What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-11 compared with 2021-05-12 · 226 added, 153 removed, 473 unchanged (44% of the section changed)

5 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowances of $4 and $4 at March 31, 2021

and December 31, 2020, respectively

Accounts receivable, net of allowances of $ 4 at June 30, 2021

and December 31, 2020

Contract assets

23 unchanged sentences

Shareholders’ equity:

Preferred Shares, $0.0001 par value, 7 authorized shares, 4 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

Common shares, $0.0001 par value, 500 authorized shares, 201 shares and 168 shares issued at March 31, 2021 and December 31, 2020, respectively (includes 12 shares declared for stock dividend at December 31, 2020)

Preferred Shares, $ 0.0001 par value, 7 authorized shares, 4 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Common shares, $ 0.0001 par value, 500 authorized shares, 201 shares and 168 shares issued at June 30, 2021 and December 31, 2020, respectively (includes 12 shares declared for stock dividend at December 31, 2020)

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Total shareholders’ equity

5 unchanged sentences

Three Months Ended

Six Months Ended

Cost of revenues

1 unchanged sentence

Impairment of goodwill and intangible assets

Operating loss

Operating income (loss)

Interest expense, net

Loss on extinguishment of debt

Investment income and other, net

Other expense, net

Loss before income taxes

Income tax benefit

Net loss per common share:

Income (loss) before income taxes

Income tax provision (benefit)

Net income (loss)

Net income (loss) per common share:

Weighted average shares outstanding:

3 unchanged sentences

(In millions)

Three Months Ended

Other comprehensive loss:

Fair value change - derivatives, net of tax (expense) benefit ($0 and $9, respectively)

Three Months Ended June 30,

Six Months Ended June 30,

Net income (loss)

Other comprehensive income (loss):

Fair value change - derivatives, net of tax (expense) benefit of ($ 3 ), $ 1 , ($ 3 ), and $ 10 , respectively

Foreign currency translation adjustment

Comprehensive loss

Comprehensive income (loss)

See notes to condensed consolidated financial statements.

17 unchanged sentences

Balance, March 31, 2021

Fair value change - derivatives

Foreign currency translation adjustment

Share-based compensation and other, net

Balance, June 30, 2021

Preferred Shares Issued

11 unchanged sentences

Balance, March 31, 2020

Fair value change - derivatives

Foreign currency translation adjustment

Share-based compensation

Balance, June 30, 2020

See notes to condensed consolidated financial statements.

2 unchanged sentences

(In millions)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Impairment of goodwill and intangible assets

3 unchanged sentences

Non-cash lease expense

Loss on extinguishment of debt

Changes in operating assets and liabilities, net of effects of business acquisitions:

10 unchanged sentences

Purchases of property and equipment

Proceeds from disposals of property, equipment, held for sale assets and businesses

Proceeds from sales of property, equipment, held for sale assets, and businesses

Net cash used in investing activities

Cash flows from financing activities:

Net short-term debt

Proceeds from long-term borrowings

Payments on long-term borrowings

Payments of debt issuance costs

Proceeds from warrant exercises

1 unchanged sentence

Restricted shares tendered for taxes

Net cash provided by financing activities

Net cash provided by (used in) financing activities

Effect of foreign currency exchange rate change on cash and cash equivalents

5 unchanged sentences

Cash paid for income taxes, net of refunds

Accrued contingent consideration issued in business combinations

Shares issued to profit sharing plan

See notes to condensed consolidated financial statements.

9 unchanged sentences

These Interim Statements have been prepared pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission (“SEC”) and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S.

Securities and Exchange Commission (“SEC”) and do not include all of the information and footnotes required by generally accepted accounting principles in the United States of America (“U.S.

GAAP”) for complete financial statements.

7 unchanged sentences

Restricted cash reflects collateral against certain bank guarantees.

Restricted cash is reported as prepaid expenses and other current assets in the unaudited condensed consolidated balance sheets.

Restricted cash is reported as prepaid expenses and other current assets and other assets in the unaudited condensed consolidated balance sheets.

The Company holds investments in joint ventures which are accounted for under the equity method of accounting as the Company does not exercise control over the joint ventures.

The Company’s share of earnings from the joint ventures was $1 and $2 during the three months ended March 31, 2021 and 2020, respectively.

The Company’s share of earnings from the joint ventures was $ 1 and $ 5 during the three months ended June 30, 2021 and 2020, respectively, and $ 2 and $ 7 during the six months ended June 30, 2021 and 2020, respectively.

The earnings are recorded within investment income and other, net in the unaudited condensed consolidated statements of operations.

The investment balances were $9 and $9 as of March 31, 2021 and December 31, 2020, respectively, and are recorded within other assets in the unaudited condensed consolidated balance sheets.

The investment balances were $ 8 and $ 9 as of June 30, 2021 and December 31, 2020, respectively, and are recorded within other assets in the unaudited condensed consolidated balance sheets.

RECENT ACCOUNTING PRONOUNCEMENTS

See the recent accounting pronouncements discussion below for information pertaining to the effects of recently adopted and other recent accounting pronouncements as updated from the discussion in the Company’s 2020 audited consolidated financial statements included in Form 10-K filed on March 24, 2021.

Accounting Standards Issued and Adopted:

4 unchanged sentences

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which eliminates certain exceptions to the existing guidance for income taxes related to the approach for intra-period tax allocations, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

basis differences.

This ASU also simplifies the accounting for income taxes by clarifying and amending existing guidance related to the effects of enacted changes in tax laws or rates in the effective tax rate computation, the recognition of franchise tax , and the evaluation of a step-up in the tax basis of goodwill, among other clarifications.

9 unchanged sentences

The excess of the purchase price over the tangible and intangible assets acquired and liabilities assumed is recorded as goodwill.

Goodwill is attributable to the workforce of the acquired businesses, the complementary strategic fit and resulting synergies these businesses bring to existing operations, and the opportunities from the expanded platform in new markets expected to be achieved.

Goodwill is attributable to the workforce of the acquired businesses, the complementary strategic fit and resulting synergies these businesses bring to existing operations, and the opportunities in new markets expected to be achieved from the expanded platform.

2021 Acquisitions

During 2021, the Company completed several immaterial acquisitions for consideration transferred of $7, primarily made up of cash paid at closing.

