What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-12-22 compared with 2020-12-17 · 327 added, 415 removed, 1229 unchanged (38% of the section changed)

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Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of ABM Industries Incorporated and subsidiaries (the Company) as of October 31, 2020 and 2019, the related consolidated statements of comprehensive (loss) income, stockholders’ equity, and cash flows for each of the years in the three‑year period ended October 31, 2020, and the related notes and financial statement Schedule II (collectively, the consolidated financial statements).

We have audited the accompanying consolidated balance sheets of ABM Industries Incorporated and subsidiaries (the Company) as of October 31, 2021 and 2020, the related consolidated statements of comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three‑year period ended October 31, 2021, and the related notes and financial statement schedule II (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three‑year period ended October 31, 2021, in conformity with U.S.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of self-insurance liabilities

Fair value of customer relationship intangible asset from the acquisition of Able

As discussed in Note 4 to the consolidated financial statements, on September 30, 2021, the Company completed its acquisition of Crown Building Maintenance Co.

and Crown Energy Services, Inc.

(collectively,

Able) for $741.7 million.

As a result of the transaction, the Company acquired a customer relationship intangible asset representing future estimated income from Able’s existing customers.

The acquisition-date preliminary fair value determined for the customer relationship intangible asset was $220.0 million.

We identified the evaluation of the fair value of the customer relationship intangible asset from the acquisition of Able as a critical audit matter as a high degree of subjectivity was required to evaluate certain inputs in the discounted cash flow model used to determine the fair value of the asset.

Such inputs included expected future revenue growth, future operating performance margins, customer attrition rate, and discount rate applied.

Changes in these inputs could have a significant impact on the fair value of the customer relationship intangible asset.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-date valuation process, including controls over the development of the above listed inputs used to value the customer relationship intangible asset.

We evaluated the future revenue growth and future operating performance margins by comparing these inputs to the historical performance of peer companies and to the pre-acquisition historical performance of both the Company and Able.

We involved valuation professionals with specialized skills and knowledge who assisted in:

• evaluating the estimated annual attrition rate by comparing the selected attrition rate against historical customer attrition of Able

• evaluating the Company’s discount rate by comparing the rate against a discount rate range that was independently developed

• developing a fair value estimate of the customer relationship intangible asset using the Company’s cash flow projections and independently developed range of discount rates and comparing it to the Company’s estimate.

Valuation of self-insurance liabilities

As discussed in Notes 2 and 10 to the consolidated financial statements, the Company uses a combination of insured and self-insurance programs to cover workers’ compensation, general liability, automobile liability, property damage, and other insurable risks.

The balance of casualty program insurance reserves, net of recoverables, as of October 31, 2020 amount ed to $434.8 million.

The C ompany engages actuaries to estimate its self-insurance liabilities at least annually.

We identified the evaluation of the self-insurance liabilities as a critical audit matter because it involves a high degree of judgment and actuarial expertise to:

(1) assess the actuarial models used and (2) estimate incurred but not reported claims based on application of loss development factors to historical claims experience.

The balance of casualty program insurance reserves, net of recoverables, as of October 31, 2021 amounted to $508.3 million.

The Company engages actuaries to estimate its self-insurance liabilities at least annually.

We identified the assessment of the valuation of self-insurance liabilities, other than those assumed in the acquisition of Able, as a critical audit matter.

A high degree of judgment and actuarial expertise was required to assess:

(1) the actuarial models used and (2) the estimated incurred but not reported claims based on application of loss development factors to historical claims experience.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s self-insurance reserve process, including controls related to (1) evaluate claims information sent to the actuary, (2) estimate incurred but not reported claims based on the application of loss development factors to historical claims experience, and (3) evaluate the actuarial report and the external actuarial expert’s qualifications, competency, and objectivity.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s self-insurance liability process, including controls related to (1) evaluation of claims information sent to the actuary, (2) estimation of incurred but not reported claims based on the application of loss development factors to historical claims experience, and (3) evaluation of the actuarial report and the external actuarial specialist’s qualifications and competency.

We evaluated the Company’s historical ability to estimate self-insurance liabilities by comparing the prior year recorded amounts to the subsequent claim development.

We tested a sample of the claims data utilized by the Company’s actuaries by comparing to underlying claims details;

We tested a sample of the claims data utilized by the Company’s actuaries by comparing it to underlying claims details;

and involved an actuarial professional with specialized skills and knowledge who assisted in the:

• assessment of the actuarial models used by the Company for consistency with generally accepted actuarial standards and

• Development of an independent actuarial estimate of self-insurance liabilities based on the Company’s underlying historical paid and incurred loss data.

Evaluation of the goodwill impairment charge for the Aviation and Education reporting units

As discussed in Notes 2 and 9 to the consolidated financial statements, the Company performs goodwill impairment testing on an annual basis and whenever events or changes in circumstances indicate that the fair value of a reporting unit has declined below its carrying value.

The Company estimates the fair value of a reporting unit using a weighting of fair values derived from an income approach and a market approach.

The goodwill balance as of October 31, 2020 was $1,671.4 million, of which $69.5 million related to the Aviation reporting unit and $459.3 million related to the Education reporting unit.

The Company determined that the carrying value of the Aviation and Education reporting units exceeded the fair value of each of those reporting units, resulting in an impairment charge of $154.8 million.

We identified the evaluation of the goodwill impairment charge for the Aviation and Education reporting units as a critical audit matter.

A high degree of subjective auditor judgment was required to evaluate the reporting units’ forecasted revenue growth rates, operating margins, and discount rate assumptions used in the income approach.

Changes to these assumptions could have a substantial impact on the estimated fair value of the Aviation and Education reporting units.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of an internal control over the Company’s goodwill impairment process including the evaluation of the forecasted revenue growth rates, operating margins, and discount rate assumptions used to estimate the fair value of the reporting units.

We performed sensitivity analyses over the forecasted revenue growth rates, operating margins, and discount rate assumptions to assess the impact of the changes in those assumptions on the impairment charge.

We evaluated the Company’s forecasted revenue growth rates and operating margins for the Aviation and Education reporting units by comparing them to underlying business strategies and growth plans and to relevant industry information, including trends and analytics.

We also involved valuation professionals with specialized skills and knowledge, who assisted in:

• Evaluating the Company’s discount rate, by comparing it against a discount rate range that was independently developed using publicly available market data for comparable entities

• Developing an estimate of the Aviation and Education reporting units’ fair values using the reporting units’ cash flow forecast and an independently developed discount rate, and comparing the results to the Company’s fair value estimates.

• development of an actuarial estimate of self-insurance liabilities based on the Company’s underlying historical paid and incurred loss data for comparison with the liabilities recorded by the Company.

We have served as the Company’s auditor since 1980.

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of October 31, 2020 and 2019, the related consolidated statements of comprehensive (loss) income, stockholders’ equity, and cash flows for each of the years in the three‑year period ended October 31, 2020, and the related notes and financial statement Schedule II (collectively, the consolidated financial statements), and our report dated December 17, 2020 expressed an unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of October 31, 2021 and 2020, the related consolidated statements of comprehensive income, (loss), stockholders’ equity, and cash flows for each of the years in the three‑year period ended October 31, 2021, and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated December 22, 2021 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired Crown Building Maintenance Co.

and Crown Energy Services, Inc.

(collectively, “Able”) on September 30, 2021, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of October 31, 2021, Able’s internal control over financial reporting.

Able represented approximately 4.4% of the Company’s total consolidated assets (excluding goodwill and intangibles, which are included in the scope of the assessment) and 1.6% of total consolidated revenues as of and for the year ended October 31, 2021.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Able.

Basis for Opinion

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A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may

become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

New York, New York

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ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Years Ended October 31,

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Amortization of intangible assets 45.0 48.4 58.5

Impairment loss 172.8 — 26.5

Impairment loss of goodwill and other intangibles — 172.8 —

Operating profit 206.3 95.7 208.3

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Income from continuing operations before income taxes 179.8 53.3 160.2

Income tax (provision) benefit ( 53.1 ) ( 32.7 ) 8.2

Income tax provision ( 53.5 ) ( 53.1 ) ( 32.7 )

Income from continuing operations 126.3 0.2 127.5

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Net income 126.3 0.3 127.4

Other comprehensive (loss) income

Other comprehensive income (loss)

Interest rate swaps 4.5 ( 7.6 ) ( 22.4 )

Foreign currency translation and other 5.3 ( 1.8 ) 1.6

Income tax benefit (provision) 2.4 5.9 ( 5.9 )

Comprehensive (loss) income $ ( 6.6 ) $ 112.5 $ 109.0

Income tax (provision) benefit ( 1.5 ) 2.4 5.9

Comprehensive income (loss) $ 134.5 $ ( 6.6 ) $ 112.5

Net income per common share — Basic

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Balance, beginning of year ( 30.8 ) ( 23.9 ) ( 9.0 )

Other comprehensive (loss) income ( 6.9 ) ( 14.9 ) 11.3

Other comprehensive income (loss) 8.2 ( 6.9 ) ( 14.9 )

Balance, end of year ( 22.5 ) ( 30.8 ) ( 23.9 )

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Depreciation and amortization 89.9 96.4 107.4

Proceeds from termination of interest rate swaps — — 25.9

Impairment loss 172.8 — 26.5

Impairment loss on goodwill and other intangibles — 172.8 —

Impairment loss on fixed assets 9.1 — —

Deferred income taxes ( 48.0 ) ( 36.6 ) 9.7

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Proceeds from sale of assets 4.4 5.5 1.3

Adjustments to sale of business — — ( 1.9 )

Proceeds from redemption of auction rate security — 5.0 —

Investments in unconsolidated affiliates — — ( 0.4 )

Purchase of business, net of cash acquired ( 710.2 ) — —

Net cash used in investing activities ( 740.0 ) ( 27.5 ) ( 58.3 )

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Repayment of finance lease obligations ( 2.8 ) ( 3.4 ) ( 3.1 )

Net cash used in financing activities ( 94.1 ) ( 184.8 ) ( 295.8 )

Net cash provided by (used in) financing activities 92.4 ( 94.1 ) ( 184.8 )

Effect of exchange rate changes on cash and cash equivalents 1.9 ( 0.2 ) ( 0.2 )

Net increase (decrease) in cash and cash equivalents 335.7 19.4 ( 23.7 )

Net (decrease) increase in cash and cash equivalents ( 331.4 ) 335.7 19.4

Cash and cash equivalents at beginning of year 394.2 58.5 39.1

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Supplemental cash flow information

Income tax payments (refunds), net $ 82.2 $ 20.6 $ ( 1.0 )

Income tax payments, net $ 93.5 $ 82.2 $ 20.6

Interest paid on credit facility 14.3 32.9 39.9

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We account for ABM’s investments in unconsolidated affiliates under the equity method of accounting.

