8 million ($99.3 million related to Education, $55.5 million related to Aviation, and $9.0 million related to our U.K.

Technical Solutions business) driven by the impact of the Pandemic.

Goodwill decreased in 2018 due to an impairment charge of $20.3 million related to Westway Services Holdings (2014) Ltd.

(“Westway”) and to a $7.0 million adjustment to the final GCA purchase price allocation.

Goodwill increased by $933.9 million on September 1, 2017, as a result of the GCA acquisition.

(9) In 2020, other intangible assets, net of accumulated amortization, were reduced by impairment charges of $5.6 million related to Aviation and $3.4 million related to our U.K.

Technical Solutions business driven by the impact of the Pandemic.

In 2018, other intangible assets, net of accumulated amortization, were reduced by an impairment charge of $6.2 million related to Westway and a $1.0 million adjustment to the final GCA purchase price allocation.

During 2017, we recorded $349.0 million of other intangible assets as a result of the GCA acquisition.

(10) On September 1, 2017, we refinanced and replaced our existing $800.0 million credit facility with a new secured $1.7 billion credit facility, which we partially used to fund the GCA acquisition.

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.

What changed 10-K

Item 5. Market for Registrant’s Common Equity