ABM INDUSTRIES INC / DE / MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS. (form 10-K)

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The following MD&A is intended to facilitate an understanding of the results of
operations and financial condition of ABM. This MD&A is provided as a supplement
to, and should be read in conjunction with, our Financial Statements. This MD&A
contains both historical and forward-looking statements, within the meaning of
the Private Securities Litigation Reform Act of 1995, that involve risks and
uncertainties. We make forward-looking statements related to future
expectations, estimates, and projections that are uncertain and often contain
words such as "anticipate," "believe," "could," "estimate," "expect,"
"forecast," "intend," "likely," "may," "outlook," "plan," "predict," "should,"
"target," or other similar words or phrases. These statements are not guarantees
of future performance and are subject to known and unknown risks, uncertainties,
and assumptions that are difficult to predict. Factors that might cause such
differences include, but are not limited to, those discussed in Part 1. of this
Form 10-K under Item 1A., "Risk Factors," which are incorporated herein by
reference. Our future results and financial condition may be materially
different from those we currently anticipate. Throughout the MD&A, amounts and
percentages may not recalculate due to rounding. Unless otherwise indicated, all
information in the MD&A and references to years are based on our fiscal year,
which ends on October 31.

Business Overview


ABM is a leading provider of integrated facility solutions, customized by
industry, with a mission to make a difference, every person, every day. Our
principal operations are in the United States, and in 2021 our U.S. operations
generated approximately 94% of our revenues.
Strategic Growth
We remain focused on long-term, profitable growth by delivering valued service
offerings to both new and existing clients within our industry groups and across
our many service lines. Our revenue growth strategy is predicated on pursuing
new sales and targeting a favorable retention rate among existing contracts.
Cross-selling and up-selling projects and services is also an integral part of
our strategy. We believe our strategic growth initiatives, coupled with our
continued focus on marketing, capital, and sales resources, will increase
profitability.
ELEVATE Transformation
Through our ELEVATE strategy, as described in Item 1., "Business.," we plan to
primarily focus our efforts on:
•the client experience, by enhancing service delivery through the development of
a new workforce management platform with modern timekeeping, scheduling, and
forecasting modules to create a digital connection with our workforce;
•the team member experience, by investing in development programs, talent
acquisition tools, and training; and
•the use of technology and data in our systems, tools, business processes, and
operating models.
We believe that our technology and data investments will enable: the development
and deployment of client-facing technology to improve service delivery to our
clients; the use of advanced data analytics for sales targeting, team member
retention, and recruiting; and the upgrade of our Enterprise Resource Planning
and payroll systems.
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Developments and trends


COVID-19 Pandemic
COVID-19 has resulted in a worldwide health Pandemic. To date, COVID-19 has
surfaced in regions all around the world and resulted in business slowdowns and
shutdowns, as well as global travel restrictions. We, along with many of our
clients, have been impacted by recommendations and/or mandates from federal,
state, and local authorities to practice social distancing, to refrain from
gathering in groups, and, in some areas, to refrain from non-essential movements
outside of homes. The Pandemic has also created unanticipated circumstances and
uncertainty, disruption, and significant volatility in the broader economy.
These factors have led to lower demand for some of our services in certain
end-markets, particularly in our Aviation segment. Refer to "Consolidated
Results of Operations" and "Results of Operations by Segment" for additional
information related to the impact of the Pandemic on our financial results.
Given the unprecedented and uncertain nature and potential duration of this
situation, we cannot reasonably estimate the full extent of the impact the
Pandemic will have on our financial condition, results of operations, or cash
flows. The ultimate extent of the effects of the Pandemic on our company is
highly uncertain and will depend on future developments, and we may continue to
experience adverse effects on our business, consolidated results of operations,
financial position, and cash flows resulting from a recessionary economic
environment that may persist.
Our priority has been and continues to be the health, safety, and support of our
employees, our clients, and the communities that we serve. We have also taken
actions to strengthen our liquidity, cash flows, and financial position to help
mitigate potential future impacts on our operations and financial performance.
These priorities and measures include, but are not limited to, the following:
Health and Safety of our Employees and Clients
As the Pandemic has developed, we have taken steps to support our employees and
clients based on recommendations from various global experts, including the
World Health Organization, the Centers for Disease Control and Prevention, the
Occupational Safety and Health Administration, and the U.K. National Health
Service. To help protect our employees and our clients, face masks and other
personal protective equipment ("PPE") are being used by our employees. We have
also encouraged our employees to practice social distancing and wash hands
frequently. Additionally, we transitioned many office-based employees to a
remote work environment, suspended non-essential travel, and adopted
technologies to allow employees to effectively perform their functions remotely.
Client Focus
Over the past few years, we have focused on consolidating purchasing activities
to leverage our scale and identify preferred suppliers. While we have seen a
reduction in the availability of supplies and an increase in costs, our
procurement efforts have helped create a positive supply chain for our company
and clients during the Pandemic. We will continue to monitor our supply chain
for potential impacts as future developments unfold.
The Pandemic continues to create a dynamic client environment, and we are
working diligently to ensure our clients' changing staffing and service needs
are met. We developed new cleaning initiatives in accordance with various
protocols issued by global experts, including deep cleaning services, special
project cleaning services, and other work orders.
In April 2020, we announced our EnhancedCleanTM Program ("EnhancedClean"), an
innovative solution that helps provide clients with healthy spaces. We designed
EnhancedClean under the guidance of experts on infectious diseases and
industrial hygiene to help provide our clients with processes that use
hospital-grade disinfectants, specialized equipment, and innovative solutions
and technology. These solutions include: hygiene and safety protocols,
utilization of disinfecting procedures and products for high-touch surfaces,
employment of PPE, and communication and training protocols.
Management of Direct Labor
As we adapt to the changing demand environment resulting from the Pandemic, we
continue to actively manage direct labor and related personnel costs, including
furloughs or reduced hours for certain frontline employees in markets
significantly impacted by business slowdowns and shutdowns.
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Liquidity, Cash Flows, and Financial Position
We have taken and continue to take actions to help preserve cash, increase
liquidity, and strengthen our financial position, including:
•Amending our credit facility on June 28, 2021, to increase our borrowing
capacity and further enhance our financial flexibility (refer to "Liquidity and
Capital Resources" for more information);
•Focusing on collection of client receivables and monitoring the adequacy of our
reserves;
•Extending vendor payment terms where possible; and
•Utilizing certain governmental relief efforts (as further described below).
In response to the Pandemic, Congress enacted the Coronavirus Aid, Relief, and
Economic Security Act ("CARES Act") on March 27, 2020. The CARES Act provides
various stimulus measures, including several income tax and payroll tax
provisions. Among the payroll tax provisions is the creation of a refundable
credit for employee retention and the deferral of certain payroll tax
remittances through December 31, 2020, to future years (with 50% of the deferred
amount due by December 31, 2021, and the remaining 50% due by December 31,
2022). We evaluated the impact of business tax provisions in the CARES Act and
determined the impact of the income tax provisions is not material. The impact
of the payroll tax provisions was the deferral of approximately $132 million of
payroll tax as of October 31, 2021. Additionally, we received grants under the
United Kingdom's job retention scheme to reimburse us for a portion of certain
furloughed employees' salaries from March 2020 through September 2021.
As a result of the actions taken above, we were able to strengthen our cash flow
in fiscal 2021. As of October 31, 2021, these actions resulted in a borrowing
capacity of $875.0 million.
Insurance Reserves
We use a combination of insured and self-insurance programs to cover workers'
compensation, general liability, automobile liability, property damage, and
other insurable risks. Insurance claim liabilities represent our estimate of
retained risks without regard to insurance coverage. We retain a substantial
portion of the risk related to certain workers' compensation and medical claims.
Liabilities associated with these losses include estimates of both filed claims
and incurred but not reported claims ("IBNR Claims").
With the assistance of third-party actuaries, we review our estimate of ultimate
losses for IBNR Claims on a quarterly basis and adjust our required
self-insurance reserves as appropriate. As part of this evaluation, we review
the status of existing and new claim reserves as established by third-party
claims administrators. The third-party claims administrators establish the case
reserves based upon known factors related to the type and severity of the
claims, demographic factors, legislative matters, and case law, as
appropriate. We compare actual trends to expected trends and monitor claims
developments. The specific case reserves estimated by the third-party
administrators are provided to an actuary who assists us in projecting an
actuarial estimate of the overall ultimate losses for our self-insured or high
deductible programs, which includes the case reserves plus an actuarial estimate
of reserves required for additional developments, such as IBNR Claims. We
utilize the results of actuarial studies to estimate our insurance rates and
insurance reserves for future periods and to adjust reserves, if appropriate,
for prior years.
The actuarial reviews demonstrate that the changes we have made to our risk
management program continue to positively impact the frequency and severity of
claims. The claims management strategies and programs that we have implemented
have resulted in improvements. Furthermore, we continue to adjust our reserves
consistent with known fact patterns. Based on the results of the actuarial
reviews performed, we decreased our total reserves related to prior years for
known claims as well as our estimate of the loss amounts associated with IBNR
claims during 2021 by $36.0 million. In 2020, we decreased our total reserves
related to prior year claims by $30.2 million.
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Key Financial Highlights
•Revenues increased by $241.0 million, or 4.0%, during 2021, as compared to
2020, primarily driven by a $101.1 million revenue increase due to the Able
Acquisition in the fourth quarter of 2021, an increase in work orders (primarily
as a result of the Pandemic), new business within B&I, T&M, and Technical
Solutions, and the recovery of volume in Education and Technical Solutions as
Pandemic-related disruptions eased in the last half of fiscal year 2021.
•Operating profit increased by $110.6 million during 2021, as compared to 2020.
The increase in operating profit was attributable to:
•the absence of prior year impairment charges recorded on goodwill and
intangible assets totaling $172.8 million due to the adverse impact of market
and business conditions resulting from the Pandemic;
•higher margins on work orders as a result of the Pandemic;
•a decrease in bad debt expense, primarily associated with higher reserves
established for client receivables in the prior year, due to increasing credit
risk resulting from the Pandemic; and
•the absence of a reserve on notes receivable related to a unique,
entertainment-related project within Technical Solutions, mainly associated with
increasing credit risk resulting from the Pandemic.
The increase was partially offset by:
•the accrual of a legal settlement for the Bucio case;
•increased expenditures for certain technology projects and other enterprise
initiatives (including ELEVATE);
•the absence of management and staff furloughs that occurred in the prior year
in response to the Pandemic; and
•acquisition and integration costs related to the Able Acquisition.
•Our effective tax rate on income from continuing operations was 29.8% for 2021,
as compared to 99.6% during 2020, with the decrease primarily due to the
impairment of non-deductible goodwill during 2020 and not recurring in 2021.
•Net cash provided by operating activities of continuing operations was $314.3
million during 2021.
•Dividends of $51.0 million were paid to shareholders, and dividends totaling
$0.760 per common share were declared during 2021.
•At October 31, 2021, total outstanding borrowings under our credit facility
were $888.8 million, and we had up to $875.0 million of borrowing capacity.
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Results of Operations


