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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) September 9, 2003

ABM Industries Incorporated


(Exact name of registrant as specified in its charter)
         
Delaware   1-8929   94-1369354

 
 
(State or other jurisdiction
of incorporation)
  (Commission File
Number)
  (IRS Employer
Identification No.)
     
160 Pacific Avenue, Suite 222, San Francisco, California   94111

 
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code (415) 733-4000

Not Applicable


(Former name or former address if changed since last report)

 


TABLE OF CONTENTS

Item 5. Other Events and Regulation FD Disclosure.
Item 7(c). Exhibits.
Item 12. Results of Operations and Financial Condition
SIGNATURES
EXHIBIT INDEX
Exhibit 99.1
Exhibit 99.2


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Item 5. Other Events and Regulation FD Disclosure.

     On September 9, 2003, ABM Industries Incorporated issued a press release announcing that a quarterly dividend of $0.095 per share would be paid on November 3, 2003, to the record holders of common stock as of the close of business on October 13, 2003. A copy of the press release is attached as Exhibit 99.1, which is incorporated into this item by reference.

Item 7(c). Exhibits.

     
99.1   Press Release of ABM Industries Incorporated dated September 9, 2003, announcing the declaration of a dividend.

Item 12. Results of Operations and Financial Condition

     On September 9, 2003, ABM Industries Incorporated issued a press release announcing financial results related to the third quarter of fiscal year 2003. A copy of the press release is attached as Exhibit 99.2, which is incorporated into this item by reference.

 


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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
    ABM INDUSTRIES INCORPORATED
         
Dated: September 9, 2003   By:   /s/ George B. Sundby
       
        George B. Sundby
Senior Vice President and
Chief Financial Officer

 


Table of Contents

EXHIBIT INDEX

     
99.1   Press Release of ABM Industries Incorporated dated September 9, 2003, announcing the declaration of a dividend.
     
99.2   Press Release of ABM Industries Incorporated dated September 9, 2003, announcing its earnings report for the third quarter of 2003.

  exv99w1

 

EXHIBIT 99.1

For more information, please contact our Senior Vice
President & Chief Financial Officer, George B. Sundby,
at 415/733-4000 (or e-mail gsundby@abm.com).

ABM INDUSTRIES CONTINUES BEST-EVER QUARTERLY DIVIDEND RATE

SAN FRANCISCO, September 9, 2003 – The Board of Directors of ABM Industries Incorporated (NYSE: ABM) has declared an all-time-high fourth quarter cash dividend of $0.095 per common share for payment on November 3, 2003 to stockholders of record on October 13, 2003. This will be ABM’s 150th consecutive quarterly cash dividend, and is $0.005 (5.5%) above the $0.09 per share quarterly dividend rate paid in 2002.

     ABM Industries Incorporated is one of the largest facility services contractors listed on the New York Stock Exchange. With fiscal 2002 revenues in excess of $2.0 billion and more than 63,000 employees, ABM provides janitorial, parking, engineering, security, lighting, mechanical and network services for thousands of commercial, industrial, institutional and retail facilities in hundreds of cities across North America. The ABM Family of Services includes ABM Janitorial, Ampco System Parking, ABM Engineering, American Commercial Security (ACSS), Amtech Lighting, CommAir Mechanical and ABM Service Network.

# # #

exv99w2

 

EXHIBIT 99.2

For further information, please contact ABM’s Senior Vice
President & Chief Financial Officer, George B. Sundby,
at 415/733-4000 (or e-mail gsundby@abm.com).

ABM INDUSTRIES ANNOUNCES THIRD QUARTER FINANCIAL RESULTS AND
ACQUISITION OF THE JANITORIAL OPERATIONS OF PHILADELPHIA-BASED
HGO, INC.

