UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 14, 2005
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)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On December 14, 2005, ABM Industries Incorporated (the “Company”) issued a press release
announcing financial results related to fiscal year 2005 and the fourth quarter of fiscal year
2005. A copy of the press release is attached as Exhibit 99.1, which is incorporated into this item
by reference.
Item 8.01 Other Events.
On December 14, 2005, the Board of Directors of the Company declared a quarterly dividend of
$0.11 per share, payable on February 6, 2006 to stockholders of record on January 13, 2006. A copy
of the press release announcing the declaration of the dividend is attached as Exhibit 99.2, which
is incorporated into this item by reference.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
| 99.1 | Press Release of ABM Industries Incorporated dated December 14, 2005, announcing financial results related to the third quarter of fiscal year 2005. | |
| 99.2 | Press Release of ABM Industries Incorporated dated December 14, 2005, announcing the declaration of a dividend. |
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: December 14, 2005 | By: | /s/ George B. Sundby | ||
| George B. Sundby | ||||
| Executive Vice President and Chief Financial Officer |
||||
EXHIBIT INDEX
| 99.1 | Press Release of ABM Industries Incorporated dated December 14, 2005, announcing financial results related to fiscal year 2005 and the fourth quarter of fiscal year 2005. | |
| 99.2 | Press Release of ABM Industries Incorporated dated December 14, 2005, announcing the declaration of a dividend. |
Exhibit 99.1
ABM INDUSTRIES ANNOUNCES FOURTH QUARTER FISCAL 2005 FINANCIAL RESULTS
Company Achieves Record Fourth Quarter Revenues of $658.7 Million and
EPS from Continuing Operations of $0.30 for the Fourth Quarter
EPS from Continuing Operations of $0.30 for the Fourth Quarter
SAN FRANCISCO, CA — December 14, 2005 — ABM Industries Incorporated (NYSE:ABM), a leading facility
services contractor in the United States, today reported income from continuing operations for the
fourth quarter ended October 31, 2005 of $15.2 million ($0.30 per diluted share), up 358.3%,
compared to $3.3 million ($0.06 per diluted share) for the prior year fourth quarter. Sales and
other income for the fourth quarter of fiscal 2005 were $658.7 million, up 6.3% from $619.8 million
in the fourth quarter of fiscal 2004. In the fourth quarter of fiscal 2004, the Company recorded a
$17.2 million or $10.5 million after-tax ($0.21 per diluted share) charge for adverse developments
in the Company’s California workers’ compensation claims.
“This was a strong quarter of revenue growth and profitability — with positive double-digit
comparisons across all of our operating segments,” commented Henrik Slipsager, ABM’s president and
chief executive officer. “ABM’s focus on our key strategic initiatives — combined with an improved
economy and lower office vacancy rates — resulted in new business across the country.
“We’re gaining momentum among all customer segments — commercial, industrial, institutional and
retail facilities. Customers are increasingly attracted to the benefits of our bundled and
integrated services, and the opportunity to contract multiple services from a single, leading
national provider. In 2006, we expect to further leverage our customer value proposition through
continued strategic acquisitions.
“In addition to our business success, our financial position remains very strong. We ended fiscal
2005 with approximately $64 million in cash and equivalents, no long-term debt and more than $257
million in working capital, and we generated $52 million in operating cash flow from
continuing operations for fiscal 2005. For the first time in ABM’s history, total assets exceeded
$900 million.”
Influences on Quarterly Results
The quarter ended October 31, 2005 included $4.3 million after-tax ($0.09 per diluted share) of
higher professional fees related to initial compliance with the Sarbanes-Oxley internal controls
certification requirement which was substantially offset by $2.6 million after-tax gain ($0.05 per
diluted share) for the sale of the leasehold interest for an off-airport parking facility and $1.6
million after-tax benefit ($0.03 per diluted share) from the reduction of 2004 and prior-year
insurance reserves on three specialty risk programs.
The fourth quarter of fiscal 2005 had one more workday than the comparable period in fiscal 2004,
resulting in an additional expense of $1.4 million after-tax ($0.03 per diluted share) on
janitorial contracts with variable labor cost but fixed monthly pricing. On a fiscal year basis,
2005 also had one additional workday compared to 2004.
Full-Year 2005
The Company’s income from continuing operations for fiscal 2005 was $55.1 million ($1.09 per
diluted share), up 85.8%, compared to $29.6 million ($0.59 per diluted share) for fiscal 2004.