During the first six months of 2021, the Company completed several individually immaterial acquisitions for consideration transferred of $ 13 , made up of cash paid at closing of $ 12 and accrued consideration of $ 1 .

The results of operations of these acquisitions are included in the Company’s unaudited condensed consolidated statement of operations from their respective dates of acquisition and were not material.

2020 Acquisitions

During 2020, the Company completed the acquisition of SK FireSafety (“SKG”) within the Safety Services segment and a number of other immaterial acquisitions for consideration transferred of $324, which includes a cash payment made at closing of $319, net of cash acquired, and $5 of deferred consideration that may be paid out in 1-2 years.

During 2020, the Company completed the acquisition of SK FireSafety (“SKG”) within the Safety Services segment and a number of other immaterial acquisitions for consideration transferred of $ 324 , which includes a cash payment made at closing of $ 319 , net of cash acquired, and $ 5 of accrued consideration that may be paid out in 1 - 2 years .

SKG is a European market-leading provider of commercial safety services with operations primarily in the Netherlands, Belgium, Sweden, Norway, and the United Kingdom.

3 unchanged sentences

The Company has not finalized its accounting for all 2020 acquisitions that occurred during the fourth quarter of 2020.

The areas of the purchase price allocation not yet finalized are primarily related to SKG and include the valuation of:

i) property and equipment;

ii) intangible assets and goodwill;

iii) lease-related assets and liabilities and;

iv) income tax related matters.

The areas of the purchase price allocation not yet finalized are primarily related to SKG and include the valuation of intangible assets and goodwill and income tax related matters.

The Company will make appropriate adjustments to the purchase price allocation prior to completion of the measurement period, as required.

During Q2 2021, we recorded a measurement period adjustment, primarily related to intangible assets and goodwill, for which the resulting impact to amortization expense was immaterial.

Based on preliminary estimates, the total amount of goodwill from the 2020 acquisitions expected to be deductible for tax purposes is $ 20 .

See Note 6 – “Goodwill and Intangibles” for the provisional goodwill assigned to each segment.

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

The following table summarizes the preliminary estimated fair values of the assets acquired and liabilities assumed at the dates of acquisition:

Cash paid at closing

10 unchanged sentences

Net assets acquired

The purchase agreements related to the Company’s previously completed acquisitions typically included deferred payment provisions to the former owners who became employees of the Company.

The provisions are made up of two general types of arrangements, contingent compensation and contingent consideration, both of which are contingent on the future performance of the acquired entity.

Compensation arrangements are contingent on the former owner’s future employment with the Company.

The expense related to contingent compensation arrangements is recognized over the required employment period which is typically three to five years.

Contingent consideration arrangements are not contingent on employment and are included as part of purchase consideration at the

time of the initial acquisition.

Both the compensation type and contingent type consideration arrangements are typically paid over a three to five year period.

The total contingent compensation arrangement liability was $39 at March 31, 2021 and December 31, 2020.

The maximum payout of these arrangements upon completion of the future performance periods is $62 and $85, inclusive of the $39 accrued as of March 31, 2021 and December 31, 2020, respectively.

The contingent compensation liability is included in contingent consideration and compensation liabilities for all periods presented.

The Company’s acquisition purchase agreements typically include deferred payment provisions, often to sellers who become employees of the Company.

The provisions are made up of three general types of arrangements- contingent compensation and contingent consideration (both of which are contingent on the future performance of the acquired entity) and deferred payments related to indemnities.

Contingent compensation arrangements are contingent on the former owner’s future employment with the Company, and the related amounts are recognized over the required employment period, which is typically three to five years .

Contingent consideration arrangements are not contingent on employment and are included as part of purchase consideration at the time of the initial acquisition and are paid over a three to five year period.

The liability for deferred payments is recognized at the date of acquisition based on the Company’s best estimate and is typically payable over a twelve to twenty-four month period.

Deferred payments are not contingent on any future performance or employment obligations and can be offset for working capital true-ups, and representations and warranty items.

The total contingent compensation arrangement liability was $ 15 and $ 39 at June 30, 2021 and December 31, 2020, respectively.

The maximum payout of these arrangements upon completion of the future performance periods was $ 46 and $ 85 , inclusive of the $ 15 and $ 39 , accrued as of June 30, 2021 and December 31, 2020, respectively.

The contingent compensation liability is included in contingent consideration and compensation liabilities in the unaudited condensed consolidated balance sheets for all periods presented.

The Company primarily determines the contingent compensation liability based on forecasted cumulative earnings compared to the cumulative earnings target set forth in the arrangement.

1 unchanged sentence

Compensation expense associated with these arrangements is recognized ratably over the required employment period.

The total liability for deferred payments was $ 11 and $ 16 at June 30, 2021 and December 31, 2020, respectively, and are included in contingent consideration and compensation liabilities in the unaudited condensed consolidated balance sheets for all periods presented.

Under ASC 606, Revenue from Contracts with Customers (“ASC 606”) , revenue is recognized when or as control of promised goods and services is transferred to customers, and the amount of revenue recognized reflects the consideration to which an entity expects to be entitled in exchange for the goods and services transferred.

Revenue is primarily recognized by the Company over time utilizing the cost-to-cost measure of progress, consistent with the Company’s previous revenue recognition practices.

Revenue recognized at a point in time relates primarily to distribution contracts and was not material for the three months ended March 31, 2021 and 2020, respectively.

Revenue recognized at a point in time relates primarily to distribution contracts and was not material for the three and six months ended June 30, 2021 and 2020, respectively.

Contracts with Customers

18 unchanged sentences

Disaggregated revenue information is as follows:

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Corporate and

3 unchanged sentences

Corporate and Eliminations

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Corporate and

2 unchanged sentences

Corporate and Eliminations

Three Months Ended March 31, 2021

Six Months Ended June 30, 2021

Corporate and

Infrastructure/Utility

Specialty Contracting

Corporate and Eliminations

Six Months Ended June 30, 2020

Corporate and

Infrastructure/Utility

Specialty Contracting

Corporate and Eliminations

Three Months Ended June 30, 2021

Corporate and

United States

Canada and Europe

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Corporate and

1 unchanged sentence

Canada and Europe

The Company’s contracts with its customers generally require significant services to integrate complex activities and equipment into a single deliverable and are, therefore, generally accounted for as a single performance obligation to provide a single contracted service for the duration of the project.