SAN FRANCISCO, September 9, 2003 — ABM Industries Incorporated (NYSE:ABM) today reported net income for the quarter ended July 31, 2003 of $11.7 million ($0.23 per diluted share) compared to $12.6 million ($0.25 per diluted share) reported for the third quarter of fiscal 2002. As a result of the previously announced sale of the assets of Amtech Elevator Services to Otis Elevator on August 15, 2003, results from the Elevator segment have been reclassified as income from discontinued operations. Revenues from continuing operations for the third quarter of 2003 were $569.1 million, up 9% from $520.0 million in the third quarter of 2002. Income from continuing operations for the quarter ended July 31, 2003 was $10.6 million ($0.21 per diluted share) compared to $11.9 million ($0.23 per diluted share) for the third quarter of fiscal 2002.

A number of events affected the comparability of the quarters. The quarter ended July 31, 2002 benefited from a $5.7 million gain ($3.6 million after-tax) from a partial settlement on the World Trade Center insurance claim, a $2.0 million tax benefit from the adjustment of tax liabilities resulting from the filing of the 2001 tax returns, and a related $0.6 million tax benefit from reducing the estimated tax rate for 2002 from 38.0% to 36.3%. The third quarter of 2002 was adversely affected by a $3.1 million provision ($1.9 million after-tax) for costs associated with the elimination of the Chief Administrative Officer position, the early retirement of the Corporate General Counsel and the replacement of the President of the ABM Facility Services.

 


 

The quarter ended July 31, 2003 includes revenues and operating profits generated by the operations of Lakeside Building Maintenance acquired in July 2002, the self-performed janitorial operations of Horizon National Commercial Services acquired in January 2003 and the commercial parking operations of Valet Parking Service acquired in May 2003. Third quarter 2003 operating profits also include a $0.7 million tax benefit from the adjustment of tax liabilities resulting from the filing of the 2002 tax returns during the quarter.

     Net income for the nine months ended July 31, 2003 was $26.0 million ($0.52 per diluted share) compared to $34.6 million ($0.68 per diluted share) reported for the first nine months of fiscal 2002. Income from continuing operations for the nine months ended July 31, 2003 was $23.6 million ($0.47 per diluted share) compared to $32.9 million for the comparable period in fiscal 2002 ($0.64 per diluted share). Revenues from continuing operations for the first nine months of 2003 were $1,684.1 million up 11% from $1,523.0 million in the comparable 2002 period. In addition to the unusual items noted above, the nine months ended July 31, 2002 included an additional $4.3 million ($2.7 million after-tax) gain recognized in the second quarter of 2002 from the initial proceeds from the World Trade Center insurance claim.

     On August 29, 2003, ABM acquired the operations of HGO, Inc., a provider of janitorial services based in King of Prussia, Pennsylvania. Assets acquired by ABM include key accounts in the eastern United States. The terms of the acquisition include a cash payment made at closing of $12.8 million, plus contingent payments based on income improvement and contract retention during the three years commencing September 1, 2003. Annual revenues from the acquisition are approximately $40 million. The operating results generated from these assets

 


 

will be included in the consolidated financial results of ABM Industries effective September 1, 2003.

     “Third quarter performance was solid in spite of some weakness in a couple of isolated areas and continued tightening of customers’ budgets that reduced higher margin capital project work and extra services,” said Henrik C. Slipsager, ABM’s President & Chief Executive Officer. “While not reflected in our third quarter results, the completion of the successful sale of Amtech Elevator Services to Otis Elevator and the acquisition of HGO, Inc., a premier janitorial operation in Philadelphia, are significant accomplishments that will be beneficial for ABM and its stockholders in the future,” said Slipsager.

     “Our cash flow from operations continued to be strong in the quarter, and with the sale of Elevator we have a cash surplus never seen before. We expect over time to continue to make acquisitions in our core services. Despite the good news associated with our recent acquisitions, we anticipate that the challenging economic environment will continue for the remainder of fiscal 2003,” said Slipsager. “We expect income from continuing operations for the fourth quarter of 2003 to be approximately $0.25 per diluted share. Net income for the fourth quarter including the gain on the sale of our elevator services business to Otis Elevator, will be approximately $1.25 per diluted share.”

