ABM Industries Reports Year-End Financial Results.

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--Dec. 10, 2002

ABM Industries Incorporated (NYSE:ABM) today reported net income for the year ended October 31, 2002 of $46.7 million ($0.92 diluted earnings per share), up 42% over the $32.8 million ($0.65 diluted earnings per share) reported in fiscal 2001. Sales and other income for the year ended October 31, 2002 was $2,181.9 million, up 2% from $2,149.2 million for the prior year. The Company's generation of cash from operations increased to $110.9 million for fiscal 2002 from $65.8 million the prior year.

Net income for the fourth quarter of fiscal 2002 was $12.1 million ($0.24 diluted earnings per share), compared to a net loss of $0.9 million ($0.02 diluted loss per share) for the fourth quarter of fiscal 2001. Sales and other income for the fourth quarter of fiscal 2002 was $584.8 million, up 7% from $546.8 million for the fourth quarter of fiscal 2001. Net cash flow from operations was $47.8 million in the fourth quarter of fiscal 2002 compared with $12.1 million for the comparable quarter the prior year.

The World Trade Center (WTC) and adjacent facilities were ABM's largest jobsite before the terrorist attacks on September 11, 2001. From these facilities, the Company realized income of $2.0 million ($1.2 million after-tax) and $8.2 million ($5.1 million after-tax) on revenue of $12.7 million and $70.7 million for the quarter and year ended October 31, 2001, respectively.

Net income for fourth quarter 2002 benefited from the July 12, 2002 acquisition of Lakeside, which generated profits of $3.0 million ($1.9 million after-tax) during the quarter, interest income of $1.0 million ($0.6 million after-tax) from the resolution of past due balances with two janitorial customers, and a $0.5 million gain ($0.3 million after-tax) generated from the early termination of a parking lease. The fourth quarter of 2002 was adversely affected by a $2.3 million increase ($1.5 million after-tax) in the bad debt provision primarily due to increased bankruptcies, and a $1.0 million increase ($0.6 million after-tax) in operating expenses in New York City as a result of the WTC-related seniority-based payroll premium, and higher state unemployment insurance costs. Fourth quarter 2001 included $3.2 million of goodwill amortization expense ($2.0 million after-tax) which has been eliminated in 2002 with the adoption by the Company of new accounting rules governing goodwill, and a $20 million charge ($12.4 million after-tax) to strengthen the Company's self-insurance reserves reflecting the results of the annual independent actuarial review in December 2001.

Net income for fiscal 2002 benefited from a $10.0 million gain ($6.4 million after-tax) from partial settlements on the World Trade Center business interruption and property loss portions of the Company's insurance claim, pretax income of $3.5 million ($2.2 million after-tax) from the previously mentioned Lakeside acquisition, a $2.0 million non-recurring tax benefit from the adjustment of prior-year estimated tax liabilities and a related $1.4 million tax benefit from a lower tax rate. Fiscal 2002 was adversely affected by a $5.8 million increase ($3.7 million after-tax) in the bad debt provision primarily due to increased bankruptcies, a $3.2 million provision ($2.0 million after-tax) for costs associated with the elimination of the Chief Administrative Officer position, the early retirement of the Corporate General Counsel and the replacement of the President of the ABM Facility Services Division, a $3.2 million increase ($2.0 million after-tax) in operating expenses in New York City as a result of the WTC-related seniority-based payroll premium and higher state unemployment insurance costs, a $1.2 million write-down ($0.8 million after-tax) of work in process, and $1.0 million of costs ($0.6 million after-tax) associated with the on-going litigation regarding the World Trade Center insurance claim. Fiscal 2001 included $12.3 million of goodwill amortization expense ($7.6 million after-tax), which has been eliminated in 2002 with the adoption by the Company of new accounting rules governing goodwill, and the previously mentioned $20 million ($12.4 million after-tax) insurance charge.

"Fiscal year 2002 is a record year with net income of $46.7 million despite the impacts from a number of unusual gains or losses, some as direct and indirect reflections of the World Trade Center tragedy," said Henrik C. Slipsager, ABM's President and Chief Executive Officer. "The acquisition of Lakeside Building Maintenance, which we completed last summer, continues to go well and, in fact, is exceeding our expectations," said Slipsager.

"With the Company's record cash flow for fiscal year 2002 and strong balance sheet at fiscal year end, we are cautiously positive as we enter fiscal year 2003," stated Mr. Slipsager. "We are estimating 2003 diluted earnings per share to be between $1.00 and $1.10," he added.