Consolidated
                                                     Years Ended October 31,                               2021 vs. 2020
($ in millions)                             2021               2020               2019                 Increase / (Decrease)
Revenues                                $ 6,228.6          $ 5,987.6          $ 6,498.6          $      241.0              4.0%
Operating expenses                        5,258.2            5,157.0            5,767.5                 101.2              2.0%
Gross margin                                 15.6  %            13.9  %            11.2  %               171 bps
Selling, general and administrative
expenses                                    719.2              506.1              452.9                 213.1             42.1%
Restructuring and related expenses              -                7.6               11.2                  (7.6)             NM*
Amortization of intangible assets            45.0               48.4               58.5                  (3.4)            (7.1)%
Impairment loss of goodwill and other
intangibles                                     -              172.8                  -                (172.8)             NM*
Operating profit                            206.3               95.7              208.3                 110.6              NM*

Income from unconsolidated affiliates         2.1                2.2                3.0                  (0.1)            (3.9)%
Interest expense                            (28.6)             (44.6)             (51.1)                (16.0)            35.9%
Income from continuing operations
before
income taxes                                179.8               53.3              160.2                 126.5              NM*
Income tax provision                        (53.5)             (53.1)             (32.7)                  0.4             (0.8)%
Income from continuing operations           126.3                0.2              127.5                 126.1              NM*
Income (loss) from discontinued
operations,
net of taxes                                    -                0.1               (0.1)                 (0.1)             NM*
Net income                                  126.3                0.3              127.4                 126.0              NM*
Other comprehensive income (loss)
Interest rate swaps                           4.5               (7.6)             (22.4)                 12.1              NM*
Foreign currency translation and other        5.3               (1.8)               1.6                   7.1              NM*
Income tax (provision) benefit               (1.5)               2.4                5.9                  (3.9)             NM*
Comprehensive income (loss)             $   134.5          $    (6.6)         $   112.5          $      141.1              NM*


