Back to GetFilings.com

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

For the quarterly period ended       January 31, 2003

OR

For the transition period from                    to      

Commission file Number     1-8929

ABM INDUSTRIES INCORPORATED

160 Pacific Avenue, Suite 222, San Francisco, California 94111

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  [x]  No  [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes  [ ]  No  [x]

Number of shares of common stock outstanding as of February 28, 2003: 48,939,828.

Table of Contents

ABM Industries Incorporated

Table of Contents

1

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In thousands except share amounts)

(Continued)

2

Table of Contents

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In thousands except share amounts)

     The accompanying notes are an integral part of the consolidated financial statements.

3

Table of Contents

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JANUARY 31, 2003 AND 2002
(In thousands except per share amounts)

     The accompanying notes are an integral part of the consolidated financial statements.

4

Table of Contents

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JANUARY 31, 2003 AND 2002
(In thousands)

(Continued)

5

Table of Contents

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JANUARY 31, 2003 AND 2002
(In thousands)

     The accompanying notes are an integral part of the consolidated financial statements.

6

Table of Contents

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.

General

     In the opinion of management, the accompanying unaudited consolidated financial statements contain all material adjustments which are necessary to present fairly ABM Industries Incorporated and subsidiaries (the Company) financial position as of January 31, 2003 and the results of operations and cash flows for the three months then ended. These adjustments are of a normal, recurring nature.

     These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Form 10-K for the fiscal year ended October 31, 2002, as filed with the Securities and Exchange Commission.

2.

Stock-Based Compensation – Adoption of Statement of Financial Accounting Standards No. 148

     In December 2002, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure.” SFAS No. 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation” to provide for alternative methods of transition to SFAS No. 123 and amends disclosure provisions. The Statement is effective for financial statements for fiscal years ending after December 15, 2002. The Company continues to account for stock-based employee compensation plans using the intrinsic value method under the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees” but has adopted the disclosure provisions of SFAS 148 effective November 1, 2002. APB Opinion No. 25 generally does not result in compensation cost because the exercise price of the options is equal to the fair value of the stock at the grant date. Under the intrinsic value method, if the fair value of the stock is greater than the exercise price at grant date, the excess is amortized to compensation expense over the estimated service life of the recipient. No stock-based employee compensation cost is reflected in net income for the quarters ended January 31, 2003 and 2002 as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123 to all employee options granted, modified, or settled after October 31, 1995 using

7

Table of Contents

the retroactive restatement method (in thousands except per share amounts):

reimbursed under managed parking lot agreements were netted against the reimbursement received. EITF No. 01-14 did not change the income statement presentation of revenues and expenses of any other segments. Amounts have been reclassified to conform to the presentation of these reimbursed expenses in all prior periods presented. Adoption of the pronouncement resulted in an increase in total revenues and total costs and expenses in equal amounts of $53,705,000 and $51,576,000 for the three months ended January 31, 2003 and 2002, respectively. This presentation change had no impact on operating profits or net income.

5.

Goodwill and Other Intangibles

     The changes in the carrying amount of goodwill (in thousands) for the three months ended January 31, 2003 are as follows (acquisitions are discussed in Note 9):

     As of January 31, 2003 and October 31, 2002, all intangible assets other than goodwill, consisting principally of contract rights with a net book value of $4,030,000 and $4,059,000, respectively, were included in other assets and are being amortized over the contract periods. Amortization expense for intangible assets other than goodwill was $262,000 and $263,000 for the three months ended January 31, 2003 and 2002, respectively. The remaining amortization period for intangible assets other than goodwill ranges from 11 months to 14 years. The weighted average remaining life is 8 years.

6.

Net Income per Common Share

     The Company has reported its earnings in accordance with SFAS No. 128, “Earnings per Share.” Basic net income per common share is based on the weighted average number of shares outstanding during the period. Diluted net income per common share is based on the weighted average number of shares outstanding during the period, including common stock equivalents. The calculation of net income per common share is as follows (in thousands except per share amounts):

9

Table of Contents