Six Months Ended June 30, 2021

Corporate and

United States

Canada and Europe

Six Months Ended June 30, 2020

Corporate and

United States

Canada and Europe

for the duration of the project.

For contracts with multiple performance obligations, the transaction price of a contract is allocated to each performance obligation and recognized as revenue when or as the performance obligation is satisfied using the estimated stand-alone selling price of each distinct good or service.

The stand-alone selling price is estimated using the expected cost plus a margin approach for each performance obligation.

The aggregate amount of transaction price allocated to the performance obligations that are unsatisfied as of March 31, 2021, was $1,530.

The aggregate amount of transaction price allocated to the performance obligat ions that are unsatisfied as of June 30, 2021 , was $ 1,251 .

When more than one contract is entered into with a customer on or close to the same date, management evaluates whether those contracts should be combined and accounted for as a single contract as well as whether those contracts should be accounted for as one, or more than one, performance obligation.

5 unchanged sentences

Management estimates variable consideration for a performance obligation utilizing estimation methods believed to best predict the amount of consideration to which the Company will be entitled.

Variable consideration is included in the transaction price only to the extent it is probable, in the Company’s judgment, a significant future reversal in the amount of cumulative revenue recognized under the contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Variable consideration is included in the transaction price only to the extent it is probable, in the Company’s judgment, that a significant future reversal in the amount of cumulative revenue recognized under the contract will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Changes in the estimates of transaction prices are recognized in revenue on a cumulative catch-up basis in the period in which the revisions to the estimates are made.

Such changes in estimates may also result in the reversal of previously recognized revenue if the ultimate outcome differs from the Company’s previous estimate.

For the three months ended March 31, 2021 and 2020, there were no significant reversals of revenue recognized associated with the revision of transaction prices.

For the three and six months ended June 30, 2021 and 2020, there were no significant reversals of revenue recognized associated with the revision of transaction prices.

The Company typically does not incur any returns, refunds or similar obligations after the completion of the performance obligation since any deficiencies are corrected during the course of performance.

4 unchanged sentences

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

Contract assets include unbilled amounts from the Company’s projects when revenues recognized under the cost-to-cost measure of progress exceed the amounts invoiced to the Company’s customers, as the amounts cannot be billed under the terms of the Company’s contracts.

Contract assets include unbilled amounts from the Company’s projects when revenue is recognized under the cost-to-cost measure of progress and exceeds the amounts invoiced to the Company’s customers, as the amounts cannot be billed under the terms of the Company’s contracts.

In addition, many of the Company’s time and material arrangements are billed in arrears pursuant to contract terms, resulting in contract assets being recorded as revenue is recognized in advance of billings.

1 unchanged sentence

The Company’s revenue arrangements are typically accounted for under such expedient as payments are within one year of performance for the Company’s services.

As of March 31, 2021, none of the Company’s contracts contained a significant financing component.

As of June 30, 2021, none of the Company’s contracts contained a significant financing component.

Contract liabilities from the Company’s contracts arise when amounts invoiced to the Company’s customers exceed revenues recognized under the cost-to-cost measure of progress.

2 unchanged sentences

Contract assets and liabilities are classified as current in the unaudited condensed consolidated balance sheets as all amounts are expected to be relieved within one year.

The opening and closing balances of accounts receivable, net of allowances, contract assets and contract liabilities from contracts with customers as of March 31, 2021 and December 31, 2020 are as follows:

Balance as of March 31, 2021

The opening and closing balances of accounts receivable, net of allowances, contract assets and contract liabilities from contracts with customers as of June 30, 2021 and December 31, 2020 are as follows:

Balance as of June 30, 2021

Balance as of December 31, 2020

1 unchanged sentence

In accordance with industry practice, accounts receivable includes retentions receivable, a portion of which may not be received within one year.

At March 31, 2021 and December 31, 2020, retentions receivable were $110 and $122, respectively, while the portions that may not be received within one year were $20 and $26, respectively.

At June 30, 2021 and December 31, 2020, retentions receivable were $ 112 and $ 122 , respectively, while the portions that may not be received within one year were $ 20 and $ 26 , respectively.

There were no other significant changes due to business acquisitions or significant changes in estimates of contract progress or transaction price.

There was no significant impairment of contract assets recognized during the period.

There were no significant impairments of contract assets recognized during the period.

Costs to Obtain or Fulfill a Contract

3 unchanged sentences

(ii) are expected to generate resources that will be used to satisfy the Company’s performance obligation under the contract;

and (iii) are expected to be recovered through revenue

generated under the contract.

and (iii) are expected to be recovered through revenues generated under the contract.

Such costs, which are amortized over the life of the respective project, were not material for any period presented.

GOODWILL AND INTANGIBLES

The changes in the carrying amount of goodwill by reportable segment for the three months ended March 31, 2021 are as follows:

The changes in the carrying amount of goodwill by reportable segment for the six months ended June 30, 2021 are as follows:

Goodwill as of December 31, 2020

Measurement period adjustments and other (1)

Goodwill as of March 31, 2021

Goodwill as of June 30, 2021

Measurement period adjustments related to the purchase accounting for SKG and finalization of certain immaterial acquisitions in 2020 (see Note 4 – “Business Combinations”).

Other includes fluctuations due to foreign currency translation.

As of June 30, 2021, the Company has recorded accumulated goodwill impairment charges of $ 193 , including $ 83 in the Safety Services segment, $ 52 in the Specialty Services segment, and $ 58 in the Industrial Services segment.

During 2020, while the Company’s services were largely deemed essential under various governmental orders, the Company did experience negative impacts from COVID-19 on its operations including impacts from the Company’s suppliers, other vendors, and customer base.

1 unchanged sentence

As a result of these factors and the significant decline in the Company’s market capitalization during the first quarter 2020, the Company concluded an impairment triggering event had occurred for all of its reporting units and performed impairment tests for its goodwill and recoverability tests for its long-lived assets, which primarily include finite-lived intangible assets, property and equipment and right of use lease assets.

As of March 31, 2020, based on preliminary carrying values from the October 1, 2019 acquisition of APi Group, Inc.

During the first quarter of 2020, based on preliminary carrying values from the October 1, 2019 acquisition of APi Group, Inc.