*Not meaningful
The Year Ended October 31, 2021 Compared with the Year Ended October 31, 2020
Revenues
Revenues increased by $241.0 million, or 4.0%, during 2021, as compared to 2020.
The increase in revenues was primarily driven by a $101.1 million revenue
increase due to the Able Acquisition in the fourth quarter of 2021, an increase
in work orders (primarily as a result of the Pandemic), new business within B&I,
T&M, and Technical Solutions, and the recovery of volume in Education and
Technical Solutions as Pandemic-related disruptions eased in the last half of
fiscal year 2021.
Operating Expenses
Operating expenses increased by $101.2 million, or 2.0%, during 2021, as
compared to 2020. Gross margin increased by 171 bps to 15.6% in 2021 from 13.9%
in 2020. The increase in gross margin was primarily associated with higher
margins on new business within B&I and Aviation and an increase in work orders
with higher margins as a result of the Pandemic (primarily within B&I). The
increase in gross margin was also driven by lower self-insurance expense, due to
decreased claim frequency as a result of our safety and claims management
program and reduced workplace occupancy as a result of the Pandemic.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $213.1 million, or
42.1%, during 2021, as compared to 2020. The increase in selling, general and
administrative expenses was primarily attributable to:
•a $144.2 million increase in legal costs and settlements, primarily attributed
to the accrual of a legal settlement for the Bucio case;
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•a $43.2 million increase in certain technology projects and other enterprise
initiatives (including ELEVATE), in addition to marketing events;
•a $38.8 million increase in compensation and related expenses, primarily driven
by corporate and staff labor reductions that occurred in the prior period due to
the Pandemic, including wage reductions, employee furloughs, and the suspension
of certain benefits such as 401(k) matching. The increase was also due to
updated assessments regarding financial performance target achievements in
connection with certain performance share awards and cash incentive plans;
•a $21.9 million increase in acquisition and integration costs attributable to
the Able Acquisition; and
•a $9.1 million non-cash impairment charge for previously capitalized
internal-use software related to our ERP system implementation as we determined
that certain components developed will no longer be incorporated into the new
ERP system;
This increase was partially offset by:
•a $19.0 million decrease in bad debt expense, primarily associated with higher
reserves established for client receivables in the prior year, due to increasing
credit risk resulting from the Pandemic;
•the absence of a $17.6 million reserve on notes receivable related to a unique,
entertainment-related project within Technical Solutions, mainly associated with
increasing credit risk resulting from the Pandemic; and
•an $11.7 million decrease in prior year medical and dental self-insurance
reserves as a result of actuarial evaluations completed in fiscal year 2021.
Restructuring and Related Expenses
Restructuring and related expenses decreased by $7.6 million during 2021, as
compared to 2020. We substantially completed the restructuring program by the
end of fiscal year 2020.
Amortization of Intangible Assets
Amortization of intangible assets decreased by $3.4 million, or 7.1%, during
2021, as compared to 2020, mainly due to the lower intangible assets balance
resulting from the impairment loss recorded in the second quarter of 2020 and to
certain intangible assets being amortized using the sum-of-the-years'-digits
method, which results in declining amortization expense over the useful lives of
the assets.
Impairment Loss
During 2020, we recorded impairment charges on goodwill related to our
Education, Aviation, and U.K. Technical Solutions businesses totaling $163.8
million. Additionally, we recorded impairment charges on customer relationships
related to our Aviation and U.K. Technical Solutions businesses totaling $9.0
million. During the second quarter of 2020, these businesses were adversely
impacted by the market and business conditions resulting from the Pandemic.
During 2021, we did not record any impairment charges to goodwill or intangible
assets.
Interest Expense
Interest expense decreased by $16.0 million, or 35.9%, during 2021, as compared
to 2020, primarily attributable to lower relative interest rates as the result
of amending our credit facility in 2021 and lower average outstanding borrowings
under our credit facility throughout the year.
Income Taxes from Continuing Operations
During 2021 and 2020, we had effective tax rates of 29.8% and 99.6%,
respectively, resulting in a provision for tax of $53.5 million and $53.1
million, respectively. Our effective tax rate for 2021 was also impacted by the
following discrete items: a $3.0 million provision for nondeductible transaction
costs; a $2.6 million provision for change in tax reserves; a $1.4 million
provision for true-ups; and a $1.2 million benefit for energy efficiency
incentives. Our effective tax rate for 2020 was impacted by the following
discrete items: a $5.7 million benefit from true-ups; a $2.3 million provision
related to the Work Opportunity Tax Credit ("WOTC"); a $2.1 million benefit from
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energy efficiency incentives; and a $1.1 million benefit from change of tax
reserves. The effective tax rate for the year ended October 31, 2020, excluding
a nondeductible impairment loss of $163.8 million, was 24.4%.
Interest Rate Swaps
We had a gain of $4.5 million on interest rate swaps during the year ended
October 31, 2021, as compared to a loss of $7.6 million during the year ended
October 31, 2020, primarily due to underlying changes in the fair value of our
interest rate swaps.
Foreign Currency Translation and Other
We had a foreign currency translation gain of $5.3 million during the year ended
October 31, 2021, as compared to a foreign currency translation loss of $1.8
million during the year ended October 31, 2020. This change was due to
fluctuations in the exchange rate between the U.S. Dollar ("USD") and the
British pound sterling ("GBP"). Future gains and losses on foreign currency
translation will be dependent upon changes in the relative value of foreign
currencies to the USD and the extent of our foreign assets and liabilities.
The Year Ended October 31, 2020 Compared with the Year Ended October 31, 2019
For a comparison of our Results of Operations for the year ended October 31,
2020, to the year ended October 31, 2019, see "Part II, Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations" of our
Form 10-K for the fiscal year ended October 31, 2020, filed with the SEC on
December 17, 2020.
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Segment Information
Our current reportable segments consist of B&I, T&M, Education, Aviation, and
Technical Solutions.
Financial Information for Each Reportable Segment
                                                         Years Ended October 31,                                2021 vs. 2020
($ in millions)                                 2021               2020               2019                  Increase / (Decrease)
Revenues
Business & Industry                         $ 3,346.5          $ 3,157.8          $ 3,251.4          $      188.7               6.0%
Technology & Manufacturing                      987.1              956.0              917.0                  31.1               3.3%
Education                                       836.4              808.8              847.4                  27.6               3.4%
Aviation                                        668.8              680.9            1,017.3                 (12.1)             (1.8)%
Technical Solutions                             534.0              506.6              593.2                  27.4               5.4%
Elimination of inter-segment revenues          (144.2)            (122.4)            (127.7)                (21.8)            (17.8)%
                                            $ 6,228.6          $ 5,987.6          $ 6,498.6          $      241.0               4.0%
Operating profit (loss)
Business & Industry                         $   337.8          $   253.7          $   182.3          $       84.1              33.1%
Operating profit margin                          10.1  %             8.0  %             5.6  %               206 bps
Technology & Manufacturing                      103.8               84.4               72.5                  19.4              22.9%
Operating profit margin                          10.5  %             8.8  %             7.9  %               168 bps
Education                                        60.5              (41.1)              39.0                 101.6               NM*
Operating margin                                  7.2  %            (5.1) %             4.6  %                   NM*
Aviation                                         32.5              (59.6)              21.1                  92.1               NM*
Operating margin                                  4.9  %            (8.7) %             2.1  %                   NM*
Technical Solutions                              49.8                9.5               55.4                  40.3               NM*
Operating profit margin                           9.3  %             1.9  %             9.3  %               745 bps
Government Services                              (0.2)              (0.1)              (0.1)                 (0.1)              NM*
Operating profit margin                              NM*                NM*                NM*                   NM*
Corporate                                      (374.6)            (146.9)            (159.0)               (227.7)              NM*
Adjustment for income from unconsolidated
affiliates, included in Aviation                 (2.1)              (2.2)              (3.0)                  0.1               3.9%
Adjustment for tax deductions for energy
efficient government buildings, included in
Technical Solutions                              (1.2)              (2.1)               0.1                   0.9              44.2%
                                            $   206.3          $    95.7          $   208.3          $      110.6               NM*


*Not meaningful



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The Year Ended October 31, 2021 Compared with the Year Ended October 31, 2020
Business & Industry
                              Years Ended October 31,
($ in millions)                2021              2020              Increase
Revenues                  $    3,346.5       $ 3,157.8       $  188.7       6.0%
Operating profit                 337.8           253.7           84.1       33.1%
Operating profit margin           10.1  %          8.0  %       206 bps


B&I revenues increased by $188.7 million, or 6.0%, during 2021, as compared to
2020. The increase was primarily driven by a $101.1 million revenue increase due
to the Able Acquisition in the fourth quarter of 2021. The remaining increase
was due to an increase in work orders (as a result of the Pandemic) and net new
business in our U.K. Operations. Management reimbursement revenues for this
segment totaled $185.8 million and $221.4 million during 2021 and 2020,
respectively.
Operating profit increased by $84.1 million, or 33.1%, during 2021, as compared
to 2020. Operating profit margin increased by 206 bps to 10.1% in 2021 from 8.0%
in 2020. The increase in operating profit margin was primarily associated with
higher margins on certain accounts in both our U.S. and U.K. businesses and an
increase in work orders, which have higher margins. Operating margin was also
positively impacted by lower insurance expense related to our self-insurance
program and a decrease in bad debt expense as higher reserves were recorded in
the prior year, mainly associated with increasing credit risk resulting from the
Pandemic.
     Technology & Manufacturing
                                         Years Ended October 31,
     ($ in millions)                    2021                    2020              Increase
     Revenues                      $     987.1               $ 956.0       $    31.1       3.3%
     Operating profit                    103.8                  84.4            19.4       22.9%
     Operating profit margin              10.5   %               8.8  %        168 bps