We include the results of acquired businesses in the Consolidated Statements of Comprehensive (Loss) Income from their respective acquisition dates.

We include the results of acquired businesses in the Consolidated Statements of Comprehensive Income (Loss) from their respective acquisition dates.

All intercompany accounts and transactions have been eliminated in consolidation.

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Impact of the Pandemic

A novel strain of COVID-19 has resulted in a worldwide health Pandemic.

To date, the Pandemic has surfaced in nearly all regions around the world and resulted in business slowdowns and shutdowns, as well as global travel restrictions.

In these Financial Statements and related disclosures we have assessed the current impact of the Pandemic on our financial condition, results of operations, and cash flows as well as on our estimates, forecasts, and accounting policies.

COVID-19 has resulted in a worldwide health Pandemic.

To date, the Pandemic has surfaced in regions all around the world and resulted in business slowdowns and shutdowns, as well as global travel restrictions.

In these Financial Statements, we have assessed the current impact of the Pandemic on our financial condition, results of operations, and cash flows as well as on our estimates, forecasts, and accounting policies.

We have made additional disclosures of these assessments, as necessary.

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The Pandemic continues to create a dynamic client environment, and we are working diligently to ensure our clients’ changing staffing and service needs are met while actively managing direct labor and related personnel

costs, including furloughs or reduced hours for certain service employees in markets significantly impacted by business slowdowns and shutdowns.

In addition, during the second and third quarters of 2020, we took several human capital management actions to align our organization operationally and help mitigate the financial impact of the Pandemic on our business, one of which included temporary furloughs for certain staff and management employees.

To continue supporting furloughed staff and management employees during the Pandemic, we paid 100 % of health insurance premiums during the furlough period for those enrolled in health benefit plans.

Most of the furloughed staff and management employees returned to work effective August 1, 2020, and we have no t accrued any additional expenses associated with these employees as of October 31, 2020.

In response to the Pandemic, Congress enacted the CARES Act on March 27, 2020.

The CARES Act provides various stimulus measures, including several income tax and payroll tax provisions.

Among the payroll tax provisions is the creation of a refundable credit for employee retention and the deferral of certain payroll tax remittances through December 31, 2020, to future years (with 50% of the deferred amount due by December 31, 2021, and the remaining 50% due by December 31, 2022).

We evaluated the impact of business tax provisions in the CARES Act.

The impact of the income tax provisions was not material.

The impact of the payroll tax provisions was the deferral of approximately $ 101 million of payroll tax as of October 31, 2020.

costs, including furloughs or reduced hours for certain frontline employees in markets significantly impacted by business slowdowns and shutdowns.

Refer to additional discussion regarding the Pandemic and the impact on our business throughout this document, including Note 7, “Fair Value of Financial Instruments,” Note 9, “Goodwill and Other Intangible Assets,” and Note 11, “Credit Facility.”

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Trade Accounts Receivable and Costs Incurred in Excess of Amounts Billed

Trade accounts receivable arise from services provided to our clients and are usually due and payable on varying terms from receipt of the invoice to net ninety days, with the exception of certain Technical Solutions project receivables that may have longer collection periods.

Trade accounts receivable arise from services provided to our clients and are usually due and payable on varying terms from receipt of the invoice to net 90 days, with the exception of certain Technical Solutions project receivables that may have longer collection periods.

These receivables are recorded at the invoiced amount and normally do not bear interest.

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We determine the allowance for doubtful accounts based on historical write-offs, known or expected trends, and the identification of specific balances deemed uncollectible.

For the specifically identified balances, we establish the reserve upon the earlier of a client’s inability to meet its financial obligations or after a period of twelve months, unless our management believes such amounts will ultimately be collectible.

For the specifically identified balances, we establish the reserve upon the earlier of a client’s inability to meet its financial obligations or after a period of 12 months, unless our management believes such amounts will ultimately be collectible.

Sales Allowance

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Other Investments

At October 31, 2020 and 2019, other investments primarily consisted of investments in unconsolidated affiliates, as well as auction rate securities at October 31, 2019.

At October 31, 2021 and 2020, other investments primarily consisted of investments in unconsolidated affiliates.

Investments in Unconsolidated Affiliates

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An impairment loss is recognized to the extent that the estimated fair value of the investment is less than its carrying amount and we determine that the impairment is other than temporary.

At October 31, 2020, 2019, and 2018, our investments in unconsolidated affiliates were $ 11.0 million, $ 8.9 million, and $ 11.3 million, respectively.

At October 31, 2021, 2020, and 2019, our investments in unconsolidated affiliates were $ 11.7 million,

$ 11.0 million, and $ 8.9 million, respectively.

We did not recognize any impairment charges on these investments in 2021, 2020, or 2019.

Investments in Auction Rate Securities

Our investments in auction rate securities are classified as available-for-sale.

Accordingly, auction rate securities are presented at fair value with unrealized gains and losses recorded in accumulated other comprehensive (loss) income, net of tax es (“AOCL”).

On a quarterly basis, we analyze all auction rate securities that have unrealized losses for impairment consideration and assess the intent to sell such securities.

If such intent exists, impaired securities are considered other-than-temporarily impaired and we recognize the entire difference between the auction rate security’s amortized cost and its fair value in earnings.

We also consider if we may be required to sell the securities prior to the recovery of amortized cost, which may trigger an impairment charge.

If these securities are considered impaired, we assess whether the amortized costs of the securities can be recovered by reviewing several factors, including credit risks associated with the issuer.

If we do not expect to recover the entire amortized cost of the security, we consider the security to be other-than-temporarily impaired and record the difference between the security’s amortized costs and its recoverable amount in earnings and the difference between the security’s amortized cost and fair value in AOCL .

During the first quarter of 2020, our last remaining auction rate security was called by the issuer, and we received proceeds for the fair value of the debt instrument of $ 5.0 million.

As of October 31, 2020, we had no investments in auction rate securities.

Property, Plant and Equipment

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Upon retirement or sale of an asset, we remove the cost and accumulated depreciation from our Consolidated Balance Sheets.

When applicable, we record corresponding gains or losses within the accompanying Consolidated Statements of Comprehensive (Loss) Income.

We enter into various noncancelable lease agreements for office space, parking facilities, warehouses, vehicles, and equipment used in the normal course of business.

When applicable, we record corresponding gains or losses within the accompanying Consolidated Statements of Comprehensive Income (Loss).

We adopted ASU 2016-02, Leases (Topic 842), and all related amendments on November 1, 2019, on a modified retrospective basis.

Comparative prior period Financial Statements for fiscal year 2019 have not been restated and continue to be reported under the accounting standards in effect for fiscal year 2019.

Topic 842 requires lessees to recognize substantially all leases on their balance sheet as a right-of-use (“ROU”) asset and a lease liability.

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 our Consolidated Statements of Comprehensive Income (Loss) on a straight-line basis over the lease term.

We did not elect the use of hindsight for determining the reasonably certain lease term.

We enter into various noncancelable l ease agreements for office space, parking facilities, warehouses, vehicles, and equipment used in the normal course of business.

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.

Right-of-use (“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.

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 in a lease is readily determinable.

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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 below in “Recently Adopted Accounting Standards.”

Our lease terms range from 1 to 30 years.

Our incremental borrowing rate as of November 1, 2019, was utilized for the initial measurement of operating lease liabilities upon adoption of Topic 842.

Our lease terms range from one to 30 years.

Some leases include one or more options to renew, with renewal terms that can extend the lease term.

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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.

Typically, if we decide to cancel or terminate a lease before the end of its term, then 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.

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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:

The ROU assets recognized upon adoption of Topic 842 included:

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.

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Goodwill represents the excess purchase price of acquired businesses over the fair value of the assets acquired and liabilities assumed.

We have elected to make the first day of our fourth quarter, August 1st, the annual impairment assessment date for goodwill.

We have elected to make the first day of our fourth quarter, August 1, the annual impairment assessment date for goodwill.

However, we could be required to evaluate the recoverability of goodwill more often if impairment indicators exist.

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We may elect not to perform the qualitative assessment for some or all reporting units and instead perform a quantitative test under which we estimate the fair value using a weighting of fair values derived from an income approach and a market approach.

The discounted estimates of future cash flows include significant management

assumptions, such as revenue growth rates, operating margins, weighted average cost of capital, and future economic and market conditions.

The discounted estimates of future cash flows include significant management assumptions, such as revenue growth rates, operating margins, weighted average cost of capital, and future economic and market conditions.

Other intangible assets primarily consist of acquired customer contracts and relationships that are amortized using the sum-of-the-years’-digits method over their useful lives, consistent with the estimated useful life considerations used in the determination of their fair values.

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When this occurs, a recoverability test is performed that compares the projected undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying amount.

If the projected undiscounted cash flows are less than the carrying amount, we calculate an impairment loss.

If the projected undiscounted cash flows are less than the carrying amount, then we calculate an impairment loss.

The impairment loss calculation compares the fair value, which is based on projected discounted cash flows, to the carrying value.

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Other Noncurrent Assets

At October 31, 2020 and 2019, other noncurrent assets primarily consisted of long-term insurance recoverables, deferred charges, insurance and other long-term deposits, ESPC receivables, capitalized commissions, and prepayments to carriers for future insurance claims.

At October 31, 2021 and 2020, other noncurrent assets primarily consisted of long-term insurance recoverables, deferred charges, capitalized commissions, ESPC receivables, insurance and other long-term deposits, and prepayments to carriers for future insurance claims.

Federal Energy Savings Performance Contract Receivables

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Liabilities associated with these losses include estimates of both filed claims and IBNR Claims.

With the assistance of third-party actuaries, we periodically review our estimate of ultimate losses for IBNR Claims and adjust our required self-insurance reserves as appropriate.

With the assistance of third-party actuaries, we review our estimate of ultimate losses for IBNR Claims on a quarterly basis and adjust our required self-insurance reserves as appropriate.

See Note 10, “Insurance,” for further details on the quarterly review procedures.

As part of this evaluation, we review the status of existing and new claim reserves as established by third-party claims administrators.

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We allocate current-year insurance expense to our operating segments based upon their underlying exposures, while actuarial adjustments related to prior year claims are recorded within Corporate expenses.

We classify claims as current or long-term based on the expected settlement date.

We classify claims as current or long-term

based on the expected settlement date.

Estimated insurance recoveries related to recorded liabilities are reflected as assets in our Consolidated Balance Sheets when we believe the receipt of such amounts is probable.

Other Accrued Liabilities

At October 31, 2020 and 2019, other accrued liabilities primarily consisted of notes payable, other accrued expenses, legal fees and settlements, contract liabilities (which include deferred revenue and progress billings in excess of costs), employee benefits, unclaimed property, severance, insurance claims, rent payable, interest, and current finance leases.