     Wednesday morning, September 10th, at 6:00 a.m. (Pacific Daylight Time), ABM will host a live webcast of remarks by President & Chief Executive Officer Henrik C. Slipsager and Senior Vice President & Chief Financial Officer George B. Sundby, who will also answer questions from a panel of financial analysts who will join Slipsager and Sundby on the conference call. The webcast will be accessible at www.irconnect.com/primecast/03/q3/abm_3q2003.mhtml by clicking on ABM at that site. Listeners are requested to be online at least fifteen minutes early

 


 

to register, as well as to download and install any complimentary audio software that might be required. The webcast will be archived at this URL for 90 days thereafter. In addition to the webcast, a limited number of toll-free telephone lines will be available for listeners who are among the first to call 877/440-9648 within fifteen minutes before the event. Telephonic replays will be accessible for 48 hours beginning two hours after the call ends by dialing 800/642-1687, and then entering ID #2432289.

     ABM Industries Incorporated is one of the largest facility services contractors listed on the New York Stock Exchange. With fiscal 2002 revenues in excess of $2.0 billion and more than 63,000 employees, ABM provides janitorial, parking, engineering, security, lighting, mechanical and network services for thousands of commercial, industrial, institutional and retail facilities in hundreds of cities across North America. The ABM Family of Services includes ABM Janitorial, Ampco System Parking, ABM Engineering, American Commercial Security (ACSS), Amtech Lighting, CommAir Mechanical and ABM Service Network.

Safe Harbor Statement

     Cautionary Safe Harbor Disclosure for Forward Looking Statements under the Private Securities Litigation Reform Act of 1995: Because of the factors set forth below, as well as other variables affecting the Company’s operating results, past financial performance should not be considered a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. The statements contained herein which are not historical facts are forward-looking statements that are subject to meaningful risks and uncertainties, including but not limited to: (1) significant decreases in commercial real estate occupancy, resulting in reduced demand and pricing pressures on building maintenance and other facility services in the Company’s major markets, (2) inability to pass through cost increases in a timely manner, or at all, or to reduce expenses when sales decline, (3) loss or bankruptcy of one or more of the Company’s major customers, which could adversely affect the Company’s ability to collect its accounts receivable or recover its deferred costs as well as having an adverse impact on future revenue, (4) major collective bargaining issues that may cause loss of revenues or cost increases that non-union competitors can use to their advantage in gaining market share, (5) significant shortfalls in adding additional customers in existing and new territories and markets, (6) inability to successfully integrate acquisitions into the Company, (7) a protracted slowdown in the Company’s acquisition activities, (8) legislation or other governmental action that severely impacts one or more of the Company’s lines of business, such as price controls that could restrict price increases, or the unrecovered cost of any universal employer-paid health insurance, as well as government investigations that adversely affect the Company, (9) reduction or revocation of the Company’s line of credit, which

 


 

would increase interest expense or the cost of capital, (10) cancellation or nonrenewal of the Company’s primary insurance policies, as many customers contract out services based on the contractor’s ability to provide adequate insurance coverage and limits, (11) catastrophic uninsured or underinsured claims against the Company, the inability of the Company’s insurance carriers to pay otherwise insured claims, or inadequacy in the Company’s reserve for self-insured claims, (12) inability to employ entry level personnel at competitive wage rates due to labor shortages, (13) resignation, termination, death or disability of one or more of the Company’s key executives, which could adversely affect customer retention and day-to-day management of the Company, and (14) other material factors that are disclosed from time to time in the Company’s public filings with the United States Securities and Exchange Commission, such as reports on Forms 8-K, 10-Q and 10-K.

BALANCE SHEET SUMMARY (UNAUDITED)

                         
    July 31,   July 31,   Increase
    2003   2002   (Decrease)
   
 
 
Assets
                       
Assets held for sale
  $ 28,831,000     $ 34,206,000       -15.7 %
Other current assets
    428,142,000       409,650,000       4.5 %
Goodwill
    182,814,000       161,968,000       12.9 %
All other assets
    105,586,000       98,843,000       6.8 %
Total assets
  $ 745,373,000     $ 704,667,000       5.8 %
Liabilities
                       
Liabilities held for sale
  $ 7,869,000     $ 5,508,000       42.9 %
Other current liabilities
    243,719,000       214,504,000       13.6 %
Non-current liabilities
    94,758,000       103,036,000       -8.0 %
Total liabilities
  $ 346,346,000     $ 323,048,000       7.2 %
Stockholders’ Equity
  $ 399,027,000     $ 381,619,000       4.6 %
Total liabilities and stockholders’ equity
  $ 745,373,000     $ 704,667,000       5.8 %