T&M revenues increased by $31.1 million, or 3.3%, during 2021, as compared to
2020. The increase was primarily attributable to net new business and an
increase in work orders (primarily as a result of the Pandemic).
Operating profit increased by $19.4 million, or 22.9%, during 2021, as compared
to 2020. Operating profit margin increased by 168 bps to 10.5% in 2021 from 8.8%
in 2020. The increase in operating profit margin was primarily attributable to a
decrease in bad debt expense, as higher reserves were recorded in the prior year
mainly associated with increasing credit risk resulting from the Pandemic, and
higher margins on work orders.
Education
                                 Years Ended October 31,
($ in millions)                 2021                    2020             Increase
Revenues                   $     836.4               $ 808.8       $    27.6       3.4%
Operating profit (loss)           60.5                 (41.1)          101.6       NM*
Operating margin                   7.2  %               (5.1) %            NM*


*Not meaningful
Education revenues increased by $27.6 million, or 3.4%, during 2021, as compared
to 2020. The increase was primarily attributable to an increase in work orders
as a result of Pandemic-related demands and recovery in the volume of our
business as schools gradually reopened. The increase was partially offset by the
loss of certain accounts during the year.
Education had an operating profit of $60.5 million during 2021, as compared to
an operating loss of $41.1 million during 2020. Operating margin increased to
7.2% in 2021 from (5.1)% in 2020. The increase in operating profit margin was
primarily attributable to the absence of prior year goodwill impairment charges
of $99.3 million. Additionally, operating margin was positively impacted by
higher margin work orders, a decrease in bad debt expense, driven by net
recoveries of certain previously reserved receivables, and lower amortization of
intangible assets. The increase in operating margin, excluding the impact of
prior year impairment, was mostly offset by the increase in direct labor and
related costs as schools reopened.
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Aviation
                                 Years Ended October 31,
($ in millions)                 2021                    2020              Increase / (Decrease)
Revenues                   $     668.8               $ 680.9       $               (12.1)      (1.8)%
Operating profit (loss)           32.5                 (59.6)                       92.1        NM*
Operating margin                   4.9  %               (8.7) %                        NM*


*Not meaningful
Aviation revenues decreased by $12.1 million, or 1.8%, during 2021, as compared
to 2020. The decrease was primarily attributable to travel restrictions and a
decline in passenger demand resulting from the Pandemic. While demand and
revenue improved during the third and fourth quarter of 2021, Pandemic-related
volume reductions continued to impact parking, janitorial, passenger services,
transportation, and catering accounts. The decrease was partially offset by
Pandemic-related cleaning services and new parking-related services. Management
reimbursement revenues for this segment totaled $54.5 million and $74.3 million
during 2021 and 2020, respectively.
Aviation had an operating profit of $32.5 million during 2021, as compared to an
operating loss of $59.6 million during 2020. Operating margin increased to 4.9%
during 2021, from (8.7)% during 2020. This increase in operating profit margin
was primarily attributable to the absence of prior year impairment charges of
$55.5 million on goodwill and $5.6 million on customer relationships.
Additionally, operating margin increased as the result of management of direct
labor and related personnel costs during the Pandemic, higher margins on
Pandemic-related cleaning services, and a strategic shift toward securing higher
margin contracts with airports and related facilities.
Technical Solutions
                                Years Ended October 31,
($ in millions)                2021                    2020             Increase
Revenues                  $     534.0               $ 506.6       $    27.4       5.4%
Operating profit                 49.8                   9.5            40.3       NM*
Operating profit margin           9.3  %                1.9  %        745 bps


*Not meaningful
Technical Solutions revenues increased by $27.4 million, or 5.4%, during 2021,
as compared to 2020. The increase was primarily attributable to an increase in
the volume of our U.S. and U.K. businesses due to the easing of Pandemic-related
lockdowns, which provided access to facilities that were previously restricted.
In addition, the revenue increase was driven by growth in electric vehicle
charging station installation sales.
Operating profit increased by $40.3 million during 2021, as compared to 2020.
Operating profit margin increased by 745 bps to 9.3% in 2021 from 1.9% in 2020.
The increase in operating profit margin was primarily attributable to the
absence of a prior year $17.6 million reserve on notes receivable related to a
unique, entertainment-related project, mainly associated with increasing credit
risk resulting from the Pandemic. The increase was also due to the absence of
prior year impairment charges of $9.0 million on goodwill and $3.4 million on
customer relationships related to our U.K. business.
Corporate
                           Years Ended October 31,
($ in millions)               2021                2020            Increase
Corporate expenses   $      (374.6)            $ (146.9)     $ (227.7)      NM*


*Not meaningful
Corporate expenses increased by $227.7 million during 2021, as compared to 2020.
The increase in corporate expenses was primarily related to:
                                       31
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•a $145.8 million increase in legal costs and settlements, primarily attributed
to the accrual of a legal settlement for the Bucio case;
•a $43.2 million increase in certain technology projects and other enterprise
initiatives (including ELEVATE), in addition to marketing events;
•a $33.4 million increase in compensation and related expenses, primarily driven
by corporate and staff labor reductions that occurred in the prior period due to
the Pandemic, including wage reductions, employee furloughs, and the suspension
of certain benefits such as 401(k) matching. The increase was also due to
updated assessments regarding financial performance target achievements in
connection with certain performance share awards and cash incentive plans;
•a $21.9 million increase in acquisition and integration costs attributable to
the Able Acquisition; and
•a $9.1 million non-cash impairment charge for previously capitalized
internal-use software related to our ERP system implementation as we determined
that certain components developed will no longer be incorporated into the new
ERP system.
This increase was partially offset by:
•a $17.4 million decrease in insurance expense as the result of favorable
self-insurance reserve adjustments from actuarial evaluations completed in
fiscal year 2021 as compared to 2020; and
•a $7.6 million decrease in restructuring and related expenses due to the
completion of our restructuring program in fiscal year 2020.
The Year Ended October 31, 2020 Compared with the Year Ended October 31, 2019
For a comparison of our Segment Information for the year ended October 31, 2020,
to the year ended October 31, 2019, see "Part II, Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations" of our
Form 10-K for the fiscal year ended October 31, 2020, filed with the SEC on
December 17, 2020.
                                       32
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Liquidity and capital resources