At October 31, 2021 and 2020, other accrued liabilities primarily consisted of legal fees and settlements, other accrued expenses (which include the current portion of deferred payroll taxes), employee benefits, contract liabilities (which include deferred revenue and progress billings in excess of costs), unclaimed property, dividends payable, and insurance claims.

Other Noncurrent Liabilities

At October 31, 2020 and 2019, other noncurrent liabilities primarily consisted of deferred payroll taxes, deferred rent, warranty reserves, ESPC liabilities, retirement plan liabilities, deferred compensation, and long-term finance leases.

Revenue Recognition

Beginning in fiscal 2019, we adopted 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 .

Prior period amounts have not been restated and continue to be reported in accordance with our historical accounting policies.

Our revenue recognition policies under Topic 606 and Topic 853 are described in the following paragraphs, and references to our prior period policies are included below where they are substantially different.

See Note 3, “Revenues,” for further information on our revenues.

At October 31, 2021 and 2020, other noncurrent liabilities primarily consisted of noncurrent deferred payroll taxes, deferred compensation, ESPC liabilities, retirement plan liabilities, long-term finance leases, and warranty reserves.

Contracts with Customers

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Contracts generally can be modified to account for changes in specifications and requirements.

We consider contract modifications to exist when the modification either changes the consideration, creates new performance obligations, or changes the existing scope of the contract and related performance obligations.

We consider contract modifications to exist when the modification either changes the consideration, creates new

performance obligations, or changes the existing scope of the contract and related performance obligations.

Historically, contract modifications have been for services that are not distinct from the existing contract, since we are providing a bundle of services that are highly interrelated, and are therefore treated as if they were part of that existing contract.

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Such revenues do not include gross customer collections at the managed locations, because they belong to the property owners.

We have determined we are the principal in these transactions, because the nature of our performance obligation is for us to provide the services on behalf of the customer and we have control of the promised services before they are transferred to the customer.

We have determined we are the principal in

these transactions, because the nature of our performance obligation is for us to provide the services on behalf of the customer and we have control of the promised services before they are transferred to the customer.

Leased Location

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We measure progress toward satisfaction of the performance obligation as the services are provided, and revenue is recognized over time, because the customer simultaneously receives and consumes the benefits of the services as they are performed.

In accordance with Topic 853, rental expense and certain other expenses under contracts that meet the definition of service concession arrangements are now recorded as a reduction of revenue.

Prior to November 1, 2018, such amounts were recorded as operating expenses.

Rental expense and certain other expenses under contracts that meet the definition of service concession arrangements are recorded as a reduction of revenue.

Under allowance parking arrangements, we are paid a fixed amount or hourly rate to provide parking services, and we are responsible for certain operating expenses that are specified in the contract.

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Additionally, as part of bundled energy solutions arrangements, we guarantee the project will satisfy agreed-upon performance standards.

We use the cost-to-cost method, which compares the actual costs incurred to date with the current estimate of total costs to complete, to measure the satisfaction of the performance obligation and recognize revenue as work

progresses and we incur costs on our contracts;

we believe this method best reflects the transfer of control to the customer.

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Revenue for uninstalled equipment is recognized at cost and the associated margin is deferred until installation is substantially complete.

Prior to November 1, 2018, we recognized revenue and margin on uninstalled equipment consistent with other project costs under the percentage-of-completion method.

We recognize revenue over time for all of our services as we perform them, because (i) control continuously transfers to the customer as work progresses or (ii) we have the right to bill the customer as costs are incurred.

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Initial franchise fees result from the sale of a franchise license and include the use of the name, trademarks, and proprietary methods.

The franchise license is considered symbolic intellectual property, and revenue related to the sale of this right is recognized at the agreed-upon contractual amount over the term of the initial franchise agreement.

Prior to November 1, 2018, initial fees from sales of franchise licenses were recognized in the year of sale.

The franchise license is

considered symbolic intellectual property, and revenue related to the sale of this right is recognized at the agreed-upon contractual amount over the term of the initial franchise agreement.

Royalty fee revenue consists of sales-based royalties received as part of the consideration for the franchise right, which is calculated as a percentage of the franchisees’ revenue.

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Capitalized commissions are classified as current or noncurrent based on the timing of when we expect to recognize the expense.

Prior to November 1, 2018, such incremental costs were expensed as incurred.

Contract Balances

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The timing of revenue recognition may differ from the timing of invoicing to customers.

If a contract includes a cancellation clause that allows for the termination of the contract by either party without a substantive penalty, the contract term is limited to the termination notice period.

If a contract includes a cancellation clause that allows for the termination of the contract by either party without a substantive penalty, then the contract term is limited to the termination notice period.

Contract assets primarily consist of billed trade receivables, unbilled trade receivables, and costs incurred in excess of amounts billed.

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Costs incurred in excess of amounts billed typically arise when the revenue recognized on projects exceeds the amount billed to the customer.

These amounts are transferred to billed

trade receivables when the rights become unconditional.

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.

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Restructuring and Related Expenses

We may periodically engage in various restructuring activities intended to drive long-term profitable growth and increase operational efficiency, which can include streamlining and realigning our overall organizational structure and reallocating resources.

Our most recent restructuring program was primarily associated with integrating our acquisition of GCA and reorganizing our healthcare business.

During 2020 and 2019, restructuring expenses were $ 7.6 million and $ 11.2 million, respectively.

By the end of 2020, we had substantially completed the restructuring program.

Restructuring and related expenses include employee severance, external support fees, lease exit costs, and other costs.

Our methodology to record these costs is described below.

As we do not have a past history of consistently providing severance benefits, we recognize severance costs for employees who do not have formal employment agreements when management has committed to a restructuring plan and communicated those actions to impacted employees, such that the employee is able to determine the type and amount of benefits that they will receive upon termination.

In addition, if the employees are required to render service beyond the minimum retention period until they are terminated in order to receive the benefits, a liability is recognized ratably over the future service period.

As we do not have a history of consistently providing severance benefits, we recognize severance costs for employees who do not have formal employment agreements when management has committed to a restructuring plan and communicated those actions to impacted employees, such that the employee is able to determine the type and amount of benefits that they will receive upon termination.

In addition, if the employees are required to render service beyond the minimum retention period until they are terminated in order to receive the benefits, then a liability

is recognized ratably over the future service period.

For employees with employment agreements, we accrue for these severance liabilities when it is probable that the impacted employee will be entitled to the benefits and the amount can be reasonably estimated.

For other costs associated with exit and disposal activities, we recognize an expense at fair value in the period in which the liability is incurred.

Advertising costs are expensed as incurred.

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We accrue for loss contingencies when losses become probable and are reasonably estimable.

If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability.

If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, then the minimum amount of the range is recorded as a liability.

We recognize legal costs as an expense in the period incurred.

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A valuation allowance is recorded to reduce the carrying amount of a deferred tax asset to its realizable value unless it is more likely than not that such asset will be realized.

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense in our Consolidated Statements of Comprehensive (Loss) Income.

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense in our Consolidated Statements of Comprehensive Income (Loss).

Recently Adopted Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued 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 replaced existing lease accounting guidance and was 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 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).

This guidance requires us to continue classifying leases as either operating or financing, with classification affecting the pattern of expense recognition in the Consolidated Statements of Comprehensive (Loss) Income.

In addition, this 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 our Consolidated Statements of Comprehensive (Loss) 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 Consolidated Balance Sheet, but did not have a significant impact on our Consolidated Statement of Comprehensive (Loss) Income, our Consolidated Statement of Stockholders’ Equity, our Consolidated Statement of Cash Flows, our liquidity, or our compliance with the various covenants contained within our credit facility, as further described in Note 11, “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 Consolidated Balance Sheet was as follows:

(in millions) Balance at

October 31, 2019 Adjustments Due

to Adoption of

Topic 842 Balance at

November 1, 2019

Right-of-use assets (1)

$ — $ 167.5 $ 167.5

LIABILITIES AND STOCKHOLDERS’ EQUITY

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.

In April 2020, the FASB issued a question and answer document focused on the application of lease accounting guidance to lease concessions provided relating to the Pandemic (the “Lease Modification Q&A”).

The Lease Modification Q&A provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease when the total cash flows resulting from the modified lease are substantially similar to the cash flows in the original lease.

We have elected this practical expedient for Pandemic-related rent concessions, primarily rent deferrals or rent abatements, and we have elected not to remeasure the related lease liability and ROU asset for those leases.

These concessions will be recognized as a reduction of rent expense in the month they occur.

This election will continue while these concessions are in effect.

Pandemic-related lease concessions were not material for the year ended October 31, 2020.

Recently Issued Accounting Standards

Measurement of Credit Losses of Financial Instruments

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

Since the release of ASU 2016-13, the FASB issued the following additional ASUs further updating Topic 326:

• In November 2018, ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses

• In April 2019, ASU 2019-04, Codification Improvements to Topic 326:

Financial Instruments—Credit Losses;

Derivatives and Hedging;

and Topic 825:

Financial Instruments

• In May 2019, ASU 2019-05, Financial Instruments—Credit Losses (Topic 326):

Targeted Transition Relief

• In November 2019, ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses

• In March 2020, ASU 2020-03, Codification Improvements to Financial Instruments

The Financial Accounting Standards Board (“FASB”) issued ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326) in June 2016 and subsequently issued these amendments to the initial guidance:

ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11, and ASU 2020-03 (collectively, “Topic 326”).

Topic 326 replaces the existing incurred loss impairment model with a methodology that incorporates all expected credit loss estimates, resulting in more timely recognition of losses.

Under Topic 326, an organization is required to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported financial assets.

Under Topic 326, an organization is required to measure all

expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported financial assets.

It also requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses.

We will adopt this standard effective November 1, 2020 on a modified retrospective basis.

The adoption of the standard is not expected to have a material impact on the consolidated financial statements.

Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

We adopted this standard effective November 1, 2020, on a modified retrospective basis.

The asset and liability classes that we have identified to be in the scope of Topic 326 at the time of the adoption are trade accounts receivable, costs incurred in excess of amounts billed, guarantees, reinsurance recoverables, and notes receivable.

The adoption of this standard did not have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No.

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This accounting update aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

The guidance also specifies that the balance sheet, income statement, and statement of cash flows presentation of capitalized implementation costs and the related amortization should align with the presentation of the hosting (service) element of the arrangement.

We will adopt this standard effective November 1, 2020 on a prospective basis.

The adoption of the standard is not expected to have a material impact on the consolidated financial statements.

No other recently issued accounting standards are expected to have a significant impact on our fiscal 2021 consolidated financial statements.

The guidance also specifies that the presentation of capitalized implementation costs and the related amortization on the balance sheet, income statement, and statement of cash flows should align with the presentation of the hosting (service) element of the arrangement.

We adopted this standard effective November 1, 2020, on a prospective basis.

The adoption of the standard did not have a material impact on our consolidated financial statements.

