UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON,
Washington, D.C. 20549
FORM 10-K

            (Mark One)
            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES 
(Mark One)
XANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED OCTOBER
For the Fiscal Year Ended October 31, 2001

         OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES 2002
ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from ________ to ________

                           .
Commission File Number 1-8929
ABM INDUSTRIES INCORPORATED
             (Exact
(Exact name of registrant as specified in its charter)

                          DELAWARE                                                      
Delaware
94-1369354
(State
(State or other jurisdiction of incorporation or organization)             (IRS(IRS Employer Identification Number)
160 PACIFIC AVENUE, SUITEPacific Avenue, Suite 222, SAN FRANCISCO, CALIFORNIASan Francisco, California 94111
              (Address and zip code
(Address of principal executive offices) TELEPHONE:(Zip Code)
Registrant’s telephone number, including area code: 415/733-4000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassName of Each Exchange on Which Registered
 COMMON STOCK,
Common Stock, $.01 PAR VALUE                       NEW YORK STOCK EXCHANGE
PREFERRED STOCK PURCHASE RIGHTS                     NEW YORK STOCK EXCHANGE
par value
New York Stock Exchange
Preferred Stock Purchase Rights
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X]X  No [ ]


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant'sregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  [ ]


As of November 30, 2001,2002, nonaffiliates of the registrant beneficially owned 19,416,42239,011,613 shares of the registrant'sregistrant’s common stock with an aggregate market value of $586,375,944.

$578,932,337.
As of November 30, 2001,2002, there were 24,444,26649,070,289 shares of the registrant'sregistrant’s common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement to be used by the Company in connection with its 20022003 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.
ABM INDUSTRIES INCORPORATED
FORM 10-K
                   FOR THE FISCAL YEAR ENDED OCTOBER
For the Fiscal Year Ended October 31, 2001
                                TABLE OF CONTENTS

2002
Table of Contents

                                                                                              PAGE
                                                                                              ----

PART
Page
Part I
Item 1     Business..........................................................................   Business3
Executive Officers of the Company.................................................   Company6
Item 2     Properties........................................................................   Properties7
Item 3Legal Proceedings.................................................................   Proceedings7
Item 4Submission of Matters to a Vote of Security Holders...............................   Holders7

PART
Part II
Item 5Market for Registrant'sRegistrant’s Common Equity and Related Stockholder Matters.............   Matters7
Item 6Selected Consolidated Financial Data..............................................   Data8
Item 7     Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations........................................................................   Operations9
Item 7AQualitative and Quantitative Disclosures About Market Risk........................  15
Risk17
Item 8Financial Statements and Financial Statement Schedule.............................  15
Supplementary Data18
Item 9Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........................................................................  33

PARTDisclosure35
Part III
Item 10Directors and Executive Officers of the Registrant................................  33
Registrant35
Item 11Executive Compensation............................................................  33
Compensation35
Item 12Security Ownership of Certain Beneficial Owners and Management....................  33
Management35
Item 13Certain Relationships and Related Transactions....................................  33

PARTTransactions35
Part IV
Item 14Controls and Procedures36
Item 15Exhibits, Consolidated Financial Statement Schedules, and Reports on Form 8-K.....  33
           Signatures........................................................................  35
           8-K36
Signatures37
Certifications38, 39
Schedule II40
Exhibit Index.....................................................................  36
Index41
PART I
ITEM 1. BUSINESS
       ABM Industries Incorporated ("ABM"(“ABM”) is the largest facility services contractor listed on the New York Stock Exchange. With annual revenues exceeding $1.9$2.1 billion and more than 60,00062,000 employees, ABM and its subsidiaries (the "Company"“Company”) provide janitorial, parking, engineering, security, lighting, elevator and air conditioning elevator, engineering, janitorial,
lighting, parking and security services to thousands of commercial, industrial, institutional and institutional customersretail facilities in hundreds of cities across North America.
      ABM was reincorporated in Delaware on March 19, 1985, as the successor to a business founded in California in 1909. The Corporate Headquarterscorporate headquarters of the Company areis located at 160 Pacific Avenue, Suite 222, San Francisco, California 94111, and itsthe Company’s telephone number at that location is 415/733-4000.

INDUSTRY INFORMATION
Industry Information
      The Company'sCompany’s operations are grouped into eight divisions (comprised(each comprised of one or more subsidiaries of the Company), as they existed at October 31, 2001.2002. Referred to as "ABM Industries Incorporatedthe “ABM Family of Services"Services”, they are listed
below by their respective division name:

                       -are:
         • ABM Janitorial Services
         • Ampco System Parking
         • ABM Engineering Services
                       -  ABM Janitorial Services
                       -  ABM Service Network
                       -
         • American Commercial Security Services
                       -  Ampco System Parking
                       -
         • Amtech Lighting Services
         • Amtech Elevator Services
                       -  Amtech Lighting Services
                       -
         • CommAir Mechanical Services
         • ABM Service Network
     Additional information relating to the Company'sCompany’s industry segments appears in Note 13 of Notes to Consolidated Financial Statements contained in Item 8, "Financial“Financial Statements and Financial Statement Schedule."Supplementary Data.” The business activities of the Company'sCompany’s industry segments, as they existed at October 31, 2001,2002, are more fully described below.

       - ABM ENGINEERING SERVICES provides building owners and managers with
on-site engineers to operate, maintain and repair electrical, energy management,
mechanical, and plumbing systems utilizing computerized maintenance management
systems ("CMMS"). This service is primarily for high-rise office buildings, but
customers also include schools, warehouses, factories, shopping malls and
universities. ABM Engineering Services operates in 21 states through ten
regional offices, three of which are in California and one each in Arizona,
Colorado, Florida, Illinois, Pennsylvania, New York and Texas. In 1999, this
Division earned ISO 9002 Certification, the first national engineering services
provider of on-site operating engineers to earn this exclusive designation. ISO
is a quality standard comprised of a rigorous set of guidelines and good
business practices against which companies are rated through a comprehensive
independent audit process that can take several years.

       - ABM JANITORIAL SERVICES (also known as "American Building Maintenance")
provides a wide range of basic janitorial services for a variety of structures
and organizations, including office buildings, industrial plants, banks,
department stores, theaters, warehouses, educational and health institutions and
airport terminals. Services provided include floor cleaning and finishing, wall
and window washing, furniture polishing, rug cleaning, dusting, as well as other
building cleaning services. ABM Janitorial Services maintains 99 offices in 35
states, the District of Columbia and one Canadian province, and operates under
thousands of individually negotiated building maintenance contracts, the
majority of which are obtained by competitive bidding. Generally, profit margins
on maintenance contracts tend to be inversely proportional to the size of the
contract. Although many of this Division's maintenance contracts are fixed-price
agreements, others contain clauses under which the customer agrees to reimburse
the full amount of wages, payroll taxes, insurance charges and other expenses
plus a profit percentage. The majority of ABM Janitorial Services contracts are
for one-year periods, contain automatic renewal clauses and are subject to
termination by either party by a 30 to 90 day written notice.


                                       
      - ABM Janitorial Services(also known as “American Building Maintenance” and “ABM Lakeside Building Maintenance”) provides a wide range of basic janitorial services for a variety of facilities, including office buildings, industrial plants, banks, department stores, theaters, warehouses, educational and health institutions, and airport terminals. Services provided include floor cleaning and finishing, wall and window washing, furniture polishing, rug cleaning and dusting, as well as other building cleaning services. ABM Janitorial Services maintains 106 offices in 35 states, the District of Columbia and one Canadian province, and operates under thousands of individually negotiated building maintenance contracts, nearly all of which are obtained by competitive bidding. Generally, profit margins on maintenance contracts tend to be inversely proportional to the size of the contract. The Division’s maintenance contracts are either fixed-price agreements or they contain clauses under which the customer agrees to reimburse the full amount of wages, payroll taxes, insurance charges and other expenses plus a profit percentage. The majority of ABM Janitorial Services contracts are for one-year periods, but are subject to termination by either party after a 30 to 90 day written notice and contain automatic renewal clauses.
      The operations of Lakeside Building Maintenance, Inc. and an affiliated company (collectively, Lakeside) were acquired by the Company on July 12, 2002. Chicago-based Lakeside operated as the largest privately-owned janitorial contractor in the Midwest, with operations in Chicago, Cincinnati, Cleveland, Columbus, Detroit, Indianapolis, Louisville, Milwaukee, Nashville and St. Louis.
      - Ampco System Parking(also known as “Ampco System Airport Parking” and “Ampco Express Airport Parking”) operates approximately 1,700 parking lots and garages, including the following airports: Austin, Texas; Denver, Colorado; Detroit, Michigan; Honolulu, Hawaii; Orlando, Florida; and San Francisco, California, to name a few. In conjunction with its on-airport parking services, this Division also operates off-airport parking facilities in Philadelphia, Pennsylvania; Houston and Dallas, Texas; Los Angeles and San Diego, California, and parking shuttle bus services at thirteen locations. Approximately 40% of the lots and garages are leased and 60% are operated through management contracts for third parties. The lease terms generally range from 3 to 20 years and usually contain provisions for renewal options. Leases which expire may continue on a month-to-month basis or may be replaced by similar leases. Many leases contain provisions for contingent rentals based on revenues. Management contracts
3

       - ABM SERVICE NETWORK (also known as "ABM Facility Services") provides
customers with streamlined, centralized control and coordination of multiple
facility service needs. This process is consistent with the greater competitive
demands on corporate organizations to become more efficient in the business
market today. By leveraging the core competencies of the Company's other
divisions, this Division attempts to reduce overhead, such as redundant
personnel, for its customers by providing multiple services under a single
contract, with one contact and one invoice. Its National Service Center provides
centralized dispatching, emergency services, accounting and related reports to
financial institutions, high-tech companies, and other customers regardless of
industry or size. ABM Service Network is headquartered in San Francisco, where
it also maintains its National Service Center.

       - AMERICAN COMMERCIAL SECURITY SERVICES (also known as "ACSS" and "ABM
Security Services") provides security guards, electric monitoring of fire, life,
safety, and access control devices, and security consulting services to a wide
range of businesses in the major metropolitan areas of Phoenix, Arizona; San
Francisco, San Diego and Los Angeles, California; Chicago, Illinois; New
Orleans, Louisiana; Minneapolis, Minnesota; Portland, Oregon; Houston, Dallas,
Fort Worth, Austin and San Antonio, Texas; Seattle, Washington; and Salt Lake
City, Utah. Much like ABM Janitorial Services, the majority of this Division's
contracts are for one-year periods, contain automatic renewal clauses and are
subject to termination by either party by a 30 to 90 day written notice.

       - AMPCO SYSTEM PARKING (also known as "Ampco System Airport Parking" and
"Ampco Express Airport Parking") operates approximately 1,600 parking lots and
garages, which are either leased from or operated through management contracts
for third parties. The lease terms generally range from 5 to 20 years and
usually contain provisions for renewal options. Leases which expire may continue
on a month-to-month basis or may be replaced by similar leases. Many leases
contain provisions for contingent rentals based on revenues. Ampco System
Parking currently operates in 26 states and the following airports: Austin,
Texas; Denver, Colorado; Detroit, Michigan; Honolulu, Hawaii; and San Francisco,
California, to name a few. In conjunction with its on-airport parking services,
this Division also operates off-airport parking facilities in Philadelphia,
Pennsylvania; Houston, Texas; Los Angeles and San Diego, California, and parking
shuttle bus services at thirteen locations.

       - AMTECH ELEVATOR SERVICES maintains, modernizes and repairs elevators
and escalators in major metropolitan areas of California; Houston, Texas;
Cincinnati, Ohio; Detroit, Michigan; Upper Marlboro, Maryland; Las Vegas,
Nevada; Pennsauken, New Jersey; Atlanta, Georgia; Philadelphia, Pennsylvania;
Phoenix, Arizona; Denver, Colorado; Chicago, Illinois; and Washington, D.C.
Amtech Elevator Services maintains 18 offices and several parts warehouses, and
operates a fleet of radio-equipped service vehicles.

       - AMTECH LIGHTING SERVICES provides relamping, fixture cleaning, and
periodic lighting maintenance service to a variety of commercial, retail, and
industrial customers. Amtech Lighting Services also maintains electrical outdoor
signage and provides electrical service and repairs for their customer base.
This Division maintains 28 offices, eight of which are located in California,
four are in Texas, two in North Carolina; and one office in each of the
following states: Alabama, Arizona, Florida, Georgia, Illinois, Louisiana,
Maryland, Minnesota, Nevada, New Jersey, New York, Oklahoma, Oregon, and
Washington.

       - COMMAIR MECHANICAL SERVICES (also known as "CommAir Preferred
Mechanical Services") installs, maintains, and repairs heating, ventilation and
air conditioning equipment, performs chemical water treatment, and provides
energy conservation services for commercial, industrial and institutional
facilities. CommAir Mechanical Services maintains nine offices, eight of which
are located in California, and one in Phoenix, Arizona.

       Effective April 30, 2001, the Company sold its Easterday Janitorial
Supply Division, which in fiscal 2000 had annual revenues of $43.9 million, of
which 27% were intercompany sales. Additional information regarding this
transaction appears in Note 10 of Notes to Consolidated Financial Statements
contained in Item 8, "Financial Statements and Financial Statement Schedule."

       The effect on revenues and operations of the September 11 terrorist
attacks is described in Part II, Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations."


                                       
contain clauses under which the customer agrees to reimburse the full amount of wages, payroll taxes, insurance charges and other expenses plus a profit percentage. Ampco System Parking maintains 30 offices and operates in 26 states.
      - ABM Engineering Servicesprovides facilities with on-site engineers to operate, maintain and repair electrical, energy management, mechanical and plumbing systems utilizing in part computerized maintenance management systems (“CMMS”). These services are primarily designed for high-rise office buildings, but customers also include schools, computer centers, shopping malls and universities. ABM Engineering Services operates in 19 states through ten regional offices, three of which are in California and one each in Arizona, Colorado, Florida, Illinois, Pennsylvania, New York and Texas. The Division has maintained ISO 9002 Certification for the past four years, the only national engineering services provider of on-site operating engineers to earn this exclusive designation. ISO is a quality standard comprised of a rigorous set of guidelines and good business practices against which companies are evaluated through a comprehensive independent audit process.
      - American Commercial Security Services(also known as “ACSS” and “ABM Security Services”) provides security guards; electronic monitoring of fire, life, safety and access control devices; and security consulting services’ to a wide range of businesses. This Division maintains 24 offices and operates in the major metropolitan areas of Phoenix, Arizona; Los Angeles, Sacramento, San Diego, San Francisco and Santa Clara, California; Chicago, Illinois; New Orleans, Louisiana; Minneapolis, Minnesota; Portland, Oregon; Houston, Dallas, Fort Worth, Austin and San Antonio, Texas; Seattle, Washington; New York City, New York; Philadelphia and Pittsburgh, Pennsylvania; and Washington, D.C. Much like ABM Janitorial Services, the majority of this Division’s contracts are for one-year periods, but are subject to termination by either party after a 30 to 90 day written notice and contain automatic renewal clauses.
      - Amtech Lighting Servicesprovides relamping, fixture cleaning, and periodic lighting maintenance service to a variety of commercial, industrial and retail facilities. Amtech Lighting Services also repairs and maintains electrical outdoor signage, and provides electrical service and repairs. This Division operates 28 offices, eight of which are located in California, four in Texas, two in North Carolina; and one office in each of the following states: Alabama, Arizona, Florida, Georgia, Illinois, Louisiana, Minnesota, Nevada, New Jersey, New York, Ohio, Oklahoma, Oregon and Washington.
      - Amtech Elevator Servicesmaintains, repairs and modernizes elevators and escalators in major metropolitan areas of California; Houston, Texas; Detroit, Michigan; Las Vegas, Nevada; Atlanta, Georgia; Philadelphia, Pennsylvania; Phoenix, Arizona; Denver, Colorado; Chicago, Illinois; and Washington, D.C. Amtech Elevator Services maintains 15 offices and several parts warehouses, and operates a fleet of radio-equipped service vehicles.
      - CommAir Mechanical Services(also known as “CommAir Preferred Mechanical Services”) installs, maintains and repairs heating, ventilation and air conditioning (“HVAC”) equipment, performs chemical water treatment and provides energy conservation services for commercial, industrial and institutional facilities. CommAir Mechanical Services maintains nine offices, eight of which are located in California, and one in Phoenix, Arizona.
      - ABM Service Network(also known as “ABM Facility Services”) provides customers with streamlined, centralized control and coordination of multiple facility service needs. This process is consistent with the greater competitive demands on corporate organizations to become more efficient in the business market today. By leveraging the core competencies of the Company’s other divisions, this Division attempts to reduce overhead (such as redundant personnel) for its customers by providing multiple services under a single contract, with one contact and one invoice. Its National Service Center provides centralized dispatching, emergency services, accounting and related reports to financial institutions, high-tech companies and other customers regardless of industry or size. ABM Service Network is headquartered in San Francisco, where it also maintains the National Service Center.
4

TRADEMARKS
Trademarks
      The Company believes that it owns or is licensed to use all corporate names, trade names, trademarks, service marks, copyrights, patents and trade secrets which are material to the Company'sCompany’s operations.

COMPETITION
Competition
      The Company believes that each aspect of its business is highly competitive, and that such competition is based primarily on price and quality of service. Nearly all services provided by the Company are under contracts originally obtained through competitive bidding. The Company'smajority of the Company’s competitors include a large number ofare regional and local companies located in major cities throughout the United States and Canada. While the majority of the Company's
competitorsCanada that operate in a limited geographic area, thearea. The operating divisions of a few large, diversified facility service and manufacturing companies compete with the Company on a national basis.

SALES AND MARKETING
Sales and Marketing
      The Company'sCompany’s sales and marketing efforts are conducted by its corporate, division, region, branch and district offices. Sales, marketing, management and operations personnel in each of these offices participate directly in selling and servicing customers. The broad geographic scope of these offices enables the Company to provide a full range of facility services through intercompany sales referrals, multi-service "bundled"“bundled” sales and national account sales. The Company also has designated a nationwide group of "ABM“ABM Family of Services"Services” executives to market all of the Company'sCompany’s facility services capabilities.
      The Company has a broad customer base, including airports, apartment complexes, city centers, colleges and universities, financial institutions, industrial plants, office buildings, retail stores, shopping centers and theme parks. No customer accounted for more than 5% of its revenues during the fiscal year ended October 31, 2001.

EMPLOYEES2002.
Employees
      The Company employs over 60,00062,000 persons, of whom the vast majority are service employees who perform janitorial, parking, engineering, security, lighting, elevator and air conditioning elevator, engineering,
janitorial, lighting, parking and security services. Approximately 24,90027,800 of these employees are covered under collective bargaining agreements. There are about 3,6003,700 employees with executive, managerial, supervisory, administrative, professional, sales, marketing or clerical responsibilities, or other office assignments.