Our primary sources of liquidity are operating cash flows and borrowing capacity
under our credit facility. We assess our liquidity in terms of our ability to
generate cash to fund our short- and long-term cash requirements. As such, we
project our anticipated cash requirements as well as cash flows generated from
operating activities to meet those needs.
In addition to normal working capital requirements, we anticipate that our
short- and long-term cash requirements will include funding legal settlements,
insurance claims, dividend payments, capital expenditures, share repurchases,
mandatory loan repayments, and systems and technology transformation initiatives
under our ELEVATE strategy. We anticipate long-term cash uses may also include
strategic acquisitions. On a long-term basis, we will continue to rely on our
credit facility for any long-term funding not provided by operating cash flows.
We believe that the Pandemic has had, and will likely continue to have, an
impact on our consolidated financial position, results of operations, and cash
flows. Since we cannot predict the duration or scope of the Pandemic, we cannot
fully anticipate or reasonably estimate all the ways in which the current global
health crisis and financial market conditions could adversely impact our
business in fiscal 2022 or in the future.
We have taken and continue to take certain steps to preserve liquidity,
including: imposing furloughs or reduced hours for certain service employees in
markets significantly impacted by business slowdowns and shutdowns; managing our
operating expenditures and certain selling, general and administrative expenses;
amending our credit facility, as further described under "Credit Facility"
below; and suspending share repurchases under our share repurchase program. In
addition, we continue focusing on collection of customer receivables, monitoring
the adequacy of our reserves, and extending vendor payment terms where possible.
We also evaluated the business tax provisions of the CARES Act and have deferred
remittance of approximately $132 million of payroll tax through December 31,
2020, which the CARES Act requires to be remitted by December 31, 2021, and
December 31, 2022, in equal parts.
We believe that our operating cash flows and borrowing capacity under our credit
facility are sufficient to fund our cash requirements for the next 12 months. In
the event that our plans change or our cash requirements are greater than we
anticipate, we may need to access the capital markets to finance future cash
requirements. However, there can be no assurance that such financing will be
available to us should we need it or, if available, that the terms will be
satisfactory to us and not dilutive to existing shareholders.
Credit Facility
On September 1, 2017, we refinanced and replaced our then-existing $800.0
million credit facility with a new senior, secured five-year syndicated credit
facility (the "Credit Facility"), consisting of a $900.0 million revolving line
of credit and an $800.0 million amortizing term loan. In accordance with the
terms of the Credit Facility, the revolving line of credit was reduced to $800.0
million on September 1, 2018.
On May 28, 2020, we amended and restated our Credit Facility ("the First
Amendment") to further enhance our financial flexibility as a precautionary
measure in response to uncertainty arising from the Pandemic. The First
Amendment modified certain financial covenants, the interest rate, interest
margins, and commitment fees applicable to loans and commitments under the
Credit Facility. The First Amendment made certain additional changes to the
negative covenants restrictions under the Credit Facility, including, subject to
certain exceptions: restrictions on our ability to make acquisitions, share
repurchases, and other defined restricted payments, depending on our total net
leverage ratio.
On June 28, 2021, the Company amended and restated the Credit Facility (the
"Second Amendment," and the Credit Facility as amended, the "Amended Credit
Facility"), extending the maturity date to June 28, 2026, and increasing the
capacity of the revolving credit facility from $800.0 million to $1.3 billion
and the then-remaining term loan outstanding from $620.0 million to
$650.0 million. The Second Amendment also removed the anti-cash hoarding
mandatory prepayment requirement as well as other restrictions that limited our
ability to make acquisitions, share repurchases, and other defined restricted
payments under the First Amendment. Additionally, the Second Amendment modified
certain financial covenants, terms, interest rates, interest margins, and
commitment fees applicable to loans and commitments under the prior Credit
Facility. The Amended Credit Facility provides for the issuance of up to
$350.0 million for standby letters of credit and the issuance of up to $75.0
million in swingline advances. The obligations under the Amended Credit Facility
are secured on a first-priority basis by a lien on
                                       33
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substantially all of our assets and properties, subject to certain exceptions.
We may repay amounts borrowed under the Amended Credit Facility at any time
without penalty.
Under the Amended Credit Facility, the term loan and U.S.-dollar-denominated
borrowings under the revolver bear interest at a rate equal to one-month LIBOR
plus a spread based upon our leverage ratio. Euro- and sterling-denominated
borrowings under the revolver bear at the interest rate of the Euro Interbank
Offered Rate (EURIBOR) and the daily Sterling Overnight Index Average (SONIA)
reference rate, respectively, plus a spread that is based upon our leverage
ratio. The spread ranges from 1.375% to 2.250% for Eurocurrency loans and 0.375%
to 1.250% for base rate loans. At October 31, 2021, the weighted average
interest rate on our outstanding borrowings was 1.59%. We also pay a commitment
fee, based on our leverage ratio and payable quarterly in arrears, ranging from
0.20% to 0.40% on the average daily unused portion of the line of credit. For
purposes of this calculation, irrevocable standby letters of credit, which are
issued primarily in conjunction with our insurance programs, and cash borrowings
are included as outstanding under the line of credit.
The Amended Credit Facility contains certain covenants, including a maximum
total net leverage ratio of 5.00 to 1.00, a maximum secured net leverage ratio
of 4.00 to 1.00, and a minimum interest coverage ratio of 1.50 to 1.00, as well
as other financial and non-financial covenants. In the event of a material
acquisition, as defined in the Amended Credit Facility, we may elect to increase
the maximum total net leverage ratio to 5.50 to 1.00 for a total of four fiscal
quarters and increase the maximum secured net leverage ratio to 4.50 to 1.00 for
a total of four fiscal quarters. We did not make this election for the Able
Acquisition. Our borrowing capacity is subject to, and limited by, compliance
with the covenants described above. At October 31, 2021, we were in compliance
with these covenants and expect to be in compliance in the foreseeable future.
During 2021, we made $76.3 million of principal payments under the term loan. At
October 31, 2021, the total outstanding borrowings under our Amended Credit
Facility in the form of cash borrowings and standby letters of credit were
$888.8 million and $167.7 million, respectively. At October 31, 2021, we had up
to $875.0 million of borrowing capacity.
On March 5, 2021, the United Kingdom's Financial Conduct Authority, the
regulator of LIBOR, announced that the USD LIBOR rates will no longer be
published after June 30, 2023. While we expect LIBOR to be available in
substantially its current form until at least the end of June 30, 2023, it is
possible that LIBOR will become unavailable prior to that point, which may
impact our Amended Credit Facility and interest rate swaps. Our current credit
agreement as well as our International Swaps and Derivatives Association, Inc.
agreement provide for any changes away from LIBOR to a successor rate to be
based on prevailing or equivalent standards. Additionally, our interest rate
swaps mature before June 30, 2023. As such, we do not anticipate a material
impact related to the LIBOR transition and will continue to monitor developments
related to the LIBOR transition and/or identification of an alternative,
market-accepted rate.
Reinvestment of Foreign Earnings
We plan to reinvest our foreign earnings to fund future non-U.S. growth and
expansion, and we do not anticipate remitting such earnings to the United
States. While U.S. federal tax expense has been recognized as a result of the
Tax Cuts and Jobs Act of 2017, no deferred tax liabilities with respect to
federal and state income taxes or foreign withholding taxes have been
recognized. We believe that our cash on hand in the United States, along with
our Amended Credit Facility and future domestic cash flows, are sufficient to
satisfy our domestic liquidity requirements.
Share Repurchases
Effective December 18, 2019, our Board of Directors replaced our then-existing
share repurchase program with a new share repurchase program under which we may
repurchase up to $150.0 million of our common stock. We repurchased shares under
the 2019 Share Repurchase Program during the second quarter of 2020. However,
due to the market and business conditions arising from the Pandemic, we
suspended further repurchases of our common stock in March 2020 and did not
repurchase any shares of our outstanding common stock during fiscal year 2021.
At October 31, 2021, authorization for $144.9 million of repurchases remained
under the 2019 Share Repurchase Program.
                                       34
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                                                Years Ended October 31,
(in millions, except per share amounts)            2021                2020
Total number of shares purchased                 -                       

0.2

Average price paid per share                                  N/A    $ 

36.16

Total cash paid for share repurchases     $      -                   $   

5.1


Proceeds from Federal Energy Savings Performance Contracts
As part of our Technical Solutions business, we enter into energy savings
performance contracts ("ESPC") with the federal government pursuant to which we
agree to develop, design, engineer, and construct a project and guarantee that
the project will satisfy agreed-upon performance standards. Proceeds from ESPC
projects are generally received in advance of construction through agreements to
sell the ESPC receivables to unaffiliated third parties. We use the advances
from the third parties under these agreements to finance the projects, which are
recorded as cash flows from financing activities. The use of the cash received
under these arrangements to pay project costs is classified as operating cash
flows.
Effect of Inflation
The rates of inflation experienced in recent years have not had a material
impact on our Financial Statements. We attempt to recover increased costs by
increasing prices for our services to the extent permitted by contracts and
competition.
Regulatory Environment
Our operations are subject to various federal, state, and/or local laws, rules,
and regulations regulating the discharge of materials into the environment or
otherwise relating to the protection of the environment, as well as laws and
regulations relating to, among other things, labor, wages, and health and safety
matters. Historically, the cost of complying with these laws, rules, and
regulations has not had a material adverse effect on our financial position,
results of operations, or cash flows.
Cash Flows
  In addition to revenues and operating profit, our management views operating
cash flows as a good indicator of financial performance, because strong
operating cash flows provide opportunities for growth both organically and
through acquisitions. Operating cash flows primarily depend on: revenue levels;
the quality and timing of collections of accounts receivable; the timing of
payments to suppliers and other vendors; the timing and amount of income tax
payments; and the timing and amount of payments on insurance claims and legal
settlements.
                                                                           Years Ended October 31,
(in millions)                                                       2021              2020             2019