No other recently adopted accounting standards have had a significant impact on our fiscal 2021 consolidated financial statements

Recently Issued Accounting Standards

We do not expect any recently issued accounting pronouncements to have a material impact on our consolidated financial statements and related disclosures.

Disaggregation of Revenues

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These arrangements are generally structured as monthly fixed-price, cost-plus, and work order 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.

(4) Building & Energy Solutions arrangements provide custom energy solutions, electrical, HVAC, lighting, electric vehicle charging station installation, 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.

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(1) Included in other accrued liabilities on the Consolidated Balance Sheets.

The components of lease assets and liabilities and their classification on our Consolidated Balance Sheets as of October 31, 2020 were as follows:

(in millions) Classification October 31, 2020

Acquisition of Able

On September 30, 2021, we completed the Able Acquisition for a net cash purchase price of $ 741.7 million.

Pursuant to the terms of the purchase agreement, approximately $ 12.1 million of the cash consideration was placed into escrow accounts, of which approximately $ 8.2 million was placed into escrow to satisfy any applicable indemnification claims for a period of 12 months.

To fund the cash purchase price, we used cash on hand and borrowed $ 325.0 million on September 30, 2021, at an average interest rate of 1.58 % from our revolving line of credit.

Preliminary Acquisition Accounting

The assets acquired and liabilities assumed were recognized at their acquisition date fair values.

The acquisition accounting is subject to change as the Company obtains additional information during the measurement period about the facts and circumstances that existed as of the acquisition date.

The final acquisition accounting may include changes to customer relationships, goodwill, deferred taxes, legal matters, insurance claims reserves, and other liabilities.

Goodwill arising from the Able Acquisition is not deductible for tax reporting purposes.

The following table summarizes the preliminary acquisition accounting based on currently available information:

(in millions)

Cash and cash equivalents $ 31.5

Trade accounts receivable (1)

Other assets 24.9

Customer relationships (2)

Trade names (2)

Trade accounts payable ( 27.0 )

Accrued compensation ( 38.2 )

Insurance claims ( 91.6 )

Other liabilities ( 41.7 )

Deferred income tax liability, net ( 59.5 )

Net assets acquired $ 741.7

(1) The gross amount of trade accounts receivable was $ 160.6 million, of which $ 1.4 million was deemed uncollectible at October 31, 2021.

(2) The amortization periods for the acquired intangible assets are 15 years for customer relationships and 2 years for trade names.

(3) Goodwill is largely attributable to value we expect to obtain from long-term business growth, the established workforce, and buyer-specific synergies.

This goodwill is not deductible for income tax purposes.

Financial Information

The Consolidated Statements of Comprehensive Income (Loss) for the fiscal year ended October 31, 2021, includes $ 101.1 million of revenue and $ 4.4 million of net income attributable to the operations of Able since the acquisition date.

The operations of Able are included in our B&I segment.

The following table presents our unaudited pro forma results for 2021 and 2020 as though the Able Acquisition occurred on November 1, 2019.

These results include adjustments for the estimated amortization of intangible assets, interest expense, and the income tax impact of the pro forma adjustments at the statutory rate of 28 %.

These unaudited pro forma results do not reflect the cost of integration activities or benefits from expected revenue enhancements and synergies.

Years Ended October 31,

(in millions) 2021 2020

Pro forma revenue $ 7,223.2 $ 7,078.2

Pro forma income (loss) from continuing operations (1)

139.1 ( 7.9 )

( 1) These results were adjusted to exclude $ 17.3 million of acquisition-related costs incurred during 2021, which are included in selling, general and administrative expenses in the accompanying Consolidated Statements of Comprehensive Income (Loss).

The components of lease assets and liabilities and their classification on our Consolidated Balance Sheets were as follows:

(in millions) Classification October 31, 2021 October 31, 2020

Operating leases Right-of-use assets $ 126.5 $ 143.1

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Total lease liabilities $ 150.8 $ 171.4

(1) Finance lease assets are recorded net of accumulated amortization of $ 13.6 million as of October 31, 2020.

Total lease costs for the year ended October 31, 2020 were $ 100.4 million, including operating leases of $ 96.4 million and finance leases of $ 4.0 million.

The components of lease costs and classification within the Consolidated Statements of Comprehensive (Loss) Income were as follows:

(1) Finance lease assets are recorded net of accumulated amortization of $ 16.3 million and $ 13.6 million as of October 31, 2021 and October 31, 2020, respectively.

The components of lease costs and classification within the Consolidated Statements of Comprehensive Income (Loss) were as follows:

(in millions) Year Ended

October 31, 2021 Years Ended

October 31, 2020

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Operating expenses (1)(2)

$ 51.9 $ 67.9

Selling, general and administrative expenses (3)

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(in millions) Year Ended

October 31, 2021 Year Ended

October 31, 2020

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The following table includes the weighted-average remaining lease terms, in years, and the weighted-average discount rate used to calculate the present value of operating lease liabilities:

October 31, 2021 Year Ended

October 31, 2020

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(in millions) Year Ended

October 31, 2021 Year Ended

October 31, 2020

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Lease assets obtained in exchange for new operating lease liabilities (1)

(1) Excludes the amount initially capitalized in conjunction with the adoption of Topic 842.

The amounts of minimum future commitments under non-cancelable operating and capital leases as of October 31, 2019, in accordance with Topic 840 were as follows:

(in millions) Operating and Other (1)

Capital Total

Fiscal 2020 $ 42.8 $ 3.1 $ 45.9

Fiscal 2021 35.5 2.5 38.0

Fiscal 2022 30.3 1.3 31.6

Fiscal 2023 25.6 0.6 26.2

Fiscal 2024 20.5 — 20.5

Thereafter 51.8 — 51.8

$ 206.5 $ 7.5 $ 214.0

(1) Includes total estimated sublease rental income of $ 15.8 million.

(2) Total undiscounted future minimum payments.

RESTRUCTURING AND RELATED COSTS

These activities may result in restructuring costs related to employee severance, other project fees, external support fees, lease exit costs, and asset impairment charges.

Recently, our significant restructuring activities have been primarily associated with integrating our acquisition of GCA and implementing our 2020 Vision initiative, as described below.

GCA Restructuring and Other Initiatives

Following the acquisition of GCA, during the first quarter of 2018 we initiated a restructuring program to achieve cost synergies and subsequently incurred expenses primarily related to employee severance, the migration and upgrade of several key technology platforms, and the consolidation of certain real estate leases.

Additionally, during 2019 we reorganized our former Healthcare business and incurred immaterial severance expense.

In early 2020 we continued our technology-based modernization efforts, including standardizing our financial systems.

However, due to the Pandemic, the majority of these projects have been temporarily suspended since the second quarter of 2020.

2020 Vision Restructuring

During the fourth quarter of 2015, we initiated a restructuring plan as part of a comprehensive strategy intended to have a positive transformative effect on ABM.

These actions were substantially completed by the end of fiscal 2019 at a cumulative cost of $ 66.5 million.

Rollforward of Restructuring and Related Liabilities

(in millions) External Support Fees Employee Severance Other Project Fees Lease Exit Costs Asset Impairment Total

Balance, October 31, 2017 $ 2.5 $ 2.7 $ 0.4 $ 2.8 $ — $ 8.4

Costs recognized (1)

4.0 11.0 8.2 2.0 0.6 25.7

Payments ( 6.5 ) ( 9.9 ) ( 6.7 ) ( 1.5 ) — ( 24.7 )

Non-cash items — — — ( 0.2 ) ( 0.6 ) ( 0.7 )

Balance, October 31, 2018 $ — $ 3.8 $ 1.8 $ 3.1 $ — $ 8.6

Costs recognized (1)

1.5 4.6 4.5 0.7 — 11.2

Payments ( 1.0 ) ( 5.3 ) ( 5.6 ) ( 1.1 ) — ( 12.9 )

Balance, October 31, 2019 $ 0.5 $ 3.0 $ 0.7 $ 2.7 $ — $ 7.0

Costs recognized (1)

1.4 0.3 3.2 2.7 — 7.6

Payments ( 1.9 ) ( 2.0 ) ( 3.7 ) ( 0.2 ) — ( 7.9 )

Non-cash items — — ( 0.2 ) ( 5.3 ) — ( 5.4 )

Balance, October 31, 2020 $ — $ 1.3 $ — $ — $ — $ 1.3

(1) We include these costs within corporate expenses.

Cumulative Restructuring and Related Charges

(in millions) External Support Fees Employee Severance Other Project Fees Lease Exit Costs Asset Impairment Total

GCA and Other $ 4.9 $ 18.3 $ 15.5 $ 3.4 $ — $ 42.2

30.0 13.0 10.7 7.7 5.2 66.5

Total $ 34.9 $ 31.3 $ 26.2 $ 11.1 $ 5.2 $ 108.7

(1) Excludes the amount initially capitalized in 2020 in conjunction with the adoption of Topic 842.

NET INCOME PER COMMON SHARE

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Interest rate swap liabilities (5)

Investments in auction rate securities (6)

(1) Cash and cash equivalents are stated at nominal value, which equals fair value.

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See Note 10, “Insurance,” for further information.

(3) Represents investments held in a Rabbi trust associated with one of our deferred compensation plans, which we include in “Other noncurrent assets” on the accompanying Consolidated Balance Sheets.

(3) Represents investments held in Rabbi trusts associated with two of our deferred compensation plans, which we include in “Other noncurrent assets” on the accompanying Consolidated Balance Sheets.

The fair value of the assets held in the funded deferred compensation plan is based on quoted market prices.

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The fair values of the interest rate swaps are estimated based on the present value of the difference between expected cash flows calculated at the contracted interest rates and the expected cash flows at current market interest rates using observable benchmarks for the London Interbank Offered Rate (“LIBOR”) forward rates at the end of the period.

At October 31, 2020 and 2019, our interest rate swaps are included in “Other noncurrent liabilities” on the accompanying Consolidated Balance Sheets.

At October 31, 2021 and 2020, our interest rate swaps are included in “Other accrued liabilities” and “Other noncurrent liabilities,” respectively, on the accompanying Consolidated Balance Sheets.

See Note 11, “Credit Facility,” for further information.

(6) The fair value of investments in auction rate securities is based on discounted cash flow valuation models, primarily utilizing unobservable inputs, including assumptions about the underlying collateral, credit risks associated with the issuer, credit enhancements associated with financial insurance guarantees, and the possibility of the security being refinanced by the issuer or having a successful auction.

At October 31, 2019, we held an investment in one auction rate security that had an original principal amount, amortized cost, and fair value of $ 5.0 million that was included in “Other investments” on the accompanying Consolidated Balance Sheets.

During the first quarter of 2020, this auction rate security was called by the issuer, and we received proceeds for the fair value of this debt instrument of $ 5.0 million.

There were no unrealized gains or losses on this auction rate security included in AOCL.

At October 31, 2020, we had no investments in auction rate securities.