ENVIRONMENTAL MATTERS
Environmental Matters
      The nature of the Company'sCompany’s operations, primarily services, would not ordinarily involve it in environmental contamination. However, the Company'sCompany’s operations are subject to various federal, state and/or local laws regulating the discharge of materials into the environment or otherwise relating to the protection of the environment, such as discharge into soil, water and air, and the generation, handling, storage, transportation and disposal of waste and hazardous substances. These laws generally have the effect of increasing costs and potential liabilities associated with the conduct of the Company'sCompany’s operations, although historically they have not had a material adverse effect on the Company'sCompany’s financial position, cash flows or its results of operations.
      The Company is currently involved in threefive proceedings relating to environmental matters: one involving alleged potential soil and groundwater contamination at a Company facility in Florida; one involving alleged potential soil contamination at a former Company facility in Arizona; and one involving alleged potential soil and groundwater contamination at a former dry-cleaning facility leased by the Company in Nevada.Nevada; one involving alleged potential soil contamination at a former parking facility leased by the Company in Washington; and one involving alleged potential soil and groundwater contamination at a third party recycling center in Southern California. While it is difficult to predict the ultimate outcome of these matters, based on information currently available, management believes that none of these matters, individually or in the aggregate, are reasonably likely to have a material adverse effect on the Company'sCompany’s financial position, cash flows, or results of operations. As anyTwo of the five proceedings are subject to ongoing settlement negotiations and a reserve of $300,000 has been set aside for the potential liability. The liability related to thesethe other three claims is neither probable nor estimable, hence no accruals have been made related to these matters.
5

EXECUTIVE OFFICERS OF
Executive Officers of ABM
      The executive officers of ABM as of October 31, 2001 wereare as follows:

NAME                 AGE   PRINCIPAL OCCUPATIONS AND BUSINESS EXPERIENCE DURING PAST FIVE YEARS
- ------------------------------------------------------------------------------------------------

Principal Occupations and Business Experience
NameAgeDuring Past Five Years
Henrik C. Slipsager   46   47President & Chief Executive Officer and Director of ABM since November 2000; Executive Vice President of ABM, and President of theABM Janitorial Services,
                           Division, from November 1999 through October 2000; Senior Vice President of ABM from March 1998 through October 1999; Executive Vice President of theABM Janitorial Services Division from January 1997 through October 1999

Martinn H. Mandles    61   Chairman of the Board since December 1997; Chief Administrative
                           Officer since November 1991; Executive Vice President from November
                           1991 through November 1997


Jess E. Benton III    61   62Chief Operating Officer of ABM since November 2000; Executive Vice President since November 1999; Senior Vice President from July 1994 through October 1999
James P. McClure45Executive Vice President of ABM since September 2002; President of ABM Janitorial Services since November 2000; Senior Vice President of ABM Janitorial Services from July 1997 through October 2000
Donna M. Dell         53   54Senior Vice President of Human Resources of ABM since November 1999; Chief Employment Counsel since April 1997; Vice President of Human Resources from July 1994 through October 1999

Harry H. Kahn         58   Senior Vice President since November 1999; General Counsel &
                           Corporate Secretary since November 1991; Vice President from
                           November 1991 through October 1999


George B. Sundby      50   51Senior Vice President & Chief Financial Officer of ABM since June 2001; Senior Vice President & Chief Financial Officer of Transamerica Finance Corporation from September 1999 through March 2001; also served as
                           Vice President of Financial Planning and Analysis of Transamerica Corporation from January 1995 through March 2001
Gary R. Wallace       50   51Senior Vice President of ABM, Director of Business Development & Chief Marketing Officer of ABM since November 2000; Senior Vice President of theABM Janitorial Services Division from September 1995 through October 2000
Steven M. Zaccagnini41Senior Vice President of ABM since September 2002; President of CommAir Mechanical Services since September 2002; President of ABM Service Network since April 2002; Senior Vice President of Jones Lang LaSalle from April 1989 through February 2002
Maria P. Y. de la Pena      42   Peña43Vice President & Controller of ABM since July 2001; Controller of Vectiv Corporation from March 2001 through June 2001; Assistant Controller of Transamerica Finance Corporation from December 1999 through March 2001; Director of Accounting of Transamerica Corporation from December 1997 through November 1999; Accounting Manager of Transamerica Corporation from March 1994 through November 1997

Anthony D. Lackey     38   
David L. Farwell41Vice President & Treasurer of ABM since NovemberAugust 2002; Treasurer of JDS Uniphase Corporation from December 1999 through April 2002; Assistant Treasurer of Acuson Corporation from October 1997 through December 1999; DirectorAssistant Treasurer of Electronic Services
                           & Chief Technology Officer since July 1996; Assistant Vice PresidentVerifone Corporation from JulyDecember 1996 through October 1999

Terry D. McNeil       54   Vice President sinceSeptember 1997; Portfolio Manager of Microsoft Corporation from August 1994 through November 1999; Director of Insurance Services
                           since October 1988; Assistant Vice President from July 1996 through
                           October 1999

Eleonora C. Walsh     61   Vice President since November 1999; Director of Administrative
                           Services since November 1991; Assistant Vice President from July
                           1996 through October 1999

6
ITEM 2. PROPERTIES
       The Company has corporate, division, regional, branch or district offices in over 250 locations throughout the United States and Canada. ThirteenFourteen of these facilities are owned by the Company and the remainder are leased.Company. At October 31, 2001,2002, the real estate owned by the Company had an aggregate net book value of $3.6 million and was located in: Phoenix, Arizona; Fresno, California; Jacksonville and Tampa, Florida; Portland, Oregon; Arlington, Houston and San Antonio, Texas; and Kennewick, Seattle, Spokane and Tacoma, Washington.
      Rental payments under long and short-term lease agreements amounted to $103.3$100.2 million for the fiscal year ended October 31, 2001.2002. Of this amount, $69.7$65.8 million in rental expense was attributable to public parking lots and garages thatleased and operated by Ampco System Parking leases and operates.Parking. The remaining expense was for the rental or lease of office space, computers, operating equipment and motor vehicles.
ITEM 3. LEGAL PROCEEDINGS
       Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
       Not applicable.
PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS

MARKET INFORMATION AND DIVIDENDS

       ABM's
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information and Dividends
      ABM’s common stock is listed on the New York Stock Exchange. ABM's credit
agreement places certain limitations on dividend payments based on net income
(see Note 4 of Notes to Consolidated Financial Statements contained in Item 8). The following table sets forth the high and low prices of ABM'sABM’s common stock and quarterly cash dividends on common shares for the periods indicated:

                                                      FISCAL QUARTER
                                  ------------------------------------------------------
                                    FIRST          SECOND         THIRD         FOURTH           YEAR
                                  ---------      ---------      ---------      ---------      ---------

2001
Price range of common stock:
   High                           $   32.13      $   33.00      $   38.20      $   37.65      $   38.20
   Low                            $   27.56      $   28.46      $   30.72      $   24.96      $   24.96
Dividends per share               $    0.165     $    0.165     $    0.165     $    0.165     $    0.66

2000
Price range of common stock:
   High                           $   23.88      $   28.00      $   26.19      $   28.00      $   28.00
   Low                            $   19.25      $   20.25      $   21.75      $   23.94      $   19.25
Dividends per share               $    0.155     $    0.155     $    0.155     $    0.155     $    0.62

                      
Fiscal Quarter
FirstSecondThirdFourthYear
Fiscal Year 2002
                    
Price range of common stock:                    
 High $16.40  $19.24  $19.59  $17.69  $19.59 
 Low $13.36  $14.88  $14.00  $12.92  $12.92 
Dividends per share $0.09  $0.09  $0.09  $0.09  $0.36 
Fiscal Year 2001
                    
Price range of common stock:                    
 High $16.07  $16.50  $19.10  $18.83  $19.10 
 Low $13.78  $14.23  $15.36  $12.48  $12.48 
Dividends per share $0.0825  $0.0825  $0.0825  $0.0825  $0.33 
      On March 12, 2002, ABM’s Board of Directors declared a 2-for-1 split of ABM’s common stock in the form of a 100% stock dividend payable on May 7, 2002 to stockholders of record on March 29, 2002. The per share amounts set forth above have been retroactively restated to reflect the stock split.
      At November 30, 2001,2002, there were approximately 4,7354,451 registered holders of ABM'sABM’s common stock, in addition to stockholders in street name.
7
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
       The selected consolidated financial data presented below is derived from the Company'sCompany’s consolidated financial statements for each of the years in the five-year period ended October 31, 2001.




(in thousands, except per share amounts and ratios)         2001            2000            1999            1998            1997
                                                         ----------      ----------      ----------      ----------      ----------

OPERATIONS
Revenues and other income                                $1,950,038      $1,807,557      $1,629,716      $1,501,827      $1,252,472
                                                         ----------      ----------      ----------      ----------      ----------
Expenses
Operating expenses and cost of goods sold                 1,722,334       1,573,998       1,413,541       1,298,423       1,076,078
Selling, general and administrative                         172,157         157,546         146,984         142,431         126,755
Interest                                                      2,602           3,320           1,959           3,465           2,675
                                                         ----------      ----------      ----------      ----------      ----------
Total expenses                                            1,897,093       1,734,864       1,562,484       1,444,319       1,205,508
                                                         ----------      ----------      ----------      ----------      ----------
Income before income taxes                                   52,945          72,693          67,232          57,508          46,964
Income taxes                                                 20,119          28,350          27,565          23,578          19,725
                                                         ----------      ----------      ----------      ----------      ----------
Net income                                               $   32,826      $   44,343      $   39,667      $   33,930      $   27,239
                                                         ==========      ==========      ==========      ==========      ==========
Net income per common share
Basic                                                    $     1.36      $     1.94      $     1.77      $     1.58      $     1.33
Diluted                                                  $     1.30      $     1.85      $     1.65      $     1.44      $     1.22
                                                         ==========      ==========      ==========      ==========      ==========
Common and common equivalent shares
Basic                                                        23,799          22,551          22,067          21,110          20,143
Diluted                                                      25,010          23,709          23,748          23,161          21,872
                                                         ==========      ==========      ==========      ==========      ==========
FINANCIAL STATISTICS
Dividends paid per common share                          $     0.66      $     0.62      $     0.56      $     0.48      $     0.40
Stockholders' equity                                     $  361,177      $  316,309      $  276,951      $  236,838      $  197,278
Common shares outstanding at October 31                      24,389          22,999          22,407          21,601          20,464
Stockholders' equity per common share                    $    14.81      $    13.75      $    12.36      $    10.96      $     9.64
Working capital                                          $  229,542      $  224,199      $  184,279      $  165,788      $  137,223
Current ratio                                                  1.97            2.05            2.01            2.05            1.89
Long-term debt (less current portion)                    $      942      $   36,811      $   28,903      $   33,720      $   38,402
Redeemable cumulative preferred stock                    $       --      $    6,400      $    6,400      $    6,400      $    6,400
Total assets                                             $  683,100      $  641,985      $  563,384      $  501,363      $  464,251
Property, plant and equipment--net                       $   42,936      $   40,734      $   35,181      $   27,307      $   26,584
Capital expenditures                                     $   16,922      $   18,717      $   19,451      $   11,715      $   13,272
Depreciation and amortization                            $   26,328      $   23,524      $   20,698      $   19,593      $   16,118
Trade accounts receivable--net                           $  367,201      $  353,017      $  290,920      $  255,758      $  226,093
                                                         ==========      ==========      ==========      ==========      ==========



       Stockholders'2002. The share data has been retroactively restated to reflect the stock split on March 12, 2002.
                     
(in thousands, except per share data and ratios)  2002   2001   2000   1999   1998 
Operations
                    
Revenues:                    
Sales and other income $2,181,932  $2,149,171  $1,993,859  $1,798,150  $1,669,820 
Gain on insurance claim  10,025   —   —   —   — 
Total revenues  2,191,957   2,149,171   1,993,859   1,798,150   1,669,820 
Expenses:                    
Operating expenses and cost of goods sold  1,946,750   1,919,054   1,757,619   1,579,524   1,464,163 
Selling, general and administrative  174,827   162,313   149,029   139,674   136,052 
Interest  1,052   2,602   3,320   1,959   3,465 
Goodwill amortization  —   12,257   11,198   9,761   8,632 
Total expenses  2,122,629   2,096,226   1,921,166   1,730,918   1,612,312 
Income before income taxes  69,328   52,945   72,693   67,232   57,508 
Income taxes  22,600   20,119   28,350   27,565   23,578 
Net income $46,728  $32,826  $44,343  $39,667  $33,930 
Net income per common share                    
Basic $0.95  $0.68  $0.97  $0.89  $0.79 
Diluted $0.92  $0.65  $0.92  $0.82  $0.72 
Average common and common equivalent shares                
Basic  49,116   47,598   45,102   44,134   42,220 
Diluted  51,015   50,020   47,418   47,496   46,322 
Financial Statistics
                    
Dividends paid per common share $0.36  $0.33  $0.31  $0.28  $0.24 
Stockholders’ equity $386,670  $361,177  $316,309  $276,951  $236,838 
Common shares outstanding  48,997   48,778   45,998   44,814   43,202 
Stockholders’ equity per common share $7.89  $7.40  $6.88  $6.18  $5.48 
Working capital $210,695  $229,542  $224,199  $184,279  $165,788 
Net operating cash flows $110,919  $65,796  $18,925  $35,305  $32,061 
Current ratio  1.93   1.97   2.05   2.01   2.05 
Long-term debt (less current portion) $—  $942  $36,811  $28,903  $33,720 
Redeemable cumulative preferred stock $—  $—  $6,400  $6,400  $6,400 
Total assets $704,939  $683,100  $641,985  $563,384  $501,363 
Trade accounts receivable — net $318,376  $367,201  $353,017  $290,920  $255,758 
Goodwill $167,916  $113,199  $109,407  $105,583  $102,776 
Property, plant and equipment — net $36,266  $42,936  $40,734  $35,181  $27,307 
Capital expenditures $7,491  $16,922  $18,717  $19,451  $11,715 
Depreciation and intangible amortization $15,182  $14,071  $12,326  $10,937  $10,961 
      Stockholders’ equity per common share is calculated by dividing stockholders'stockholders’ equity at the end of the fiscal year by the number of shares of common stock outstanding at that date. The Company believes that stockholders'
equity per common share is a standard measure commonly reported and widely used
by analysts, investors and other interested persons. However, stockholders'
equity per common share as presented in this reportThis calculation may not be comparable to similarly titled measures reported by other companies.
8
ITEM 7. MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FINANCIAL CONDITION
       The following discussion should be read in conjunction with the consolidated financial statements of the Company and the notes thereto contained in Item 8, "Financial“Financial Statements and Financial Statement Schedule."Supplementary Data”. All information in the discussion and references to the years are based on the Company'sCompany’s fiscal year that ends on October 31.
      On March 12, 2002, ABM’s Board of Directors declared a 2-for-1 split of ABM’s common stock in the form of a 100% stock dividend payable on May 7, 2002 to stockholders of record on March 29, 2002. Unless otherwise stated, all references to the number of shares of ABM’s common stock and per share amounts of ABM’s common stock have been retroactively restated to reflect the increased number of shares resulting from the stock split.
Financial Condition
      Funds provided from operations and bank borrowings have historically been the sources for meeting working capital requirements, financing capital expenditures and acquisitions, and paying cash dividends. Management believes that funds from these sources will remain available and adequately serve the Company'sCompany’s liquidity needs. TheOn June 28, 2002, the Company has anentered into a three-year unsecured revolving credit agreement with a syndicate of U.S. banks that provides a $150 million line of credit. This agreement replaced the Company’s unsecured revolving credit expiringagreement in an equal amount that expired on July 1, 2002. AtUnder the Company's option,terms of the new credit facility, providesno compensating balances are required and the interest rate is determined at the time of borrowing based on the London interbank offered rate (LIBOR) plus a spread, or prime rate or IBOR+.35%.for overnight borrowing. As of October 31, 20012002, the total amount outstanding in the form of standby letters of credit was approximately$102 million compared to $52 million as of October 31, 2001, which was comprised of loans in the amount of $10 million of loans and $42 million of standby letters of credit. The increase is primarily due to the use of standby letters of credit instead of $42 million.
Thisfinancial responsibility bonds for certain self-insurance agreements. The credit agreement requires the Company to meet certain financial ratios, and places some limitations on outside borrowing. In addition,borrowings, and restricts the Company hasamount of capital stock that the company may repurchase during a loan
agreement with a major U.S. bank with a balancefiscal year. The Company’s effective weighted average interest rate (excluding amortization of $1.8 million atrelated fees) for all Eurodollar, Prime and Fixed Rate borrowings for the year ended October 31, 2001. This loan bears interest at a fixed rate of 6.78% with annual payments of
principal, in varying amounts, and interest due each February 15 through 2003.

       On September 4, 2001, the Company redeemed 6,400 shares of Series B 8%
Senior Redeemable Cumulative Preferred Stock having a par value of $0.01 per
share and redemption price of $1,000 per share.2002 was 3.20%.
      Operating activities generated cash flows in 2002, 2001 and 2000 and 1999 of $110.9 million, $65.8 million and $18.9 million, respectively. Operating cash flows have increased significantly, primarily due to higher cash collection from customers, and $35.3in 2002 the receipt of two partial settlements totaling $13.3 million in gross insurance proceeds related to the destruction of the World Trade Center in 2001.
      Net cash used in investing activities in 2002, 2001 and 2000 was $59.3 million, $27.0 million and $31.4 million, respectively. While each year'sThe increase in cash flows were impactedused in investing activities in 2002 from 2001 primarily reflects the down payment for the acquisition of Lakeside Building Maintenance (see Footnote 10 of the Financial Statements), which was by higher volume in revenues,far the 2000 decrease reflected
slower paymentslargest acquisition made by some large customers. Cash paid for acquisitionsthe Company during the fiscallast three years, ended October 31,offset by the decrease in capital expenditures in 2002 due to reduced investment in information technology as implementation of the Company’s new accounting system nears completion (see Footnote 1 of the Financial Statements). The cash used in investing activities in 2001 2000 and 1999, including payments pursuantincluded $12 million of proceeds from the sale of Easterday Janitorial Supply in April 2001.
      Net cash used in financing activities decreased slightly to contractual arrangements involved$35.2 million in prior acquisitions, were approximately
$23.4 million, $14.2 million and $11.0 million, respectively. Capital
expenditures during fiscal years 2001, 2000 and 1999 were $16.9 million, $18.7
million and $19.5 million, respectively. Cash dividends paid to stockholders of
common and redeemable preferred stock and amounts used to repurchase common
stock were approximately $16.22002 from $37.7 million in 2001 $22.9 millionprimarily due to lower debt repayments partially offset by common stock purchases in 2002. In 2000, and $18.5
million in 1999. Cash from financing activities changedprovided $12.3 million of net cash. This change in 2001 compared tofrom 2000 was primarily due to repayments of nearly $26bank debt in 2001 of $41.8 million compared with net borrowings in debt and2000 of $18.9 million.
      On September 16, 2001 the Company’s Board of Directors authorized the purchase of up to two million shares (post-split) of its outstanding stock at any time through December 31, 2001. On December 17, 2001, the Board of Directors extended this authorization to purchase until December 31, 2002. On December 10, 2002, the Board of Directors extended this authorization through January 31, 2003. As of October 31, 2002, the Company had purchased 1.4 million shares at a reduction in the
bank overdraft (outstanding checks)cost of nearly $16$23.6 million .(i.e. an average price per share of $16.88) under this authorization.
9
      At October 31, 2001,2002, working capital was $229.5$210.7 million, as compared to $224.2$229.5 million at October 31, 2000.2001. The largest component of working capital consists of trade accounts receivable that totaled $367$318.4 million at October 31, 20012002, compared to $353$367.2 million at October 31, 2000.2001. These amounts were net of an
allowanceallowances for doubtfuluncollectible accounts of $9.4$6.6 million and $8.8$9.4 million at October 31, 20012002 and 2000,October 31, 2001, respectively. As of October 31, 2001,2002, accounts receivable that were over 90 days past due had increased $6.6decreased by $14.3 million to $41.6 million (13% of the total outstanding) from $55.9 million (15% of the total outstanding) from $49.3 million (14% of the total outstanding) at October 31, 2000.2001, primarily due to increased collection efforts.
      The Company self-insures, generallymade five cash advances totaling $3.4 million in 2002 to SiteStuff, Inc. as part of a secured convertible promissory note agreement. SiteStuff, Inc. is an e-commerce enterprise within the real estate industry designed to provide owners and managers of real estate the ability to aggregate their buying power for procurement of goods and services. The provisions of this note agreement provide for additional advances payable upon written request by SiteStuff, Inc. at any time prior to May 13, 2003, up to $500,000 per occurrence,a maximum advance of the lesser of $4.0 million or 80% of its current customer receivables. Interest of 5% on any outstanding amount is payable in arrears at the end of each calendar quarter. The note is secured by the customer accounts of SiteStuff, Inc., as well as records, cash accounts and proceeds related to those accounts.
      The Company self-insures certain insurable risks such as general liability, property damage and workers'workers’ compensation. Commercial umbrella policies are obtained to provide for $125 million of coverage above the self-insured retention limits. Itlimits (i.e. deductible). As of November 1, 2002, substantially all of the self-insured retentions increased from $500,000 to $1 million per occurrence due to the general insurance market conditions. Despite the increased retention, the price of recent renewals of 2003 umbrella policies is significantly higher and this has been factored into the Company's
policyself-insurance rates charged by the Company to its divisions in 2003. The Company annually retainretains an outside actuary to review the adequacy of its self-insurance claim reserves.
Contractual Obligations and Commercial Commitments
      The energy crisis inCompany is contractually obligated to make future payments under non-cancelable operating lease agreements. As of October 31, 2002, future contractual payments were as follows:
           
(in thousands) Payments Due By Period
Contractual Obligations Total Less than 1 year 1 – 3 years 4 – 5 years After 5 years
Operating Leases $186,775 $50,660 $59,709 $30,783 $45,623
      Additionally, the StateCompany has the following commercial commitments (in thousands):
           
(in thousands) Amounts of Commitment Expiration Per Period
Commercial
Commitments		 Total Amounts
Committed		 
Less than 1 year		 
1 – 3 years		 
4 – 5 years		 
After 5 years
Standby Letters of Credit $101,828 $101,828 — — —
Financial Responsibility Bonds  1,883  1,883 — — —
  $103,711 $103,711 — — —
Insurance Claims Related to the Destruction of California has not had a material
impact on the Company.