Net cash flow generated by operating activities from continuing operations

                                                      $   314.3   

$ 457.4 $ 262.8
Net cash provided by (used in) operating activities of discontinued operations

                                                 -              0.1             (0.1)
Net cash provided by operating activities                           314.3            457.5            262.7

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

Net cash provided by (used in) financing activities                  92.4   

(94.1) (184.8)


Operating Activities of Continuing Operations
Net cash provided by operating activities of continuing operations decreased by
$143.1 million during 2021, as compared to 2020. The decrease was primarily
related to the timing of working capital changes, partially offset by deferred
remittance of payroll taxes under the CARES Act.
Net cash provided by operating activities of continuing operations increased by
$194.6 million during 2020, as compared to 2019. The increase was primarily
related to the timing of client receivable collections and deferred remittance
of approximately $101 million of payroll taxes under the CARES Act, partially
offset by the timing of vendor payments.
                                       35
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Investing Activities
Net cash used in investing activities increased by $712.5 million during 2021,
as compared to 2020. The increase was primarily related to the Able Acquisition
during the fourth quarter of 2021.
Net cash used in investing activities decreased by $30.8 million during 2020, as
compared to 2019. The decrease was primarily related to lower additions to
property, plant and equipment in 2020. Additionally, the implementation of the
new ERP system was temporarily suspended during 2020 due to the Pandemic.
Financing Activities
Net cash provided by financing activities was $92.4 million in 2021, as compared
to net cash used in financing activities of $94.1 million in 2020, primarily due
to higher net borrowings to partially fund the purchase price of the Able
Acquisition.
Net cash used in financing activities decreased by $90.7 million during 2020, as
compared to 2019, primarily due to lower repayments of our borrowings in 2020.
Dividends
On December 15, 2021, we announced a quarterly cash dividend of $0.195 per share
on our common stock, payable on February 7, 2022. We declared a quarterly cash
dividend on our common stock every quarter during 2021, 2020, and 2019. We paid
total annual dividends of $51.0 million, $49.3 million, and $47.7 million during
2021, 2020, and 2019, respectively.
                                       36
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Significant cash flow requirements arising from contractual and other obligations

From October 31, 2021, our significant cash requirements for our known contractual and other obligations were as follows:

•Debt Obligations and Interest Payments - Outstanding payments on our Amended
Credit Facility were $888.8 million, with $32.5 million payable within 12
months. Additionally, we had future interest payments based on our hedged
borrowings under our Amended Credit Facility of $5.0 million, which is payable
within 12 months. The interest payments on our remaining borrowings under the
Amended Credit Facility will be determined based upon the average outstanding
balance of our borrowings and the prevailing interest rate during that time. See
Note 11, "Credit Facility," in the Financial Statements for further detail of
our debt and the timing of expected future principal and interest payments.

•Operating and Finance Leases - We enter into various noncancelable lease
agreements for office space, parking facilities, warehouses, vehicles, and
equipment used in the normal course of business. Operating and finance lease
obligations were $170.6 million, with $38.9 million payable within 12 months.
See Note 5, "Leases," in the Financial Statements for further detail of our
obligations and the timing of expected future payments.

• Service Concession Agreements – As defined in Topic 853, Service Concession Agreements, our rental parking agreements are represented as service concession agreements. We had contract payments for these arrangements of $ 89.9 million, with $ 24.9 million payable within 12 months.

•Information Technology Service Agreements - Information technology service
agreements represent outsourced services and licensing costs pursuant to our
information technology agreements. We had contractual payments for these
agreements of $79.9 million, with $44.9 million payable within 12 months.

•Benefit Obligations - Expected future payments relating to our defined benefit,
postretirement, and deferred compensation plans were $45.8 million, with $4.5
million payable in 12 months. These amounts are based on expected future service
and were calculated using the same assumptions used to measure our benefit
obligation at October 31, 2021.
•Litigation Settlements - A litigation settlement of $142.9 million related to
the Bucio case is payable in 12 months. See Note 13, "Commitments and
Contingencies," in the Financial Statements for further details.

•CARES Act Tax Obligations - We deferred approximately $132 million of payroll
tax provisions under the CARES Act with $66 million payable in 12 months. See
Note 16, "Income Taxes," in the Financial Statements for further details.

In addition, our significant cash requirements for other obligations, for which we cannot reasonably estimate future payments, include the following:

•Multiemployer Benefit Plans - In addition to our company sponsored benefit
plans, we participate in certain multiemployer pension and other postretirement
plans. The cost of these plans is equal to the annual required contributions
determined in accordance with the provisions of negotiated collective bargaining
arrangements. During 2021, 2020, and 2019, contributions made to these plans
were $348.8 million, $335.8 million, and $345.4 million, respectively; however,
our future contributions to the multiemployer plans are dependent upon a number
of factors, including the funded status of the plans, the ability of other
participating companies to meet ongoing funding obligations, and the level of
our ongoing participation in these plans. Amounts of future contributions that
we would be contractually obligated to make pursuant to these plans cannot be
reasonably estimated. See Note 12, "Employee Benefit Plans," in the Financial
Statements for more information.

•Self-Insurance Obligations - We may make payments for exposures for which we
are self-insured, including workers' compensation, general liability, automobile
liability, property damage, and other insurable risks. At October 31, 2021, our
self-insurance reserves, net of recoverables, were $508.3 million. As these
obligations do not have scheduled maturities, we are unable to make a reliable
estimate of the amount or timing of cash that may be required to settle these
matters. See Note 10, "Insurance," in the Financial Statements for further
detail.

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•Unrecognized Tax Benefits - At October 31, 2021, our total liability for
unrecognized tax benefits was $12.5 million. The resolution or settlement of
these tax positions with the taxing authorities is subject to significant
uncertainty, and therefore we are unable to make a reliable estimate of the
amount or timing of cash that may be required to settle these matters. In
addition, certain of these matters may not require cash settlements due to the
exercise of credits and net operating loss carryforwards as well as other
offsets, including the indirect benefit from other taxing jurisdictions that may
be available.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements other than unrecorded standby letters
of credit and surety bonds. We use letters of credit and surety bonds in the
ordinary course of business to ensure the performance of contractual obligations
and to collateralize self-insurance obligations in the event we are unable to
meet our claim payment obligations. As we already have reserves on our books for
the claims costs, these do not represent additional liabilities. The surety
bonds typically remain in force for one to five years and may include optional
renewal periods. As of October 31, 2021, these letters of credit and surety
bonds totaled $167.7 million and $687.3 million, respectively. Neither of these
arrangements has a material current effect, or is reasonably likely to have a
material future effect, on our financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures, or capital resources.

                                       38
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Critical accounting conventions and estimates


The preparation of consolidated financial statements in accordance with United
States generally accepted accounting principles requires our management to make
certain estimates that affect the reported amounts. We base our estimates on
historical experience, known or expected trends, independent valuations, and
various other assumptions that we believe to be reasonable under the
circumstances. As future events and their effects cannot be determined with
precision, actual results could differ significantly from these estimates. There
have been no significant changes to our critical accounting policies and
estimates for the year ended October 31, 2021. We believe the following critical
accounting policies govern the more significant judgments and estimates used in
the preparation of our Financial Statements.