Operating results for 2005 include $5.0 million of after tax benefits ($0.10 per diluted share)
from prior year insurance reserve adjustments, a $2.7 million ($0.05 per diluted share) state income tax settlement and the
fourth quarter parking leasehold gain. These benefits were substantially offset by the $7.0 million
after-tax ($0.14 per diluted share) increase in Sarbanes-Oxley compliance professional fees and a
$3.0 million after-tax ($0.06 per diluted share) settlement of former employee litigation.
Sales and other income for the year ended October 31, 2005 were $2.59 billion, up 8.9%, compared to
$2.38 billion in 2004. Net income, which includes income from discontinued operations, was $69.5
million ($1.38 per diluted share), up 127.9%, compared to $30.5 million ($0.61 per diluted share)
for fiscal 2004. The Company realized an after-tax gain from the sale of its Mechanical Services
subsidiary of $14.2 million ($0.29 per diluted share) in fiscal 2005.
2006 Guidance
Mr. Slipsager concluded, “Given the strength of our balance sheet and our cash flow from continuing
operations, we remain well positioned to continue to expand our existing lines of business in
fiscal 2006 through a combination of acquisition and organic growth.
“Based on the current economic environment, our strong operational momentum and the recent
increase in the level of sales activity, we expect income from continuing operations for fiscal
2006 will be in the range of $1.08 to $1.14 per diluted share. This is exclusive of future
acquisitions, and includes $0.06 of stock-based compensation expense as a result of the adoption of
SFAS 123R in fiscal 2006. Excluding 2006 stock based compensation and 2005 insurance and tax
benefits related to prior years, we expect to increase income from operations by more than 20
percent.”
Conference Call
On Thursday, December 15, 2005 at 6:00 a.m. (PST), ABM will host a live webcast of remarks by
President and Chief Executive Officer Henrik C. Slipsager, and Executive Vice President and Chief
Financial Officer George B. Sundby. A webcast of the conference call will be accessible at
www.irconnect.com/primecast/05/q4/abm_4q2005.html. Listeners are asked 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. Following the call, the webcast will be available at this URL for
a period of one year.
In addition to the webcast, a limited number of toll-free telephone lines will also 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 during the period from two hours to seven days after the call
by dialing 800/642-1687, and then entering ID # 3013802.
About ABM Industries
ABM Industries Incorporated is among the largest facility services contractors listed on the New
York Stock Exchange. With more than 73,000 employees, ABM provides janitorial, parking,
security, engineering and lighting services for thousands of commercial, industrial, institutional
and retail facilities in hundreds of cities across the United States and British Columbia, Canada.
The ABM Family of Services includes ABM Janitorial; Ampco System Parking; ABM Security, which
includes American Commercial Security (ACSS) and Security Services of America (SSA); ABM Facility
Services; ABM Engineering; and Amtech Lighting Services.
Cautionary Statement Under the Private Securities Litigation Reform Act of 1995.
This press release contains forward-looking statements that set forth management’s anticipated
results based on management’s plans and assumptions. Any number of factors could cause the
Company’s actual results to differ materially from those anticipated. These risks and uncertainties
include, but are not limited to: (1) a delay in the filing of the Company’s Fork 10-K and an
adverse internal control evaluation under Section 404 of the Sarbanes-Oxley Act that affects ABM’s
stock price; (2) a significant increase in the Company’s significant accounting and other control
costs; (3) labor disputes that lead to a loss of sales and expense variations; (4) an increase in
costs that the Company cannot pass on to customers; (5) a change in actuarial analysis that causes
an unanticipated change in insurance reserves; (6) a change in the frequency or severity of claims
against the Company, a deterioration in claims management, or the cancellation or non-renewal of
the Company’s primary insurance policies; (7) intense competition that lowers revenue or reduces
margins; (8) low levels of capital investments by customers that impacts project sales of the
Lighting segment; (9) a decline in commercial office building occupancy and rental rates lowers
sales and profitability; (10) financial difficulties or bankruptcy of a major customer; (11) the
loss of long-term customers; (12) weakness in airline travel and the hospitality industry that
affects the results of the Company’s Parking segment; (13) acquisition activity slows or is
unsuccessful; and (14) other issues and uncertainties that may include: natural or man made
disasters, new accounting pronouncements or changes in accounting policies, labor shortages that
adversely affect the Company’s ability to employ entry level personnel, the on-going impact of
Hurricane Katrina on the United States economy and on the Company’s ability to provide services in
the Gulf Coast region, legislation or other governmental action that detrimentally impacts the
Company’s expenses or reduces sales by adversely affecting the Company’s customers such as state or
locally mandated healthcare benefits, impairment of goodwill and other intangible assets, a
reduction or revocation of the Company’s line of credit that increases interest expense and the
cost of capital ,and the resignation, termination, death or disability of one or more of the
Company’s key executives that adversely affects customer retention or day-to-day management of the
Company. Additional information regarding these and other risks and uncertainties the Company faces
is contained in the Company’s Annual Report on Form 10-K and in other reports it files from time to
time with the Securities and Exchange Commission.