IMPACT OF SEPTEMBER 11, 2001 TERRORIST ATTACKS

       As previously reported by the Company, the World Trade Center in New York was the Company's largest single job site with annual revenues of approximately
$65 million (3% of ABM's consolidated revenues). Nearly 800 operating engineers,
janitorial workers and lighting technicians from three divisions of the Company
worked various shifts throughout the day and night. There has been no further
information regarding the fate of seventeen employees still missing and now
presumed dead. The Company estimates that annual gross profits


                                       9
City on this business approached $10 million. Additionally, the Company provided
approximately $60 million in annual services to neighboring job sites which had
various major disruptions.September 11, 2001
      The Company has commercial insurance policies covering business interruption, property damage and other losses related to this tragic incident
andincident. As previously reported by the Company, the World Trade Center complex in New York was the Company’s largest single job-site with annual sales of approximately $75 million (3% of ABM’s consolidated sales for 2001). The Company has been working with its insurance carrier, Zurich Insurance, in providing preliminary claim information regarding the property damage and lost business income. Zurichincome and, as described further below, has neither accepted nor denied coverage for all or any partsubstantially settled the property portion of the claim as of the date of this filing. However,claim. In December 2001, Zurich filed for a Declaratory JudgementJudgment Action in the Southern District of New York claiming the loss of the business profit falls under athe policy’s Contingent
10
Business Interruption Sub-limit within
the policy of $10 million. The trial date is set for January 2003. Based on a review of the policy and consultation with coveragelegal counsel and other claim experts,specialists, the Company believes that its business interruption claim does not fall under the $10 million sub-limit on contingent business interruption. Zurich'sZurich’s filing does not impact any other aspects of the claim. As of October 31, 2002, Zurich paid two partial settlements totaling $13.3 million, of which $10 million is for business interruption and $3.3 million for property damage. The Company realized a pretax gain of $10 million in 2002 on the proceeds received.
      Under the guidance published by the Emerging Issues Task Force of the Financial Accounting Standards Board "Accounting“Accounting for the Impact of the Terrorist Attacks of September 11, 2001",2001,” the Company has not recognized thefuture amounts it expects to recover from its business interruption insurance as income. Any gain from insurance proceeds is considered a contingent gain and, under Statement of Financial Accounting Standards No. 5, "Accounting“Accounting for Contingencies,"” can only be recognized as income in the period when any and all contingencies relating tofor that portion of the insurance claim have been resolved. The Company has recognized income from
insurance policies to the extent
Effect of costs incurred for property damageInflation and direct expenditures related to the attacks.

       In response to these announced developments, on September 16, 2001, the
Company's Board of Directors authorized the repurchase of up to one million
shares of its outstanding stock at any time through December 31, 2001. On
December 17, 2001, the Board of Directors extended this authorization to
repurchase until December 31, 2002. As of the filing date of this report, there
has been no repurchase by the Company of its outstanding shares.

EFFECT OF INFLATIONEnergy Crisis
      The low rates of inflation experienced in recent years have had no material impact on the financial statements of the Company. The Company attempts to recover increased costs by increasing sales prices to the extent permitted by contracts and competition.

ACQUISITIONS
      The energy crisis in the State of California has not had a material impact on the Company.
Acquisitions
      The operating results of businesses acquired have been included in the accompanying consolidated financial statements from their respective dates of acquisition and are more fully discussed in Note 10 to the Consolidated Financial Statements. Acquisitions made during the three years ended October 31, 2002, contributed approximately $175 million (8%) to 2002 sales.
Results of Operations
      In July 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 142 became effective in fiscal years beginning after December 15, 2001, with early adoption permitted. The Company has adopted the provisions of SFAS No. 142 beginning with the first quarter of 2002. In accordance with this standard, goodwill is no longer amortized but will be subject to an annual assessment for impairment. The Company is required to perform goodwill impairment tests on an annual basis and, in certain circumstances, between annual tests. As of October 31, 2002, no impairment of the Company’s goodwill carrying value has been indicated. For comparative purposes, goodwill amortization has been segregated from the operating profits of the divisions for the years ended October 31, 2001 contributed approximately $119.2and 2000 and reported separately.
      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 Ampco System Parking Division, this pronouncement requires both revenues and expenses be classified, in equal amounts, for costs directly reimbursed for the parking facilities that it manages on behalf of its 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 classification of any 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 expenses in equal amounts of $203.8 million, to fiscal$199.1 million and $186.3 million for years ended October 31, 2002, 2001 revenues.

RESULTS OF OPERATIONS

and 2000, respectively. This reclassification has no impact on operating profits or net income.
COMPARISON OF 20012002 TO 2000

       The Company reported record revenues2001
      Net income for 2002 was $46.7 million ($0.92 per diluted share), an increase of 42.4% from the net income of $32.8 million ($0.65 per diluted share) for 2001. Revenues
      The results for 2002 included a $10.0 million pretax gain from the receipt of two partial settlements from Zurich Insurance totaling $13.3 million related to the World Trade Center; the impact of new acquisitions, primarily Lakeside Building Maintenance in July 2002, which contributed $3.5 million of operating
11
profit in 2002; a $2.0 million non-recurring income tax benefit from the adjustment of prior year tax liabilities; a $1.4 million tax benefit from a lower income tax rate; $1.0 million interest income from the resolution of past due balances with two janitorial customers; and $0.5 million of pretax gain from the early termination of a parking lease. The results for 2002 were adversely impacted by a $3.2 million pretax provision 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 ABM Service Network; a $3.2 million pretax increase in operating expenses in New York City as a result of the World Trade Center related increase in seniority-based payroll and unemployment insurance costs at other job-sites in New York City; a $1.2 million pretax write-down of work-in-progress; and $1.0 million of professional fees related to the World Trade Center insurance claim. Additionally, the bad debt expense for 2002 was $5.8 million higher than 2001, primarily due to increased bankruptcies. Lastly, the business lost at the World Trade Center had higher gross margins than those obtained on new business.
      Results for 2001 included a $20 million pretax insurance charge; $12.3 million of pretax goodwill amortization expense; and a pretax gain of $0.7 million from the sale of Easterday Janitorial Supply in April 2001. Additionally, for the fiscal year ended October 31, 2001, the Company realized pretax income of $8.4 million on revenue of $71 million from the World Trade Center and adjacent facilities.
      Sales and other income (hereinafter called "revenues"“sales”) for 2002 of $2.2 billion increased by 1.5% compared to $2.1 billion for 2001 despite the loss of the World Trade Center and the sale of Easterday Janitorial Supply. Easterday contributed $16 million to sales for the first six months of 2001. Offsetting the absence of the World Trade Center and Easterday sales in 2002 were over $1.9 billionsales from the newly acquired operations of Lakeside Building Maintenance in 2001, up $142 million
or 8%, from $1.8 billion reported in 2000. The increase in revenues in 2001 over
2000 was attributable tothe Midwest and other new business, and acquisitions made duringprimarily in the prior
years. RevenuesAmerican Commercial Security Services. Sales generated from acquisitions during the prior year contributed $9.4$10.8 million of the 20012002 increase, while the current year acquisitions added $65.7$69.8 million. AlthoughAlso included in sales for 2002 was $1.0 million of interest income from the Company achieved record annual revenues, net income
fell by 26%resolution of past due balances with two janitorial customers and $0.5 million of pretax gain from the early termination of a lease at Ampco System Parking.
      As a percentage of sales, operating expenses and cost of goods sold was 89.2% for 2002, compared to $32.889.3% for 2001. Consequently, as a percentage of sales, the Company’s gross profit (sales minus operating expenses and cost of goods sold) of 10.8% in 2002 was higher than the gross profit of 10.7% in 2001.
      Selling, general and administrative expenses were $174.8 million ($1.30 per diluted share) in 2002, an increase of 7.7% from $162.3 million in 2001. The increase in selling, general and administrative expenses was primarily due to the $3.2 million costs associated with the above-mentioned personnel changes, $5.8 million of higher bad debt expense due to increased bankruptcies, and $1.0 million of professional expenses associated with the World Trade Center insurance claim. Accordingly, as a percentage of sales, selling, general and administrative expenses increased to 8.0% in 2002 from 7.6% in 2001.
      Interest expense was $1.1 million in 2002 compared to $2.6 million for 2001, from $44.3
million ($1.85 per diluted share)a decrease of $1.5 million. This decrease was primarily due to lower weighted average borrowings and lower interest rates in 20002002.
      The effective tax rate for 2002 was 32.6%, compared to 38.0% for 2001. The decline was primarily due to a $2.0 million non-recurring benefit from the adjustment of the prior year’s estimated tax liabilities and a $1.4 million benefit from the reduction in the state tax rate and non-deductible expenses.
      The Company is currently organized into eight separate operating divisions. Using the criteria of Statement of Financial Accounting Standards (“SFAS”) No. 131, “Disclosures about Segments of an Enterprise and Related Information”, ABM Janitorial Services, Ampco System Parking, ABM Engineering Services, American Commercial Security Services, Amtech Lighting Services, and Amtech Elevator Services are reportable segments. Results of ABM Service Network, CommAir Mechanical Services and Easterday Janitorial Supply, prior to its sale on April 29, 2001, are included in the Other segment. Additional information relating to the Company’s industry segments appears in Note 13 of Notes to Consolidated Financial Statements contained in Item 8, “Financial Statements and Supplementary Data.” The results of operations from the Company’s operating divisions for 2002 as compared to 2001 are more fully described below. The comparison of the fiscal years are related to the sales and operating profits in Note 13. Operating profits exclude goodwill
12
amortization from both periods to provide a comparable analysis.
      ABM Janitorial Services reported sales for 2002 of $1.2 billion, an increase of 3.2%, from 2001. Sales included $1.0 million of interest income from the resolution of past due balances with two customers. Janitorial accounted for nearly 55% of the Company’s consolidated sales in 2002. ABM Janitorial Services sales increased primarily due to the impact of new acquisitions partially offset by the loss of the World Trade Center. Sales generated from acquisitions during 2001 contributed $14.2 million of the 2002 increase, while the 2002 acquisitions added a total of $53.4 million, of which $51.6 million was contributed by ABM Lakeside Building Maintenance. Operating profits decreased 19.6% in 2002 to $54.3 million as compared to 2001 due to the loss of the World Trade Center, and $3.2 million of pretax increase in operating expenses in New York City as a result of the World Trade Center related increase in seniority-based payroll and unemployment insurance costs which could not be absorbed through increased pricing. Furthermore, bad debt expense increased to $6.3 million in 2002 compared to $2.1 million in 2001 due to increased bankruptcies.
      Ampco System Parking sales decreased by 0.4% to $363.5 million in 2002, while its operating profits increased 5.0% to $6.9 million in 2002 compared to 2001. The decrease in sales was due to the loss of an airport contract and the continuing effects of the terrorist attacks of September 11, 2001 on sales at airport and hotel facilities, partially offset by sales from new parking contracts. The increase in operating profits resulted from higher margins on new parking contracts, discontinuation of unprofitable contracts and a $0.5 million gain on the early termination of a parking lease, which more than offset increased insurance costs that could not be fully absorbed through increased pricing.
      Sales for ABM Engineering Services increased 1.5% to $173.6 million in 2002 compared to 2001, due to an increased customer base in all regions and, in the second quarter of 2002, the resolution of disputed additional work performed for the Port Authority of New York. This was partially offset by the absence of the World Trade Center contract. Operating profits increased 6.7% to $10.0 million from 2001 to 2002, due to increased business and improved profit margins at the contract level.
      American Commercial Security Services sales increased 35.2% to $140.6 million due to the acquisitions of Sundown Security in June 2001, Triumph Security in January 2002, and Foulke Security in February 2002, as well as the addition of several large accounts including Microsoft Corporation. Tag sales, or sales in addition to recurring fees, were also higher due to heightened security concerns after the September 11, 2001 terrorist attacks. Operating profits increased 77.7% to $5.6 million in 2002 compared to fiscal year 2001 operating profits primarily due to increased sales and lower costs due to tighter control over labor and operating expenses.
      Amtech Lighting Services reported a 9.3% decrease in sales to $130.9 million for 2002 compared to 2001, and a decrease in operating profits by 31.1% to $8.3 million in 2002. The decrease in sales and profits was primarily due to decreased business in the Southeast and Southwest regions, mostly related to non-recurring energy conservation projects in 2001, and the loss of sales and profits from the World Trade Center.
      Sales for Amtech Elevator Services decreased by 6.2% to $113.9 million in 2002 compared to 2001, primarily due to the decline in service and modernization contract work and the loss of two large service contracts in San Francisco and Orange County. The Division reported a 13.8% decrease in operating profits for 2002 to $4.3 million as compared to 2001. This reduction in operating profits can be attributed primarily to completed contracts; lower margins on modernization projects, primarily in the Division’s Chicago, Philadelphia and Atlanta offices; and higher operating expenses, including data processing, insurance and bad debt expense.
      Sales for Other Divisions were down 24.6% to $62.0 million, and contributed a loss of $1.2 million in 2002 compared to a profit of $5.3 million in 2001. The loss was primarily due to lower sales from fewer projects, a write-down of work-in-progress and an additional bad debt provision totaling approximately $1.7 million in the CommAir Mechanical Services Division, a $1.3 million bad debt provision in the ABM Service Network Division related to the bankruptcy of Consolidated Freightways in September of 2002, as well as $0.4 million in costs associated with the replacement of the President of ABM Services Network. Included in the results for 2001 was the pretax gain of $0.7 million from the sale of Easterday Janitorial Supply in the second quarter of 2001.
      Corporate expenses for 2002 include a $2.8 million pretax provision for costs associated with the elimination of the Chief Administrative Officer
13
position and the early retirement of the Corporate General Counsel, and $1.0 million of professional fees related to the World Trade Center insurance claim. Included in 2001 is $20 million pre-taxof pretax insurance charge to strengthen the Company'sCompany’s self-insurance reserves, reflecting the results of the annual independent actuarial review completed in December.December 2001. Based on the annual actuarial review completed in November 2002, the self-insurance reserves as of the end of 2002 were deemed adequate.
COMPARISON OF 2001 TO 2000
      Net income for 2001 fell by 26% to $32.8 million ($0.65 per diluted share) from $44.3 million ($0.92 per diluted share) in 2000 primarily due to a $12.4 million after tax charge ($0.25 per diluted share) to strengthen the Company’s self-insurance reserves reflecting the results of the annual independent actuarial review completed in December 2001. Excluding the insurance charge, net income per diluted share declined 3% primarily due to the increase in diluted average shares outstanding resulting from the exercise of stock options.
      The actuarial report this yearin 2001 revealed that while the frequency of claims iswas trending favorably as expected, the severity of claims in 2000 and 2001 trended higher than anticipated in the report received last year.in 2000. The impact of these trends on known claims and Claims Incurred But Not Reported (IBNR)claims incurred but not reported called for an increase of approximately $8.5 million for fiscal 2001 claims, while approximately $10.5 million reflects the unfavorable trend on pre-2001 claims. Additionally, 2001 required a loss of $1.0 million in claims related to the 10
World Trade Center terrorist attack. As a result of the actuarial report,Company’s 2001 claims experience, the Company has increased itsthe self-insurance rates that it charged to the divisions in 2002 by 21% over 2001. The estimated future charge is designedwas intended to captureaccount for the recent2001 experience and trends.
Actual results could be different. Excluding the insurance charge of $0.50 per
diluted share, net
      Sales and other income per diluted share declined 3% to $1.80 forwere over $2.1 billion in 2001, up $155 million or 8% from $1.85 for 2000 due to the$2.0 billion in 2000. The increase in diluted average shares outstanding
resultingsales in 2001 over 2000 was attributable to new business and acquisitions made during the prior years. Sales generated from option exercises.acquisitions during 2000 contributed $9.4 million of the 2001 increase, while the 2001 acquisitions added $65.7 million.
      As a percentage of revenues,sales, operating expenses and cost of goods sold was 88.3%were 89.3% for 2001, compared to 87.1%88.2% in 2000. Consequently, as a percentage of revenues,sales, the Company'sCompany’s gross profit (revenues minus operating expenses and cost
of goods sold) of 11.7%10.7% in 2001 was lower than the gross profit of 12.9%11.8% in 2000. The decrease in gross profit as a percentage of revenuessales was mostly due to the $20 million insurance adjustment, higher labor and related costs, and continued competitive pressure to maintain or lower prices.
      Selling, general and administrative expenses were $172$162.3 million in 2001, an increase of 9% from $158$149.0 million in 2000. As a percentage of revenues,sales, selling, general and administrative expenses increased to 7.6% for 2001 from 8.7%7.5% for 2000, to
8.8% for 2001, primarily due to an increase in bad debt expense of $3.2 million over the prior year and to salaries and expenses associated with acquisitions
including the amortization of goodwill.acquisitions.
      Interest expense was $2.6 million in 2001, compared to $3.3 million for 2000, a decrease of $718,000.$0.7 million. This decrease was primarily due to lower weighted average borrowings and lower interest rates in 2001.
      The effective income tax rate for 2001 was 38%, compared to 39% in 2000. The lower tax rate was due for the most part to a significant increase in the federal work opportunity tax credits in relation to pre-tax income. The Company is currently organized into eight separate operating
divisions as defined under StatementHence, income taxes for 2001 included $0.5 million of Financial Accounting Standards ("SFAS")
No. 131, "Disclosures about Segments of an Enterprise and Related Information".
However, only the ABM Janitorial, Ampco System Parking, ABM Engineering, Amtech
Lighting, and Amtech Elevator Divisions are reportable using the criteria of
SFAS No. 131. Results of Easterday Janitorial Supply Division are included in
Other Segments prior to its sale on April 29, 2001. Additional information
relating to the Company's industry segments appears in Note 13 of Notes to
Consolidated Financial Statements contained in Item 8, "Financial Statements and
Financial Statement Schedule."tax benefit from a lower tax rate.
      The results of operations from the five
reportableCompany’s operating divisions for 2001 as compared to 2000 are more fully described below:

       The
      ABM Janitorial Services Division reported revenuessales for 2001 of $1.2 billion, ana 10% increase of $107 million or 10%, from 2000. This is the Company's
largest Division and accounted for nearly 60% of the Company's consolidated
revenues in 2001. ABM Janitorial Services revenuesSales increased as a result of acquisitions and new business, particularly in the Mid-Atlantic and Northeast regions. RevenuesSales generated from acquisitions during the prior year2000 contributed $4.8 million of the 2001 increase while the current year2001 acquisitions added $51.1 million. ABM Janitorial Services'Services’ operating profits increased 13% in 2001 to $59.9$67.6 million when compared to 2000. The higher percentage increase in profits compared to revenuessales can be primarily attributed to the Company'sCompany’s fixed price contracts on which hourly workers were paid one less workday in 2001 compared to 2000. The change in the number of workdays affects the profit margin on this type of contract.
      Ampco System Parking revenues decreased by 4%reported a 2% increase in sales to $365 million during 2001 from 2000compared to $166
million, and its operating2000. Operating profits decreased by 53%42% to $4.1$6.6 million during 2001 compared to 2000. The decrease in revenues was mostly due tooperating profits resulted from the loss
14
of three airport contracts, the conversion of lease contracts to management fee
contracts, and the effect of the terrorist attacks on September 11, 2001 on sales at airport and hotel facilities. The decrease in operating profits
resulted fromfacilities, and increased litigation expense increasedand insurance costs and the decline in
sales.

       Thecosts.
      ABM Engineering Services Division increased revenuessales by 9% in 2001 from 2000 to $171 million, while its operating profits increased 11%10% to $9$9.4 million for 2001 compared to 2000. The revenuesales increase was due primarily to additional business. The increase in operating profits iswas due to the increase in sales and slightly higher profit margins as a result of lower administrative costs.


                                       11

      American Commercial Security Services sales increased by 2% to $104 million, and its operating profit increased by 61% to $3.2 million, in 2001 compared to 2000. The increase in operating profits resulted from lower costs due to tighter control over labor and operating expenses.
      Amtech Lighting Services reported a 22% revenuesales increase to $144 million in 2001 from 2000 due to acquired business from the purchase of SLI Lighting Solutions in March 2001, and sales increases in the Northwest region. The smaller increase in operating profits of 9%11% to $11$12.0 million during 2001 compared to the prior year is attributable to lower margins in the Southeast on business acquired in 2001.

       Revenues2000.
      Sales for Amtech Elevator Services were $121 million, up by 6% for 2001 over 2000, largely due to an increased customer base. The Amtech Elevator Division reported $4.8$5.0 million in operating profits in 2001, a 29% decrease compared to 2000. This decrease in operating profits can be attributed primarily to lower margins on maintenance contracts and losses on several modernization contracts, as well as higher insurance, bad debt, communications and computer related expenses.
      The significant increase in unallocated Corporate expenses for 2001
includes the $20 million insurance adjustment mentioned previously and
centralization of marketing and sales expenses compared to the prior year.

       Other Segments representSegment represents the results of the remaining divisions including the operating results of Easterday Janitorial Supply Company prior to its sale effective April 30, 2001, which includes a pre-tax gain onof $0.7 million. The sales price of $12 million included a $3.7 million premium over the book value of the net assets sold. The pre-tax gain is net of Easterday-specific insurance expenses of $1.3 million, reserves for sale contingencies (including the guarantee of $718,000.sold receivables and expenses of winding-up Easterday operations) of $1 million, write-offs of intangible assets of $0.3 million, and second quarter operating losses of $0.4 million. The loss of Easterday'sEasterday’s income in the third and fourth quarter of 2001 was more than offset by the increase in the operating profitprofits of the Company's American
Commercial Security Services andCompany’s CommAir Mechanical Services Divisions.