Wednesday morning, December 11th, at 6:00 a.m. (Pacific Standard Time), ABM will host a live webcast of remarks by President & Chief Executive Officer Henrik C. Slipsager and Senior Vice President & Chief Financial Officer George B. Sundby, who will also answer questions from a panel of financial analysts who will join Slipsager and Sundby on the conference call. The webcast will be accessible at www.irconnect.com/primecast/02/q4/abm_4q2002/html 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 the aforementioned URL for 90 days thereafter. In addition to the webcast, a limited number of toll-free telephone lines will be available for listeners who are among the first to call 877/440-9648 within fifteen minutes before the event. Telephonic replays will be accessible during the period from two to 48 hours thereafter by dialing 800/642-1687, and then entering ID #6766494.

ABM Industries Incorporated is the largest facility services contractor listed on the New York Stock Exchange. With annualized revenues in excess of $2.1 billion and more than 62,000 employees, ABM provides air conditioning, elevator, engineering, janitorial, lighting, parking, security and related services for thousands of commercial, industrial, institutional and retail facilities in hundreds of cities across North America. The ABM Family of Services includes ABM Janitorial, Ampco System Parking, American Commercial Security (ACSS), ABM Engineering, Amtech Elevator, Amtech Lighting, CommAir Mechanical and ABM Lakeside Building Maintenance.

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, (12) inability to successfully integrate Lakeside Building Maintenance or other acquisitions into the Company, (13) inability to timely increase prices to cover all or any portion of increased costs, and (14) other material factors that are disclosed from time to time in the Company's public filings with the United States Securities and Exchange Commission, such as reports on Forms 8-K, 10-K and 10-Q.

BALANCE SHEET SUMMARY

                                  October 31,   October 31,  Increase
                                     2002          2001     (Decrease)
Assets:

Current assets                   $437,785,000  $465,541,000        -6%
Goodwill                          167,916,000   113,199,000        48%
All other assets                   99,238,000   104,360,000        -5%

Total assets                     $704,939,000  $683,100,000         3%

Liabilities:

Current liabilities (excluding
 debt)                           $227,090,000  $225,122,000         1%
Line of credit borrowings                   -    10,000,000         -
Notes payable                               -     1,819,000         -
Other non-current liabilities      91,179,000    84,982,000         7%

Total liabilities                $318,269,000  $321,923,000        -1%

Stockholders' Equity             $386,670,000  $361,177,000         7%

Total liabilities and
 stockholders' equity            $704,939,000  $683,100,000         3%


SELECTED CASH FLOW INFORMATION

                                  October 31,   October 31,  Increase
                                     2002          2001     (Decrease)
Three Months Ended October 31
 (Unaudited):

Net Cash Provided By Operating
 Activities                       $47,769,000   $12,075,000       296%

Net Cash Used In Investing
 Activities                       $(4,707,000)  $(5,619,000)      -16%

Common stock issued                $4,299,000    $7,293,000       -41%
Stock buyback                      (6,962,000)            -         -
Preferred stock redemption                  -    (6,400,000)        -
Dividends paid                     (4,447,000)   (4,065,000)        9%
Net debt borrowings (payments)    (15,000,000)    2,000,000         -
Decrease in bank overdraft         (4,281,000)   (4,618,000)       -7%

Net Cash Used In Financing
 Activities                      $(26,391,000)  $(5,790,000)      356%

Year Ended October 31:

Net Cash Provided By Operating
 Activities                      $110,919,000   $65,796,000        69%

Net Cash Used In Investing
 Activities                      $(59,318,000) $(27,021,000)      120%

Common stock issued               $17,955,000   $26,688,000       -33%
Stock buyback                     (23,632,000)            -         -
Preferred stock redemption                  -    (6,400,000)        -
Dividends paid                    (17,730,000)  (16,202,000)        9%
Net debt payments                 (11,819,000)  (25,857,000)      -54%
Decrease in bank overdraft                  -   (15,952,000)        -

Net Cash Used In Financing
 Activities                      $(35,226,000) $(37,723,000)       -7%



SUMMARY INCOME STATEMENT

                                                             Increase
                                     2002           2001    (Decrease)
Three Months Ended October 31
 (Unaudited):

Sales and other income          $584,778,000   $546,801,000         7%
Gain on insurance claim                    -              -         -
Total revenues                  $584,778,000   $546,801,000         7%

Operating expenses and cost of
 goods sold                      519,109,000    503,098,000         3%
Selling, general and
 administrative expenses          47,193,000     41,542,000        14%
Interest expense                     326,000        372,000       -12%
Goodwill amortization                      -      3,184,000         -

Income (loss) before income
 taxes                           $18,150,000    $(1,395,000)        -

Net income (loss)                $12,114,000      $(865,000)        -

Net income (loss) per common
 share:
Basic                                  $0.25         $(0.02)        -
Diluted                                $0.24         $(0.02)        -

Average common shares
 outstanding:
Basic                             49,186,000     48,628,000         1%
Diluted                           50,710,000     50,662,000         0%

Year Ended October 31:

Sales and other income        $2,181,932,000 $2,149,171,000         2%
Gain on insurance claim           10,025,000              -         -
Total revenues                $2,191,957,000 $2,149,171,000         2%