                                                                        Effect if Actual Results Differ from
Description                       Judgments and Uncertainties           

Hypotheses

Customer Relationships            Future revenue growth, future         We 

have not made any changes to the

                                  operating performance margin as       accounting methodology used to determine the
When we acquire a company,        a percentage of revenues,             fair value of customer relationships during
we determine the fair value       customer attrition rate, and          the last three years.
on the acquisition date of        discount rate applied are the
assets acquired and               significant estimates used in         If the subsequent actual results and updated
liabilities assumed.              the excess earnings method to         

projections of the underlying activity

                                  determine the fair value of           activity change compared with the assumptions
We anticipate that for most       customer relationships. These         and projections used to develop the values of
acquisitions, we will             estimates are influenced by           the identifiable intangible assets, then we
exercise significant              many factors, including               

could record significant impairment losses. judgment in estimating the historical financial fair value of intangible information, estimated

                With other assumptions held constant, a 10%
assets.                           retention rates, and                  

increase in the calculated fair value of

                                  management's expectations for         Able customer relationships would increase
In a typical acquisition,         future customer growth as a           the annual amortization expense by $2.8
customer relationships are        combined company.                     million in 2022.
our most significant
definite-lived intangible         Another estimate that impacts         See the "Valuation of Long-Lived Assets"
asset. In valuing these           the valuation is the                  critical accounting policy for information
relationships, we engage a        contributory charge for the           about impairment evaluations.
third-party valuation             acquired workforce, which
expert to fair value these        involves management assumptions
assets using a version of         based on historical experience,
the income approach known         including interview time and
as the "excess earnings           new hire productivity.
method."
                                  The estimated life is
This method uses a                determined by calculating the
discounted cash flow              number of years necessary to
approach that is derived          obtain 90% of the value of the
from historical                   discounted cash flows of the
information, future revenue       relationships and is directly
and operating profit              tied to the accuracy of the
margins, contributory asset       above assumptions.
charges, and the selection
of an appropriate discount
rate.

We consider this approach
the most appropriate
valuation technique because
the inherent value of these
assets is their ability to
generate current and future
income.



                                       39
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                                                                              Effect if Actual Results Differ from
Description                            Judgments and Uncertainties          

Hypotheses

Long-lived asset valuation Our impairment assessments

In the past three years, we have not done

                                       require us to apply judgment in        any changes in the accounting methodology used
We evaluate our fixed assets and       determining whether a triggering       to evaluate the impairment of long-lived
amortizable intangible assets          event has occurred, including          assets or to estimate the useful lives of our
for impairment whenever events         the evaluation of whether it is        long-lived assets. Additionally, we have not
or changes in circumstances            more- likely-than-not that a           made any changes in the accounting methodology
indicate that the carrying             long-lived asset will be               used to evaluate impairment of goodwill during
amount of such assets may not be       disposed of significantly before     

the last three years. restorable. These events and the end of its prior circumstances include, but are estimated to be useful life. Incorrect

       At October 31, 2021, we had $2.2 billion of
not limited to: higher than            estimation of useful lives may         goodwill. Our goodwill is included in the
expected attrition for customer        result in inaccurate                   following segments:
relationships; a current               depreciation and amortization

the expectation that a long service life of loads over future periods

   $1.1 billion - B&I (includes $554.0 million
asset will be disposed of              leading, to future impairment.         related to the Able Acquisition on September
significantly before the end of                                             

30, 2021) its previously estimated useful life Our calculations of impairment, for example when we classify a contain uncertainties because

          $407.2 million - T&M
business as held for sale; a           they require management to make
significant adverse change in          assumptions and to apply             

$ 459.3 million – Education the extent or manner in which we judge to estimate the future use of cash of a long-lived asset; or one

           flows and asset fair values,         

$ 69.9 million – Modification of the physical state of aviation, including the useful forecast of a long-term asset.

                 lives of the assets and              

$ 162.7 million – Technical solutions

                                       selecting the discount rate that

Undiscounted cash flow analyzes reflect the risk inherent in

   A goodwill impairment analysis was performed
are used to determine if               future cash flows.                     for each of our reporting units on August 1,
impairment exists; if impairment                                              2021. Based on these studies, the implied fair
is determined to exist, the loss       We estimate the fair value of          value of each of our reporting units was
is calculated based on estimated       each reporting unit using a            substantially in excess of its carrying value.
fair value.                            combination of the income            

Therefore, we concluded that there was no

                                       approach and the market                indicators of impairment. A 10% decrease in
Goodwill is not amortized but          approach.                              the estimated fair value of any of our
rather tested at least annually                                               reporting units would not have resulted in a
for impairment or more often if        The income approach incorporates       different conclusion.
events or changes in                   the use of a discounted cash
circumstances indicate it is           flow method in which the               During the third quarter of 2021, we
more-likely-than-not that the          estimated future cash flows and        recognized a non-cash impairment charge
carrying amount of the asset may       terminal value are calculated          totaling $9.1 million in our Corporate segment
not be recoverable. Goodwill is        for each reporting unit and then       for previously capitalized internal-use
tested for impairment at the           discounted to present value            software related to our ERP system
reporting unit level, which            using an appropriate discount          implementation. The Company determined that
represents an operating segment        rate.                                  certain components that were previously
or a component of an operating                                                developed would no longer be integrated into
segment. Goodwill is tested for        The valuation of our reporting         the new ERP system. The impairment charge
impairment by either performing        units requires significant             reduced the carrying value to zero for those
a qualitative evaluation or a          judgment in evaluation of recent     

Components.

quantitative test. The                 indicators of market activity
qualitative evaluation is an           and estimated future cash flows,       During the second quarter of 2020, given the
assessment of factors to               discount rates, and other              general deterioration in economic and market
determine whether it is                factors. Our impairment analyses       conditions arising from the Pandemic, we
more-likely-than-not that the          contain inherent uncertainties         identified a triggering event indicating
fair value of a reporting unit         due to uncontrollable events           possible impairment of goodwill and intangible
is less than its carrying              that could positively or               assets. For the three goodwill reporting units
amount, including goodwill. We         negatively impact anticipated          tested quantitatively, we estimated the fair
may elect not to perform the           future economic and operating          value using a weighting of fair values derived
qualitative assessment for some        conditions.                            from an income approach and a market approach.
or all of our reporting units                                                 Based on the evaluation performed, we
and instead perform a                  In making these estimates, the         determined that goodwill was impaired for each
quantitative impairment test.          weighted-average cost of capital       of the three goodwill reporting units
                                       is utilized to calculate the           evaluated and recognized a non-cash impairment
                                       present value of future cash           charge totaling $163.8 million ($99.3 million
                                       flows and terminal value. Many         related to Education, $55.5 million related to
                                       variables go into estimating           Aviation, and $9.0 million related to our U.K.
                                       future cash flows, including           Technical Solutions business). We also
                                       estimates of our future revenue        recognized intangible asset impairment charges
                                       growth and operating results.          of $5.6 million related to Aviation and $3.4
                                       When estimating our projected          million related to our U.K. Technical
                                       revenue growth and future              Solutions business. We performed our annual
                                       operating results, we consider         goodwill impairment analysis on August 1,
                                       industry trends, economic data,        2020, using a qualitative approach since there
                                       and our competitive advantage.         were no indicators of impairment subsequent to
                                                                              our quantitative analysis performed in the
                                       The market approach estimates          second quarter of 2020 as discussed above. As
                                       fair value of a reporting unit         a result of the qualitative analysis, we
                                       by using market comparables for        concluded that there were no further
                                       reasonably similar public              impairments.
                                       companies.


