ABM Industries Announces Second Quarter Financial Performance and Letter of Intent to Acquire Lakeside Building Maintenance.

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--June 11, 2002

ABM Industries Incorporated (NYSE:ABM) has announced the balance sheet, cash flow, revenues, earnings and segment data summarized as follows for the second quarter and first six months ended April 30, 2002, of ABM's current fiscal year that ends on October 31, 2002.

Revenues for the second quarter of fiscal 2002 decreased by 2% to $481,161,000 from $490,494,000 last year. Net income was $13,989,000 compared to $12,054,000 for an increase of 16% over 2001. Diluted net income per share increased by 13% from $0.24 to $0.27 in the second quarter of this year. For the first half of fiscal 2002, revenues decreased slightly to $957,137,000 from $960,913,000 last year. Net income was $21,980,000 compared to $20,458,000, for an increase of 7% over 2001. Diluted net income per share increased by 5% from $0.41 in 2001 to $0.43 in the first six months of this year. Overall, the company's operating cash flow increased by 264% to $27,850,000 in the second quarter of this fiscal year from $7,661,000 in the corresponding quarter of 2001, and was up 61% for the first six months of fiscal 2002 to $40,311,000 from $25,037,000 last year.

The World Trade Center (WTC) and adjacent facilities were ABM's largest jobsite before the terrorist attacks on September 11, 2001. The company incurred a quarterly reduction of $19 million in revenues and $2.5 million in pretax income from the loss of these facilities. Operating expenses in New York City as a result of WTC-related seniority-based payroll premium and unemployment insurance costs increased $1.5 million in the second quarter. On the other hand, the company's second quarter and first six months revenues and pretax income included a gain of $4.3 million from a $6.5 million payment on account from its insurance carrier with regard to the WTC. Earnings for the second quarter and first six months of fiscal 2002 also benefited from the elimination of goodwill amortization of approximately $3.0 million per quarter versus 2001 in accordance with a change of accounting rules (SFAS No. 142) by the Financial Accounting Standards Board.

In other news, ABM and Lakeside Building Maintenance, Inc. (Lakeside) have signed a non-binding letter of intent whereby a subsidiary of ABM would acquire Lakeside during ABM's current fiscal quarter, subject to customary conditions such as satisfactory completion of due diligence, a definitive agreement and antitrust clearance. With annual revenues exceeding $160 million, Chicago-based Lakeside is the largest privately-owned janitorial contractor in the Midwest, with operations in Cincinnati, Cleveland, Columbus, Detroit, Indianapolis, Louisville, Milwaukee, Nashville and St. Louis. The letter of intent contemplates that Lakeside's founder and chief executive officer Michael Sweig, and president Nicholas Baker, would continue to manage Lakeside separate and apart from ABM's other subsidiaries operating in the Midwest.

Henrik Slipsager, ABM's President & Chief Executive Officer, expressed cautious optimism for the remainder of the year. "With the initial payment of WTC-related insurance proceeds and our potential acquisition of Lakeside, we expect to be near our initial low estimate of $1.05 in net income per diluted share for fiscal 2002."

Tomorrow morning, Wednesday, June 12th, at 6:00 a.m. (Pacific Daylight Time), ABM will host a live webcast of remarks by President & Chief Executive Officer Henrik C. Slipsager and Senior Vice President & Chief Financial Officer George B. Sundby, who will also answer questions from a panel of several financial analysts who will join Slipsager and Sundby on a conference call. The webcast will be accessible at www.bestcalls.com by clicking on ABM at that site. Listeners are requested to be online at least fifteen minutes early to register, as well as to download and install any complimentary audio software that might be required. The webcast will be archived at www.bestcalls.com for 90 days thereafter. 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 to twenty-four hours thereafter by dialing 800-642-1687, and then entering ID #4431347.

ABM Industries Incorporated is the largest facility services contractor listed on the New York Stock Exchange. With annualized revenues in excess of $1.9 billion and more than 60,000 employees, ABM provides air conditioning, elevator, engineering, janitorial, lighting, parking, security and related services to thousands of commercial, industrial, institutional and retail facilities in hundreds of cities across North America. The ABM Family of Services includes American Building Maintenance, Ampco System Parking, American Commercial Security (ACSS), ABM Engineering, ABM Janitorial, Amtech Elevator, Amtech Lighting and CommAir Mechanical.