(“APi Acquisition”), the Company determined goodwill was impaired as the preliminary carrying values of some reporting units exceeded fair values.

The Company recorded an impairment charge to goodwill of $203 based on preliminary carrying values and during the third quarter of 2020 when purchase accounting was finalized, the impairment charge was finalized at $197.

As of March 31, 2021, the Company has recorded accumulated goodwill impairment charges of $193, including $83 in the Safety Services segment, $52 in the Specialty Services segment, and $58 in the Industrial Services segment.

The Company has the following identifiable intangible assets as of March 31, 2021 and December 31, 2020:

March 31, 2021

The Company recorded an impairment charge to goodwill of $ 203 based on preliminary carrying values.

During the third quarter of 2020 when purchase accounting was finalized, the impairment charge was finalized at $ 197 .

The Company’s identifiable intangible assets are comprised of the following as of June 30, 2021 and December 31, 2020:

June 30, 2021

Weighted Average

9 unchanged sentences

Customer relationships

Amortization expense recognized on intangibles was as follows:

Three Months Ended March 31,

Amortization expense recognized on identifiable intangible assets are as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Cost of revenues

2 unchanged sentences

During the first quarter 2020, the Company concluded an impairment triggering event had occurred.

As of March 31, 2020, the Company reviewed its long-lived assets for impairment and recorded a $5 preliminary impairment charge related to the intangible assets that were part of a business classified as held for sale.

The Company reviewed its long-lived assets for impairment and recorded a $ 5 preliminary impairment charge related to the intangible assets that were part of a business classified as held for sale.

The impairment was based on preliminary carrying values from the APi Acquisition which were later finalized in the third quarter of 2020, and as a result the final impairment charge related to intangible assets was adjusted to $ 0 .

During the year ended December 31, 2020, the Company finalized the fair value of goodwill and intangible assets related to the APi Acquisition.

The measurement period adjustments recorded during the year ended December 31, 2020 resulted in a cumulative reversal to amortization expense earlier in the year.

If the final intangible assets fair values had been known at the date of the APi Acquisition, amortization expense would have decreased by $5 for the three months ended March 31, 2020 to $47.

The measurement period adjustments recorded during the year ended December 31, 2020 resulted in a cumulative reversal to amortization expense that had been recorded earlier in the year.

If the final intangible assets fair values had been known at the date of the APi Acquisition, amortization expense would have decreased by $ 5 and $ 10 for the three and six months ended June 30, 2020, to $ 46 and $ 93 , respectively.

FAIR VALUE OF FINANCIAL INSTRUMENTS

1 unchanged sentence

As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

The carrying values of long-term debt, including current portions, approximate their fair values because of the variable interest rates of these instruments, which generally are reset monthly.

The authoritative guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost).

9 unchanged sentences

The Company’s financial assets and liabilities (adjusted to fair value at least quarterly) are derivative instruments which are primarily included in other noncurrent liabilities and contingent consideration which is primarily included in contingent consideration and compensation liabilities in the unaudited condensed consolidated balance sheets.

The following tables summarize the fair values and levels within the fair value hierarchy in which the measurements fall for assets and liabilities measured on a recurring basis as of March 31, 2021 and December 31, 2020:

Fair Value Measurements at March 31, 2021

Fair Value Measurements at June 30, 2021

Assets (Liabilities)

2 unchanged sentences

Cross currency swaps

Foreign currency contracts

Net investment hedges

Contingent consideration obligations

10 unchanged sentences

This fair value measurement is based on unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy.

This analysis reflects the contractual terms of the purchase agreements (e.g., potential payment amounts, length of measurement periods, manner of calculating any amounts due, etc.) and utilizes assumptions with regard to future cash flows, probabilities of achieving such future cash flows, and a discount rate.

This analysis reflects the contractual terms of the purchase agreements (e.g., potential payment amounts, length of measurement periods, manner of calculating any amounts due) and utilizes assumptions with regard to future cash flows, probabilities of achieving such future cash flows, and a discount rate.

Depending on the contractual terms of the purchase agreement, the probability of achieving future cash flows or earnings generally represent the only significant unobservable inputs.

1 unchanged sentence

The table below presents a reconciliation of the fair value of the Company’s contingent consideration obligations that use unobservable inputs (Level 3), as well as other information about the contingent consideration obligations:

Three Months Ended

March 31, 2021

Six Months Ended

June 30, 2021

Balance as of December 31, 2020

Adjustments to fair value

Balance as of March 31, 2021

Number of open contingent consideration arrangements

at the end of period

Balance as of June 30, 2021

Number of open contingent consideration arrangements at the end of period

Maximum potential payout at end of period

At March 31, 2021, the remaining open contingent consideration arrangements are set to expire at various dates through 2024.

At June 30, 2021, the remaining open contingent consideration arrangements are set to expire at various dates through 2024.

Level 3 unobservable inputs were used to calculate the fair value adjustments shown in the table above.

The fair value adjustments and the related unobservable inputs were not considered significant for the three months ended March 31, 2021.

The fair value adjustments and the related unobservable inputs were not considered significant for the three and six months ended June 30, 2021.

Fair Value Estimates

The following table presents the carrying amount and fair value of the Company’s non-variable interest rate debt (“Senior Notes,” as defined in Note 10 – “Debt”), including current portion and excluding unamortized debt issuance costs, which is estimated by discounting future cash flows at currently available rates for borrowing arrangements with similar terms and conditions, which are considered to be Level 2 inputs under the fair value hierarchy.

The carrying values of variable interest rate long-term debt, including current portions, approximate their fair values because of the variable interest rates of these instruments, which generally are reset monthly.

June 30, 2021

December 31, 2020

Carrying Value

From time to time, the Company enters into derivative transactions to hedge its exposures to interest rate and foreign currency rate fluctuations.

4 unchanged sentences

The cash paid and received from the settlement of interest rate swaps is included in interest expense in the unaudited condensed consolidated statement of operations.

At March 31, 2021, the Company had a $720 notional amount interest rate swap that fixes the London Interbank Offering Rate (“LIBOR”) at 1.62%.

At June 30, 2021, the Company had a $ 720 notional amount interest rate swap that fixes the London Interbank Offering Rate (“LIBOR”) at 1.62 %.