COMPARISON OF 2000 TO 1999

       Revenues were $1.8 billion in 2000, up $178 million or 11%, from $1.6
billion reported in 1999.Division.
      The increase in revenues in 2000 over 1999 was
attributable to new business and acquisitions made during the prior years.
Acquisitions during 2000 accounted for approximately $17.4 million, or 10%, of
the total revenue increase of $178 million for 1999. Net income for 2000 was
$44.3 million, an increase of 12%, compared to net income of $39.7 million in
1999. Diluted net income per common share also rose 12% to $1.85 for 2000
compared to $1.65 for the same period in 1999. On September 22, 1999 the Company
announced a stock repurchase program for up to one million outstanding shares.
As of October 31, 2000, 603,000 shares had been reacquired.

       As a percentage of revenues, operating expenses and cost of goods sold
were 87.1% for 2000, compared to 86.7% in 1999. Consequently, the Company's
gross profit as a percentage of revenues of 12.9% in 2000 was slightly lower
than the gross profit of 13.3% in 1999. The gross profit percentage declined
mostly due to higher labor and related costs, particularly workers' compensation
insurance, and continued competitive pressure to maintain or lower prices. In
addition, the Company's hourly workers were paid two additional workdays in 2000
compared to 1999. On fixed price monthly contacts, such increases are not
recovered.

       Selling, general and administrative expenses increased 7.2% for 2000
compared to 1999. However, as a percentage of revenues, selling, general and
administrative expenses decreased from 9.0% for 1999, to 8.7% for 2000,
primarily due to certain costs that do not increase at the same rate as sales.
The dollar increase in selling, general and administrative expenses is primarily
due to salaries and expenses associated with acquisitions including the
amortization of goodwill, and costs associated with the implementation of a new
accounting system. The cost increases were somewhat offset by decreased profit
sharing expense.

       Interest expense was $3.3 million in 2000 compared to $2.0 million for
1999, a decrease of $1.3 million. This decrease was primarily due to lower
weighted average borrowings and interest rates in 2000.

       The income before income taxes (pre-tax income) for 2000 was $72.7
million compared to $67.2 million, an increase of 8% over 1999. Pre-tax income
did not increase at the same rate as revenues due to the higher operating
expenses.

       The effective income tax rate for 2000 was 39%, compared to 41% in 1999.
The lower tax rate was due for the most part to a significant increase in unallocated Corporate expenses for 2001 included the federal work opportunity tax credits.

       The results$20 million insurance adjustment mentioned previously, and centralization of operations from the Company's five reportable operating
divisions for 2000 as compared to 1999 are more fully described below:


                                       12


       Revenues of the ABM Janitorial Services Division increased by 13% during
2000 to $1.1 billion over 1999, as a result of new business, particularly in the
Mid-Atlantic, Northwestmarketing and Southwest regions. Revenues generated from
acquisitions during 1999 contributed about $11.8 million of the 2000 increase
while the 2000 acquisitions added $10.8 million. Operating profits increased 8%
in 2000 to $53.1 million when compared to 1999. The lower percentage increase in
profits can be attributed to low profit margins and high startup costs on some
large contracts in this Division's Southeast region as well as the expense of
extra workdays in fiscal 2000, as discussed previously.

       Ampco System Parking's revenues increased by 6% to $172.4 million, and
its operating profits also increased by 4% to $8.7 million during 2000 compared
to 1999. The increase in revenues and operating profits was mostly due to growth
in California and Texas, along with small acquisitions in Florida, Texas and
Washington.

       The ABM Engineering Services Division increased revenues by 2% to $156.3
million, while its operating profits decreased by 2% to $8.2 million for 2000
compared to 1999. The large revenue increase was due primarily to additional
business obtained in New York City and Southern California. The decrease in
operating profits was due to lower profit margins and increased administrative
costs.

       Amtech Lighting Services reported a 24% revenue increase to $118.4
million in 2000 from 1999 due to increased business in all its markets, except
Northern California, and an acquisition in the Southeast. Operating profits
increased by 35% to $10.1 million during 2000sales expenses compared to the prior year. Profit
margins improved due to a reductionWhile virtually all insurance claims arise from the operating divisions, this adjustment was included in labor and material costs.

       Revenues for Amtech Elevator Services were $114.4 million, up by 18% for
2000 over 1999, largely due to an increased customer base. The Amtech Elevator
Divisionunallocated corporate expenses. Had the Company allocated the insurance adjustment among the divisions, the reported a 3% increase inpre-tax operating profits in 2000 to $6.8 million
compared to 1999. The smaller increase in operating profits can be attributed
primarily to increased labor, material and insurance costsof the divisions, as well as
computer-related expenses.

RECENT ACCOUNTING PRONOUNCEMENTS

       In fiscal 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (as amended by SFAS Nos. 137 and
138). SFAS No. 133 relates to accounting for derivative instruments, including
certain derivative instruments embedded in other contracts, and hedging
activities. It requires that an entity recognizes all derivatives as either
assets or liabilities and measures those instruments at fair value. The Company
adopted SFAS No. 133 on November 1, 2000; however, the Company is not a party to
any contracts thatwhole, would meet the definition of a derivative under SFAS No. 133.
Upon adoption of this standard there was no effect on the Company's financial
statements.

       In July 2001, FASB issued SFAS No. 141, "Business Combinations", and SFAS
No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 requires all
business combinations initiated after June 30, 2001 to be accounted for using
the purchase method of accounting. Historically, all acquisitions by the Company have been accounted for as purchases, thus there wasreduced by $20 million, with an equal and offsetting change to unallocated Corporate expenses, and therefore no effect on the Company's
financial statements upon adoption of this standard. SFAS No. 142 becomes
effective in fiscal years beginning after December 15, 2001, with early adoption
permitted. The Company planschange to early adopt the provisions of SFAS No. 142
beginning in the first quarter of fiscal 2002. In accordance with this standard,
goodwill will no longer be amortized but will be subject to annual assessment
for impairment by applying a fair-value-based test. All other intangible assets
will continue to be amortized over their estimated useful lives. Goodwill
amortization expense was $12.3 million for the twelve months ended October 31,
2001. The Company's preliminary determination has indicated no impairment of its
goodwill carrying value.consolidated pre-tax earnings.
Recent Accounting Pronouncements
      In June 2001, FASB issued SFAS No. 143, "Accounting“Accounting for Asset Retirement Obligations"Obligations”, which addresses the financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and associated retirement costs. SFAS No. 143 requires that the fair value of a liability for an asset


                                       13
 retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. The adoption of SFAS No. 143 is not anticipated to have a material effect on the Company'sCompany’s results of operations or financial condition.
      In August 2001, FASB issued SFAS No. 144, "Accounting“Accounting for the Impairment or Disposal of Long-Lived Assets"Assets”. SFAS No. 144 supercedes SFAS No. 121, "Accounting“Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of"of”, and elements of APB 30, "Reporting“Reporting the Results of Operations--ReportingOperations — Reporting the Effects on Disposal of a Segment of a Business and Extraordinary, Unusual or Infrequently Occurring Events and Transactions"Transactions”. SFAS No. 144 establishes a single-accounting model for long-lived assets to be disposed of while maintaining many of the provisions relating to impairment testing and valuation. SFAS No. 144 is effective for fiscal years beginning after December 31, 2001. The adoption of SFAS No. 144 is not anticipated to have a material effect on the Company'sCompany’s results of operations or financial condition.

SAFE HARBOR STATEMENT
      In July 2002, FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”. SFAS No. 146 requires compa-
15
nies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. Statement 146 replaces EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)”. SFAS No. 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. Management does not expect this statement to have a material impact on the Company’s financial statements.
Critical Accounting Policies and Estimates
      The preparation of consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, sales and expenses. On an ongoing basis, the Company evaluates its estimates, including those related to self-insurance reserves, allowance for doubtful accounts, valuation allowance for the net deferred income tax asset, contingencies and litigation liabilities. The Company bases its estimates on historical experience, independent valuations, and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
      The Company believes the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.
Self-Insurance Reserves:Certain insurable risks such as general liability, property damage and workers’ compensation are self-insured by the Company. However, the Company has umbrella insurance coverage for certain risk exposures subject to specified limits. Accruals for claims under the Company’s self-insurance program are recorded on a claim-incurred basis. The Company uses an independent actuarial firm to annually evaluate and estimate the range of the Company’s claim costs and liabilities. The Company accrues the minimum amount of the actuarial range of exposure. Using the annual actuarial report, management develops annual insurance costs for each division, expressed as a rate per $100 of exposure (labor and revenue) to estimate insurance costs on a quarterly basis. Additionally, management monitors new claims and claim development to assess the adequacy of the insurance reserves. The estimated future charge is intended to reflect the recent experience and trends. If the number of claims incurred were to increase, or the severity of the claims were to increase, the Company may be required to record an additional expense for self-insurance liabilities.
Allowance for Doubtful Accounts:The Company’s accounts receivable arise from services provided to its customers and are generally due and payable on terms varying from the receipt of invoice to net thirty days. The Company estimates an allowance for accounts it does not consider collectible. Changes in the financial condition of the customer or adverse development in negotiations or legal proceedings to obtain payment could result in the actual loss exceeding the estimated allowance.
Deferred Income Tax Asset Valuation Allowance:Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. If management determines it is more likely than not that the net deferred tax asset will be realized, no valuation allowance is recorded. At October 31, 2002, the net deferred tax asset was $63.5 million and no valuation allowance was recorded. Should future income be less than anticipated, the net deferred tax asset may not be recoverable.
Contingencies and Litigation:ABM and certain of its subsidiaries have been named defendants in certain litigation arising in the ordinary course of business including certain environmental matters. When a loss is probable and estimable the Company records the estimated loss. The actual loss may be greater than estimated or litigation where the outcome was not considered probable may result in a loss.
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'sCompany’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
16
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'sCompany’s major markets, (2) loss or bankruptcy of one or more of the Company'sCompany’s major customers, which could adversely affect the Company'sCompany’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'sCompany’s acquisition activities, (6) legislation or other governmental action that severely impacts one or more of the Company'sCompany’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'sCompany’s line of credit, which would increase interest expense or the cost of capital, (8) cancellation or nonrenewal of the Company'sCompany’s primary insurance policies, as many customers contract out services based on the contractor'scontractor’s ability to provide adequate insurance coverage and limits, (9) catastrophic uninsured or underinsured claims against the Company, the inability of the Company'sCompany’s insurance carriers to pay otherwise insured claims, or inadequacy in the Company'sCompany’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'sCompany’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 (12)(14) other material factors that are disclosed from time to time in the Company'sCompany’s public filings with the United States Securities and Exchange Commission, such as reports on Forms 8-K, 10-K and 10-Q.

ITEM 7A. 
ITEM 7A.QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
       The Company does not issue or invest in financial instruments or their derivatives for trading or speculative purposes.purposes, although options on the Company’s common stock are traded on the American Stock Exchange without the Company’s approval and consent. The operations of the Company are conducted primarily in the United States, and, as such, are not subject to material foreign currency exchange rate risk. The Company has no outstanding debt. Although the Company has
outstanding debthad over $19 million in cash and relatedcash equivalents, at year-end, market rate risk associated with falling interest expense, market risk in interest rate
exposurerates in the United States is currently not material.


                                       14


ITEM 8. FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

INDEPENDENT AUDITORS' REPORT


17
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Independent Auditors’ Report
To the Stockholders and Board of Directors
ABM Industries Incorporated:
      We have audited the accompanying consolidated balance sheets of ABM Industries Incorporated and subsidiaries as of October 31, 20012002 and 2000,2001, and the related consolidated statements of income, stockholders'stockholders’ equity and comprehensive income, and cash flows for each of the years in the three-year period ended October 31, 2001.2002. In connection with our audits of the consolidated financial statements, we also have audited the related financial statement schedule II. These consolidated financial statements and the financial statement schedule are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on these consolidated financial statements and the financial statement schedule based on our audits.
      We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
      In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ABM Industries Incorporated and subsidiaries as of October 31, 20012002 and 2000,2001, and the results of their operations and their cash flows for each of the years in the three-year period ended October 31, 2001,2002, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the related financial statement schedule II, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

/s/
/s/ KPMG LLP
- -------------------------

KPMG LLP
San Francisco, California
December 17, 2001


                                       15
10, 2002
18
ABM Industries Incorporated and Subsidiaries
CONSOLIDATED BALANCE SHEETS

OCTOBER 31                                                                                    2001              2000
(in thousands, except share amounts)
                                                                                            ---------         ---------

ASSETS
Cash and cash equivalents                                                                   $   3,052         $   2,000
Trade accounts receivable (less allowances of $9,420 and $8,825)                              367,201           353,017
Inventories                                                                                    25,974            25,513
Deferred income taxes                                                                          26,806            17,531
Prepaid expenses and other current assets                                                      42,508            38,758
                                                                                            ---------         ---------
      Total current assets                                                                    465,541           436,819
Investments and long-term receivables                                                          13,871            13,920
Property, plant and equipment (less accumulated depreciation of $65,951 and $65,753)           42,936            40,734
Goodwill (less accumulated amortization of $73,264 and $61,693)                               113,199           109,407
Deferred income taxes                                                                          35,400            32,537
Other assets                                                                                   12,153             8,568
                                                                                            ---------         ---------
                                                                                            $ 683,100         $ 641,985
                                                                                            =========         =========
LIABILITIES

Current portion of long-term debt                                                           $  10,877         $     865
Bank overdraft                                                                                     --            15,952
Trade accounts payable                                                                         50,671            45,312
Income taxes payable                                                                            6,816             8,083
Accrued liabilities:
   Compensation                                                                                62,854            54,901
   Taxes--other than income                                                                    20,409            18,195
   Insurance claims                                                                            48,193            43,361
   Other                                                                                       36,179            25,951
                                                                                            ---------         ---------
      Total current liabilities                                                               235,999           212,620
Long-term debt (less current portion)                                                             942            36,811
Retirement plans                                                                               21,483            22,386
Insurance claims                                                                               63,499            47,459
                                                                                            ---------         ---------
      Total liabilities                                                                       321,923           319,276

SERIES B 8% SENIOR REDEEMABLE CUMULATIVE PREFERRED STOCK,
   6,400 shares authorized, issued and outstanding, stated at redemption value,
   $1,000 per share at October 31, 2000                                                            --             6,400
STOCKHOLDERS' EQUITY

Preferred stock, $.01 par value; 500,000 shares authorized; none issued                            --                --
Common stock, $.01 par value; 100,000,000 shares authorized; 24,389,000 and
    22,999,000 shares issued and outstanding at October 31, 2001 and
    2000, respectively                                                                            244               230
Additional paid-in capital                                                                    131,242           102,902
Accumulated other comprehensive income                                                           (763)             (653)
Retained earnings                                                                             230,454           213,830
                                                                                            ---------         ---------
      Total stockholders' equity                                                              361,177           316,309
                                                                                            ---------         ---------
                                                                                            $ 683,100         $ 641,985
                                                                                            =========         =========

           
October 3120022001
(in thousands, except share data)
Assets
        
Cash and cash equivalents $19,427  $3,052 
Trade accounts receivable (less allowances of $6,605 and $9,420)  318,376   367,201 
Inventories  30,055   25,974 
Deferred income taxes  30,002   26,806 
Prepaid expenses and other current assets  39,925   42,508 
  Total current assets  437,785   465,541 
Investments and long-term receivables  14,952   13,871 
Property, plant and equipment (less accumulated depreciation of $70,522 and $65,951)  36,266   42,936 
Goodwill (less accumulated amortization of $73,264)  167,916   113,199 
Deferred income taxes  33,542   35,400 
Other assets  14,478   12,153 
  $704,939  $683,100 
Liabilities
        
Current portion of long-term debt $—  $10,877 
Trade accounts payable  51,585   50,671 
Income taxes payable  6,579   6,816 
Accrued liabilities:        
 Compensation  62,412   62,854 
 Taxes — other than income  13,923   20,409 
 Insurance claims  50,969   48,193 
 Other  41,622   36,179 
  Total current liabilities  227,090   235,999 
Long-term debt (less current portion)  —   942 
Retirement plans  23,791   21,483 
Insurance claims  67,388   63,499 
  Total liabilities  318,269   321,923 
Stockholders’ equity
        
Preferred stock, $0.01 par value; 500,000 shares authorized; none issued  —   — 
Common stock, $0.01 par value; 100,000,000 shares authorized; 50,397,000 and 48,778,000 shares issued at October 31, 2002 and 2001, respectively  504   488 
Additional paid-in capital  151,135   130,998 
Accumulated other comprehensive loss  (789)  (763)
Retained earnings  259,452   230,454 
Cost of treasury stock (1,400,000 shares at October 31, 2002)  (23,632)  — 
  Total stockholders’ equity  386,670   361,177 
  $704,939  $683,100 
The accompanying notes are an integral part of the consolidated financial statements.


                                       16

19
ABM Industries Incorporated and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME

YEARS ENDED OCTOBER 31                                 2001              2000              1999
(in thousands, except per share amounts)
                                                    ----------        ----------        ----------

REVENUES AND OTHER INCOME                           $1,950,038        $1,807,557        $1,629,716
                                                    ----------        ----------        ----------
EXPENSES

   Operating expenses and cost of goods sold         1,722,334         1,573,998         1,413,541
   Selling, general and administrative                 172,157           157,546           146,984
   Interest                                              2,602             3,320             1,959
                                                    ----------        ----------        ----------
                                                     1,897,093         1,734,864         1,562,484
                                                    ----------        ----------        ----------
INCOME BEFORE INCOME TAXES                              52,945            72,693            67,232
Income taxes                                            20,119            28,350            27,565
                                                    ----------        ----------        ----------
NET INCOME                                          $   32,826        $   44,343        $   39,667
                                                    ==========        ==========        ==========
NET INCOME PER COMMON SHARE
   Basic                                            $     1.36        $     1.94        $     1.77
   Diluted                                          $     1.30        $     1.85        $     1.65
                                                    ==========        ==========        ==========
COMMON AND COMMON EQUIVALENT SHARES
   Basic                                                23,799            22,551            22,067
   Diluted                                              25,010            23,709            23,748
                                                    ==========        ==========        ==========

              
Years ended October 31200220012000
(in thousands, except per share data)
Revenues
            
Sales and other income $2,181,932  $2,149,171  $1,993,859 
Gain on insurance claim  10,025   —   — 
   2,191,957   2,149,171   1,993,859 
Expenses
            
Operating expenses and cost of goods sold  1,946,750   1,919,054   1,757,619 
Selling, general and administrative  174,827   162,313   149,029 
Interest  1,052   2,602   3,320 
Goodwill amortization  —   12,257   11,198 
   2,122,629   2,096,226   1,921,166 
Income before income taxes
  69,328   52,945   72,693 
Income taxes  22,600   20,119   28,350 
Net income
 $46,728  $32,826  $44,343 
Net income per common share
            
 Basic $0.95  $0.68  $0.97 
 Diluted $0.92  $0.65  $0.92 
Average common and common equivalent shares
            
 Basic  49,116   47,598   45,102 
 Diluted  51,015   50,020   47,418 
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME
                                   
Accumulated
Years ended October 31, 2002, 2001Common StockTreasury StockAdditionalOther
and 2000
Paid-inComprehensiveRetained
(in thousands)SharesAmountSharesAmountCapitalIncomeEarningsTotal
Balance October 31, 1999
 ��44,814   448   —   —   93,112   (635)  184,026   276,951 
 Comprehensive income:                                
  Net income                          44,343   44,343 
  Foreign currency translation                      (18)      (18)
                               
 
  Comprehensive income                              44,325 
 Dividends:                                
  Common stock                          (14,027)  (14,027)
  Preferred stock                          (512)  (512)
 Tax benefit from exercise of stock options                  480           480 
 Stock purchases  (766)  (8)          (8,382)          (8,390)
 Stock issued under employees’ stock purchase and option plans and for acquisition  1,950   20           17,462           17,482 
Balance October 31, 2000
  45,998   460   —   —   102,672   (653)  213,830   316,309 
 Comprehensive income:                                
  Net income                          32,826   32,826 
  Foreign currency translation                      (110)      (110)
                               
 
  Comprehensive income                              32,716 
 Dividends:                                
  Common stock                          (15,770)  (15,770)
  Preferred stock                          (432)  (432)
 Tax benefit from exercise of stock options                  3,651           3,651 
 Stock issued under employees’ stock purchase and option plans and for acquisition  2,780   28           24,675           24,703 
Balance October 31, 2001
  48,778   488   —   —   130,998   (763)  230,454   361,177 
 Comprehensive income:                                
  Net income                          46,728   46,728 
  Foreign currency translation                      (26)      (26)
                               
 
  Comprehensive income                              46,702 
 Dividends:                                
  Common stock                          (17,730)  (17,730)
 Tax benefit from exercise of stock options                  1,384           1,384 
 Stock purchases          (1,400)  (23,632)              (23,632)
 Stock issued under employees’ stock purchase and option plans and for acquisition  1,619   16           18,753           18,769 
Balance October 31, 2002
  50,397   504   (1,400)  (23,632)  151,135   (789)  259,452   386,670 
The accompanying notes are an integral part of the consolidated financial statements.