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                                                                                Effect if Actual Results Differ from
Description                              Judgments and Uncertainties        

Hypotheses

Insurance Reserves
We use a combination of insured          Our self-insurance liabilities         We have not made any changes in the
and self-insurance programs to           contain uncertainties due to           accounting methodology used to establish
cover workers' compensation,             assumptions required and               our self-insurance liabilities during the
general liability, automobile            judgment used.                         past three years.
liability, property damage, and
other insurable risks.                   Costs to settle our obligations,   

After having analyzed the recent evolution of claims

                                         including legal and healthcare         patterns, comparing the loss development
Insurance claim liabilities              costs, could fluctuate and cause       patterns against benchmarks, and applying
represent our estimate of retained       estimates of our self-insurance        actuarial projection methods to estimate
risks without regard to insurance        liabilities to change.                 the ultimate losses, we decreased our
coverage. We retain a substantial                                               total reserves related to prior years
portion of the risk related to           Incident rates, including              known claims as well as our estimate of
certain workers' compensation and        frequency and severity, could          the loss amounts associated with IBNR
medical claims. Liabilities              fluctuate and cause the                claims during 2021 by $36.0 million. In
associated with these losses             estimates in our self-insurance        2020, we decreased our total reserves
include estimates of both claims         liabilities to change.                 related to prior years claims by $30.2
filed and IBNR Claims.                                                      

million.

                                         These estimates are subject to:

With the help of changes made by third parties to the regulations

     It is possible that actual results could
actuaries, we periodically review        environment; fluctuations in           differ from recorded self-insurance
our estimate of ultimate losses          projected exposures, including         liabilities. A 10% change in our
for IBNR Claims and adjust our           payroll, revenues, and the             projected ultimate losses would have
required self-insurance reserves         number of vehicle units; and the       affected net income by approximately
as appropriate. As part of this          frequency, lag, and severity of        $37.3 million for 2021.
evaluation, we review the status         claims.
of existing and new claim reserves       The full extent of certain
as established by our third-party        claims, especially workers'
claims administrators.                   compensation and general
                                         liability claims, may not be
The third-party claims                   fully determined for several
administrators establish the case        years.
reserves based upon known factors
related to the type and severity         In addition, if the reserves
of the claims, demographic data,         related to self-insurance or
legislative matters, and case law,       high deductible programs from
as appropriate.                          acquired businesses are not
                                         adequate to cover damages
We compare actual trends to              resulting from future accidents

expected trends and monitor claims or other incidents we may be developing.

                             exposed to substantial losses
                                         arising from future claim
The specific case reserves               developments.
estimated by the third-party
administrators are provided to an
actuary who assists us in
projecting an actuarial estimate
of the overall ultimate losses for
our self-insured or high
deductible programs. The
projection includes the case
reserves plus an actuarial
estimate of reserves required for
additional developments, including
IBNR Claims.

We utilize the results of
actuarial studies to estimate our
insurance rates and insurance
reserves for future periods and to
adjust reserves, if appropriate,
for prior years.



                                       41
--------------------------------------------------------------------------------

                                                                               Effect if Actual Results Differ from
Description                           Judgments and Uncertainties           

Hypotheses

Contingencies and Litigation
We are a party to a number of         Litigation outcomes are difficult        We have not made any changes in the
lawsuits, claims, and                 to predict and are often resolved        accounting methodology used to establish
proceedings incident to the           over long periods of time.               our loss contingencies during the past
operation of our business,                                                  

three years. including those relating to the estimate of probable and reasonable manpower and employment,

                 possible losses requires the             Our management currently estimates the
contracts, personal injury, and       analysis of multiple possible            range of loss for all reasonably possible
other matters, some of which          outcomes that often depend on            losses for which a reasonable estimate of
allege substantial monetary           judgments about potential actions        the loss can be made is between zero and
damages. Some of these actions        by third parties, such as future         $6 million. Factors underlying this
may be brought as class actions       changes in facts and                     estimated range of loss may change from
on behalf of a class or               circumstances, differing                 time to time, and actual results may vary
purported class of employees.         interpretations of the law,           

significantly from this estimate.

                                      assessments of the amount of
We accrue for loss                    damages, and other factors beyond
contingencies when losses             our control. There is the
become probable and are               potential for a material adverse

reasonably estimable. If the effect on our financial statements, a reasonable estimate of the loss, if one or more issues are present, is a range and no amount resolved in a given period within the range is a best estimate, an amount significantly higher than the minimum amount of the range what we had expected. is recorded as a liability.

                                      In addition, in some cases,
We do not accrue for contingent       although a loss is probable or
losses that, in our judgment,         reasonably possible, we cannot
are considered to be reasonably       reasonably estimate the maximum
possible but not probable.            potential losses for probable
                                      matters or the range of losses for
                                      reasonably possible
                                      matters. Therefore, our accrual
                                      for probable losses and our
                                      estimated range of loss for
                                      reasonably possible losses do not
                                      represent our maximum possible
                                      exposure.



                                       42
--------------------------------------------------------------------------------

Recent accounting positions

                                                                                                                             Effective Date/
 Accounting Standard Updates                   Topic                                    Summary                             Method of Adoption
           2021-01                     Reference Rate Reform          This

Update of accounting standards (“ASU”), this update has entered into force

                                        (Topic 848): Scope            issued in January 2021, clarifies that             upon issuance and can be
                                                                      derivatives affected by the discounting               applied to hedging
                                                                      transition are explicitly eligible for                  relationships
                                                                      certain optional expedients and exceptions            retrospectively or
                                                                      under Topic 848.                                    prospectively through
                                                                                                                            December 31, 2022.
                                                                      While

we are currently evaluating the

the impact of the implementation of these directives on our

financial statements, we do not expect

adoption to have a material impact.

           2020-04                     Reference Rate Reform          This 

ASU, published in march 2020, provides This update has been effective

                                     (Topic 848): Facilitation        optional expedients to assist with the             upon issuance and can be
                                    of the Effects of Reference       discontinuance of LIBOR. The expedients            applied prospectively to
                                     Rate Reform on Financial         allow companies to ease the potential               contract modifications
                                             Reporting                accounting burden when modifying contracts             made and hedging
                                                                      and 

hedging relationships that use LIBOR as concluded relationships

                                                                      a reference rate, if certain criteria are            or evaluated through
                                                                      met.                                                  December 31, 2022.

                                                                      While 

we are currently evaluating the

the impact of the implementation of these directives on our

financial statements, we do not expect

adoption to have a material impact.

           2020-01                      Investments-Equity            This ASU, issued in January 2020, clarifies            November 1, 2021
                                      Securities (Topic 321),         the 

interaction between Theme 321, Theme

                                     Investments-Equity Method        323, 

and Subject 815. The new guidelines, among this update will be

                                     and Joint Ventures (Topic        other 

things, states that a company should apply prospectively.

                                     323), and Derivatives and        

consider observable transactions that

                                       Hedging (Topic 815):           

force him to apply or discontinue

                                    Clarifying the Interactions       the 

equity method for the recognition of

                                     between Topic 321, Topic         

fair value application purposes

                                        323, and Topic 815            

measurement alternative just before

application or termination of equity

method.

                                                                      While 

we are currently evaluating the

the impact of the implementation of these directives on our

financial statements, we do not expect

adoption to have a material impact.

           2019-12                   Income Taxes (Topic 740):        This ASU, issued in December 2019, removes             November 1, 2021
                                    Simplifying the Accounting        

some exceptions related to the approach

                                         for Income Taxes             for intraperiod tax allocation, the                  The amendments have
                                                                      methodology for calculating income taxes in           differing adoption
                                                                      an interim period, and the recognition of             methods, including
                                                                      deferred tax liabilities for outside basis             retrospectively,
                                                                      differences. This ASU also amends other           prospectively, and/or on a
                                                                      aspects of the guidance to help simplify            modified retrospective
                                                                      and promote consistent application of Topic                 basis.
                                                                      740.

                                                                      We 

are currently evaluating the impact of

implement this orientation on our finances

                                                                      statements.




                                       43

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