This interest rate swap is designated as a cash flow hedge of the interest rate risk attributable to the Company’s forecasted variable interest payments and has a maturity date of October 2024.

The fair value of the interest rate swap designated as an effective hedge was a liability of $25 as of March 31, 2021 and a liability of $35 as of December 31, 2020.

The fair value of the interest rate swap designated as an effective hedge was a liability of $ 24 as of June 30, 2021 and a liability of $ 35 as of December 31, 2020.

The decrease in the liability was primarily driven by changes in the applicable forward yield curves related to the LIBOR.

2 unchanged sentences

The Company used foreign currency contracts, primarily forward foreign currency contracts, to mitigate the foreign currency exposure of certain other foreign currency transactions.

At March 31, 2021, the Company had no foreign currency contracts outstanding that are not designated as effective hedges for accounting purposes.

Fair market value gains or losses were included in the results of operations and are classified in other (income) expense, net in the Company’s unaudited condensed consolidated statement of operations.

At June 30, 2021, the Company had no foreign currency contracts outstanding that are not designated as effective hedges for accounting purposes.

Fair market value gains or losses on foreign currency contracts not designated as hedges were included in the results of operations and are classified in other (income) expense, net in the unaudited condensed consolidated statement of operations.

The Company recognized income of $ 0 and $ 1 in other (income) expense, net, during the three and six months ended June 30 , 2021 , respectively , and $ 0 during the three and six months ended June 30, 2020 related to derivatives that are not designated as hedging instruments.

As of December 31, 2020, foreign currency contracts carried a liability balance of $ 9 and an asset balance of less than $ 1 .

The Company recognized income of $1 and $0 in other (income) expense, net, during the three months ended March 31, 2021 and 2020, respectively, related to derivatives that are not designated as hedging instruments.

Cash Flow Hedging

2 unchanged sentences

The Company periodically assesses whether its currency exchange contracts are effective, and when a contract is determined to be no longer effective as a hedge, the Company discontinues hedge accounting prospectively.

During the first quarter 2021, the Company entered into cross-currency swaps with gross notional U.S.

During the first quarter of 2021, the Company entered into cross-currency swaps with gross notional U.S.

dollar equivalent amount of $ 120 .

The fair value of the cross-currency swaps was a liability of $3 as of March 31, 2021.

The fair value of the cross-currency swaps was a liability of less than $ 1 as of June 30, 2021.

Net Investment Hedge

2 unchanged sentences

Gains and losses resulting from a change in fair value of the net investment hedge are offset by gains and losses on the underlying foreign currency exposure and included in AOCI in the unaudited condensed consolidated balance sheets.

The fair value of the net investment hedge was a liability of $3 as of March 31, 2021.

The fair value of the net investment hedge was an asset of $ 1 as of June 30, 2021.

PROPERTY AND EQUIPMENT, NET

The components of property and equipment as of March 31, 2021 and December 31, 2020 are as follows:

The components of property and equipment as of June 30, 2021 and December 31, 2020 are as follows:

Machinery and equipment

4 unchanged sentences

Property and equipment, net

Depreciation expense related to property and equipment, including capital leases, was $19 and $18 during the three months ended March 31, 2021 and 2020, respectively.

Depreciation expense related to property and equipment, including finance leases, was $ 20 and $ 23 during the three months ended June 30, 2021 and 2020, respectively, and $ 39 and $ 41 during the six months ended June 30, 2021 and 2020, respectively.

Depreciation expense is included within cost of revenues and selling, general and administrative expenses in the unaudited condensed consolidated statements of operations.

1 unchanged sentence

These measurement period adjustments resulted in a cumulative adjustment to depreciation expense.

If the property and equipment fair values had been known at the date of the APi Acquisition, depreciation expense would have been higher by $2 to be $20 for the three months ended March 31, 2020.

If the property and equipment fair values had been known at the date of the APi Acquisition, depreciation expense would have increased by $ 2 to $ 43 for the six months ended June 30, 2020.

Debt obligations consist of the following:

7 unchanged sentences

October 1, 2026

July 15, 2029

Other Obligations

4 unchanged sentences

Long-term debt

As of March 31, 2021, there was $1.2 billion of principal outstanding under the 2019 Term Loan.

As of March 31, 2021, the Company had a 5-year interest rate swap with respect to $720 of notional value of the 2019 Term Loan, exchanging one-month LIBOR for a fixed rate of 1.62% per annum.

During the second quarter of 2021, APi Group DE, Inc, a wholly-owned subsidiary, completed a private offering of $ 350 aggregate principal amount of 4.125 % Senior Notes (“Senior Notes”) issued under an indenture dated June 22, 2021 (the “Indenture”).

The Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Company and certain of the Company’s existing and future domestic subsidiaries.

The Company used the net proceeds from the sale of the Senior Notes to repay the $ 250 million 2020 Term Loan, prepay a portion of the 2019 Term Loan and fund general corporate purposes.

In connection with the repayment of the 2020 Term Loan and prepayment on the 2019 Term Loan, the Company incurred a loss on debt extinguishment of $ 9 related to unamortized debt issuance costs, which was recorded within loss on debt extinguishment in the unaudited condensed consolidated statements of operations.

The Senior Notes contain customary terms and provisions (including representations, covenants, and conditions).

Certain covenants, among other things, restrict the Company's and its subsidiaries' ability to incur indebtedness, grant liens, make investments and sell assets.

The Senior Notes also contain customary events of default, covenants, and representations and warranties.

Financial covenants include:

a senior secured leverage ratio no greater than 3.5 to 1.0 , a total net leverage ratio of 3.0 to 1.0 , and a fixed charge coverage ratio of 2.0 to 1.0 .

As of June 30, 2021, there was $ 1,140 of principal outstanding under the 2019 Term Loan.

As of June 30, 2021, the Company had a 5 -year interest rate swap with respect to $ 720 of notional value of the 2019 Term Loan, exchanging one-month LIBOR for a fixed rate of 1.62 % per annum.

Accordingly, the Company’s fixed interest rate per annum on the swapped $ 720 notional value of the 2019 Term Loan is 4.12 % through its maturity.

The remaining $465 of our 2019 Term Loan balance is bearing interest at 2.61% per annum based on one-month LIBOR plus 250 basis points.