                                      17-A

20
ABM Industries Incorporated and Subsidiaries
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME



                                                                                    Accumulated
YEARS ENDED OCTOBER 31, 2001, 2000 AND 1999          Common Stock       Additional     Other
                                                   ----------------       Paid-in   Comprehensive    Retained
(in thousands)                                     Shares    Amount       Capital      Income        Earnings       Total
                                                   ------    ------     ----------  -------------    --------       -----

BALANCE OCTOBER 31, 1998                           21,601     $ 216      $ 79,904      $ (696)      $ 157,414      $236,838
Comprehensive income:
Net income                                                                                             39,667        39,667
        Other comprehensive income:
        Foreign currency translation                                                       61                            61
                                                                                                                   --------
Comprehensive income                                                                                                 39,728
Dividends:
        Common stock                                                                                  (12,543)      (12,543)
        Preferred stock                                                                                  (512)         (512)
Tax benefit from exercise of stock options                                    387                                       387
Stock purchases                                      (220)       (2)       (5,446)                                   (5,448)
Stock issued under employees' stock purchase
        and option plans and for acquisition        1,026        10        18,491                                    18,501
                                                   ------     -----     ---------      ------       ---------      --------
BALANCE OCTOBER 31, 1999                           22,407       224        93,336        (635)        184,026       276,951
Comprehensive income:
Net income                                                                                             44,343        44,343
        Other comprehensive income:
        Foreign currency translation                                                      (18)                          (18)
                                                                                                                   --------
Comprehensive income                                                                                                 44,325
Dividends:
        Common stock                                                                                  (14,027)      (14,027)
        Preferred stock                                                                                  (512)         (512)
Tax benefit from exercise of stock options                                    480                                       480
Stock purchases                                      (383)       (4)       (8,386)                                   (8,390)
Stock issued under employees' stock purchase
        and option plans and for acquisition          975        10        17,472                                    17,482
                                                   ------     -----     ---------      ------       ---------      --------
BALANCE OCTOBER 31, 2000                           22,999       230       102,902        (653)        213,830       316,309
Comprehensive income:
Net income                                                                                             32,826        32,826
        Other comprehensive income:
        Foreign currency translation                                                     (110)                         (110)
                                                                                                                   --------
Comprehensive income                                                                                                 32,716
Dividends:
        Common stock                                                                                  (15,770)      (15,770)
        Preferred stock                                                                                  (432)         (432)
Tax benefit from exercise of stock options                                  3,651                                     3,651
Stock issued under employees' stock purchase
        and option plans and for acquisition        1,390        14        24,689                                    24,703
                                                   ------     -----     ---------      ------       ---------      --------
BALANCE OCTOBER 31, 2001                           24,389     $ 244     $ 131,242      $ (763)      $ 230,454      $361,177
                                                   ======     =====     =========      ======       =========      ========

CASH FLOWS
              
Years Ended October 3120022001
(in thousands)2000
Cash flows from operating activities:
            
Cash received from customers $2,212,269  $2,117,691  $1,925,599 
Other operating cash receipts  16,149   5,523   2,347 
Interest received  1,602   859   580 
Cash paid to suppliers and employees  (2,094,597)  (2,021,762)  (1,873,290)
Interest paid  (1,156)  (2,991)  (3,209)
Income taxes paid  (23,348)  (33,524)  (33,102)
Net cash provided by operating activities  110,919   65,796   18,925 
Cash flows from investing activities:
            
Additions to property, plant and equipment  (7,491)  (16,922)  (18,717)
Proceeds from sale of assets  1,702   1,253   1,164 
(Increase) decrease in investments and long-term receivables  (1,081)  49   370 
Purchase of businesses  (52,448)  (23,401)  (14,191)
Proceeds from sale of business  —   12,000   — 
Net cash used in investing activities  (59,318)  (27,021)  (31,374)
Cash flows from financing activities:
            
Common stock issued  17,955   26,688   16,381 
Common stock purchases  (23,632)  —   (8,390)
Preferred stock redemption  —   (6,400)  — 
Dividends paid  (17,730)  (16,202)  (14,539)
(Decrease) increase in bank overdraft  —   (15,952)  10,985 
Long-term borrowings  —   108,000   126,000 
Repayments of long-term borrowings  (11,819)  (133,857)  (118,127)
Net cash (used in) provided by financing activities  (35,226)  (37,723)  12,310 
Net increase (decrease) in cash and cash equivalents  16,375   1,052   (139)
Cash and cash equivalents beginning of year  3,052   2,000   2,139 
Cash and cash equivalents end of year
 $19,427  $3,052  $2,000 
Reconciliation of net income to net cash provided by operating activities:
Net income $46,728  $32,826  $44,343 
Adjustments:
            
Depreciation and intangible amortization  15,182   14,071   12,326 
Goodwill amortization  —   12,257   11,198 
Provision for bad debts  11,910   6,134   2,971 
Gain on sale of assets  (236)  (41)  (265)
Gain on sale of business  —   (718)  — 
Increase in deferred income taxes  (1,338)  (12,138)  (5,517)
Decrease (increase) in trade accounts receivable  38,299   (24,340)  (65,555)
Increase in inventories  (4,081)  (3,223)  (2,217)
Decrease (increase) in prepaid expenses and other current assets  3,093   (3,045)  (1,200)
(Increase) decrease in other assets  (3,410)  40   2,475 
Increase (decrease) in income taxes payable  590   (1,267)  765 
Increase (decrease) in retirement plans accrual  2,308   (903)  3,092 
Increase in insurance claims liability  6,665   18,872   7,155 
(Decrease) increase in trade accounts payable and other accrued liabilities  (4,791)  27,271   9,354 
 Total adjustments to net income  64,191   32,970   (25,418)
Net cash provided by operating activities
 $110,919  $65,796  $18,925 
Supplemental data:
            
Non-cash investing activities:            
Common stock issued for net assets of business acquired $1,371  $1,666  $1,581 
The accompanying notes are an integral part of the consolidated financial statements.


                                      17-B

21
ABM Industries Incorporated and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS



YEARS ENDED OCTOBER 31                                                     2001                2000                1999
(in thousands)
                                                                        -----------         -----------         -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers                                            $ 1,918,558         $ 1,739,297         $ 1,589,775
Other operating cash receipts                                                 5,523               2,347               1,491
Interest received                                                               859                 580                 870
Cash paid to suppliers and employees                                     (1,822,629)         (1,686,988)         (1,522,495)
Interest paid                                                                (2,991)             (3,209)             (2,025)
Income taxes paid                                                           (33,524)            (33,102)            (32,311)
                                                                        -----------         -----------         -----------
Net cash provided by operating activities                                    65,796              18,925              35,305
                                                                        -----------         -----------         -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment                                  (16,922)            (18,717)            (19,451)
Proceeds from sale of assets                                                  1,253               1,164                 922
Decrease (increase) in investments and long-term receivables                     49                 370              (1,885)
Purchase of businesses                                                      (23,401)            (14,191)            (10,980)
Proceeds from sale of business                                               12,000                  --                  --
                                                                        -----------         -----------         -----------
Net cash used in investing activities                                       (27,021)            (31,374)            (31,394)
                                                                        -----------         -----------         -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued, including tax benefit                                   26,688              16,381              17,178
Common stock purchases                                                           --              (8,390)             (5,448)
Preferred stock redemption                                                   (6,400)                 --                  --
Dividends paid                                                              (16,202)            (14,539)            (13,055)
(Decrease) increase in bank overdraft                                       (15,952)             10,985               2,492
Long-term borrowings                                                        108,000             126,000              57,064
Repayments of long-term borrowings                                         (133,857)           (118,127)            (61,847)
                                                                        -----------         -----------         -----------
Net cash (used in) provided by financing activities                         (37,723)             12,310              (3,616)
                                                                        -----------         -----------         -----------
Net increase (decrease) in cash and cash equivalents                          1,052                (139)                295
Cash and cash equivalents beginning of year                                   2,000               2,139               1,844
                                                                        -----------         -----------         -----------
CASH AND CASH EQUIVALENTS END OF YEAR                                   $     3,052         $     2,000         $     2,139
                                                                        ===========         ===========         ===========
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED
   BY OPERATING ACTIVITIES:
Net income                                                              $    32,826         $    44,343         $    39,667
ADJUSTMENTS:
Depreciation                                                                 13,710              12,265              10,815
Amortization                                                                 12,618              11,259               9,883
Provision for bad debts                                                       6,134               2,971               2,257
Gain on sale of assets                                                          (41)               (265)               (160)
Gain on sale of business                                                       (718)                 --                  --
Increase in deferred income taxes                                           (12,138)             (5,517)             (6,537)
Increase in trade accounts receivable                                       (24,340)            (65,555)            (39,304)
Increase in inventories                                                      (3,223)             (2,217)               (331)
Increase in prepaid expenses and other current assets                        (3,045)             (1,200)             (1,950)
(Increase) decrease in other assets                                              40               2,475              (3,295)
(Decrease) increase in income taxes payable                                  (1,267)                765               1,791
(Decrease) increase in retirement plans accrual                                (903)              3,092               3,320
Increase in insurance claims liability                                       18,872               7,155               4,500
Increase in trade accounts payable and other accrued liabilities             27,271               9,354              14,649
                                                                        -----------         -----------         -----------
   Total adjustments to net income                                           32,970             (25,418)             (4,362)
                                                                        -----------         -----------         -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES                               $    65,796         $    18,925         $    35,305
                                                                        ===========         ===========         ===========
SUPPLEMENTAL DATA:
Non-cash investing activities:
Common stock issued for net assets of business acquired                 $     1,666         $     1,581         $     1,710
                                                                        ===========         ===========         ===========




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


                                       18


ABM Industries Incorporated and Subsidiaries


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       PRINCIPLES OF CONSOLIDATION: 
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation:The consolidated financial statements include the accounts of ABM Industries Incorporated and its subsidiaries ("(“the Company"Company”). All material intercompany transactions and balances have been eliminated. Certain reclassifications of prior year amounts have been made to conform with the current year presentation.

       USE OF ESTIMATES: 
Use of Estimates:The preparation of consolidated financial statements in conformity
with United States generally accepted accounting principles requires managementthe Company to make estimates and assumptionsjudgments that affect the reported amounts reported inof assets, liabilities, sales and expenses. On an ongoing basis, the consolidated financial statementsCompany evaluates its estimates, including those related to self-insurance reserves, allowance for doubtful accounts, valuation allowance for the net deferred income tax asset, contingencies and related noteslitigation liabilities. The Company bases its estimates on historical experience, independent valuations, and various other assumptions that are believed to financial statements.
Changes in suchbe reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates may affect amounts reported in future periods.

       TRADE ACCOUNTS RECEIVABLE: under different assumptions or conditions.
Trade Accounts Receivable:The Company'sCompany’s accounts receivable arise from services provided to its customers and are generally due and payable on terms varying from the receipt of invoice to net thirty days. The Company does not believe that it has any material exposure due to either industry or regional concentrations of credit risk.

       INVENTORIES: 
Inventories:Inventories are valued at amounts approximating the lower of cost (first-in, first-out basis) or market.

       PROPERTY, PLANT AND EQUIPMENT: 
Property, Plant and Equipment:Property, plant and equipment are stated at cost less accumulated depreciation and amortization. At the time property, plant and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in income. Maintenance and repairs are charged against income.
      Depreciation and amortization are calculated principally on the straight-line method. LivesUseful lives used in computing depreciation for transportation equipment average 3 to 5 years and 2 to 20 years for machinery and other equipment. Buildings are depreciated over periods of 20 to 40 years. Leasehold improvements are amortized over the shorter of the terms of the respective leases, or the assets'assets’ useful lives.
      The Company is implementing an enterprise-wide accounting and management information system.system (also known as “Enterprise Resources Planning” (ERP) software). External direct costs of materials and services and payroll-related costs of employees working solely on the development of the system are capitalized. Capitalized costs of the project are being amortized over a period of seven years beginning on May 1, 2000. Training costs are expensed as incurred.

       GOODWILL: 
Goodwill which representsand Other Intangibles:In July 2001, the excessFinancial Accounting Standards Board (FASB) issued Statement of cost overFinancial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets”. SFAS No. 142 became effective in fiscal years beginning after December 15, 2001, with early adoption permitted. The Company elected to early adopt the provisions of SFAS No. 142 beginning with the first quarter of fiscal 2002. In accordance with this standard, goodwill is no longer amortized but will be subject to an annual assessment for impairment. The Company is required to perform goodwill impairment tests on an annual basis using the two-step process prescribed in Statement 142. The first step is a screen for potential impairment comparing the reporting unit’s fair value with its book value. If the first step indicates potential impairment, the required second step allocates the fair value of the reporting unit to its assets and liabilities, including recognized and unrecognized intangibles. If the implied fair value of the reporting unit’s goodwill is lower than its carrying amount, goodwill is impaired and written down to its implied fair value.
      As of October 31, 2002 and 2001, all other intangible assets, consisting principally of contract rights with a net tangiblebook value of $4,059,000 and $4,544,000 respectively, are included in other assets and will continue to be amortized over the contract periods. Amortization expense for other intangible assets was $1,085,000, $355,000 and $95,000 for the years ended October 31, 2002, 2001 and 2000,
22
respectively. The remaining amortization period for other intangible assets ranges from 2 months to 14 years.
      The changes in the carrying amount of businesses acquired,goodwill (in thousands) for the year ended October 31, 2002 are as follows (acquisitions are discussed in Note 10):
                 
BalanceBalance
as ofas of
October 31,2002EarnoutOctober 31,
Segment2001AcquisitionsPayments2002
Janitorial $62,906  $41,267  $4,525  $108,698 
Parking  27,113   —   158   27,271 
Engineering  2,166   —   8   2,174 
Security  1,656   5,368   189   7,213 
Lighting  13,854   —   2,847   16,701 
Elevator  3,907   —   —   3,907 
Other  1,597   —   355   1,952 
  $113,199  $46,635  $8,082  $167,916 
      Transitional disclosure of earnings excluding goodwill amortization is amortized on a straight-line
basis over periods not exceeding 40 years. It is the Company's policy to carry
goodwill applicable to acquisitions prior to 1971 of $1,433,000 at cost until
such time as there may be evidence of diminution in value.

       INCOME TAXES: follows:
              
(in thousands, except
per share amounts)200220012000
Net income $46,728  $32,826  $44,343 
Goodwill amortization (after tax)  —   7,599   6,831 
Adjusted net income  46,728   40,425   51,174 
Preferred stock dividends  —   (432)  (512)
Adjusted net income available to common stockholders $46,728  $39,993  $50,662 
Net income per common share — basic:            
 Net income $0.95  $0.68  $0.97 
 Goodwill amortization  —   0.16   0.15 
Adjusted net income $0.95  $0.84  $1.12 
Net income per common share — diluted:            
 Net income $0.92  $0.65  $0.92 
 Goodwill amortization  —   0.15   0.14 
Adjusted net income $0.92  $0.80  $1.07 
Average common shares outstanding — basic  49,116   47,598   45,102 
Average common shares outstanding — diluted  51,015   50,020   47,418 
Income Taxes:Income tax expense is based on reported results of operations before income taxes. In accordance with Statement of Financial Accounting Standards No. 109, "Accounting“Accounting for Income Taxes"Taxes”, deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. These deferred taxes are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

       REVENUE RECOGNITION: 
Revenue Recognition:The Company earns revenue primarily under service contracts that are either fixed price or are time and materials based. In both contract types, revenue is recognized as the services are performed. Under the fixed price contacts, there are no up-front fee arrangements or 19
acceptance requirements that would require deferral of revenue recognition under Staff Accounting Bulletin No. 101.

       NET INCOME PER COMMON SHARE: 
      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 expenses in equal amounts of $203,841,000, $199,133,000 and $186,302,000 for fiscal years ended October 31, 2002, 2001 and 2000, respectively. This presentation change has no impact on operating profits or net income.
Net Income per Common Share:The Company has reported its earnings in accordance with Statement of Financial Accounting Standards No. 128, "Earnings“Earnings per Share"Share”. Basic net income per common share, after the reduction for preferred stock dividends, is based on the weighted average number of shares outstanding during the period. Diluted net income per common share, after the reduction for preferred stock dividends, is based on the weighted average number of shares outstanding during the period, including common stock equivalents. Preferred stock dividends no longer apply after the
23
redemption of preferred stock on September 4, 2001. The calculation of these amounts is as follows:

                                                2001                 2000                 1999
                                            ------------         ------------         ------------

Net income                                  $ 32,826,000         $ 44,343,000         $ 39,667,000
Preferred stock dividends                       (432,000)            (512,000)            (512,000)
                                            ------------         ------------         ------------
                                            $ 32,394,000         $ 43,831,000         $ 39,155,000
                                            ============         ============         ============
Common shares outstanding -- basic            23,799,000           22,551,000           22,067,000
Effect of dilutive securities:
   Stock options                               1,150,000            1,035,000            1,544,000
   Other                                          61,000              123,000              137,000
                                            ------------         ------------         ------------
Common shares outstanding -- diluted          25,010,000           23,709,000           23,748,000
                                            ============         ============         ============

              
(in thousands, except
per share amounts)200220012000
Net income $46,728  $32,826  $44,343 
Preferred stock dividends  —   (432)  (512)
Net income available to common stockholders $46,728  $32,394  $43,831 
Average common shares outstanding — basic  49,116   47,598   45,102 
Effect of dilutive securities:            
 Stock options  1,899   2,300   2,070 
 Other  —   122   246 
Average common shares outstanding — diluted  51,015   50,020   47,418 
Net income per common share — basic $0.95  $0.68  $0.97 
Net income per common share — diluted $0.92  $0.65  $0.92 
      For the purposes of computing diluted net income per common share, weighted average common share equivalents do not include stock options with an exercise price that exceeds the average fair market value of the Company'sCompany’s common stock for the period.period (i.e. “out-of-the-money” options). On October 31, 2002, 2001 2000 and 1999,2000, options to purchase common shares of 874,000, 1,078,0003,075,000, 1,748,000 and 1,268,0002,156,000 at a weighted average exercise price of $32.62, $31.71$16.29, $16.31 and $31.09,$15.86, respectively, were excluded from the computation.

       CASH AND CASH EQUIVALENTS: 
Cash and Cash Equivalents:The Company considers all highly liquid instruments with original maturities of three months or less to be cash and cash equivalents.

       STOCK-BASED COMPENSATION: 
Stock-Based Compensation:The Company accounts for its stock-based awards using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, "Accounting“Accounting for Stock Issued to Employees".

       COMPREHENSIVE INCOME: Employees”, which generally does not result in compensation cost because the exercise price of the options is equal to the fair value of the stock at the grant date. Under the intrinsic value method, if the fair value of the stock is greater than the exercise price at grant date, the excess is amortized to compensation expense over the estimated service life of the recipients.
Comprehensive Income:Comprehensive income consists of net income and other related gains and losses affecting shareholders'shareholders’ equity that, under generally accepted accounting principles, are excluded from net income. For the Company, such comprehensive income items consist of unrealized foreign currency translation gains and losses.
2. INSURANCE

       Certain
      The Company’s insurance program includes the use of large self-insured retentions (i.e. deductibles) with regard to certain insurable risks such as general liability, property damageautomobile liability, and workers' compensation are self-insured by the Company. However, theworkers’ compensation. The Company has umbrellapurchased excess insurance coverage for certain risk exposures subject to specified
limits.protecting against losses in excess of these deductible and/or self-insured retentions. Accruals for claims underwithin the Company's self-insurance programdeductible and/or self-insured retentions are recorded on a claim-incurred basis. The accrual includes any general liability,
property damage or workers' compensation claim that as of the applicable
accounting period end was incurred. The Company's method accounts for known
claims and incurred but not reported claims. The claim-incurred method includes cost factors for inflation and the cost of litigation and administration. The Company uses independent actuaries to annually evaluate and record the Company'sCompany’s estimated claim costs and liabilities and accrues an amount that is within an actuarial range of exposure. The estimated liability for claims incurred but unpaid at October 31, 2002 and 2001 was $118,357,000 and 2000 was $111,692,000, and $90,820,000, respectively. In the fourth quarter of fiscal year 2001, the Company recorded a $20,000,000 pre-tax expense to strengthen reserves as a result of the actuarial evaluation. The 2001 actuarial report revealed that while the frequency of claims was trending favorably as expected, the severity of claims in 2000 and 2001 trended higher than anticipated in the report received in 2000. The impact of these trends on known claims and on claims incurred but not reported called for an increase of approximately $8,500,000 for fiscal 2001 claims while approximately $10,500,000 reflected 2001’s unfavorable trend on pre-2001 claims. Additionally, 2001 required a provision of $1,000,000 for claims related to the September 11, 2001 World Trade Center attack. Based on the annual actuarial review completed in November of 2002, the self-insurance reserves as of the end of fiscal year 2002 were deemed adequate.
In connection with certain self-insurance agreements, the Company has standby letters of credit at October 31, 20012002 supporting the estimated unpaid liability in the amount of $39,800,000.