Operating expenses and cost of
 goods sold                    1,946,750,000  1,919,054,000         1%
Selling, general and
 administrative expenses         174,827,000    162,313,000         8%
Interest expense                   1,052,000      2,602,000       -60%
Goodwill amortization                      -     12,257,000         -

Income before income taxes       $69,328,000    $52,945,000        31%

Net income                       $46,728,000    $32,826,000        42%

Net income per common share:
Basic                                  $0.95          $0.68        41%
Diluted                                $0.92          $0.65        43%

Average common shares
 outstanding:
Basic                             49,116,000     47,598,000         3%
Diluted                           51,015,000     50,020,000         2%



SALES AND OPERATING PROFIT BY SEGMENT
                                                             Increase
                                     2002           2001    (Decrease)
Three Months Ended October 31
 (Unaudited):

Sales And Other Income
  ABM Janitorial Services       $330,450,000   $295,493,000        12%
  Ampco System Parking            93,760,000     89,932,000         4%
  ABM Engineering Services        43,951,000     44,060,000         0%
  American Commercial Security
   Services                       37,172,000     29,339,000        27%
  Amtech Lighting Services        34,352,000     40,062,000       -14%
  Amtech Elevator Services        29,655,000     30,174,000        -2%
  Other Divisions                 15,315,000     16,946,000       -10%
  Corporate                          123,000        795,000       -85%
                                $584,778,000   $546,801,000         7%

Operating Profit
  ABM Janitorial Services        $14,725,000    $17,701,000       -17%
  Ampco System Parking             2,040,000        813,000       151%
  ABM Engineering Services         2,747,000      2,429,000        13%
  American Commercial Security
   Services                        1,911,000      1,221,000        57%
  Amtech Lighting Services         2,377,000      4,123,000       -42%
  Amtech Elevator Services         1,593,000        306,000       421%
  Other Divisions                    197,000      1,260,000       -84%
  Corporate expenses              (7,114,000)   (25,692,000)      -72%
  Goodwill amortization                    -     (3,184,000)        -
        Operating Profit         $18,476,000    $(1,023,000)        -
  Gain on insurance claim                  -              -         -
  Interest expense                  (326,000)      (372,000)      -12%
  Income before income taxes     $18,150,000    $(1,395,000)        -

Year Ended October 31:

Sales And Other Income
  ABM Janitorial Services     $1,197,035,000 $1,159,914,000         3%
  Ampco System Parking           363,511,000    365,073,000         0%
  ABM Engineering Services       173,561,000    171,008,000         1%
  American Commercial Security
   Services                      140,569,000    103,980,000        35%
  Amtech Lighting Services       130,858,000    144,319,000        -9%
  Amtech Elevator Services       113,874,000    121,371,000        -6%
  Other Divisions                 61,963,000     82,188,000       -25%
  Corporate                          561,000      1,318,000       -57%
                              $2,181,932,000 $2,149,171,000         2%

Operating Profit
  ABM Janitorial Services        $54,337,000    $67,590,000       -20%
  Ampco System Parking             6,948,000      6,619,000         5%
  ABM Engineering Services        10,033,000      9,404,000         7%
  American Commercial Security
   Services                        5,639,000      3,174,000        78%
  Amtech Lighting Services         8,261,000     11,983,000       -31%
  Amtech Elevator Services         4,319,000      5,012,000       -14%
  Other Divisions                 (1,190,000)     5,280,000         -
  Corporate expenses             (27,992,000)   (41,258,000)      -32%
  Goodwill amortization                    -    (12,257,000)        -
        Operating Profit         $60,355,000    $55,547,000         9%
  Gain on insurance claim         10,025,000              -         -
  Interest expense                (1,052,000)    (2,602,000)      -60%
  Income before income taxes     $69,328,000    $52,945,000        31%

Note to Financial Tables:

In January 2002, the Emerging Issues Task Force ("EITF") released Issue No. 01-14. Income Statement Characterization of Reimbursements Received for "Out-of-Pocket" Expenses Incurred, which the Company adopted in the third quarter of fiscal 2002. For the Company's Parking Division this pronouncement requires both revenues and expenses be recognized, in equal amounts, for costs directly reimbursed from its managed parking lot clients. Previously, expenses directly reimbursed under managed parking lot agreements were netted against the reimbursement received. EITF No. 01-14 did not change the income statement presentation of revenues and expenses of other ABM Divisions. Amounts have been reclassified to conform to the presentation of these reimbursed expenses in all prior periods presented. Adoption of the pronouncement resulted in an increase in total revenues and total costs and expense in equal amounts of $51,957,000 and $50,130,000 for the three months ended October 31, 2002 and 2001, respectively, and $203,841,000 and $199,133,000 for the year ended October 31, 2002 and 2001, respectively. This presentation change has no impact on operating profits or net income.