The Company’s 2020 Term Loan balance was $249 bearing interest at 2.86% per annum based on one-month LIBOR plus 275 basis points.

The remaining $ 420 of the 2019 Term Loan balance is bearing interest at 2.59 % per annum based on one-month LIBOR plus 250 basis points .

In addition, during the first quarter 2021, the Company entered into a cross currency interest rate swap with a notional value of $ 230 .

The swap reduces the Company’s interest expense by approximately $ 3 annually and reduces its overall effective interest rate by approximately 20 basis points.

The interest rate applicable to borrowings under the $300 million five-year senior secured revolving credit facility (the “Revolving Credit Facility”) is, at the Company’s option, either (1) a base rate plus an applicable margin equal to 1.25%, or (2) a Eurocurrency rate (adjusted for statutory reserves) plus an applicable margin equal to 2.25%.

At March 31, 2021 and December 31, 2020, the Company had no amounts outstanding under the Revolving Credit Facility, and $227 and $230 was available at March 31, 2021 and December 31, 2020, respectively, after giving effect to $73 and $70 of outstanding letters of credit.

As of March 31, 2021 and December 31, 2020, the Company was in compliance with all applicable debt covenants.

As of March 31, 2021 and December 31, 2020, the Company had $5 in notes outstanding for the acquisition of equipment and vehicles.

The interest rate applicable to borrowings under the $ 300 five-year senior secured revolving credit facility (the “Revolving Credit Facility”) is, at the Company’s option, either (1) a base rate plus an applicable margin equal to 1.25 %, or (2) a Eurocurrency rate (adjusted for statutory reserves) plus an applicable margin equal to 2.25 %.

At June 30, 2021 and December 31, 2020, the Company had no amounts outstanding under the Revolving Credit Facility, and $ 227 and $ 230 was available at June 30, 2021 and December 31, 2020, respectively, after giving effect to $ 73 and $ 70 of outstanding letters of credit.

As of June 30, 2021 and December 31, 2020, the Company was in compliance with all applicable debt covenants.

As of June 30, 2021 and December 31, 2020, the Company had $ 2 and $ 5 in notes outstanding, respectively, for the acquisition of equipment and vehicles.

The Company’s quarterly income tax provision is measured using an estimate of its consolidated annual effective tax rate, adjusted in the current period for discrete income tax items, within the periods presented.

The comparison of the Company’s income tax provision between periods may be impacted by the level and mix of earnings and losses by tax jurisdiction, foreign income tax rate differentials and discrete items.

The Company’s effective tax rate was 42.3% and 20.9% for the three months ended March 31, 2021 and 2020, respectively.

The Company’s effective tax rate was 28.9 % and ( 49.0 )% for the three months ended June 30, 2021 and 2020, respectively, and 17.0 % and 28.5 % for the six months ended June 30, 2021 and 2020, respectively.

The difference between the effective tax rate and the statutory U.S.

federal income tax rate of 21.0% for the three months ended March 31, 2021 is due to nondeductible permanent items, state taxes and taxes on foreign earnings in jurisdictions that have higher tax rates.

As of March 31, 2021, the Company’s deferred tax assets included a valuation allowance of $4 primarily related to certain deferred tax assets of the Company’s foreign subsidiaries and a capital loss carryforward in the U.S.

federal income tax rate of 21.0 % for the six months ended June 30, 2021 is due to nondeductible permanent items, state taxes, and taxes on foreign earnings in jurisdictions that have higher tax rates.

As of June 30, 2021, the Company’s deferred tax assets included a valuation allowance of $ 4 primarily related to certain deferred tax assets of the Company’s foreign subsidiaries and a capital loss carryforward in the U.S.

The factors used to assess the likelihood of realization were the past performance of the related entities, forecasts of future taxable income, future reversals of existing taxable temporary differences, and available tax planning strategies that could be implemented to realize the deferred tax assets.

The ability or failure to achieve the forecasted taxable income in these entities could affect the ultimate realization of deferred tax assets.

As of March 31, 2021 , the Company had gross federal, state and foreign net operating loss carryforwards of approximately $ 0 , $ 15 and $ 10 , respectively.

As of June 30, 2021, the Company had gross federal, state and foreign net operating loss carryforwards of approximately $ 0 , $ 15 and $ 9 , respectively.

The state net operating losses have carryforward periods of five to twenty years and begin to expire in 2024 .

1 unchanged sentence

The Company’s liability for unrecognized tax benefits is recorded within other noncurrent liabilities in the unaudited condensed consolidated balance sheets and recognizes interest and penalties accrued related to unrecognized tax benefits in the provision for income taxes in the income statement.

As of March 31, 2021 and December 31, 2020, the total gross unrecognized tax benefits were $3 and $2, respectively.

The Company had accrued gross interest and penalties as of March 31, 2021 and December 31, 2020 of $1 and $1, respectively.

During the three months ended March 31, 2021 and 2020, the Company recognized net interest expense of less than $1 for all periods.

If all of the Company’s unrecognized tax benefits as of March 31, 2021 were recognized, $3 would impact the Company’s effective tax rate.

As of June 30, 2021 and December 31, 2020, the total gross unrecognized tax benefits were $ 3 and $ 2 , respectively.

The Company had accrued gross interest and penalties as of June 30, 2021 and December 31, 2020 of $ 1 and $ 1 , respectively.

During the three and six months ended June 30, 2021 and 2020, the Company recognized net interest expense of $ 0 for all periods.

If all of the Company’s unrecognized tax benefits as of June 30, 2021 were recognized, $ 2 would impact the Company’s effective tax rate.

The Company expects $ 1 of unrecognized tax benefits to expire in the next twelve months due to lapses in the statute of limitations.

As of March 31, 2021, with few immaterial exceptions, neither the Company nor its subsidiaries are subject to examination prior to tax year 2014.

The Company’s consolidated U.S.

federal return is under exam for the period ended December 31, 2017.

The Company does not expect the results of the audit to have a material impact on the consolidated financial statements.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed into law making several changes to the Internal Revenue Code.

The CARES Act, among other things, permits Net Operating Loss (“NOL“) carryovers to offset 100% of taxable income for tax years beginning before 2021.

In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding tax years to generate a refund of previously paid income taxes.

The CARES Act contains modifications on the limitation of business interest for tax years beginning in 2019 and 2020.