# # #
BALANCE SHEET SUMMARY (UNAUDITED)
| October 31, | October 31, | |||||||
| 2005 | 2004 | |||||||
Assets |
||||||||
Cash and cash equivalents |
$ | 63,991,000 | $ | 63,369,000 | ||||
Trade accounts receivable, net |
345,104,000 | 307,237,000 | ||||||
Assets held for sale |
— | 14,441,000 | ||||||
Other current assets |
112,462,000 | 100,079,000 | ||||||
Total current assets |
521,557,000 | 485,126,000 | ||||||
Goodwill |
243,559,000 | 225,495,000 | ||||||
Other intangibles, net |
24,463,000 | 22,290,000 | ||||||
All other assets |
114,232,000 | 109,613,000 | ||||||
Total assets |
$ | 903,811,000 | $ | 842,524,000 | ||||
Liabilities |
||||||||
Liabilities held for sale |
$ | — | $ | 3,926,000 | ||||
Other current liabilities |
263,653,000 | 250,502,000 | ||||||
Non-current liabilities |
152,710,000 | 145,935,000 | ||||||
Total liabilities |
416,363,000 | 400,363,000 | ||||||
Stockholders’ Equity |
487,448,000 | 442,161,000 | ||||||
Total liabilities and stockholders’ equity |
$903,811,000 | $ | 842,524,000 | |||||
SELECTED CASH FLOW INFORMATION (UNAUDITED)
| Three Months Ended October 31, | ||||||||
| 2005 | 2004 | |||||||
Net cash flows from continuing operating activities |
$ | 37,507,000 | $ | 22,179,000 | ||||
Net operational cash flows from discontinued operations |
(7,720,000 | ) | (912,000 | ) | ||||
Net Cash Provided By Operating Activities |
$ | 29,787,000 | $ | 21,267,000 | ||||
Net Cash Used In Investing Activities |
$ | (7,601,000 | ) | $ | (5,051,000 | ) | ||
Common stock issued |
$ | 3,750,000 | $ | 2,524,000 | ||||
Dividends paid |
(5,147,000 | ) | (4,872,000 | ) | ||||
Net Cash Used In Financing Activities |
$ | (1,397,000 | ) | $ | (2,348,000 | ) | ||
| Year Ended October 31, | ||||||||
| 2005 | 2004 | |||||||
Net cash flows from continuing operating activities |
$ | 51,997,000 | $ | 64,412,000 | ||||
Net operational cash flows from discontinued operations |
(7,348,000 | ) | (30,722,000 | ) | ||||
Net Cash Provided By Operating Activities |
$ | 44,649,000 | $ | 33,690,000 | ||||
Net Cash Used In Investing Activities |
$ | (13,102,000 | ) | $ | (60,753,000 | ) | ||
Common stock issued |
$ | 21,137,000 | $ | 10,034,000 | ||||
Stock buyback |
(31,318,000 | ) | (11,073,000 | ) | ||||
Dividends paid |
(20,744,000 | ) | (19,476,000 | ) | ||||
Net Cash Used In Financing Activities |
$ | (30,925,000 | ) | $ | (20,515,000 | ) | ||
INCOME STATEMENT (UNAUDITED)
| Three Months Ended October 31, | Increase | |||||||||||
| 2005 | 2004 | (Decrease) | ||||||||||
Revenues |
||||||||||||
Sales and other income |
$ | 658,706,000 | $ | 619,794,000 | 6.3 | % | ||||||
Expenses |
||||||||||||
Operating expenses and cost of goods sold |
578,446,000 | 572,031,000 | 1.1 | % | ||||||||
Selling, general and administrative expenses |
53,775,000 | 41,741,000 | 28.8 | % | ||||||||
Intangible amortization |
1,409,000 | 1,280,000 | 10.1 | % | ||||||||
Interest expense |
171,000 | 270,000 | (36.7 | )% | ||||||||
Total expenses |
633,801,000 | 615,322,000 | 3.0 | % | ||||||||
Income from continuing operations before income taxes |
24,905,000 | 4,472,000 | 456.9 | % | ||||||||
Income taxes |
9,708,000 | 1,156,000 | 739.8 | % | ||||||||
Income from continuing operations |
15,197,000 | 3,316,000 | 358.3 | % | ||||||||
Income (loss) from discontinued operations, net of income taxes |
(67,000 | ) | 334,000 | (120.1 | )% | |||||||
Net Income |
$ | 15,130,000 | $ | 3,650,000 | 314.5 | % | ||||||