                                       20
$100,299,000.
24
3. PROPERTY, PLANT AND EQUIPMENT
      Property, plant and equipment at October 31 consisted of the following:

(in thousands of dollars)                               2001            2000
                                                      --------        --------

Land                                                  $    876        $    878
Buildings                                                4,120           4,334
Transportation equipment                                15,546          13,127
Machinery and other equipment                           73,543          73,056
Leasehold improvements                                  14,802          15,092
                                                      --------        --------
                                                       108,887         106,487
Less accumulated depreciation and amortization          65,951          65,753
                                                      --------        --------
                                                      $ 42,936        $ 40,734
                                                      ========        ========

         
(in thousands)20022001
Land $876  $876 
Buildings  4,238   4,120 
Transportation equipment  14,245   15,546 
Machinery and other equipment  73,001   73,543 
Leasehold improvements  14,428   14,802 
   106,788   108,887 
Less accumulated depreciation and amortization  70,522   65,951 
  $36,266  $42,936 
4. LONG-TERM DEBT AND CREDIT AGREEMENT
      The Company has a $150 million syndicated line of credit which will expire July 1, 2002.2005. The unsecured revolving credit facility currently provides, at the Company'sCompany’s option, interest at the prime rate or IBOR+.35%LIBOR+.875%. The facility, at present, calls for a commitment fee payable quarterly, in arrears, of .12%.175% based on the average, daily, unused portion. For purposes of this calculation, irrevocable standby letters of credit issued in conjunction with the Company'sCompany’s self-insurance program and parking business plus cash borrowings are considered to be outstanding amounts. As of October 31, 2001,2002, the total outstanding amount under this facility was $52,000,000, comprised$101,828,000 in the form of $10,000,000 in loans and $42,000,000 in standby letters of credit. The interest rate at October 31, 2001, on loans
outstanding under this agreement was 2.9%. The Company is required under this agreement to maintain certain financial ratios and has limitations on outside borrowings. One of the provisions of the Company's revolving credit facility required
a fixed charge ratio to be maintained at the end of each quarterly reporting
period. As a result of its fiscal 2001 fourth quarter loss, the Company's fixed
charge ratio did not meet this requirement for the quarter ended October 31,
2001. The Company received a waiver from its lenders addressing the deficiency
for the quarter ended October 31, 2001. The Company was in compliance with all other debt covenants as of October 31, 2001.

       The Company has a loan agreement with a major U.S. bank with a balance of
$1,808,000, at October 31, 2001. This loan bears interest at a fixed rate of
6.78% with annual payments of principal, in varying amounts, and interest due
February 15, 2002 and 2003.

       The long-term debt and credit facility of $11,819,000 matures in the
years ending October 31 as follows: $10,877,000 in 2002 and $942,000 in 2003.2002.
      Long-term debt at October 31 is summarized as follows:

(in thousands of dollars)                                       2001           2000
                                                              -------        -------

Revolving credit facility with interest at 2.9 -- 9.5%        $10,000        $35,000
Note payable to bank with interest at 6.78%                     1,808          2,622
Other                                                              11             54
                                                              -------        -------
                                                               11,819         37,676
Less current portion                                           10,877            865
                                                              -------        -------
                                                              $   942        $36,811
                                                              =======        =======




                                       21

         
(in thousands)20022001
Revolving credit facility with interest at 2.93% $—  $10,000 
Note payable to bank with interest at 6.78%      1,808 
Other      11 
   —   11,819 
Less current portion      10,877 
  $—  $942 
5. EMPLOYEE BENEFIT PLANS
      All of the Company's employeeCompany’s defined benefit plans are unfunded, thus thereunfunded. There is no additional pension liability and hence no other comprehensive income to disclose.
(a) RETIREMENT AGREEMENTS401(k) Plan
      The Company has a 401(k) plan covering certain qualified employees, which includes employer participation in accordance with the provisions of Section 401(k) of the Internal Revenue Code. The plan allows participants to make pretax contributions and the Company matches a certain percentage of employee contributions depending on the participant’s amount of contributions. Effective January 1, 2002, the Company amended its plan to adopt the “safe harbor” rules of 401(k) plans. These rules contain more generous company match provisions and cover many employees not previously included. Therefore, since January 2002, the Company is incurring additional costs. All amounts contributed to the plan are deposited into a trust fund administered by independent trustees.
      The Company’s matching 401(k) contributions required by the 401(k) plan for 2002, 2001 and 2000 were approximately $4,159,000, $1,534,000 and $1,191,000, respectively.
(b) Retirement Agreements
      The Company has unfunded retirement agreements for approximately 5254 current and former directors and senior executives, many of which are fully vested. The agreements provide for annual benefits for ten years commencing at the later of the respective retirement dates of those executives or age 65. The benefits are accrued over various periods based on expected retirement dates.required vesting periods. During 2002, 2001 2000 and 1999,2000, amounts accrued under these agreements were $490,000, $506,000 $684,000 and $674,000,$684,000, respectively. Payments were made in 2002, 2001 2000
and 19992000 in the amounts of $377,000, $242,000 and $171,000, and $231,000, respectively. AtAs of October 31, 2001,2002 the present value of estimated future payments under these agreements is approximately $4,400,000.

(b)    401(k) AND PROFIT SHARING PLANwas $4,793,000.
(c) Service Award Benefit Plan
      The Company has a profit sharing and 401(k) plan covering certain
qualified employees, which includes employer participation in accordance with
the provisions of Section 401(k) of the Internal Revenue Code. The plan allows
participants to make pretax contributions and the Company matches certain
percentages of employee contributions depending on the participant's length of
service. The profit sharing portion of the plan is discretionary and
noncontributory. All amounts contributed to the plan are deposited into a trust
fund administered by independent trustees.

       The Company provided for profit sharing contributions of $1,643,000 for
1999. No contribution was provided for fiscal year 2001 and 2000. The Company's
matching 401(k) contributions required by the 401(k) plan for 2001, 2000 and
1999 were approximately $1,534,000, $1,191,000 and $1,210,000, respectively.

       Effective January 1, 2002, the Company is amending its plan to adopt the
"safe harbor" rules of 401(k) plans. These rules contain more generous company
match provisions and cover many employees not previously included. Therefore,
the Company will incur additional future costs, which will be dependent on
increased levels of voluntary participation.

(c)    SERVICE AWARD BENEFIT PLAN

       In 1989, the Company adopted an unfunded service award benefit plan, with a retroactive vesting period of five years. This plan is a "severance“severance pay plan"plan” as defined by the Employee Retirement Income Security Act (ERISA) and covers certain qualified employees. The plan provides participants, upon termination, with a guaranteed seven days pay for each year of employment subsequent to November 1, 1989. The Company, at its discretion, may also award additional days each year.
25
      Effective January 1, 2002, this plan will bewas amended to no longer award any additionalfurther days to employees. The enhancement of the 401(k) plan has replaced benefits previously provided under this plan. The Company will continue to incur interest costs related to this plan as the value of previously earned benefits continues to increase.
      Net cost of the plan is comprised of:

(in thousands of dollars)                        2001                 2000                 1999
                                                ------               ------               ------

Service cost                                    $  427               $  380               $  396
Interest                                           358                  318                  255
                                                ------               ------               ------
Net cost                                        $  785               $  698               $  651

Actuarial present value of:
   Vested benefit obligation                    $4,479               $3,895               $3,724
   Accumulated benefit obligation               $4,662               $4,067               $3,850
   Projected benefit obligation                 $5,342               $4,746               $4,571
                                                ======               ======               ======



                                       22

              
(in thousands)200220012000
Service cost $184  $427  $380 
Interest  350   358   318 
Net cost $534  $785  $698 
Actuarial present value of:            
 Vested benefit obligation $4,571  $4,479  $3,895 
 Accumulated benefit obligation $4,664  $4,662  $4,067 
 Projected benefit obligation $5,153  $5,342  $4,746 
      Assumptions used in accounting for the plan as of October 31 were:

                                                       2001               2000               1999
                                                       ----               ----               ----

Weighted average discount rate                         7.5%               7.5%               6.5%
Rate of increase in compensation level                 5.0%               5.0%               5.0%
                                                       ===                ===                ===

             
200220012000
Weighted average discount rate  6.75%   7.5%   7.5% 
Rate of increase in compensation level  3.0%   5.0%   5.0% 
      The liability recorded by the Company is equal to the accumulated benefit obligation shown above.
(d) PENSION PLAN UNDER COLLECTIVE BARGAININGDeath Benefit Plan
      The Company has an unfunded death benefit plan with a vesting period of ten years. This plan covers certain qualified employees and, upon retirement on or after their 62nd birthday, provides fifty percent of the accidental death and dismemberment benefit that the employees were entitled to on their retirement date subject to a maximum of $150,000. Coverage during retirement continues until death for retired employees hired before September 1, 1980 and until their 70th birthday for retirees hired after that date.
      At October 31, 2002, the actuarial present value of the accumulated post-retirement benefit obligation was $5,115,000. The accumulated post-retirement benefit obligation was calculated using the assumed rates of 6.75% weighted average discount rate and 3.0% increase in compensation level. The Company recorded a liability of $3,849,000 at October 31, 2002 for its obligations under the plan and will amortize the actuarial loss in excess of 10% of the accumulated benefit obligation over the average remaining life of the participants.
(e) Pension Plan Under Collective Bargaining
      Certain qualified employees of the Company are covered under union-sponsored collectively bargained multi-employer defined benefit plans. Contributions for these plans were approximately $29,278,000, $30,259,000 and $26,913,000 in 2002, 2001 and $25,516,000 in 2001, 2000, and 1999, respectively. These plans are not administered by the Company and contributions are determined in accordance with provisions of negotiated labor contracts.
6. LEASE COMMITMENTS AND RENTAL EXPENSE
      The Company is obligated under noncancelable operating leases for various facilities and equipment.
      As of October 31, 2001,2002, future minimum lease commitments under noncancelable operating leases are as follows:

Years ending   (in thousands of dollars)
- ------------

     2002                                      $  45,888
     2003                                         36,139
     2004                                         23,945
     2005                                         17,613
     2006                                         12,671
     Thereafter                                   65,652
                                               ---------
Total minimum lease commitments                $ 201,908
                                               =========

     
Fiscal years ending (in thousands)
2003 $50,660 
2004  34,669 
2005  25,040 
2006  17,904 
2007  12,879 
Thereafter  45,623 
Total minimum lease commitments $186,775 
      Rental expense for the years ended October 31 is summarized as follows:

(in thousands of dollars)                           2001            2000            1999
                                                  --------        --------        --------

Minimum rentals under noncancelable leases        $ 55,780        $ 53,387        $ 52,231
Contingent rentals                                  43,645          42,641          41,441
Short-term rental agreements                         3,911           4,682           2,758
                                                  --------        --------        --------
                                                  $103,336        $100,710        $ 96,430
                                                  ========        ========        ========

             
(in thousands)200220012000
Minimum rentals under noncancelable leases $60,830  $55,780  $53,387 
Contingent rentals  35,093   43,645   42,641 
Short-term rental agreements  4,248   3,911   4,682 
  $100,171  $103,336  $100,710 
      Contingent rentals are applicable to leases of parking lots and garages and are based on percentages of the gross receipts attributable to the related facilities.
7. REDEEMABLE CUMULATIVE PREFERRED STOCK
      On June 23, 1993, the Company authorized and on September 1, 1993, issued 6,400 shares of preferred stock having a par value of $0.01 per share shares in conjunction with the acquisition of System Parking. These shares designated as Series B 8% Senior Redeemable Cumulative Preferred Stock (Series B
26
Preferred Stock) were entitled to one vote per share on all matters upon which common stockholders were entitled to vote and had a redemption price of $1,000 per share, together with accrued


                                       23
 and unpaid dividends thereon. Redemption of the Series B Preferred Stock was at the option of the holders for any or all of the outstanding shares after September 1, 1998, or at the option of the Company after September 1, 2001. The
total redemption value of the shares outstanding at October 31, 2000 in an
amount of $6,400,000 was classified on the Company's balance sheet as redeemable
cumulative preferred stock. In the event of any liquidation, dissolution or
winding up of the affairs of the Company, holders of the Series B Preferred
Stock would have been paid the redemption price plus all accrued dividends to
the date of liquidation, dissolution or winding up of affairs before any payment
to other stockholders.

       On September 4, 2001, the Company redeemed all 6,400 shares of Series B 8% Senior Redeemable Cumulative Preferred Stock havingStock.
8. CAPITAL STOCK
COMMON STOCK
      On March 12, 2002, ABM’s Board of Directors declared a 2-for-1 split of ABM’s common stock in the form of a 100% stock dividend payable on May 7, 2002 to stockholders of record on March 29, 2002. A total of 24,914,000 shares of common stock were issued in connection with the stock split. The par value of $0.01the shares was not changed from $0.01. The Company’s common stock and additional paid-in capital accounts as well as all shares and per share and redemption priceamounts have been restated to retroactively reflect the stock split.
      On September 16, 2001, the Company’s Board of $1,000 per share.

       DividendsDirectors authorized the purchase of $128,000 were due and payable each quarter onup to two million shares (post-split) of its outstanding stock at any time through December 31, 2001. On December 17, 2001, the Series B
Preferred Stock. In fiscal 2001, $128,000 was paid in eachBoard of Directors extended this authorization to purchase until December 31, 2002. On December 10, 2002, the first three
quarters and $48,000 was paid forBoard of Directors extended this authorization through January 31, 2003. As of October 31, 2002, the remaining periodCompany had purchased 1,400,000 shares at timea cost of redemption.
The dividends were deducted from net income in determining net income per common
share.

8.     CAPITAL$23,632,000 under this authorization.
PREFERRED STOCK
      The Company is authorized to issue 500,000 shares of preferred stock, of which 50,000 shares have been designated as Series A Junior Participating Preferred Stock of $.01 par value. None of these preferred shares have been issued.
COMMON STOCK RIGHTS PLAN
      In March 1998, the Company'sCompany’s Board of Directors adopted a stockholder rights plan to replace an existing rights plan that expired on April 22, 1998. The new plan provides for a dividend distribution of one preferred stock purchase right (a "Right"“Right”) for each outstanding share of common stock distributed to stockholders of record on April 22, 1998.1998, and attachment of a Right to each subsequently issued share of common stock. The Rights will beare exercisable only if a person or group acquires 20% or more of the Company'sCompany’s common stock (an "Acquiring Person"“Acquiring Person”) or announces a tender offer for 20% or more of the common stock. Each Right will entitleentitles stockholders to buy one-thousandthone-two thousandths of a share of newly created Participating Preferred Stock, par value $.01 per share, of the Company at an initial exercise price of $175$87.50 per Right, subject to adjustment from time to time. However, if any person becomes an Acquiring Person, each Right will then entitle its holder (other than the Acquiring Person) to purchase at the exercise price common stock (or, in certain circumstances, Participating Preferred Stock) of the Company having a market value at that time of twice the Right'sRight’s exercise price. These RightsholdersRights holders would also be entitled to purchase an equivalent number of shares at the exercise price if the Acquiring Person were to control the Company'sCompany’s Board of Directors and cause the Company to enter into certain mergers or other transactions. In addition, if an Acquiring Person acquired between 20% and 50% of the Company'sCompany’s voting stock, the Company'sCompany’s Board of Directors may, at its option, exchange one share of the Company'sCompany’s common stock for each Right held (other than Rights held by the Acquiring Person). Rights held by the Acquiring Person will become void. The Rights Plan excludes from its operation The
Theodore Rosenberg Trust and The Sydney J. Rosenberg Trust, and certain related persons, and, as a result,cannot be “Acquiring Persons” under the Rights plan, therefore, changes in their holdings will not cause the Rights to become exercisable or nonredeemablenon-redeemable or trigger the other features of the Rights. The Rights will expire on April 22, 2008, unless earlier redeemed by the Board at $0.01$0.005 per Right.

       As discussed in Note 1,
STOCK OPTIONS
      The Company has three types of stock option plans which are described below.
“Time-Vested” Incentive Stock Option Plan, as Amended
      In 1987, the Company continuesadopted a stock option plan under which 2,400,000 shares were reserved for grant. In March 1994, this plan was amended to account for its
stock-based awards usingreserve an additional 2,000,000 shares. In March 1996, the intrinsic value method in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issuedplan was amended again to Employees",reserve another 4,000,000 shares. The options become exer-
27
cisable at a rate of 20% per year beginning one year after date of grant and its related interpretations. In the three-year period endedterminate no later than 10 years plus one month after date of grant. Options which terminate without being exercised may be reissued. At October 31, 2002, 1,308,000 shares remained available for grant.
      Transactions under this plan are summarized as follows:
         
Weighted
NumberAverage
ofExercise
OptionsPrice
Balance October 31, 1999  3,614,000  $9.19 
Granted (Weighted average fair value of $3.09)  450,000  $10.61 
Exercised  (310,000) $5.65 
Forfeitures  (50,000) $12.27 
Balance October 31, 2000  3,704,000  $9.62 
Granted (Weighted average fair value of $4.70)  546,000  $15.16 
Exercised  (868,000) $6.88 
Forfeitures  (216,000) $12.26 
Balance October 31, 2001  3,166,000  $11.14 
Granted (Weighted average fair value of $4.56)  313,000  $8.48 
Exercised  (505,000) $14.94 
Forfeitures  (346,000) $13.00 
Balance October 31, 2002  2,628,000  $11.86 
                     
Exercisable at
Outstanding at October 31, 2002October 31, 2002
Weighted
AverageWeightedWeighted
NumberRemainingAverageNumberAverage
Range ofofContractualExerciseofExercise
PricesOptionsLife (Years)PriceOptionsPrice
$ 4.24 –  6.66  358,000   1.7  $4.85   358,000  $4.85 
$ 8.72 – 14.11  1,249,000   5.3  $10.64   885,000  $10.07 
$14.71 – 18.30  1,021,000   7.2  $15.80   372,000  $16.27 
Total  2,628,000   5.5  $11.86   1,615,000  $10.34 
“Price-Vested” Performance Stock Option Plans
      In December 1996, the Company adopted a stock option plan (the 1996 Plan) under which 3,000,000 shares have been reserved. In December 2001, the exercise price of all options granted to employees had
equivalent fair market values. Therefore, no compensation expense has been
recognized in the financial statements for employee stock awards.

       Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting
for Stock-Based Compensation", requires the disclosure of pro forma net earnings
and earnings per share had the


                                       24
Company adopted an additional but substantially similar plan (the 2002 Plan) under which 4,000,000 shares were reserved for grant under the fair value method as of the beginning of fiscal 1996. Under
SFAS 123, the fair value of stock-based awards to employees is calculated
through the use of option pricing models.plan. The use of these models requires
subjective assumptions, including future stock price volatility and expected
time to exercise, which can have a significant effect on the calculated values.
The Company's calculations were made using the Black-Scholes option pricing
model with the following weighted average assumptions: expected life 9.2options expire 10 years 9.1 years, and 11.9 years fromafter the date of grant in fiscal 2001, 2000, and 1999,
respectively; expected stockany options which terminate without being exercised may be reissued. Each option has a pre-defined vesting price volatility of 28.1%, 27.7% and 26.2%,
respectively; expected dividend yields of 2.2%, 3.1% and 1.9%, and risk free
interest rates of 5.3%, 6.7%, and 5.0% in fiscal 2001, 2000, and 1999,
respectively.

       The Company's calculations are based on a single option valuation
approach and forfeitures are recognized as they occur. If the computed fair
values of the fiscal awards had been amortized to expense over the vesting
period of the awards, pro forma net earnings would have been $29,102,000 ($1.15
per diluted share)which provides for fiscal 2001, $39,477,000 ($1.64 per diluted share) for
fiscal 2000, and $35,409,000 ($1.47 per diluted share) for fiscal 1999. The
impact of outstanding stock options granted prior to fiscal 1996 has been
excluded from the pro forma calculation; accordingly, the fiscal 2001, 2000, and
1999 pro forma adjustments are not indicative of future period pro forma
adjustments, when the calculation will apply to all future applicable stock
grants.

       Under the "Price-Vested" Performance Stock Option Plan options were
granted with a ten-year term.accelerated vesting. If, during the first four years, the stock price achieved and maintained a set price for ten out of thirty consecutive trading days, the options associated with the price would vest. The prices established were $25, $30, $35$12.50, $15.00, $17.50 and $40, with$20.00 (as adjusted for the March 2002 two-for-one stock split) in the 1996 Plan. On September 10, 2002 the Board of Directors established accelerated vesting prices of $20.00, $22.50, $25.00 and $27.50 for the 2002 Plan. The 1996 Plan and 2002 Plan provide that 25% of the options vestinggranted will vest at each price point. If, at the end of four years, any of the stock price performance targets were not achieved, then the remaining options would vest at the end of eight years from the date the options were granted. SFAS 123 requires that the projected
value of the options be determined on the grant date and recognized over the
period in which the options are earned (theOptions vesting period). For these options,
the projected value of the options was determined and that value was to be
recognized over the eight-year vesting period unless vesting occurs at an
earlier date. In fiscal 2001 ABM stock achieved and maintained for the requisite
ten-day period, the price required for the third target. As a result, 75% of all
options issued prior to the current fiscal year are now vested, and the
projected value of that 75% less any amounts previously recognized for
outstanding options is recognized in this year's pro forma calculation.
Additionally as a result of the price performance, the options awarded during the current fiscalfirst year will vest 75% in December 2001, the one-year anniversary
of thefollowing grant date. Of the remaining 25% of the granted options yet to be vested,
one-eighth is recognized annually from the grant date, unless vesting occurs at
an earlier date by the stock achieving a price of $40 per share and maintaining
that price for ten out of 30 consecutive trading days.