BALANCE SHEET SUMMARY (UNAUDITED)

                              April 30,        April 30,     Increase
                                2002             2001       (Decrease)
Assets:

Current assets             $ 444,112,000    $ 450,128,000          -1%
Goodwill                     124,465,000      114,304,000           9%
All other assets              99,529,000       96,585,000           3%

Total assets               $ 668,106,000    $ 661,017,000           1%

Liabilities:

Current liabilities
 (excluding debt and bank
  overdraft)               $ 211,585,000    $ 195,899,000           8%
Line of credit borrowings             --       40,000,000          --
Bank overdraft                 1,687,000        3,095,000         -45%
Notes payable                         --        1,820,000          --
Other non-current
 liabilities                  86,111,000       70,702,000          22%

Total liabilities          $ 299,383,000    $ 311,516,000          -4%

Series B 8% senior
 redeemable cumulative
 preferred stock           $          --    $   6,400,000           --

Stockholders' Equity       $ 368,723,000    $ 343,101,000           7%

Total liabilities and
 stockholders' equity      $ 668,106,000    $ 661,017,000           1%


SELECTED CASH FLOW INFORMATION (UNAUDITED)
                                                             Increase
                                2002             2001       (Decrease)

Three Months Ended April 30:

Net Cash Provided By
 Operating Activities      $  27,850,000    $   7,661,000         264%

Net Cash Used In Investing
 Activities                $  (9,122,000)   $ (16,537,000)        -45%

Common stock issued        $   5,753,000    $   7,490,000         -23%
Stock buyback                (16,670,000)              --          --
Dividends paid                (4,463,000)      (4,059,000)         10%
Net debt borrowings
 (repayments)                   (942,000)       5,167,000          --
Increase (decrease) in
 bank overdraft               (7,299,000)         201,000          --

Net Cash Used In Financing
 Activities                $ (23,621,000)   $   8,799,000          --

Six Months Ended April 30:

Net Cash Provided By
 Operating Activities      $  40,311,000    $  25,037,000          61%

Net Cash Used In Investing
 Activities                $ (14,698,000)   $ (21,115,000)        -30%

Common stock issued        $   9,740,000    $  12,732,000         -23%
Stock buyback                (16,670,000)              --          --
Dividends paid                (8,878,000)      (8,030,000)         11%
Net debt borrowings
 (repayments)                (11,819,000)       4,144,000          --
Increase (decrease) in
 bank overdraft                1,687,000      (12,857,000)         --

Net Cash Used In Financing
 Activities                $ (25,940,000)   $  (4,011,000)         --


SUMMARY INCOME STATEMENT (UNAUDITED)
                                                             Increase
                                2002             2001       (Decrease)

Three Months Ended April 30:

Sales and other income     $ 476,861,000    $ 490,494,000          -3%
Gain on insurance claim        4,300,000               --          --
Total revenues             $ 481,161,000    $ 490,494,000          -2%

Operating expenses and
 cost of goods sold          419,574,000      425,403,000          -1%
Selling, general and
 administrative expenses      38,791,000       41,467,000          -6%
Interest expense                 232,000          796,000         -71%
Goodwill amortization                 --        3,068,000          --

Income before income taxes $  22,564,000    $  19,760,000          14%

Net income                 $  13,989,000    $  12,054,000          16%

Net income per common share:
Basic                      $        0.28    $        0.25          12%
Diluted                    $        0.27    $        0.24          13%

Average common shares
 outstanding:
  Basic                       49,256,000       47,472,000           4%
  Diluted                     51,494,000       49,826,000           3%

Six Months Ended April 30:

Sales and other income     $ 952,837,000    $ 960,913,000          -1%
Gain on insurance claim        4,300,000               --          --
Total revenues             $ 957,137,000    $ 960,913,000           0%

Operating expenses and
 cost of goods sold          842,781,000      837,802,000           1%
Selling, general and
 administrative expenses      78,407,000       81,886,000          -4%
Interest expense                 497,000        1,709,000         -71%
Goodwill amortization                 --        5,978,000          --

Income before income taxes $  35,452,000    $  33,538,000           6%

Net income                 $  21,980,000    $  20,458,000           7%

Net income per common share:
Basic                      $        0.45    $        0.43           5%
Diluted                    $        0.43    $        0.41           5%

Average common shares
 outstanding:
  Basic                       49,110,000       46,878,000           5%
  Diluted                     51,086,000       49,371,000           3%


REVENUES AND OPERATING PROFIT BY SEGMENT (UNAUDITED)
                                                             Increase
                                2002             2001       (Decrease)
Three Months Ended April 30:

Sales and other income
 ABM Janitorial Services   $ 284,229,000    $ 293,481,000          -3%
 ABM Engineering Services     42,667,000       41,637,000           2%
 Ampco System Parking         39,364,000       41,699,000          -6%
 American Commercial
  Security Services           34,631,000       24,147,000          43%
 Amtech Lighting Services     32,071,000       31,627,000           1%
 Amtech Elevator Services     28,234,000       31,400,000         -10%
 Other Divisions              15,532,000       26,419,000         -41%
 Corporate                       133,000           84,000          58%
                           $ 476,861,000    $ 490,494,000          -3%

Operating Profit
 ABM Janitorial Services   $  16,327,000    $  18,144,000         -10%
 ABM Engineering Services      2,339,000        2,110,000          11%
 Ampco System Parking          1,783,000        2,138,000         -17%
 American Commercial
  Security Services            1,065,000          614,000          73%
 Amtech Lighting Services      2,095,000        2,117,000          -1%
 Amtech Elevator Services        608,000        1,653,000         -63%
 Other Divisions                  74,000        1,749,000         -96%
 Corporate Expenses           (5,795,000)      (4,901,000)         18%
 Goodwill Amortization                --       (3,068,000)          --
      Operating Profit     $  18,496,000    $  20,556,000         -10%
 Gain on Insurance Claim       4,300,000               --          --
 Interest Expense               (232,000)        (796,000)        -71%
 Income Before Income
  Taxes                    $  22,564,000    $  19,760,000          14%

Six Months Ended April 30:

Sales and other income
 ABM Janitorial Services   $ 571,029,000    $ 570,432,000           0%
 ABM Engineering Services     86,337,000       84,411,000           2%
 Ampco System Parking         77,274,000       84,561,000          -9%
 American Commercial
  Security Services           66,794,000       48,723,000          37%
 Amtech Lighting Services     64,638,000       63,154,000           2%
 Amtech Elevator Services     54,727,000       59,789,000          -8%
 Other Divisions              31,688,000       49,645,000         -36%
 Corporate                       350,000          198,000          77%
                           $ 952,837,000    $ 960,913,000          -1%

Operating Profit
 ABM Janitorial Services   $  27,170,000    $  31,658,000         -14%
 ABM Engineering Services      4,660,000        4,490,000           4%
 Ampco System Parking          2,831,000        4,098,000         -31%
 American Commercial
  Security Services            2,260,000        1,110,000         104%
 Amtech Lighting Services      4,004,000        4,395,000          -9%
 Amtech Elevator Services      1,524,000        2,966,000         -49%
 Other Divisions                 772,000        2,669,000         -71%
 Corporate Expenses          (11,572,000)     (10,161,000)         14%
 Goodwill Amortization                --       (5,978,000)         --
       Operating Profit    $  31,649,000    $  35,247,000         -10%
 Gain on Insurance Claim       4,300,000               --          --
 Interest Expense               (497,000)      (1,709,000)        -71%
 Income Before Income
  Taxes                    $  35,452,000    $  33,538,000           6%

Safe Harbor Statement

Cautionary Safe Harbor Disclosure for Forward Looking Statements under the Private Securities Litigation Reform Act of 1995: Because of the factors set forth below, as well as other variables affecting the Company's operating results, past financial performance should not be considered a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. The statements contained herein which are not historical facts are forward-looking statements that are subject to meaningful risks and uncertainties, including but not limited to: (1) significant decreases in commercial real estate occupancy, resulting in reduced demand and prices for building maintenance and other facility services in the Company's major markets, (2) loss or bankruptcy of one or more of the Company's major customers, which could adversely affect the Company's ability to collect its accounts receivable or recover its deferred costs, (3) major collective bargaining issues that may cause loss of revenues or cost increases that non-union companies can use to their advantage in gaining market share, (4) significant shortfalls in adding additional customers in existing and new territories and markets, (5) a protracted slowdown in the Company's acquisition activities, (6) legislation or other governmental action that severely impacts one or more of the Company's lines of business, such as price controls that could restrict price increases, or the unrecovered cost of any universal employer-paid health insurance, as well as government investigations that adversely affect the Company, (7) reduction or revocation of the Company's line of credit, which would increase interest expense or the cost of capital, (8) cancellation or nonrenewal of the Company's primary insurance policies, as many customers contract out services based on the contractor's ability to provide adequate insurance coverage and limits, (9) catastrophic uninsured or underinsured claims against the Company, the inability of the Company's insurance carriers to pay otherwise insured claims, or inadequacy in the Company's reserve for self-insured claims, (10) inability to employ entry level personnel due to labor shortages, (11) resignation, termination, death or disability of one or more of the Company's key executives, which could adversely affect customer retention and day-to-day management of the Company, and (12) other material factors that are disclosed from time to time in the Company's public filings with the United States Securities and Exchange Commission, such as reports on Forms 8-K, 10-K and 10-Q.