During 2020 and 2019, we had no transfers of assets or liabilities between any of the above hierarchy levels.

At October 31, 2021 and 2020, the Company had no financial assets or liabilities recorded at fair value using Level 3 inputs, and there were no transfers to or from Level 3 financial assets or liabilities during 2021 and one such transfer during 2020.

Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis

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If an impairment were to occur, the asset would be recorded at the estimated fair value, using primarily unobservable Level 3 inputs.

During the third quarter of 2021, we recognized a non-cash impairment charge totaling $ 9.1 million in our Corporate segment for previously capitalized internal-use software related to our Enterprise Resource Planning (“ERP”) system implementation.

The Company determined that certain components that were previously developed would no longer be implemented.

The impairment charge reduced the carrying value to zero for those components and is recorded in “Selling, general and administrative expenses” on our Consolidated Statements of Comprehensive Income (Loss) for the year ended October 31, 2021.

During the second quarter of 2020, given the general deterioration in economic and market conditions arising from the Pandemic, we identified a triggering event indicating possible impairment of goodwill and intangible assets, and we recorded impairment charges on goodwill and customer relationships.

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The fair value of goodwill was determined using a weighting of fair values derived from an income approach and a market approach.

The fair value of customer relationships was determined based on discounted cash flows associated with the customer relationships that include significant management assumptions, including expected proceeds.

The fair value of customer relationships

was determined based on discounted cash flows associated with the customer relationships that include significant management assumptions, including expected proceeds.

See Note 9, “Goodwill and Other Intangible Assets,” for further information.

We did not identify impairment of our property, plant and equipment, lease-related ROU assets, or long-lived assets.

In connection with the reorganization of our Healthcare business, in the third quarter of 2019 we performed a goodwill impairment test on the underlying reporting unit immediately before the reorganization.

We estimated the fair value of goodwill using the income and market approaches, which utilize expected cash flows using Level 3 inputs.

This analysis required the exercise of significant judgments, including the identification of reporting units as well as the evaluation of recent indicators of market activity, future cash flow estimates, discount rates, and other factors.

As a result of this analysis, we concluded that the estimated fair value of the Healthcare reporting unit substantially exceeded its carrying value immediately before the reorganization and that no further evaluation of impairment was necessary.

PROPERTY, PLANT AND EQUIPMENT

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Furniture and fixtures 0.2 0.2

Machinery and other equipment — 0.3

Computer equipment and software — 0.1

Accumulated depreciation 16.3 13.6

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GOODWILL AND OTHER INTANGIBLE ASSETS

During the second quarter of 2020, given the general deterioration in economic and market conditions arising from the Pandemic, we identified a triggering event which resulted in impairment of goodwill and intangible assets.

(in millions) Business & Industry Technology & Manufacturing Education Aviation Technical Solutions Healthcare Total

(in millions) Business & Industry Technology & Manufacturing Education Aviation Technical Solutions Total

Balance at October 31, 2019 $ 573.9 $ 407.2 $ 558.6 $ 125.0 $ 170.7 $ 1,835.4

Reallocation (1)

45.7 — 1.2 — 11.8 ( 58.7 ) —

Foreign currency translation

0.1 — — — ( 0.3 ) ( 0.2 )

Balance at October 31, 2019 $ 573.9 $ 407.2 $ 558.6 $ 125.0 $ 170.7 $ — $ 1,835.4

Foreign currency translation

Impairment (1)

— — ( 99.3 ) ( 55.5 ) ( 9.0 ) ( 163.8 )

Impairment loss (2)

Balance at October 31, 2020 $ 574.0 $ 407.2 $ 459.3 $ 69.5 $ 161.5 $ 1,671.4

Acquisition (2)

554.0 — — — — 554.0

Foreign currency translation 1.8 — — 0.4 1.2 3.4

Balance at October 31, 2021 $ 1,129.8 $ 407.2 $ 459.3 $ 69.9 $ 162.7 $ 2,228.9

(1) Goodwill associated with our Healthcare business was reallocated in connection with the reorganization of this business during the third quarter of 2019.

(2) The impairment charge is included in “Impairment loss” on our Consolidated Statements of Comprehensive (Loss) Income for the year ended October 31, 2020, and is not tax deductible.

Due to the triggering event identified above arising from the impact of the Pandemic, we first performed a qualitative assessment of goodwill to determine whether it was more likely than not that impairment occurred within our goodwill reporting units in the second quarter of 2020.

Based on this qualitative assessment, we determined that goodwill impairment was not more likely than not in our goodwill reporting units, except in Education, Aviation, and our U.K.

Technical Solutions business.

As a result, we performed an interim quantitative impairment test as of March 31, 2020, on these three goodwill reporting units.

For the three goodwill reporting units tested quantitatively, we estimated the fair value using a weighting of fair values derived from an income approach and a market approach.

The income approach incorporates the use of a discounted cash flow method in which the estimated future cash flows and terminal value are calculated for each reporting unit and then discounted to present value using an appropriate discount rate.

The discount rates utilized in the income approach valuation method are summarized in the table below.

Education 10.0 %

Aviation 10.5 %

Technical Solutions 11.0 %

The market approach estimates the fair value of a reporting unit by using market comparables for reasonably similar public companies and a control premium of 15.0 %.

The valuation of our reporting units requires significant judgment in evaluating recent indicators of market activity and estimated future cash flows, discount rates, and other factors.

Our impairment analyses contain inherent uncertainties due to uncontrollable events that could positively or negatively impact anticipated future economic and operating conditions.

In making these estimates, the weighted-average cost of capital is utilized to calculate the present value of future cash flows and terminal value.

Many variables go into estimating future cash flows, including estimates of our future revenue growth and operating results.

When estimating our projected revenue growth and future operating results, we consider industry trends, economic data, and our competitive advantage.

If future cash flows or future growth rates vary from what is expected, including those assumptions relating to the duration and severity of the Pandemic, this may reduce the underlying cash flows used to estimate fair values and result in a further decline in fair value, which may trigger future impairment charges.

(1) The impairment charge is included in “Impairment loss” on our Consolidated Statements of Comprehensive Income (Loss) for the year ended October 31, 2020, and is not tax deductible.

(2) During 2021, goodwill increased as a result of the Able Acquisition.

See Note 4, “Acquisitions,” for additional information.

During the second quarter of 2020, we recognized a non-cash impairment charge totaling $ 163.8 million in three goodwill reporting units ($ 99.3 million related to Education, $ 55.5 million related to Aviation, and $ 9.0 million related to our U.K.

Technical Solutions business) as part of an interim impairment test performed as a result of a triggering event arising from the Pandemic.

The fair values of the goodwill reporting units were determined using a combination of the market approach and income approach.

The market approach estimates the fair value of a reporting unit by using market comparables for reasonably similar public companies and a control premium.

The income approach estimates fair value of a reporting unit by using discounted cash flows that include significant management assumptions, such as revenue growth rates, operating margins, weighted average cost of capital, and future economic and operating conditions.

We did not record goodwill impairment charges during fiscal year 2021.

Other Intangible Assets

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Trademarks and trade names (2)

19.8 ( 10.4 ) 9.5 9.8 ( 9.8 ) —

Contract rights and other 0.5 ( 0.4 ) 0.1 0.5 ( 0.4 ) 0.1

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Technical Solutions business (consisting of an $ 8.7 million reduction in the gross carrying amount of the underlying customer relationships less $ 5.3 million of accumulated amortization).

These impairment charges are included in “Impairment loss” on our Consolidated Statements of Comprehensive (Loss) Income for the year ended October 31, 2020.

We did no t record impairment charges on other intangible assets during 2019.

These impairment charges are included in “Impairment loss” on our Consolidated Statements of Comprehensive Income (Loss) for the year ended October 31, 2020.

We did no t record impairment charges on other intangible assets during fiscal year 2021.

(2) Reflects additions from the Able Acquisition in 2021.

See Note 4, “Acquisitions,” for additional information.

(3) These intangible assets are being amortized over the expected period of benefit, with a weighted average life of approximately 12 years.

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$ 69.1 $ 62.3 $ 51.7 $ 45.7 $ 40.2

(1) These amounts could vary as acquisitions of additional intangible assets occur in the future.

(1) These amounts could vary as acquisitions of additional intangible assets occur in the future and as purchase price allocations are finalized for existing acquisitions.

The estimates of future cash flows used in determining the fair value of goodwill and other intangible assets involve significant management judgment and are based upon assumptions about expected future operating performance, economic conditions, market conditions, and cost of capital.

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Actuarial Reviews and Updates Performed During 2021

We review our self-insurance liabilities on a regular basis and adjust our accruals accordingly.

We review our self-insurance liabilities on a quarterly basis and adjust our accruals accordingly.

Actual claims activity or development may vary from our assumptions and estimates, which may result in material losses or gains.

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These Interim Updates were abbreviated in nature based on actual versus expected development during the periods analyzed and relied on the key assumptions in the Actuarial Reviews (most notably loss development patterns, trend assumptions, and underlying expected loss costs).

Based on the results of the Actuarial Reviews and Interim Updates, we decreased our total reserves for known claims as well as our estimate of the loss amounts associated with IBNR Claims by $ 36.6 million, $ 30.2 million of which relates to prior years, during 2020 .

Based on the results of the Actuarial Reviews and Interim Updates, w e decreased our total reserves related to prior years for known claims as well as our estimate of the loss amounts associated with IBNR claims during 2021 by $ 36.0 million.

In 2020, we decreased our total reserves related to prior year claims by $ 30.2 million.

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Claims paid ( 99.8 ) ( 106.8 ) ( 119.1 )

GCA acquisition 0.2 — 0.1

Acquisition (1)

Net balance, October 31 (2)

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Gross balance, October 31 $ 574.8 $ 504.9 $ 507.8

(1) During 2021, insurance reserves increased as a result of the Able Acquisition.

See Note 4, “Acquisitions,” for additional information.

(2) Includes reserves related to discontinued operations of approximately $ 0.3 million for 2021, $ 0.5 million for 2020, and $ 1.0 million for 2019.

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During the quarter ended July 31, 2020, the Company repaid substantially all of these amounts borrowed under the revolving line of credit without penalty.

The Credit Facility also provides for the issuance of up to $ 300.0 million for standby letters of credit and the issuance of up to $ 75.0 million in swingline advances.

The obligations under the Credit Facility are secured on a first-priority basis by a lien on substantially all of our assets and properties, subject to certain exceptions.

To further enhance our financial flexibility as a precautionary measure in response to uncertainty arising from the Pandemic, we amended our Credit Facility on May 28, 2020, as further described below.

The Amendment modified the financial covenants under the Credit Facility, including:

On May 28, 2020, we amended our Credit Facility with the First Amendment to further enhance our financial flexibility as a precautionary measure in response to uncertainty arising from the Pandemic.