The modifications to Section 163(j) increase the allowable business interest deduction from 30% of adjusted taxable income to 50% of adjusted taxable income.

The CARES Act also accelerates the refund of Alternative Minimum Tax (“AMT”) credits that were previously accumulated.

The tax law changes in the CARES Act did not have a material impact on the Company’s income tax provision.

On December 27, 2020, the Consolidated Appropriations Act was signed into law, which included a temporary provision that allows for a 100 percent deduction for business meal expenses purchased from a restaurant between December 31, 2020, and January 1, 2023.

As of June 30, 2021, with few immaterial exceptions, neither the Company nor its subsidiaries are subject to examination prior to tax year 2014.

federal jurisdiction exam for the period ended December 31, 2017 is expected to close in the third quarter and is not expected to have a material impact on the consolidated financial statements.

There are various other audits in state and foreign jurisdictions.

No adjustments have been proposed and the Company does not expect the results of the audits to have a material impact on the consolidated financial statements.

On December 27, 2020, the Consolidated Appropriations Act was signed into law, which included a temporary provision that allows for a 100 percent deduction for business meals expenses purchased from a restaurant between December 31, 2020, and January 1, 2023.

The tax law changes in the Consolidated Appropriations Act did not have a material impact on the Company’s quarterly income tax provision.

4 unchanged sentences

Union payrolls cannot be determined for future periods because the number of union employees employed at a given time, and the plans in which they participate, vary depending upon the location and number of ongoing projects and the need for union resources in connection with those projects.

Total consolidated contributions to multiemployer plans were $23 and $21 during the three months ended March 31, 2021 and 2020, respectively.

Total consolidated contributions to multiemployer plans were $ 24 and $ 19 during the three months ended June 30, 2021 and 2020, respectively and $ 43 and $ 40 during the six months ended June 30, 2021 and 2020, respectively.

The Company also has a trustee-administered profit sharing retirement plan covering substantially all employees not covered by collective bargaining agreements and also adopted a profit sharing plan for employees in Canada (collectively, “Profit Sharing Plans”).

The Profit Sharing Plans provide for annual discretionary contributions in amounts based on a performance grid as determined by the Company’s directors.

The Company recognized $3 and $3 in expense during the three months ended March 31, 2021 and 2020, respectively.

The Company recognized $ 4 and $ 3 in expense during the three months ended June 30, 2021 and 2020, respectively and $ 7 and $ 6 in expense during the six months ended June 30, 2021 and 2020, respectively, in connection with these plans.

Effective January 1, 2021, most of the Company’s employees in the U.S and Canada, including named executive officers, are eligible to participate in the Company’s Employee Stock Purchase Plan (the “ESPP”).

2 unchanged sentences

Participants are subject to eligibility requirements and may not purchase more than 500 shares in any offering period or more than $ 10,000 of common stock in a year under the ESPP.

As of March 31, 2021, the Company has recognized $1 of expense related to the ESPP.

Related-Pa rty Transactions

As of December 31, 2020, an annual dividend for Preferred Shares was declared and settled in shares during January 2021.

During the three and six months ended June 30, 2021, the Company has recognized $ 1 and $ 2 of expense, respectively, related to the ESPP.

Related-Party Transactions

An annual dividend for Preferred Shares was declared as of December 31, 2020 and settled in shares during January 2021 .

The Company issued 12.4 million shares to Mariposa Acquisition IV, LLC, a related entity that is controlled by the co-chairperson of the Company’s Board of Directors .

In addition, during the three months ended March 31, 2021 and 2020, the Company incurred advisory service fees of $1 and $1, respectively, payable to Mariposa Capital, LLC, an entity owned by the co-chairperson of the Company’s Board of Directors.

In addition, the Company incurred advisory fees of $ 1 during both the three months ended June 30, 2021 and 2020, respectively, and $ 2 during both the six months ended June 30, 2021 and 2020, payable to Mariposa Capital, LLC, an entity owned by the co-chairperson of the Company’s Board of Directors.

From time to time the Company also enters into other immaterial related party transactions.

7 unchanged sentences

For periods of net loss, basic and diluted EPS are the same, as the assumed exercise of Preferred Shares, restricted and performance shares, warrants and stock options are anti-dilutive (amounts in millions, except share and per share amounts):

Three Months Ended

March 31, 2021

Three Months Ended

March 31, 2020

Net loss attributable to common shareholders

Basic and diluted weighted average shares outstanding (1)

Loss per share attributable to common shareholders:

Loss per common share - basic and diluted

For the three months ended March 31, 2021, excludes the following items as the effect would be anti-dilutive:

options to purchase 162,500 shares of common shares, 1,062,367 shares of common stock underlying restricted stock units, 4,000,000 Preferred Shares convertible to the same number of shares of common stock, and 2,383,922 common share equivalents which represent the dividend that the Preferred Shares are entitled to receive, assuming the volume weighted average price of the Company’s common shares for the last ten trading days of the three months ended March 31, 2021 would be the same volume weighted-average price during the last ten trading days of the calendar year.

Also excludes 674,229 shares of common stock underlying performance based restricted stock units for which the performance criteria had not been met as of March 31, 2021.

For the three months ended March 31, 2020, excludes the following items as the effect would be anti-dilutive:

options to purchase 162,500 shares of common stock, approximately 64,546,077 warrants exercisable to purchase common shares on a 3:1 basis (21,515,359 common stock equivalents), 1,441,546 shares of common stock underlying restricted stock units and performance based restricted stock units, and 4,000,000 Preferred Shares convertible to the same number of shares of common stock.

Three Months Ended June 30,

Six Months Ended June 30,

Basic earnings (loss) per common share:

Net income (loss)

Less income attributable to Preferred Shares

Net income (loss) attributable to common shareholders - basic

Weighted average shares outstanding - basic

Basic earnings (loss) per common share

Diluted earnings (loss) per common share:

Net income (loss)

Less income attributable to Preferred Shares

Net income (loss) attributable to common shareholders - diluted

Weighted average shares outstanding - basic

Dilutive securities:

RSUs, warrants and stock options (1)

Shares issuable pursuant to the annual Preferred Share dividend (2)

Weighted average shares outstanding - diluted

Diluted earnings (loss) per common share

For all periods presented, 4,000,000 Preferred Shares, which are convertible to the same number of common shares, have been excluded from the calculation of diluted shares, as their inclusion would be anti-dilutive.