"TIME-VESTED" INCENTIVE STOCK OPTION PLAN, AS AMENDED

       In 1987, the Company adopted a stock option plan under which 1,200,000
shares were reserved for grant until December 31, 1996. In March 1994, this plan
was amended to reserve an additional 1,000,000 shares. In March 1996, the plan
was amended again to reserve another 2,000,000 shares. Options which terminate
without being exercised may be reissued. At October 31, 2001, 637,850 shares
remained available for grant.

       Transactions under this plan are summarized as follows:



                                                                                      Weighted
                                                               Number                 Average
                                                                 of                   Exercise
                                                               Options                 Price
                                                               -------                --------

Balance October 31, 1998                                      2,012,000                $16.40
Granted (Weighted average fair value of $8.34)                  126,000                $30.86
Exercised                                                      (296,000)               $10.28
Terminated                                                      (35,000)               $18.30




                                       25

                                                              ---------                ------
Balance October 31, 1999                                      1,807,000                $18.37
Granted (Weighted average fair value of $6.18)                  225,000                $21.22
Exercised                                                      (155,000)               $11.29
Terminated                                                      (25,000)               $24.53
                                                              ---------                ------
Balance October 31, 2000                                      1,852,000                $19.23
Granted (Weighted average fair value of $9.50)                  273,000                $30.31
Exercised                                                      (434,000)               $13.76
Terminated                                                     (108,000)               $24.52
                                                              ---------                ------
Balance October 31, 2001                                      1,583,000                $22.28
                                                              =========                ======


                           Outstanding                                            Exercisable
- ------------------------------------------------------------------          -----------------------
                                         Weighted
                                          Average         Weighted                         Weighted
      Range                Number        Remaining        Average            Number        Average
       of                    of         Contractual       Exercise             of          Exercise
     Prices               Options       Life (Years)        Price           Options         Price
- ---------------           -------       ------------      --------          -------        --------

$ 8.49 -- 13.32           263,000           2.4            $ 9.39           263,000         $ 9.39
$17.44 -- 28.22           817,000           5.9            $20.53           572,000         $19.40
$29.41 -- 36.59           503,000           7.7            $31.85           149,000         $32.88
===============           =======           ===            ======           =======         ======



"PRICE-VESTED" PERFORMANCE STOCK OPTION PLAN

       In December 1996, the Company adopted a stock option plan under which
1,500,000 shares have been reserved. The options expire 10 years after the date
of grant and any options which terminate without being exercised may be
reissued. Each option will have a pre-defined vesting price which provides for
accelerated vesting if the fair market value of the Company's common stock is
equal to or greater than the pre-defined vesting price for 10 trading days in
any period of 30 consecutive trading days. Vested options willdo not become exercisable onlyuntil after the first anniversary of its grant date. Any option that
has not vested prior to the fourth anniversary of its grant date will vest on
the eighth anniversary of its grant date.grant. At October 31, 2001, 100,0002002, 140,000 shares and 2,930,000 shares remained available for grant.grant under the 1996 Plan and 2002 Plan, respectively.
      Transactions under this planthese plans are summarized as follows:
         
Weighted
NumberAverage
ofExercise
OptionsPrice
Balance October 31, 1999  2,270,000  $11.19 
Granted (Weighted average fair value of $3.51)  320,000  $10.38 
Exercised  (150,000) $10.00 
Forfeitures  (150,000) $11.98 
Balance October 31, 2000  2,290,000  $11.17 
Granted (Weighted average fair value of $5.48)  360,000  $15.38 
Exercised  (420,000) $10.09 
Forfeitures  (170,000) $13.95 
Balance October 31, 2001  2,060,000  $11.89 
Granted (Weighted average fair value of $6.09)  1,190,000  $16.67 
Exercised  (130,000) $13.89 
Forfeitures  (60,000) $10.06 
Balance October 31, 2002  3,060,000  $13.70 
                       
Exercisable at
Outstanding at October 31, 2002October 31, 2002
Weighted
AverageWeightedWeighted
NumberRemainingAverageNumberAverage
Range ofofContractualExerciseofExercise
PricesOptionsLife (Years)PriceOptionsPrice
$10.00 – 12.8   0 1,370,000   4.6  $10.21   990,000  $10.21 
$15.38 – 18.3   0 1,690,000   9.1  $16.52   380,000  $16.22 
 Total   3,060,000   7.0  $13.70   1,370,000  $11.88 

                                                                                       Weighted
                                                                 Number                Average
                                                                  of                   Exercise
                                                                Options                 Price
                                                               ---------               --------

Balance October 31, 1998                                       1,150,000                $22.40
Exercised                                                        (15,000)               $20.00
                                                               ---------                ------
Balance October 31, 1999                                       1,135,000                $22.37
Granted (Weighted average fair value of $7.01)                   160,000                $20.75
Exercised                                                        (75,000)               $20.00
Terminated                                                       (75,000)               $22.98
                                                               ---------                ------
Balance October 31, 2000                                       1,145,000                $22.33
Granted (Weighted average fair value of $10.96)                  180,000                $30.75
Exercised                                                       (210,000)               $20.18
Terminated                                                       (85,000)               $27.90
                                                               ---------                ------
Balance October 31, 2001                                       1,030,000                $23.78
                                                               =========                ======

“Age-Vested” Career Stock Option Plan, as Amended



                                       26


                       Outstanding                                   Exercisable
- -----------------------------------------------------------     ---------------------
                                   Weighted
                                    Average        Weighted                  Weighted
      Range           Number       Remaining       Average       Number      Average
       of              of         Contractual      Exercise       of         Exercise
     Prices          Options      Life (Years)      Price       Options       Price
- ---------------      -------      ------------     --------     -------      --------

$20.00 -- 25.59      750,000          5.6           $20.40      530,000       $20.42
$30.75 -- 36.59      280,000          8.2           $32.84       50,000       $36.59
===============      =======          ===           ======       ======       ======




"AGE-VESTED" CAREER STOCK OPTION PLAN, AS AMENDED
      In 1984, the Company adopted a stock option plan whereby 680,0001,360,000 shares were reserved for grant. In March of 1996, another 1,000,0002,000,000 shares were reserved for grant under the plan. As amended on
28
December 20, 1994, options which have been granted at fair market value are 50% exercisable when the option holders reach their 61st birthday and the remaining 50% will vest on their 64th birthday. To the extent vested, the options may be exercised at any time prior to one year after termination of employment. Options which terminate without being exercised may be reissued. At October 31, 2001, 418,0002002, 819,000 shares remained available for grant.
      Transactions under this plan are summarized as follows:

                                                                                        Weighted
                                                                 Number                 Average
                                                                  of                    Exercise
                                                                Options                  Price
                                                               ---------                -------

Balance October 31, 1998                                       1,184,000                $ 18.29
Granted (Weighted average fair value of $14.59)                   75,000                $ 31.88
Exercised                                                        (56,000)               $  6.22
Terminated                                                       (16,000)               $  9.31
                                                               ---------                -------
Balance October 31, 1999                                       1,187,000                $ 19.86
Granted (Weighted average fair value of $7.54)                    75,000                $ 20.75
Exercised                                                        (56,000)               $  5.92
Terminated                                                      (105,000)               $ 19.80
                                                               ---------                -------
Balance October 31, 2000                                       1,101,000                $ 20.96
Granted (Weighted average fair value of $12.84)                   73,000                $ 30.75
Exercised                                                       (211,000)               $ 11.30
Terminated                                                       (46,000)               $ 20.57
                                                               ---------                -------
Balance October 31, 2001                                         917,000                $ 23.00
                                                               =========                =======


                        Outstanding                                   Exercisable
- ----------------------------------------------------------        --------------------
                                  Weighted
                                   Average        Weighted                    Weighted
      Range          Number       Remaining       Average          Number     Average
       of             of         Contractual      Exercise          Of        Exercise
     Prices         Options      Life (Years)       Price         Options       Price
- ---------------     -------      ------------     --------        -------     --------

$ 5.72              154,000          4.6            $ 5.72         6,000       $ 5.72
$11.25 -- 19.44     130,000          6.4            $11.72        25,000       $11.25
$20.75               60,000         15.3            $20.75            --           --
$29.41 -- 36.59     573,000         11.7            $30.45        89,000       $30.62
===============     =======         ====            ======        ======       ======




                                       27

         
Weighted
NumberAverage
ofExercise
OptionsPrice
Balance October 31, 1999  2,374,000  $9.93 
Granted (Weighted average fair value of $3.77)  150,000  $10.38 
Exercised  (112,000) $2.96 
Forfeitures  (210,000) $9.90 
Balance October 31, 2000  2,202,000  $10.48 
Granted (Weighted average fair value of $6.42)  146,000  $15.38 
Exercised  (422,000) $5.65 
Forfeitures  (92,000) $10.29 
Balance October 31, 2001  1,834,000  $11.50 
Granted (Weighted average fair value of $6.29)  155,000  $15.38 
Exercised  (79,000) $10.40 
Forfeitures  (139,000) $13.84 
Balance October 31, 2002  1,771,000  $11.72 
                       
Exercisable at
Outstanding at October 31, 2002October 31, 2002
Weighted
AverageWeightedWeighted
RangeNumberRemainingAverageNumberAverage
ofofContractualExerciseofExercise
PricesOptionsLife (Years)PriceOptionsPrice
 $2.86   308,000   3.5  $2.86   104,000  $2.86 
 $5.63 – 9.72   211,000   6.7  $5.92   32,000  $5.63 
 $10.38   107,000   16.4  $10.38   —   — 
 $14.70 – 18.30   1,145,000   11.8  $15.29   202,000  $15.32 
 Total   1,771,000   10.1  $11.72   338,000  $10.58 
EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED
      In 1985, the Company adopted an employee stock purchase plan under which sale of 5 million10,000,000 shares of its common stock has been authorized. In March of
1996 and 1999, sales of an additional 1,200,0002,400,000 shares each were authorized, and again in March of 2001, 1,200,0002,400,000 additional shares were authorized under this plan. The purchase price of the shares under the plan is the lesser of 85% of the fair market value at the commencement of each plan year or 85% of the fair market value on the date of purchase. Employees may designate up to 10% of their compensation for the purchase of stock.stock, subject to a $25,000 annual limit. During 2002, 2001, and 2000, 868,000, 1,054,000 and 1999, 527,000,
635,000, and 602,0001,270,000 shares of stock were issued under the plan for an aggregate purchase price of $11,603,000, $12,142,000 $12,588,000 and $13,632,000,$12,588,000, respectively. The weighted average fair value of those purchase rights granted in 2002, 2001, and 2000 was $3.85, $3.50 and 1999 was $7.00, $7.27, and $7.32,$3.64, respectively, and were issued at a weighted average price of $23.04, $19.84$13.36, $11.52 and $23.25,$9.92, respectively. At October 31, 2001,
930,0002002, 1,114,000 shares remained unissued under the plan.

9.     
9.INCOME TAXES
      The provision for income taxes is made up of the following components for each of the years ended October 31:

(in thousands of dollars)       2001                    2000                    1999
                              --------                --------                --------

Current
   Federal                    $ 28,046                $ 29,793                $ 29,807
   State                         4,170                   4,051                   4,286
   Foreign                          41                      23                       9

Deferred
   Federal                     (11,002)                 (5,071)                 (6,022)
   State                        (1,136)                   (446)                   (515)
                              --------                --------                --------
                              $ 20,119                $ 28,350                $ 27,565
                              ========                ========                ========

              
(in thousands)200220012000
Current            
 Federal $20,789  $28,046  $29,793 
 State  3,086   4,170   4,051 
 Foreign  63   41   23 
Deferred            
 Federal  (2,472)  (11,002)  (5,071)
 State  1,134   (1,136)  (446)
  $22,600  $20,119  $28,350 
      Income tax expense attributable to income from operations differs from the amounts computed by applying the U.S. statutory rates to pretax income from operations as a result of the following for the years ended October 31:

                                                                       2001              2000              1999
                                                                       ----              ----              ----

Statutory rate                                                         35.0%             35.0%             35.0%
State and local taxes on income, net of federal tax benefit             3.6               3.1               3.5
Tax credits                                                            (5.1)             (3.6)             (2.6)
Nondeductible expenses and other--net                                   4.5               4.5               5.1
                                                                       ----              ----              ----
                                                                       38.0%             39.0%             41.0%
                                                                       ====              ====              ====

             
200220012000
Statutory rate  35.0%  35.0%  35.0%
State and local taxes on income, net of federal tax benefit  3.1   3.6   3.1 
Tax credits  (5.7)  (5.1)  (3.6)
Tax liability no longer required  (2.1)  —   — 
Nondeductible expenses and other — net  2.3   4.5   4.5 
   32.6%  38.0%  39.0%
29
      The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at October 31, are presented below:


                                       28


(in thousands of dollars)                          2001                 2000
                                                 --------             --------

Deferred tax assets:
   Self-insurance claims                         $ 43,183             $ 33,214
   Bad debt allowance                               3,652                2,464
   Deferred and other compensation                 13,579               12,063
   Goodwill amortization                            5,026                4,099
   Other                                            1,952                2,967
                                                 --------             --------
Total gross deferred tax assets                    67,392               54,807
                                                 --------             --------
Deferred tax liabilities:
   Deferred software development cost              (3,817)              (2,038)
   Union pension contributions                     (1,369)              (2,701)
                                                 --------             --------
Total gross deferred tax liabilities               (5,186)              (4,739)
                                                 --------             --------
Net deferred tax assets                          $ 62,206             $ 50,068
                                                 ========             ========

          
(in thousands)20022001
Deferred tax assets:        
 Self-insurance claims $45,202  $43,183 
 Bad debt allowance  2,524   3,652 
 Deferred and other compensation  14,375   13,579 
 Goodwill  1,143   5,026 
 Other  3,782   1,952 
Total gross deferred tax assets  67,026   67,392 
Deferred tax liabilities:        
 Deferred software development cost  (3,482)  (3,817)
 Union pension contributions  —   (1,369)
Total gross deferred tax liabilities  (3,482)  (5,186)
Net deferred tax assets $63,544  $62,206 
      Management has determined that it is more likely than not that the total net deferred tax asset will be realized.

10.    ACQUISITIONS AND DIVESTITURES
10.ACQUISITIONS
      All acquisitions have been accounted for using the purchase method of accounting; operations of the companies and businesses acquired have been included in the accompanying consolidated financial statements from their respective dates of acquisition. The excess of the purchase price over fair value of the net assets acquired is generally included in goodwill. Most purchase agreements provide for contingent payments based on the annual pretax income for subsequent periods ranging generally from threetwo to five years. Any such future payments are generally capitalized as goodwill when paid. Cash paid for acquisitions, including anydown payments and contingent amounts based on subsequent earnings, was $23,401,000$52,448,000 in 2001.2002. In addition, common shares, with a fair market value of $1,666,000$1,371,000 at the date of issuance, were issued in 20012002 under the contingent payment provisions of a prior year1997 acquisition.
      Acquisitions made during 2002 are discussed below:
      The Company acquired the service contracts and selected assets of Triumph Security Corporation and Triumph Cleaning Corporation with customers located in New York City effective January 26 and 28, 2002, respectively. This acquisition contributed $6,369,000 in sales in 2002.
      On February 28, 2002, the Company acquired the security contracts, accounts receivable and selected assets of Foulke Associates, Inc. with customers located throughout Georgia, Florida, Maryland, Pennsylvania and Virginia. This acquisition contributed $11,791,000 in sales in 2002.
      The total cost of the Triumph and Foulke acquisitions was $8,800,000, of which $7,118,000 was allocated to goodwill. The aggregate purchase prices of these acquisitions do not reflect payments of contingent consideration based upon the future results of operations of the businesses acquired. As these acquisitions were not significant,material, pro forma information is not included in thesethe accompanying consolidated financial statements.

       Acquisitions and dispositions made during the fiscal year 2001 are
discussed below:

       Effective February 1, 2001,
      On July 12, 2002, the Company acquired the operations of Lakeside Building Maintenance, Inc. and selected assets of Arcade Cleaning L.P., a janitorial servicesan affiliated company (collectively, Lakeside) with customers located in Chicago, Cincinnati, Cleveland, Columbus, Detroit, Indianapolis, Louisville, Milwaukee, Nashville and St. Louis. The total down payment acquisition cost was $41,131,000, which included the Northeastassumption of liabilities totaling $4,194,000. Of the down payment, $39,517,000 was allocated to goodwill. Contingent payments are payable over a three-year period commencing July 13, 2002. The first two annual payments will be equal to fifty percent of Lakeside’s Adjusted Earnings Before Interest Taxes Depreciation and Midwest regions. The terms included a
cashAmortization (EBITDA) for each year of the two-year period following the acquisition, while the final payment made at closing plus annual contingent payments based on operating
profitswill be equal to be made over five years.$5,304,000 provided that the gross sales of Lakeside during the third year following the acquisition are equal to or greater than $131,200,000. This acquisition contributed $47,141,000$51,601,000 in revenues in fiscal year 2001.

       Effective March 26, 2001,2002.
      The following pro forma information for the Company acquired selected customer
contracts and certain assets of SLI Lighting Solutions, a lighting services
company, with customersLakeside acquisition assumes that the acquisition occurred on November 1, 2000. Included in the Mid-Atlantic and Southeastern regions. The terms
included a cash payment made at closing plus semi-annual contingent payments
based on gross profits to be made over three years. This acquisition contributed
$13,455,000 in revenues in fiscal year 2001.

       Effective April 1, 2001, the Company acquired the operations and selected
assets of CarpetMaster Cleaning, a provider of janitorial and related services
in Albany and the surrounding capital district of New York. The terms included a
cash payment, of which 51% was made at closing and 49% paid in May 2001, plus
annual contingent payments based on operating profits to be made over five
years. This acquisition contributed $3,946,000 in revenues in fiscal year 2001.

       Effective June 11, 2001, the Company acquired the operations and selected
assets of Sundown Security, Inc., a security services company, with customers
located in the Sacramento, California area. The terms included a cash payment
made at closing plus annual contingent payments based on


                                       29


operating profits to be made over five years. This acquisition contributed
$1,130,000 in revenues in fiscal year 2001.

       The aggregate consideration paid for these acquisitions was $11,749,000
including $7,222,000 allocated to goodwill.

       Effective April 30, 2001, the Company sold its Easterday Janitorial
Supply Division to AmSan West, Inc. In fiscal 2000, this Division had annual
revenues of $43,868,000, of which 27% were intercompany sales, and assets of
$11,574,000. In 2001, this Division contributed $15,054,000 in revenues after
intercompany sales elimination. The sale of Easterday will allow the Company to
focus on its building maintenance and other operational services. The sale does
not have a material effect on the Company's consolidated net assets, financial
position orABM results of operations. The sales priceoperations for Easterday was
$12,000,000, which was received on May 1, 2001. Included in operating profits
for the fiscal year ended October 31, 2001, is a pre-tax gain2002, was $3,500,000 of $718,000.

11.    Lakeside pretax operating profit for the period July 13, 2002, through October 31, 2002.
30
                          
20022001
(in thousands, except per share
amounts)ABMLakeside*Pro FormaABMLakesidePro Forma
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Revenues $2,191,957  $113,460  $2,305,417  $2,149,171  $149,434  $2,298,605 
 Operating and SG&A expense  2,121,577   106,413   2,227,990   2,081,367   139,883   2,221,250 
 Interest expense  1,052   1,365   2,417   2,602   2,663   5,265 
 Goodwill amortization  —   —   —   12,257   2,625   14,882 
Total expenses  2,122,629   107,778   2,230,407   2,096,226   145,171   2,241,397 
Income before income taxes  69,328   5,682   75,010   52,945   4,263   57,208 
Income taxes  22,600   2,063   24,663   20,119   1,620   21,739 
Net income $46,728  $3,619  $50,347  $32,826  $2,643  $35,469 
* Represents Lakeside results of operations for the period November 1, 2001 through July 12, 2002.
                          
Net income per common share:                        
 Basic $0.95   —  $1.03  $0.68   —  $0.74 
 Diluted $0.92   —  $0.99  $0.65   —  $0.70 
Average number of common shares outstanding:                        
 Basic  49,116   —   49,116   47,598   —   47,598 
 Diluted  51,015   —   51,015   50,020   —   50,020 
11.DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
      The carrying amounts reported in the balance sheet for cash and cash equivalents approximate fair value due to the short-maturity of these instruments.
      Financial instruments included in investments and long-term receivables have no quoted market prices and, accordingly, a reasonable estimate of fair market value could not be made without incurring excessive costs. However, the Company believes by reference to stated interest rates and security held that the fair value of the assets would not differ significantly from the carrying value.
      The fair value of the Company'sCompany’s long-term debt approximates carrying value based on the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities.