The First Amendment modified the financial covenants under the Credit Facility, including:

(i) replacing a maximum total leverage ratio with a maximum total net leverage ratio that varies on a quarterly basis and adjusted to 6.50 to 1.00 by the quarter ending October 31, 2020, and back to 4.00 to 1.00 by the quarter ending October 31, 2022;

(ii) modifying the minimum fixed charge coverage ratio on a quarterly basis, which adjusts to 1.25 to 1.00 as of the quarter ending April 30, 2022;

(ii) modifying the minimum fixed charge coverage ratio on a quarterly basis, which adjusts to 1.25 to 1.00 as of the quarter ending

April 30, 2022;

and (iii) adding a minimum liquidity (defined in the Amendment as domestic cash plus available revolving loans) of $ 250.0 million.

These financial covenants were effective with the quarter ended April 30, 2020.

Our borrowing capacity is subject to, and limited by, compliance with these covenants.

The Amendment changed the interest rate, interest margins, and commitment fees applicable to loans and commitments under the Credit Facility.

It also added a new anti-cash hoarding mandatory prepayment that requires us to repay outstanding revolving loans or swingline loans if at any time we have in excess of $ 250 million of cash and cash equivalents on our balance sheet.

The Amendment made certain additional changes to the negative covenants restrictions under the Credit Facility, including, subject to certain exceptions, restrictions on our ability to make acquisitions, share repurchases, and other defined restricted payments, depending on our total net leverage ratio.

The anti-cash hoarding provision and certain of these restrictions were terminated from the Credit Facility in the fourth quarter of 2020 due to our favorable cash flow position and leverage ratios.

At October 31, 2020, we were in compliance with these covenants.

Prior to the Amendment, borrowings under the Credit Facility bore interest at a rate equal to 1-month LIBOR plus a spread that was based upon our leverage ratio.

The First Amendment changed the interest rate, interest margins, and commitment fees applicable to loans and commitments under the Credit Facility.

It also added a new anti-cash hoarding mandatory prepayment that required us to repay outstanding revolving loans or swingline loans if at any time we have in excess of $ 250 million of cash and cash equivalents on our balance sheet.

The First Amendment made certain additional changes to the negative covenants restrictions under the Credit Facility, including, subject to certain exceptions, restrictions on our ability to make acquisitions, share repurchases, and other defined restricted payments, depending on our total net leverage ratio.

Prior to the First Amendment, borrowings under the Credit Facility bore interest at a rate equal to one-month LIBOR plus a spread that was based upon our leverage ratio.

The spread ranged from 1.00 % to 2.25 % for Eurocurrency loans and 0.00 % to 1.25 % for base rate loans.

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For purposes of this calculation, irrevocable standby letters of credit, which are issued primarily in conjunction with our insurance programs, and cash borrowings were included as outstanding under the line of credit.

Subsequent to the Amendment, borrowings under the Credit Facility bear interest at a rate equal to 1-month LIBOR plus a spread that is based upon our total leverage ratio.

The spread ranges from 1.00 % to 2.75 % for revolving Eurocurrency loans and 0.00 % to 1.75 % for revolving base rate loans.

Subsequent to the First Amendment, borrowings under the Credit Facility bore interest at a rate equal to one-month LIBOR plus a spread that is based upon our total leverage ratio.

The spread ranged from 1.00 % to 2.75 % for revolving Eurocurrency loans and 0.00 % to 1.75 % for revolving base rate loans.

We were also charged a commitment fee, which was paid quarterly in arrears and was based on our total leverage ratio, that ranges from 0.200 % to 0.450 % on the average daily unused portion of the revolving line of credit.

On June 28, 2021, the Company amended and restated the Credit Facility with the Second Amendment, extending the maturity date to June 28, 2026, and increasing the capacity of the revolving credit facility from $ 800.0 million to $ 1.3 billion and the-then remaining term loan outstanding from $ 620.0 million to $ 650.0 million.

The Second Amendment also removed the anti-cash hoarding mandatory prepayment requirement under the First Amendment as well as other restrictions that limited our ability to make acquisitions, share repurchases, and other defined restricted payments.

Additionally, the Second Amendment modified certain financial covenants, terms, interest rates, interest margins, and commitment fees applicable to loans and commitments under the prior Credit Facility.

The Amended Credit Facility provides for the issuance of up to $ 350.0 million for standby letters of credit and the issuance of up to $ 75.0 million in swingline advances.

The obligations under the Amended Credit Facility are secured on a first-priority basis by a lien on substantially all of our assets and properties, subject to certain exceptions.

Additionally, we may repay amounts borrowed under the Amended Credit Facility at any time without penalty.

Under the Amended Credit Facility, the term loan and U.S.-dollar-denominated borrowings under the revolver bear interest at a rate equal to one-month LIBOR plus a spread based upon our leverage ratio.

Euro- and sterling-denominated borrowings under the revolver bear at a rate equal to the EURIBOR and the SONIA reference rates, respectively, plus a spread that is based upon our leverage ratio.

The spread ranges from 1.375 % to 2.250 % for Eurocurrency loans and 0.375 % to 1.250 % for base rate loans.

At October 31, 2021, the weighted average interest rate on our outstanding borrowings was 1.59 %.

We are also charged a commitment fee, which is paid quarterly in arrears and is based on our total leverage ratio, that ranges from 0.200 % to 0.450 % on the average daily unused portion of the revolving line of credit.

For purposes of this calculation, irrevocable standby

letters of credit, which are issued primarily in conjunction with our insurance programs, and cash borrowings are included as outstanding under the revolving line of credit.

The Credit Facility also includes customary events of default, such as:

failure to pay principal, interest, or fees when due;

failure to comply with covenants;

the occurrence of certain material judgments and a change in control of the Company.

If certain events of default occur, including certain cross-defaults, insolvency, change in control, or violation of specific covenants, the lenders can terminate or suspend our access to the Credit Facility, declare all amounts outstanding (including all accrued interest and unpaid fees) to be immediately due and payable, and require that we cash collateralize the outstanding standby letters of credit.

Total deferred financing costs related to the Credit Facility of $ 18.7 million, consisting of $ 13.4 million related to the term loan and $ 5.2 million related to the line of credit, are being amortized to interest expense over the term of the Credit Facility.

We incurred total fees of $ 4.6 million in conjunction with the Amendment, the majority of which we capitalized in the quarter ended July 31, 2020, and are amortizing over the remaining term of the Credit Facility.

We also pay a commitment fee, based on our leverage ratio and payable quarterly in arrears, ranging from 0.20 % to 0.40 % on the average daily unused portion of the line of credit.

For purposes of this calculation, irrevocable standby letters of credit, which are issued primarily in conjunction with our insurance programs, and cash borrowings are included as outstanding under the line of credit.

The Amended Credit Facility contains certain covenants, including a maximum total net leverage ratio of 5.00 to 1.00, a maximum secured net leverage ratio of 4.00 to 1.00, and a minimum interest coverage ratio of 1.50 to 1.00, as well as other financial and non-financial covenants.

In the event of a material acquisition, as defined in the Amended Credit Facility, we may elect to increase the maximum total net leverage ratio to 5.50 to 1.00 for a total of four fiscal quarters and increase the maximum secured net leverage ratio to 4.50 to 1.00 for a total of four fiscal quarters.

We did not make this election for the Able Acquisition.

Our borrowing capacity is subject to, and limited by, compliance with the covenants described above.

At October 31, 2021, we were in compliance with these covenants.

The Amended Credit Facility also includes customary events of default, including:

failure to pay principal, interest, or fees when due, failure to comply with covenants;

the occurrence of certain material judgments;

and a change in control of the Company.

If certain events of default occur, including certain cross-defaults, insolvency, change in control, or violation of specific covenants, then the lenders can terminate or suspend our access to the

Amended Credit Facility, declare all amounts outstanding (including all accrued interest and unpaid fees) to be immediately due and payable, and require that we cash collateralize the outstanding standby letters of credit.

We incurred deferred financing costs of $ 6.4 million in conjunction with the Second Amendment and carried over $ 6.2 million of unamortized deferred financing from the initial execution, First Amendment, and previous amendments of the Credit Facility.

Total deferred financing costs of $ 12.6 million, consisting of $ 4.9 million related to the term loan and $ 7.7 million related to the revolver, are being amortized to interest expense over the term of the Amended Credit Facility.

Credit Facility Information

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(1) Standby letters of credit amounted to $ 167.7 million at October 31, 2021.

(2) At October 31, 2020, we had borrowing capacity of $ 596.6 million, reflecting covenant restrictions.

(2) At October 31, 2021, we had borrowing capacity of $ 875.0 million.

Term Loan Maturities

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$ 130.0 million 2.86 % November 1, 2018 April 30, 2022

$ 90.0 million 2.84 % November 1, 2018 October 31, 2021

$ 130.0 million 2.86 % November 1, 2018 April 30, 2022

$ 130.0 million 2.84 % November 1, 2018 September 1, 2022

At October 31, 2020 and 2019, amounts recorded in AOCL for interest rate swaps were a loss of $ 3.3 million, net of taxes of $ 0.9 million, and a gain of $ 2.2 million, net of taxes of $ 1.2 million, respectively.

These amounts included the gain associated with the interest rate swaps we terminated in 2018, which is being amortized to interest expense as interest payments are made over the term of our Credit Facility.

At October 31, 2021 and 2020, amounts recorded in AOCL for interest rate swaps were a loss of $ 0.2 million, net of taxes of $ 0.3 million, and a loss of $ 3.3 million, net of taxes of $ 0.9 million, respectively.

During 2021, we amortized $ 4.7 million, net of taxes of $ 1.7 million, of that gain and we amortized $ 4.9 million, net of taxes of $ 1.8 million, during 2020.

At October 31, 2020, the total amount expected to be reclassified from AOCL to earnings during the next twelve months was $ 4.0 million, net of a tax benefit of $ 1.4 million.

At October 31, 2021, the total amount expected to be reclassified from AOCL to earnings during the next 12 months was $ 0.1 million, net of a taxes of $ 0.1 million.

EMPLOYEE BENEFIT PLANS

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Fair value of assets 8.4 7.4

At October 31, 2020, assets of the Plans were investe d 48 % in equities, 51 % in fixed income, and 1 % in cash.

The expected return on assets was $ 0.4 million during each of 2020, 2019, and 2018 .

(1) At October 31, 2021, total projected benefit obligations related to unfunded plans was $ 8.2 million.

At October 31, 2020, all plans were either unfunded or underfunded.

At October 31, 2021, assets of the Plans were invested 30 % in equities and 70 % in fixed income.

The expected return on assets was $ 0.3 million in 2021 and $ 0.4 million in 2020 and 2019.

The aggregate net periodic benefit cost for all Plans was $ 0.3 million, $ 0.2 million, and $ 0.6 million for 2021, 2020, and 2019, respectively.