SELECTED CASH FLOW INFORMATION (UNAUDITED)

                         
    Three Months Ended July 31,   Increase
    2003   2002   (Decrease)
   
 
 
Net Cash Provided By Operating Activities
  $ 25,815,000     $ 22,839,000       13.0 %
Net Cash Used In Investing Activities
  $ (5,520,000 )   $ (39,913,000 )     -86.2 %
Common stock issued
  $ 3,553,000     $ 3,916,000       -9.3 %
Stock buyback
    (2,795,000 )            
Dividends paid
    (4,693,000 )     (4,405,000 )     6.5 %
Net debt borrowings
          15,000,000        
Increase in bank overdraft
          2,594,000        
Net Cash (Used In) Provided By Financing Activities
  $ (3,935,000 )   $ 17,105,000       -123.0 %

 


 

                         
    Nine Months Ended July 31,   Increase
    2003   2002   (Decrease)
   
 
 
Net Cash Provided By Operating Activities
  $ 49,058,000     $ 63,150,000       -22.3 %
Net Cash Used In Investing Activities
  $ (26,742,000 )   $ (54,611,000 )     -51.0 %
Common stock issued
  $ 11,227,000     $ 13,656,000       -17.8 %
Stock buyback
    (12,092,000 )     (16,670,000 )     -27.5 %
Dividends paid
    (14,003,000 )     (13,283,000 )     5.4 %
Net debt borrowings
          3,181,000        
Increase in bank overdraft
          4,281,000        
Net Cash Used In Financing Activities
  $ (14,868,000 )   $ (8,835,000 )     68.3 %

SUMMARY INCOME STATEMENT (UNAUDITED)

                             
        Three Months Ended July 31,   Increase
        2003   2002   (Decrease)
       
 
 
Sales and other income
  $ 569,093,000     $ 514,260,000       10.7 %
Gain on insurance claim
          5,725,000        
 
   
     
         
Total revenues
    569,093,000       519,985,000       9.4 %
Operating expenses and cost of goods sold
    511,720,000       460,942,000       11.0 %
Selling, general and administrative expenses
    41,689,000       44,290,000       -5.9 %
Interest expense
    216,000       229,000       -5.7 %
 
Income from continuing operations before income taxes
    15,468,000       14,524,000       6.5 %
 
Income from continuing operations, net of income taxes
    10,556,000       11,891,000       -11.2 %
Income from discontinued operations, net of income taxes
    1,182,000       743,000       59.1 %
 
   
     
         
Net income
  $ 11,738,000     $ 12,634,000       -7.1 %
Net income per common share:
                       
 
Basic — From continuing operations
  $ 0.21     $ 0.24       -12.5 %
 
From discontinued operations
    0.03       0.02       50.0 %
 
   
     
         
 
Net income
  $ 0.24     $ 0.26       -7.7 %
 
Diluted — From continuing operations
  $ 0.21     $ 0.23       -8.7 %
 
From discontinued operations
    0.02       0.02       0.0 %
 
   
     
         
 
Net income
  $ 0.23     $ 0.25       -8.0 %
Average common shares outstanding:
                       
Basic
    49,269,000       49,059,000       0.4 %
Diluted
    50,244,000       51,179,000       -1.8 %
                             
        Nine Months Ended July 31,   Increase
        2003   2002   (Decrease)
       
 
 
Sales and other income
  $ 1,684,074,000     $ 1,512,935,000       11.3 %
Gain on insurance claim
          10,025,000        
 
   
     
         

 


 

                             
        Nine Months Ended July 31,   Increase
        2003   2002   (Decrease)
       
 
 
Total revenues
    1,684,074,000       1,522,960,000       10.6 %
Operating expenses and cost of goods sold
    1,520,980,000       1,360,202,000       11.8 %
Selling, general and administrative expenses
    127,027,000       113,580,000       11.8 %
Interest expense
    503,000       726,000       -30.7 %
 