Net Income Per Common Share — Basic |
||||||||||||
Income from continuing operations |
$ | 0.31 | $ | 0.07 | 342.9 | % | ||||||
Income from discontinued operations |
— | 0.01 | — | |||||||||
| $ | 0.31 | $ | 0.08 | 287.5 | % | |||||||
Net Income Per Common Share — Diluted |
||||||||||||
Income from continuing operations |
$ | 0.30 | $ | 0.06 | 400.0 | % | ||||||
Income from discontinued operations |
— | 0.01 | — | |||||||||
| $ | 0.30 | $ | 0.07 | 328.6 | % | |||||||
Average Common And Common Equivalent Shares |
||||||||||||
Basic |
48,922,000 | 48,591,000 | 0.7 | % | ||||||||
Diluted |
49,901,000 | 50,100,000 | (0.4 | )% | ||||||||
| Year Ended October 31, | Increase | |||||||||||
| 2005 | 2004 | (Decrease) | ||||||||||
Revenues |
||||||||||||
Sales and other income |
$ | 2,586,566,000 | $ | 2,375,149,000 | 8.9 | % | ||||||
Gain on insurance claim |
1,195,000 | — | — | |||||||||
Total revenues |
2,587,761,000 | 2,375,149,000 | 9.0 | % | ||||||||
Expenses |
||||||||||||
Operating expenses and cost of goods sold |
2,304,988,000 | 2,157,637,000 | 6.8 | % | ||||||||
Selling, general and administrative expenses |
193,230,000 | 166,981,000 | 15.7 | % | ||||||||
Intangible amortization |
5,673,000 | 4,519,000 | 25.5 | % | ||||||||
Interest expense |
884,000 | 1,016,000 | (13.0 | )% | ||||||||
Total expenses |
2,504,775,000 | 2,330,153,000 | 7.5 | % | ||||||||
Income from continuing operations before income taxes |
82,986,000 | 44,996,000 | 84.4 | % | ||||||||
Income taxes |
27,910,000 | 15,352,000 | 81.8 | % | ||||||||
Income from continuing operations |
55,076,000 | 29,644,000 | 85.8 | % | ||||||||
Income from discontinued operations, net of income taxes |
166,000 | 829,000 | (80.0 | )% | ||||||||
Gain on sale of discontinued operation, net of income taxes |
14,221,000 | — | — | |||||||||
Net Income |
$ | 69,463,000 | $ | 30,473,000 | 127.9 | % | ||||||
Net Income Per Common Share — Basic |
||||||||||||
Income from continuing operations |
$ | 1.12 | $ | 0.61 | 83.6 | % | ||||||
Income from discontinued operations |
— | 0.02 | — | |||||||||
Gain on sale of discontinued operation |
0.29 | — | — | |||||||||
| $ | 1.41 | $ | 0.63 | 123.8 | % | |||||||
Net Income Per Common Share — Diluted |
||||||||||||
Income from continuing operations |
$ | 1.09 | $ | 0.59 | 84.7 | % | ||||||
Income from discontinued operations |
— | 0.02 | — | |||||||||
Gain on sale of discontinued operation |
0.29 | — | — | |||||||||
| $ | 1.38 | $ | 0.61 | 126.2 | % | |||||||
Average Common And Common Equivalent Shares |
||||||||||||
Basic |
49,332,000 | 48,641,000 | 1.4 | % | ||||||||
Diluted |
50,367,000 | 50,064,000 | 0.6 | % | ||||||||
SALES AND OPERATING PROFIT BY SEGMENT (UNAUDITED)
| Three Months Ended October 31, | Increase | |||||||||||
| 2005 | 2004 | (Decrease) | ||||||||||
Sales and Other Income |
||||||||||||
Janitorial |
$ | 383,604,000 | $ | 369,426,000 | 3.8 | % | ||||||
Parking |
106,813,000 | 99,163,000 | 7.7 | % | ||||||||
Security |
73,834,000 | 66,729,000 | 10.6 | % | ||||||||
Engineering |
62,737,000 | 54,741,000 | 14.6 | % | ||||||||
Lighting |
31,138,000 | 29,014,000 | 7.3 | % | ||||||||
Corporate |
580,000 | 721,000 | (19.6 | )% | ||||||||
| $ | 658,706,000 | $ | 619,794,000 | 6.3 | % | |||||||
Operating Profit |
||||||||||||
Janitorial |
$ | 21,459,000 | $ | 18,908,000 | 13.5 | % | ||||||
Parking |
7,922,000 | 3,245,000 | 144.1 | % | ||||||||
Security |