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We maintain deferred compensation plans that permit eligible employees and directors to defer a portion of their compensation.

At October 31, 2020 and 2019, the total liability of all deferred compensation was $ 13.6 million and $ 13.2 million, respectively, and these amounts are included in “Other accrued liabilities” and “Other noncurrent liabilities” on the accompanying Consolidated Balance Sheets.

At October 31, 2021 and 2020, the total liability of all deferred compensation was $ 32.1 million (including $ 18.0 million assumed from the Able Acquisition) and $ 13.6 million, respectively, and these amounts are included in “Other accrued liabilities” and “Other noncurrent liabilities” on the accompanying Consolidated Balance Sheets.

Under one of our deferred compensation plans, a Rabbi trust was created to fund the obligations, and we are required to contribute a portion of the deferred compensation contributions for eligible participants.

1 unchanged sentence

At October 31, 2021 and 2020, the fair value of these assets was $ 4.9 million and $ 2.6 million, respectively, and these amounts are included in “Other noncurrent assets” on the accompanying Consolidated Balance Sheets.

Aggregate expense recognized under these deferred compensation plans wa s $ 0.2 million, $ 0.3 million, and $ 0.4 million for 2020, 2019, and 2018, respectively.

Aggregate expense recognized under these deferred compensation plans was $ 0.2 million, $ 0.2 million, and $ 0.3 million for 2021, 2020, and 2019, respectively.

Defined Contribution Plans

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Building Service 32BJ Pension Fund 13-1879376 / 001

Red 6/30/2019

Implemented $ 18.8 $ 16.8 $ 19.3 No 10/15/2023 – 12/31/2023

National Industry Pension Fund 52-6148540 /

Red 12/31/2019

Implemented 10.9 11.1 10.6 Yes 7/31/2022 –

IUOE Stationary Engineers Local 39 Pension Plan 94-6118939 /

Green 12/31/2019

6.6 4.3 4.6 N/A*

Central Pension Fund of the IUOE & Participating Employers 36-6052390 /

N/A* 7.1 11.7 11.0 N/A* 4/30/2021 –

Green 1/31/2020

5.3 7.1 11.7 N/A*

SEIU Local 1 & Participating Employers Pension Trust 36-6486542 /

N/A* 4.3 5.1 5.8 N/A* 4/4/2021

IUOE Stationary Engineers Local 39 Pension Plan 94-6118939 /

N/A* 4.3 4.6 5.2 N/A* 11/15/2020 –

Green 9/30/2019

3.9 4.3 5.1 N/A*

Western Conference of Teamsters Pension Plan 91-6145047 /

N/A* 2.5 3.1 3.1 N/A* 6/30/2021 –

Green 12/31/2019

2.0 2.5 3.1 N/A*

All Other Plans:

9.5 12.2 11.5

Total Contributions (6)

$ 56.8 $ 55.5 $ 66.6

*Not applicable

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(5) Indicates whether our contribution in 2021 included an amount as imposed by a plan in the red zone in addition to the contribution rate specified in the applicable collective bargaining agreement.

(6) The total contributions for fiscal year 2021 includes $ 4.6 million contributed by Able since the acquisition .

Multiemployer Pension Plans for which ABM is a Significant Contributor

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Firemen & Oilers Pension Plan of SEIU Local 1* 7/31/2020, 7/31/2019, and 7/31/2018

IUOE Stationary Engineers Local 39 Pension Trust Fund 12/31/2020, 12/13/2019, and 12/31/2018

Massachusetts Service Employees Pension Plan* 12/31/2020, 12/31/2019, and 12/31/2018

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* These plans are not separately listed in our multiemployer table as they represent an insignificant portion of our total multiemployer pension plan contributions.

There have been no significant changes that affect the comparability of total contributions for any of the periods presented.

Multiemployer Defined Contribution Plans

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Historically, we have not incurred any material losses in connection with these guarantees.

In connection with an unconsolidated joint venture in which one of our subsidiaries has a 33 % ownership interest, that subsidiary and the other joint venture partners have each jointly and severally guaranteed the obligations of the joint venture to perform under certain contracts extending through 2024.

Annual revenues relating to the underlying contracts are approximately $ 30 million.

Should the joint venture be unable to perform under these contracts, the joint venture partners would be jointly and severally liable for any losses incurred by the client due to the failure to perform.

Indemnifications

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State escheat laws generally require entities to report and remit abandoned or unclaimed property to the state, and failure to do so can result in assessments that could include interest and penalties in addition to the payment of the escheat liability.

Sales Tax Audits

We collect sales tax from clients and remit those collections to the applicable states.

When clients fail to pay their invoices, including the amount of any sales tax that we paid on their behalf, in some cases we are entitled to seek a refund of that amount of sales tax from the applicable state.

Sales tax laws and regulations enacted by the various states are subject to interpretation, and our compliance with such laws is routinely subject to audit and review by such states.

Audit risk is concentrated in several states that are conducting ongoing audits.

The outcomes of ongoing and any future audits and changes in the states’ interpretation of the sales tax laws and regulations could materially adversely impact our results of operations.

Legal Matters

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On October 17, 2019, the plaintiffs filed a motion asking the trial court to certify additional classes based on an alleged failure to maintain time records, an alleged failure to provide accurate wage statements, and an alleged practice of combining meal and rest breaks.

The trial court denied the plaintiffs’ motion

to certify additional classes on December 26, 2019.

The case was re-assigned to a new judge on January 6, 2020.

The trial court denied the plaintiffs’ motion to certify additional classes on December 26, 2019.

The case was reassigned to a new judge on January 6, 2020.

ABM filed motions for summary adjudication as to certain of plaintiffs’ class claims, and the trial court denied those motions in November 2020.

Plaintiffs filed motions for summary adjudication and/or summary judgment on some claims in December 2020, and a hearing on these motions is currently set for February 24, 2021.

The trial court has ordered that the parties complete another mediation by February 19, 2021.

The parties are currently engaged in substantive briefing and will begin expert discovery.

The class action claims accruing prior to April 30, 2013 are set for trial on July 12, 2021.

Prior to trial, we will have the opportunity to, among other things, seek decertification of the classes, seek interlocutory appellate review, or engage in further mediation if we deem such actions appropriate.

We may engage in one or more such activities before the trial.

While we believe we have valid defenses to the claims in this proceeding and will continue to vigorously defend ourselves, there can be no assurance that the final resolution of this matter will not have a material adverse effect on our business, financial condition, results of operations, or cash flows.

The parties engaged in another mediation in January 2021, which did not result in a settlement of the case.

Plaintiffs filed motions for summary adjudication and/or summary judgment on some claims in December 2020.

In February and March 2021, the parties engaged in expert discovery that provided detailed information regarding the plaintiffs’ damage calculations on the class claims.

On February 25, 2021, the California Supreme Court issued an opinion in Donohue v.

AMN Services , which addresses the standard for adjudicating meal period claims under California law and we believe is supportive of ABM’s legal position in the Bucio case.

On May 5, 2021, the trial court denied all of the plaintiffs’ December 2020 motions for summary adjudication and/or summary judgment, and the case was assigned to a new judge.

On May 5, 2021, the trial court ordered the parties to attend a mandatory settlement conference before a separate judge on June 11, 2021.

The trial date was scheduled for July 12, 2021.

On July 7, 2021, the Company entered into a class action settlement and release agreement to settle the Bucio case for $ 140 million and to obtain a release of the certified class claims that were asserted in the Bucio case.

The settlement will also resolve the PAGA claim.

The release of the certified class claims covers the time period from April 7, 2002, through April 30, 2013.

The release of the PAGA claim covers the time period from November 15, 2005, through July 18, 2021.

Any attorneys’ fees awarded by the trial court and all costs of notice and claims

administration will be paid from the $ 140 million settlement fund.

Employees who will be a part of the settlement will receive payments based on the number of pay periods they worked.

The settlement agreement is contingent upon the approval of the trial court.

On August 11, 2021, the plaintiffs filed the motion for preliminary approval of class action settlement with the trial court.

On December 7, 2021, the trial court issued its order granting preliminary approval of the class action settlement.

Members of the class will receive notice of the settlement, and there will be an opportunity for them to object to the settlement before the trial court grants final approval of the settlement.

The final approval hearing with the trial court is currently scheduled to take place on March 16, 2022.

No payments will be made to employees until after the settlement is finally approved by the trial court.

The Company has recorded a $ 142.9 million settlement accrual, which includes an accrual of $ 2.9 million of related payroll taxes, for the Bucio case within “Other current liabilities” on the unaudited Consolidated Balance Sheets as of October 31, 2021, and $ 142.9 million of related expense in “Selling, general and administrative expenses” in our unaudited Consolidated Statements of Comprehensive Income (Loss) for the year ended October 31, 2021.

PREFERRED AND COMMON STOCK

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

There were no share repurchases during 2019 or 2018.

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

There were no share repurchases during 2021.

Years Ended October 31,

(in millions, except per share amounts) 2021 2020

Total number of shares purchased — 0.2

Average price paid per share $ 36.16

Average price paid per share N/A $ 36.16

Total cash paid for share repurchases $ — $ 5.1

2 unchanged sentences

Currently, these incentives primarily consist of RSUs and performance shares.

On May 2, 2006, our stockholders approved the 2006 Equity Incentive Plan (the “2006 Equity Plan”).

On May 2, 2006, our stockholders approved the 2006 Equity Incentive Plan, which was last amended and restated on March 7, 2018 (as amended and restated, the “2006 Equity Plan”).

The 2006 Equity Plan is an omnibus plan that provides for a variety of equity and equity-based award vehicles, including stock options, stock appreciation rights, RSUs, performance shares, and other share-based awards.

1 unchanged sentence

Certain of the awards under the 2006 Equity Plan may qualify as “performance-based” compensation under the IRC.

As amended, there are 13,475,265 total shares of common stock authorized for issuance under the 2006 Equity Plan, and at October 31, 2020, there were 2,086,078 shares of common stock available for grant for future equity-based compensation awards.

In addition, there are certain plans under which we can no longer issue awards, although awards outstanding under these plans may still vest and be exercised.

On March 24, 2021, our stockholders approved the 2021 Equity and Incentive Compensation Plan (the “2021 Equity Plan”).

The 2021 Equity Plan is an omnibus plan that provides for a variety of equity and equity-based award vehicles, including stock options, stock appreciation rights, RSUs, performance shares, and other share-based awards.

Shares subject to awards that terminate without vesting or exercise are available for future awards under the 2021 Equity Plan.

Certain of the awards under the 2021 Equity Plan may qualify as “performance-based” compensation under the IRC.

No further shares are authorized for issuance under the 2006 Equity Plan.

There are 3,975,000 total shares of common stock authorized for issuance under the 2021 Equity Plan, and at October 31, 2021, there were 5,406,414 shares of common stock available for grant for future equity-based compensation awards.