For the three months ended June 30, 2020, 162,500 stock options to purchase the same number of common shares and 21,515,359 common shares that would be issuable upon exercise of 64,546,077 warrants exercisable to purchase common shares on a 3:1 basis ( 21,515,359 ordinary share equivalents) for which the exercise price exceeded the average market price, have been excluded from the calculation of diluted shares, as their inclusion would be anti-dilutive.

For the three and six months ended June 30, 2021, and the three months ended June 30, 2020, dilutive securities include common share equivalents which represent the annual dividend, payable in common shares, that Preferred Shares would be entitled to receive assuming that the volume weighted average price of the Company’s common shares for the last ten trading days of the period would be the same average price during the last ten trading days of the calendar year.

The annual dividend amount is equal to 20 % of the increase in the volume-weighted average market price per share of the Company’s common shares for the last ten trading days of the calendar year, multiplied by 141,194,638 shares (the “Annual Dividend Amount”).

During 2020, the Annual Dividend Amount was calculated based on the Company’s share price appreciation over the initial offering price of $ 10.00 .

During 2021, the Annual Dividend Amount was calculated based on the Company’s share price appreciation over the highest price previously used in calculating the Annual Dividend Amount of $ 17.8829 .

Segment Information

3 unchanged sentences

All three reportable segments derive their revenue from installation, inspection, maintenance, service and repair, retrofitting and upgrading, engineering and design, distribution, fabrication, and various types of other services primarily in the United States as well as Canada and Europe.

The Safety Services segment focuses on end-to-end integrated occupancy systems (fire protection services, HVAC, and entry systems) including installation, inspection and service, and design of these integrated systems.

The customers within this segment include, but are not limited to, customers in various industries and facilities including commercial, data center, distribution, education, transportation, healthcare, high tech, industrial and special-hazard settings .

The Specialty Services segment provides infrastructure services and specialized industrial plant services which include maintenance and repair of critical infrastructure such as underground electric, gas, water, sewer and telecommunications infrastructure.

Customers within this segment include, but are not limited to, public and private utilities, communications, healthcare, education, manufacturing, industrial plants and governmental agencies throughout the United States.

The Safety Services segment focusing on end-to-end integrated occupancy systems (fire protection solutions, HVAC and entry systems), including design, installation, inspection and service of these integrated systems.

The work performed within this segment spans across industries and facilities and includes commercial, education, healthcare, high tech, industrial and special-hazard settings.

The Specialty Services segment provides a variety of infrastructure services and specialized industrial plant services, which includes maintenance and repair of critical infrastructure such as underground electric, gas, water, sewer and telecommunications infrastructure.

This segment’s services include engineering and design, fabrication, installation, maintenance service and repair, and retrofitting and upgrading.

Customers within this segment vary from private and public utilities, communications, healthcare, education, transportation, manufacturing, industrial plants and governmental agencies throughout the United States.

The Industrial Services segment provides a variety of services to the energy industry focused on transmission and distribution.

Services within this segment include, but are not limited to, pipeline infrastructure, access and road construction, supporting facilities, and performing ongoing integrity management and maintenance.

The accounting policies of the reportable segments are the same as those described in Note 2 – “Basis of Presentation and Significant Accounting Policies”.

All intercompany transactions and balances are eliminated in consolidation.

Intercompany revenue and costs between entities within a reportable segment are eliminated to arrive at segment totals, and eliminations between segments are separately presented.

This segment’s services include pipeline infrastructure, access and road construction, supporting facilities, and performing ongoing integrity management and maintenance

The accounting policies of the reportable segments are the same as those described in Note 2 – “Basis of Presentation and Significant Accounting Policies.” All intercompany transactions and balances are eliminated in consolidation.

Intercompany revenues and costs between entities within a reportable segment are eliminated to arrive at segment totals and eliminations between segments are separately presented.

Corporate results include amounts related to corporate functions such as administrative costs, professional fees, acquisition-related transaction costs (exclusive of acquisition integration costs, which are included within the segment results of the acquired businesses), and other discrete items.

9 unchanged sentences

The tables below may contain slight summation differences due to rounding:

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Corporate and

2 unchanged sentences

Investment income and other, net

Loss on extinguishment of debt

Capital expenditures

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Corporate and

EBITDA Reconciliation

Operating loss

Operating income (loss)

Investment income and other, net

Capital expenditures

Six Months Ended June 30, 2021

Corporate and

EBITDA Reconciliation

Operating income (loss)

Investment income and other, net

Loss on extinguishment of debt

Capital expenditures

Six Months Ended June 30, 2020

Corporate and

EBITDA Reconciliation

Operating income (loss)

Investment income and other, net

Capital expenditures

SUBSEQUENT EVENTS

During July 2021, the Company completed an acquisition within the Safety Services segment for a purchase price of $ 34 , primarily made up of cash paid at closing, and also closed several other individually immaterial acquisitions.

On July 27, 2021, the Company announced it has entered into a definitive agreement to acquire the Chubb Limited (“Chubb”) fire and security business from Carrier Global Corporation for an enterprise value of $ 3,100 , which is comprised of $ 2,900 cash and approximately $ 200 of assumed liabilities, and other adjustments.

The transaction is expected to be funded through a combination of cash on hand, perpetual preferred equity financing, and debt, and is expected to close around year-end 2021.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

12 unchanged sentences

our expectations regarding future capital expenditures;

our expectations regarding the pending acquisition of the Chubb fire and security business, including the timing for closing and the sources of financing for the consideration;

our beliefs regarding the sufficiency of our current sources of liquidity to fund our future liquidity requirements, our expectations regarding the types of future liquidity requirements and our expectations regarding the availability of future sources of liquidity.

22 unchanged sentences

our substantial level of indebtedness and the effect of restrictions on our operations set forth in the documents that govern such indebtedness;

our ability to successfully complete the pending acquisition of the Chubb fire and security business, including obtaining the necessary regulatory approvals and financing for the consideration;

our compliance with certain financial maintenance covenants in our credit agreement and the effect on our liquidity of any failure to comply with such covenants.

8 unchanged sentences

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-Q

Item 1. Financial Statements