Income from continuing operations before income taxes
    35,564,000       48,452,000       -26.6 %
 
Income from continuing operations, net of income taxes
    23,554,000       32,929,000       -28.5 %
Income from discontinued operations, net of income taxes
    2,414,000       1,685,000       43.3 %
 
   
     
         
Net income
  $ 25,968,000     $ 34,614,000       -25.0 %
Net income per common share:
                       
Basic — From continuing operations
  $ 0.48     $ 0.67       -28.4 %
 
 From discontinued operations
    0.05       0.04       25.0 %
 
   
     
         
 
 Net income
  $ 0.53     $ 0.71       -25.4 %
 
Diluted — From continuing operations
  $ 0.47     $ 0.64       -26.6 %
   
 From discontinued operations
    0.05       0.04       25.0 %
 
   
     
         
   
   Net income
  $ 0.52     $ 0.68       -23.5 %
Average common shares outstanding:
                       
Basic
    49,105,000       49,093,000       0.0 %
Diluted
    50,031,000       51,117,000       -2.1 %

SALES AND OPERATING PROFIT BY SEGMENT (UNAUDITED)

                         
    Three Months Ended July 31,   Increase
    2003   2002   (Decrease)
   
 
 
Sales and Other Income
                       
Janitorial
  $ 343,314,000     $ 295,556,000       16.2 %
Parking
    97,835,000       91,912,000       6.4 %
Engineering
    44,492,000       43,273,000       2.8 %
Security
    41,449,000       36,603,000       13.2 %
Lighting
    30,657,000       31,868,000       -3.8 %
Other
    11,303,000       14,960,000       -24.4 %
Corporate
    43,000       88,000       -51.1 %
 
   
     
         
 
  $ 569,093,000     $ 514,260,000       10.7 %
Operating Profit
                       
Janitorial
  $ 13,859,000     $ 12,442,000       11.4 %
Parking
    2,326,000       2,077,000       12.0 %
Engineering
    2,631,000       2,626,000       0.2 %
Security
    1,897,000       1,468,000       29.2 %
Lighting
    1,373,000       1,880,000       -27.0 %
Other
    333,000       (2,159,000 )     -115.4 %
Corporate expenses
    (6,735,000 )     (9,306,000 )     -27.6 %
 
   
     
         
Operating profit from continuing operations
    15,684,000       9,028,000       73.7 %
Gain on insurance claim
          5,725,000        
Interest expense
    (216,000 )     (229,000 )     -5.7 %
 
   
     
         
Income from continuing operations before income taxes
  $ 15,468,000     $ 14,524,000       6.5 %

 


 

                         
    Nine Months Ended July 31,   Increase
    2003   2002   (Decrease)
   
 
 
Sales and Other Income
                       
Janitorial
  $ 1,017,671,000     $ 866,585,000       17.4 %
Parking
    283,909,000       269,751,000       5.2 %
Engineering
    134,064,000       129,610,000       3.4 %
Security
    118,246,000       103,397,000       14.4 %
Lighting
    97,380,000       96,506,000       0.9 %
Other
    32,528,000       46,648,000       -30.3 %
Corporate
    276,000       438,000       -37.0 %
 
   
     
         
 
  $ 1,684,074,000     $ 1,512,935,000       11.3 %
Operating Profit
                       
Janitorial
  $ 37,236,000     $ 39,612,000       -6.0 %
Parking
    3,938,000       4,908,000       -19.8 %
Engineering
    7,247,000       7,286,000       -0.5 %
Security
    4,399,000       3,728,000       18.0 %
Lighting
    3,866,000       5,884,000       -34.3 %
Other
    280,000       (1,387,000 )     -120.2 %
Corporate expenses
    (20,899,000 )     (20,878,000 )     0.1 %
 
   
     
         
Operating profit from continuing operations
    36,067,000       39,153,000       -7.9 %
Gain on insurance claim
          10,025,000        
Interest expense
    (503,000 )     (726,000 )     -30.7 %
 
   
     
         
Income from continuing operations before income taxes
  $ 35,564,000     $ 48,452,000       -26.6 %

 

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