In addition, there are certain plans under which we can no longer issue awards, such as the 2006 Equity Plan, although awards outstanding under such plans may still vest and be exercised.

We also maintain an employee stock purchase plan, which our stockholders approved on March 9, 2004 (the “2004 Employee Stock Purchase Plan”).

15 unchanged sentences

We award RSUs to eligible employees and our directors (each, a “Grantee”) that entitle the Grantee to receive shares of our common stock as the units vest.

RSUs granted to eligible employees in 2020 generally vest ratably over three years .

RSUs granted to eligible employees in 2020 and 2021 generally vest ratably over three years .

RSUs granted to eligible employees prior to 2020 generally vest with respect to 50 % of the underlying award on the second and fourth anniversary of the award.

RSUs granted to directors vest over three years .

RSUs granted to non-employee directors vest on the first anniversary date of the grant date.

In general, the receipt of RSUs is subject to the Grantee’s continuing employment or service as a director.

15 unchanged sentences

For certain performance share awards, the number of performance shares that will vest is based on pre-established internal financial performance targets and typically a three-year service and performance period.

The number of TSR awards and TSR-modified awards that will vest over the respective three-year performance period is based on our total shareholder return relative to the S&P 600 Small Cap Index for awards that were granted in 2018 and is based on the S&P 1500 Commercial Services & Supplies Index for awards that were granted in 2019 or 2020.

Vesting of 0 % to 150 % of the awards originally granted may occur depending on the respective performance metrics under both award types.

The number of TSR-modified awards that will vest over the respective three-year performance period is based on our total shareholder return relative to the S&P 1500 Composite Commercial Services & Supplies Index.

Vesting of 0 % to 150 % of the awards originally granted may occur depending on the respective performance metrics.

Performance Share Activity

52 unchanged sentences

Foreign ( 0.1 ) 0.9 0.4

Income tax (provision) benefit $ ( 53.1 ) $ ( 32.7 ) $ 8.2

Income tax provision $ ( 53.5 ) $ ( 53.1 ) $ ( 32.7 )

Reconciliation of the U.S.

16 unchanged sentences

Effective tax rate 29.8 % 99.6 % 20.4 %

On December 22, 2017, the Tax Act was enacted into law.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (“Tax Act”) was enacted into law.

Among other provisions, it reduced the federal corporate income tax rate from 35% to 21% and required companies to pay a one-time transition tax on the deemed repatriation of indefinitely reinvested earnings of international subsidiaries.

statutory federal tax rate for fiscal 2019 and future years was reduced to 21% from our blended rate of 23.3 % in fiscal 2018.

statutory federal tax rate for fiscal 2019 and future years was reduced to 21%.

Other provisions under the Tax Act became effective for us in fiscal 2019, including limitations on deductibility of interest and executive compensation, as well as a new minimum tax on Global Intangible Low-Taxed Income (“GILTI”), which we have elected to account for as a period cost.

During 2018, we finalized our analysis of the transitional impacts of the Tax Act.

As a result, we recorded a one-time tax benefit of $ 29.6 million from the remeasurement of certain deferred tax assets and liabilities based on the new tax rates at which they are expected to reverse in the future.

In addition, we recorded an expense of $ 4.5 million for the one-time transition tax on the deemed repatriation of indefinitely reinvested earnings of our international subsidiaries.

Upon finalizing our tax filings, the impact of the transition tax was ultimately an expense of $ 2.7 million , which resulted in a benefit of $ 1.8 million that was recorded in the fourth quarter of 2019.

We continue planning to reinvest our foreign earnings to fund future non-U.S.

growth and expansion, and we do not anticipate remitting such earnings to the United States.

federal tax expense has been recognized as a result of the Tax Act, no deferred tax liabilities with respect to federal and state income taxes or foreign withholding taxes have been recognized.

During 2021 and 2020, we had effective tax rates of 29.8 % and 99.6 %, respectively, resulting in a provision for tax of $ 53.5 million and $ 53.1 million, respectively.

The effective tax rate for the year ended October 31, 2020, excluding a nondeductible impairment loss of $ 163.8 million, was 24.4 %.

Our effective tax rate for 2021 was impacted by the following discrete items:

a $ 3.0 million provision for nondeductible transaction costs;

a $ 2.6 million provision for change in tax reserves;

a $ 1.4 million provision for true-ups;

and a $ 1.2 million benefit for energy efficiency incentives.

Our effective tax rate for 2020 was also impacted by the following discrete items:

3 unchanged sentences

and a $ 1.1 million benefit from change of tax reserves.

Our effective tax rate for 2019 was impacted by the following discrete items:

a $ 1.8 million benefit from the transition tax (including foreign tax credits);

a $ 1.7 million benefit from state true-ups;

a $ 1.6 million benefit from federal true-ups;

a $ 1.3 million provision related to WOTC;

a $ 1.3 million benefit from expiring statutes of limitations;

a $ 1.1 million benefit from the vesting of share-based compensation awards;

and a $ 0.9 million benefit from research and development credits.

The effective tax rate for the year ended October 31, 2020, excluding a nondeductible impairment loss of $ 163.8 million, was 24.4 %.

In response to the Pandemic, Congress enacted the CARES Act on March 27, 2020.

The CARES Act provides various tax provisions, including payroll tax provisions, which we have evaluated for applicability.

Through December 31, 2020, we deferred approximately $ 132 million of payroll tax, which the CARES Act requires to be remitted in equal parts by December 31, 2021, and December 31, 2022.

The CARES Act did not have a material impact on our income tax provision.

Components of Deferred Tax Assets and Liabilities

21 unchanged sentences

Right-of-use assets ( 33.8 ) ( 38.2 )

Tax accounting method change ( 15.8 ) —

Other ( 10.6 ) ( 8.5 )

12 unchanged sentences

Valuation allowance at beginning of year $ 4.1 $ 8.4 $ 12.0

GCA acquisition — — 2.4

Other, net ( 1.9 ) ( 4.3 ) ( 3.6 )

2 unchanged sentences

At October 31, 2021, 2020, and 2019, there were $ 30.4 million, $ 35.5 million, and $ 35.3 million, respectively, of unrecognized tax benefits that if recognized in the future would impact our effective tax rate.

We estimate that a decrease in unrecognized tax benefits of up to approximately $ 0.6 million is reasonably possible over the next twelve months due to lapses of applicable statutes of limitations.

We estimate that a decrease in unrecognized tax benefits of up to approximately $ 8.3 million is reasonably possible over the next 12 months due to lapses of applicable statutes of limitations.

At October 31, 2021 and 2020, accrued interest and penalties were $ 1.6 million and $ 1.5 million, respectively.

16 unchanged sentences

Generally, for the majority of state and foreign jurisdictions where we do business, periods prior to fiscal 2018 are no longer subject to examination.

We are currently being examined by the IRS and tax authorities of California, New York City, and Wisconsin.

We are currently being examined by the IRS and tax authorities of California, New York City, and Montana.

SEGMENT AND GEOGRAPHIC INFORMATION

1 unchanged sentence

Our current reportable segments consist of B&I, T&M, Education, Aviation, and Technical Solutions, as further described below.

The newly acquired Able is integrated within our B&I reportable segment.

REPORTABLE SEGMENTS AND DESCRIPTIONS

19 unchanged sentences

$ 6,228.6 $ 5,987.6 $ 6,498.6

Operating profit (loss)

Operating profit

Business & Industry $ 337.8 $ 253.7 $ 182.3

7 unchanged sentences

Corporate (4)

( 374.6 ) ( 146.9 ) ( 159.0 )

Adjustment for income from unconsolidated affiliates, included in Aviation ( 2.1 ) ( 2.2 ) ( 3.0 )

16 unchanged sentences

(3) Reflects impairment charges totaling $ 12.4 million on goodwill and intangible assets during the year ended October 31, 2020.

(4) Reflects accrued litigation settlement reserve totaling $ 142.9 million for the Bucio case during the year ended October 31, 2021

Geographic Information Based on the Country in Which the Sale Originated (1)

5 unchanged sentences

(1) Substantially all of our long-lived assets are related to United States operations.

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Fiscal Quarter

(in millions, except per share amounts) First Second Third Fourth

Year Ended October 31, 2020

Revenues $ 1,612.9 $ 1,496.0 $ 1,394.1 $ 1,484.6

Gross profit 179.2 189.9 219.2 242.4

Income (loss) from continuing operations 27.9 ( 136.8 ) 56.0 53.1

Income from discontinued operations, net of taxes 0.1 — — —

Net income (loss) $ 28.0 $ ( 136.8 ) (1)

$ 56.0 $ 53.1

Net income (loss) per common share — Basic

Income (loss) from continuing operations $ 0.42 $ ( 2.05 ) $ 0.84 $ 0.79

Income from discontinued operations — — — —

Net income (loss) $ 0.42 $ ( 2.05 ) $ 0.84 $ 0.79

Net income (loss) per common share — Diluted

Income (loss) from continuing operations $ 0.41 $ ( 2.05 ) $ 0.83 $ 0.78

Income from discontinued operations — — — —

Net income (loss) $ 0.42 $ ( 2.05 ) (1)

$ 0.83 $ 0.78

Year ended October 31, 2019

Revenues $ 1,607.9 $ 1,594.7 $ 1,647.9 $ 1,648.0

Gross profit 162.0 180.5 193.9 194.7

Income from continuing operations 13.0 29.9 36.5 48.1

(Loss) income from discontinued operations, net of taxes ( 0.1 ) ( 0.2 ) 0.2 ( 0.1 )

Net income $ 13.0 $ 29.7 $ 36.8 $ 47.9

Net income per common share — Basic

Income from continuing operations $ 0.20 $ 0.45 $ 0.55 $ 0.72

Income from discontinued operations — — — —

Net income $ 0.20 $ 0.45 $ 0.55 $ 0.72

Net income per common share — Diluted

Income from continuing operations $ 0.20 $ 0.45 $ 0.55 $ 0.71

Income from discontinued operations — — — —

Net income $ 0.19 $ 0.45 $ 0.55 $ 0.71

(1) Includes goodwill and asset impairment charges of $ 172.8 million, $ 170.6 million after tax, or $ 2.54 per diluted share.

SUBSEQUENT EVENTS

Our strategic transformation under ELEVATE will result in changes to our reportable segments in fiscal year 2022.

To align the Company’s operations with the new strategic initiative, the Manufacturing & Distribution (“M&D”) industry group will be created, replacing T&M.

As part of our focus to better serve our manufacturing and distribution clients, M&D will maintain our large manufacturing clients and add clients in the distribution sector from B&I.

In addition, technology clients served by T&M will shift into B&I.

This organizational structure change was effective as of November 1, 2021.

We will begin reporting our results under the new reportable segment of M&D beginning in the first quarter of fiscal year 2022.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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 8. Financial Statements and Supplementary Data