3,833,000 | 3,215,000 | 19.2 | % | ||||||||
Engineering |
3,873,000 | 3,405,000 | 13.7 | % | ||||||||
Lighting |
1,384,000 | 1,096,000 | 26.3 | % | ||||||||
Corporate expenses |
(13,395,000 | ) | (25,127,000 | ) | (46.7 | )% | ||||||
Operating profit from continuing operations |
25,076,000 | 4,742,000 | 428.8 | % | ||||||||
Interest expense |
(171,000 | ) | (270,000 | ) | (36.7 | )% | ||||||
Income from continuing operations before income taxes |
$ | 24,905,000 | $ | 4,472,000 | 456.9 | % | ||||||
| Year Ended October 31, | Increase | |||||||||||
| 2005 | 2004 | (Decrease) | ||||||||||
Sales and Other Income |
||||||||||||
Janitorial |
$ | 1,525,565,000 | $ | 1,442,901,000 | 5.7 | % | ||||||
Parking |
409,886,000 | 384,547,000 | 6.6 | % | ||||||||
Security |
294,299,000 | 224,715,000 | 31.0 | % | ||||||||
Engineering |
238,794,000 | 209,156,000 | 14.2 | % | ||||||||
Lighting |
116,218,000 | 112,074,000 | 3.7 | % | ||||||||
Corporate |
1,804,000 | 1,756,000 | 2.7 | % | ||||||||
| $ | 2,586,566,000 | $ | 2,375,149,000 | 8.9 | % | |||||||
Operating Profit |
||||||||||||
Janitorial |
$ | 69,254,000 | $ | 60,574,000 | 14.3 | % | ||||||
Parking |
16,837,000 | 9,514,000 | 77.0 | % | ||||||||
Security |
13,589,000 | 9,002,000 | 51.0 | % | ||||||||
Engineering |
14,200,000 | 12,096,000 | 17.4 | % | ||||||||
Lighting |
3,805,000 | 2,822,000 | 34.8 | % | ||||||||
Corporate expenses |
(35,010,000 | ) | (47,996,000 | ) | (27.1 | )% | ||||||
Operating profit from continuing operations |
82,675,000 | 46,012,000 | 79.7 | % | ||||||||
Gain on insurance claim |
1,195,000 | — | — | |||||||||
Interest expense |
(884,000 | ) | (1,016,000 | ) | (13.0 | )% | ||||||
Income from continuing operations before income taxes |
$ | 82,986,000 | $ | 44,996,000 | 84.4 | % | ||||||
ABM Industries Incorporated
George B. Sundby
Executive Vice President and
Chief Financial Officer
(415) 733-4000
George B. Sundby
Executive Vice President and
Chief Financial Officer
(415) 733-4000
EXHIBIT 99.2
ABM INDUSTRIES CONTINUES BEST-EVER QUARTERLY DIVIDEND RATE
SAN FRANCISCO, December 14, 2005 — The Board of Directors of ABM Industries Incorporated
(NYSE: ABM) has declared an all-time-high first quarter cash dividend of $0.11 per common share
payable on February 6, 2006 to stockholders of record on January 13, 2006. This will be ABM’s
159th consecutive quarterly cash dividend, and is $0.005 (4.8%) above the $0.105 per
share quarterly dividend rate paid for the first quarter of 2005.
ABM Industries Incorporated is among the largest facility services contractors listed on the
New York Stock Exchange. With fiscal 2004 revenues in excess of $2.4 billion and more than 73,000
employees, ABM provides janitorial, parking, security, engineering and lighting services for
thousands of commercial, industrial, institutional and retail facilities in hundreds of cities
across the United States and British Columbia, Canada. The ABM Family of Services includes ABM
Janitorial; Ampco System Parking; ABM Security, which includes American Commercial Security
Services (ACSS) and Security Services of America (SSA); ABM Facility Services; ABM Engineering; and
Amtech Lighting Services.
# # #
Contact:
ABM Industries, Inc.
George B. Sundby (Executive Vice President & Chief Financial Officer)
415/733-4000 or e-mail gsundby@abm.com
ABM Industries, Inc.
George B. Sundby (Executive Vice President & Chief Financial Officer)
415/733-4000 or e-mail gsundby@abm.com