12.    COMMITMENTS AND 
12.CONTINGENCIES
      The Company and certainsome of its subsidiaries have been named defendants in certain litigation arising in the ordinary course of business. In the opinion of management, based on advice of legal counsel, such matters should have no material effect on the Company'sCompany’s financial position, results of operations or cash flows.
13. SEGMENT INFORMATION
      Under Statements of Financial Accounting Standards (SFAS) No. 131, "Disclosures“Disclosures about Segments of an Enterprise and Related Information"Information”, segment information is presented under the management approach. The management approach designates the internal organization that is used by management for making operating decisions and assessing performance as the source of the Company'sCompany’s reportable segments. SFAS No. 131 also requires disclosures about products and services, geographic areas and major customers.
      The Company is currently organized into nineeight separate operating segments as defined underdivisions. Under SFAS 131. However,No. 131 criteria, only the ABM Janitorial Amtech Elevator, ABM Engineering, Amtech Lighting andServices, Ampco System Parking, operating segments areABM Engineering Services, American Commercial Security Services, Amtech Lighting Services, and Amtech Elevator Services qualify as reportable using the quantitative
threshold criteria under SFAS 131. Included in other segments aresegments. Results of ABM Service Network, American Commercial Security, CommAir Mechanical Services and Easterday Janitorial Supply, Company that was sold, as previously reported,
duringprior to its sale on April 29, 2001, are included in the second quarter of fiscal year 2001.Other segment. In addition, the corporate expenses are not allocated. The significant increase in unallocated Corporatecorporate expenses for 2001 includes the $20 million$20,000,000 insurance adjustment mentioned
previously(see Footnote 2 INSURANCE) and centralization of marketing and sales expenses compared to 2000. While virtually all insurance claims
31
arise from the prior year.operating divisions, this adjustment was recorded as unallocated corporate expense. Had the Company allocated the insurance adjustment among the divisions, the reported pre-tax operating profits of the divisions, as a whole, would have been reduced by $20,000,000 with an equal and offsetting change to unallocated Corporate expenses and therefore no change to consolidated pre-tax earnings. All of these segments are distinct business units. They are managed separately because of their unique services, technology and marketing requirements. Nearly 100% of the operations and related revenuessales are within the United States and no single customer accounts for more than 10%5% of sales. 30
For comparative purposes, goodwill amortization has been segregated from the operating profits of the divisions for the years ended October 31, 2001 and 2000 and reported separately.
32
SEGMENT INFORMATION
(in thousands)


                                 
(in thousands)
For the year ended
October 31, 2002JanitorialParkingEngineeringSecurityLightingElevatorOtherCorporate
Sales and other income $1,197,035  $363,511  $173,561  $140,569  $130,858  $113,874  $61,963  $561 
Gain on insurance claim  -   -   -   -   -   -   -   10,025 
Total revenues $1,197,035  $363,511  $173,561  $140,569  $130,858  $113,874  $61,963  $10,586 
Operating profit $54,337  $6,948  $10,033  $5,639  $8,261  $4,319  $(1,190) $(27,992)
Gain on insurance claim  -   -   -   -   -   -   -   10,025 
Interest expense  -   -   -   -   -   -   -   (1,052)
Income before income taxes $54,337  $6,948  $10,033  $5,639  $8,261  $4,319  $(1,190) $(19,019)
Identifiable assets $336,414  $80,889  $32,435  $31,295  $82,197  $32,195  $15,080  $94,434 
Depreciation expense $5,091  $1,764  $85  $304  $1,725  $227  $240  $4,661 
Intangible amortization expense $700  $244  $-  $-  $-  $-  $141  $- 
Capital expenditures $3,643  $1,119  $39  $289  $722  $146  $141  $1,392 
For the year ended October 31, 2001
                                
Sales and other income $1,159,914  $365,073  $171,008  $103,980  $144,319  $121,371  $82,188  $1,318 
Operating profit $67,590  $6,619  $9,404  $3,174  $11,983  $5,012  $5,280  $(41,258)
Interest expense  (917)  -   (7)  (10)  -   (2)  1   (1,667)
Income before income taxes $66,673  $6,619  $9,397  $3,164  $11,983  $5,010  $5,281  $(42,925)
Identifiable assets $285,979  $86,837  $47,948  $23,835  $82,528  $42,127  $14,536  $99,310 
Depreciation expense $4,980  $1,980  $79  $221  $1,542  $248  $505  $4,155 
Goodwill amortization expense $7,728  $2,569  $369  $171  $945  $192  $283  $- 
Intangible amortization expense $181  $180  $-  $-  $-  $-  $-  $- 
Capital expenditures $3,659  $1,612  $79  $311  $2,572  $255  $1,295  $7,139 
For the year ended October 31, 2000
                                
Sales and other income $1,052,865  $358,729  $156,314  $101,948  $118,054  $114,409  $91,125  $415 
Operating profit $59,867  $11,407  $8,531  $1,969  $10,823  $7,024  $4,799  $(17,209)
Interest expense  (9)  -   -   (10)  -   (1)  -   (3,300)
Income before income taxes $59,858  $11,407  $8,531  $1,959  $10,823  $7,023  $4,799  $(20,509)
Identifiable assets $274,704  $92,401  $45,459  $20,131  $65,160  $37,356  $35,989  $70,785 
Depreciation expense $4,962  $1,834  $80  $256  $1,260  $316  $703  $2,854 
Goodwill amortization expense $6,817  $2,681  $367  $124  $735  $192  $282  $- 
Intangible amortization expense $-  $61  $-  $-  $-  $-  $-  $- 
Capital expenditures $4,568  $1,521  $524  $66  $1,469  $390  $626  $9,553 
[Additional columns below]
[Continued from above table, first column(s) repeated]
         
(in thousands)
For the year endedGoodwillConsolidated
October 31, 2002AmortizationTotals
Sales and other income $-  $2,181,932 
Gain on insurance claim  -   10,025 
  
Total revenues $-  $2,191,957 
  
Operating profit $-  $60,355 
Gain on insurance claim  -   10,025 
Interest expense  -   (1,052)
  
Income before income taxes $-  $69,328 
  
Identifiable assets $-  $704,939 
  
Depreciation expense $-  $14,097 
  
Intangible amortization expense $-  $1,085 
  
Capital expenditures $-  $7,491 
  
For the year ended October 31, 2001
        
  
Sales and other income $-  $2,149,171 
  
Operating profit $(12,257) $55,547 
Interest expense  -   (2,602)
  
Income before income taxes $(12,257) $52,945 
  
Identifiable assets $-  $683,100 
  
Depreciation expense $-  $13,710 
  
Goodwill amortization expense $-  $12,257 
  
Intangible amortization expense $-  $361 
  
Capital expenditures $-  $16,922 
  
For the year ended October 31, 2000
        
  
Sales and other income $-  $1,993,859 
  
Operating profit $(11,198) $76,013 
Interest expense  -   (3,320)
  
Income before income taxes $(11,198) $72,693 
  
Identifiable assets $-  $641,985 
  
Depreciation expense $-  $12,265 
  
Goodwill amortization expense $-  $11,198 
  
Intangible amortization expense $-  $61 
  
Capital expenditures $-  $18,717 
  
33

                                                          Ampco
                                           ABM            System          ABM           Amtech          Amtech
                                       Janitorial        Parking      Engineering      Lighting        Elevator
                                       -----------     -----------    -----------     -----------    -----------

FOR THE YEAR ENDED OCTOBER 31, 2001
Revenues and other income              $ 1,159,914     $   165,940    $   171,008     $   144,319    $   121,371
Intersegment revenues                  $       572     $        --    $        --     $       217    $        --
                                       -----------     -----------    -----------     -----------    -----------
Total Revenues                         $ 1,160,486     $   165,940    $   171,008     $   144,536    $   121,371
                                       ===========     ===========    ===========     ===========    ===========
Operating profit                       $    59,862     $     4,050    $     9,035     $    11,038    $     4,820
Interest, expense                      $      (917)    $        --    $        (7)    $        --    $        (2)
                                       -----------     -----------    -----------     -----------    -----------
Income before income taxes             $    58,945     $     4,050    $     9,028     $    11,038    $     4,818
                                       ===========     ===========    ===========     ===========    ===========
Identifiable assets                    $   285,979     $    86,837    $    47,948     $    82,528    $    42,127
                                       ===========     ===========    ===========     ===========    ===========
Depreciation expense                   $     4,980     $     1,980    $        79     $     1,542    $       248
                                       ===========     ===========    ===========     ===========    ===========
Amortization expense                   $     7,909     $     2,749    $       369     $       945    $       192
                                       ===========     ===========    ===========     ===========    ===========
Capital expenditures                   $     3,659     $     1,612    $        79     $     2,572    $       255
                                       ===========     ===========    ===========     ===========    ===========

FOR THE YEAR ENDED OCTOBER 31, 2000
                                       -----------     -----------    -----------     -----------    -----------
Revenues and other income              $ 1,052,865     $   172,427    $   156,314     $   118,054    $   114,409
Intersegment revenues                  $       546     $        --    $        --     $       302    $        --
                                       -----------     -----------    -----------     -----------    -----------
Total Revenues                         $ 1,053,411     $   172,427    $   156,314     $   118,356    $   114,409
                                       ===========     ===========    ===========     ===========    ===========
Operating profit                       $    53,050     $     8,726    $     8,164     $    10,088    $     6,832
Interest, expense                      $        (9)    $        --    $        --     $        --    $        (1)
                                       -----------     -----------    -----------     -----------    -----------
Income before income taxes             $    53,041     $     8,726    $     8,164     $    10,088    $     6,831
                                       ===========     ===========    ===========     ===========    ===========
Identifiable assets                    $   274,704     $    92,401    $    45,459     $    65,160    $    37,356
                                       ===========     ===========    ===========     ===========    ===========
Depreciation expense                   $     4,962     $     1,834    $        80     $     1,260    $       316
                                       ===========     ===========    ===========     ===========    ===========
Amortization expense                   $     6,817     $     2,742    $       366     $       735    $       192
                                       ===========     ===========    ===========     ===========    ===========
Capital expenditures                   $     4,568     $     1,521    $       524     $     1,469    $       390
                                       ===========     ===========    ===========     ===========    ===========

FOR THE YEAR ENDED OCTOBER 31, 1999
                                       -----------     -----------    -----------     -----------    -----------
Revenues and other income              $   933,293     $   162,358    $   153,758     $    95,521    $    96,618
Intersegment revenues                  $       374     $        --    $       188     $       270    $        --
                                       -----------     -----------    -----------     -----------    -----------
Total Revenues                         $   933,667     $   162,358    $   153,946     $    95,791    $    96,618
                                       ===========     ===========    ===========     ===========    ===========
Operating profit                       $    49,017     $     8,385    $     8,352     $     7,457    $     6,651
Interest, expense                      $       (13)    $        --    $        --     $        --    $        --
                                       -----------     -----------    -----------     -----------    -----------
Income before income taxes             $    49,004     $     8,385    $     8,352     $     7,457    $     6,651
                                       ===========     ===========    ===========     ===========    ===========
Identifiable assets                    $   242,117     $    84,360    $    34,864     $    59,921    $    32,411
                                       ===========     ===========    ===========     ===========    ===========
Depreciation expense                   $     4,575     $     1,998    $       101     $     1,454    $       381
                                       ===========     ===========    ===========     ===========    ===========
Amortization expense                   $     5,866     $     2,568    $       368     $       531    $       192
                                       ===========     ===========    ===========     ===========    ===========
Capital expenditures                   $     6,632     $     1,763    $       168     $     1,506    $       354
                                       ===========     ===========    ===========     ===========    ===========

14.STOCK-BASED COMPENSATION


                                          Other                                        Consolidated
                                         Segments       Corporate      Eliminations       Totals
                                       -----------     -----------     ------------    ------------

FOR THE YEAR ENDED OCTOBER 31, 2001
Revenues and other income              $   186,168     $     1,318     $        --     $ 1,950,038
Intersegment revenues                  $     5,813     $        --     $    (6,602)    $        --
                                       -----------     -----------     -----------     -----------
Total Revenues                         $   191,981     $     1,318     $    (6,602)    $ 1,950,038
                                       ===========     ===========     ===========     ===========
Operating profit                       $     8,000     $   (41,258)    $        --     $    55,547
Interest, expense                      $        (9)    $    (1,667)    $        --     $    (2,602)
                                       -----------     -----------     -----------     -----------
Income before income taxes             $     7,991     $   (42,925)    $        --     $    52,945
                                       ===========     ===========     ===========     ===========
Identifiable assets                    $    38,371     $    99,310     $        --     $   683,100
                                       ===========     ===========     ===========     ===========
Depreciation expense                   $       726     $     4,155     $        --     $    13,710
                                       ===========     ===========     ===========     ===========
Amortization expense                   $       454     $        --     $        --     $    12,618
                                       ===========     ===========     ===========     ===========
Capital expenditures                   $     1,606     $     7,139     $        --     $    16,922
                                       ===========     ===========     ===========     ===========

FOR THE YEAR ENDED OCTOBER 31, 2000
                                       -----------     -----------     -----------     -----------
Revenues and other income              $   193,073     $       415     $        --     $ 1,807,557
Intersegment revenues                  $    11,954     $        --     $   (12,802)    $        --
                                       -----------     -----------     -----------     -----------
Total Revenues                         $   205,027     $       415     $   (12,802)    $ 1,807,557
                                       ===========     ===========     ===========     ===========
Operating profit                       $     6,362     $   (17,209)    $        --     $    76,013
Interest, expense                      $       (10)    $    (3,300)    $        --     $    (3,320)
                                       -----------     -----------     -----------     -----------
Income before income taxes             $     6,352     $   (20,509)    $        --     $    72,693
                                       ===========     ===========     ===========     ===========
Identifiable assets                    $    56,120     $    70,785     $        --     $   641,985
                                       ===========     ===========     ===========     ===========
Depreciation expense                   $       959     $     2,854     $        --     $    12,265
                                       ===========     ===========     ===========     ===========
Amortization expense                   $       407     $        --     $        --     $    11,259
                                       ===========     ===========     ===========     ===========
Capital expenditures                   $       692     $     9,553     $        --     $    18,717
                                       ===========     ===========     ===========     ===========

FOR THE YEAR ENDED OCTOBER 31, 1999
                                       -----------     -----------     -----------     -----------
Revenues and other income              $   187,306     $       862     $        --     $ 1,629,716
Intersegment revenues                  $    12,567     $        --     $   (13,399)    $        --
                                       -----------     -----------     -----------     -----------
Total Revenues                         $   199,873     $       862     $   (13,399)    $ 1,629,716
                                       ===========     ===========     ===========     ===========
Operating profit                       $     7,128     $   (17,799)    $        --     $    69,191
Interest, expense                      $       (10)    $    (1,936)    $        --     $    (1,959)
                                       -----------     -----------     -----------     -----------
Income before income taxes             $     7,118     $   (19,735)    $        --     $    67,232
                                       ===========     ===========     ===========     ===========
Identifiable assets                    $    52,798     $    56,913     $        --     $   563,384
                                       ===========     ===========     ===========     ===========
Depreciation expense                   $     1,032     $     1,274     $        --     $    10,815
                                       ===========     ===========     ===========     ===========
Amortization expense                   $       358     $        --     $        --     $     9,883
                                       ===========     ===========     ===========     ===========
Capital expenditures                   $     1,468     $     7,560     $        --     $    19,451
                                       ===========     ===========     ===========     ===========




Intersegment revenues
      The Company continues to account for its stock-based awards using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”, and its related interpretations. In the three-year period ended October 31, 2002, the exercise price of all options granted to employees had equivalent fair market values. Therefore, no compensation expense has been recognized in the financial statements for employee stock awards.
      Statement of Financial Accounting Standards (SFAS) No. 123, “Accounting for Stock-Based Compensation”, requires the disclosure of pro forma net earnings and earnings per share had the Company adopted the fair value method as of the beginning of fiscal 1996. Under SFAS 123, the fair value of stock-based awards to employees is calculated through the use of option pricing models. The use of these models requires subjective assumptions, including future stock price volatility and expected time to exercise, which can have a significant effect on the calculated values. The Company’s calculations were made using the Black-Scholes option pricing model with the following weighted average assumptions: expected life 9.7 years, 9.2 years and 9.1 years from the date of grant in fiscal 2002, 2001, and 2000, respectively; expected stock price volatility of 32.5%, 28.1% and 27.7%, respectively; expected dividend yields of 2.2%, 2.2% and 3.1%, and risk free interest rates of 4.4%, 5.3% and 6.7% in fiscal 2002, 2001, and 2000, respectively.
      The Company’s calculations are recordedbased on a single option valuation approach. The computed fair value of the options awards are amortized over the required vesting periods. The vesting period for the Price-Vested options is initially estimated at prices negotiated betweeneight years. Should the entities.

Certain prior year amountsearly vesting trigger occur, the remaining unrecognized value of the Price-Vested option is recognized immediately. Stock Option forfeitures are recognized as they occur. Had the Company adopted the fair value method as of the beginning of fiscal 1996, the pro forma net earnings would have been restated$42,787,000 ($0.84 per diluted share) for fiscal 2002, $29,102,000 ($0.57 per diluted share) for fiscal 2001 and $39,477,000 ($0.82 per diluted share) for fiscal 2000. The impact of outstanding stock options granted prior to conformfiscal 1996 has been excluded from the pro forma calculation; accordingly, the fiscal 2002, 2001, and 2000 pro forma adjustments are not indicative of future period pro forma adjustments, when the calculation will apply to the current year's
presentation.


                                       31


14.    QUARTERLY INFORMATION (UNAUDITED)
       (inall future applicable stock grants.
15.QUARTERLY INFORMATION (UNAUDITED)
(in thousands, except per share amounts)
                      
Fiscal Quarter
FirstSecondThirdFourthYear
2002
                    
Sales and other income $527,552  $525,850  $543,752  $584,778  $2,181,932 
Gain on insurance claim  —   4,300   5,725   —   10,025 
  
Total revenues $527,552  $530,150  $549,477  $584,778  $2,191,957 
  
Gross profit  52,769   57,287   59,457   65,669   235,182 
Net income  7,991   13,989   12,634   12,114   46,728 
Net income per common share:                    
 Basic  0.16   0.28   0.26   0.25   0.95 
 Diluted  0.16   0.27   0.25   0.24   0.92 
2001
                    
Sales and other income $520,815  $538,637  $542,918  $546,801  $2,149,171 
Gross profit  58,020   65,091   63,303   43,703   230,117 
Net income (loss)  8,404   12,054   13,233   (865)  32,826 
Net income (loss) per common share:                    
 Basic  0.18   0.25   0.27   (0.02)  0.68 
 Diluted  0.17   0.24   0.26   (0.02)  0.65 
34

                                                              Fiscal Quarter
                                         ----------------------------------------------------------
                                           First           Second          Third           Fourth            Year
                                         ----------      ----------      ----------      ----------       ----------

2001
Revenues and other income                $  470,419      $  490,494      $  492,454      $  496,671       $1,950,038
Gross profit                                 57,338          64,436          62,679          43,251          227,704
Net income (loss)                             8,404          12,054          13,233            (865)          32,826
Net income (loss) per common share:
            Basic                              0.36            0.50            0.55           (0.04)            1.36
            Diluted                            0.34            0.48            0.52           (0.04)            1.30
                                         ----------      ----------      ----------      ----------       ----------
2000
Revenues and other income                $  428,581      $  439,988      $  461,890      $  477,098       $1,807,557
Gross profit                                 52,883          56,684          60,136          63,856          233,559
Net income                                    7,527           9,880          12,445          14,491           44,343
Net income per common share:
            Basic                              0.33            0.43            0.54            0.64             1.94
            Diluted                            0.32            0.41            0.52            0.60             1.85
                                         ----------      ----------      ----------      ----------       ----------




SCHEDULE II

CONSOLIDATED VALUATION ACCOUNTS
Years ended October 31, 2001, 2000 and 1999
(in thousands)




                                      Balance      Charges to        Deductions         Other          Balance
                                     Beginning     Costs and           Net of         Additions        End of
                                      of Year       Expenses         Recoveries      (Reductions)       Year
                                     ---------     ----------        ----------      ------------      -------

ALLOWANCE FOR DOUBTFUL ACCOUNTS

Years ended October 31,
      2001                            $ 8,825        $ 6,134          $ (5,539)          $ --          $ 9,420
      2000                              7,490          2,971            (1,636)            --            8,825
      1999                              6,761          2,257            (1,528)            --            7,490
                                      -------        -------          --------           ----          -------




                                       32


ITEM 9. ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
      Not applicable.
PART III

ITEM 10. 
ITEM 10.DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
      The information required by this item regarding the Company'sABM’s directors and executive officers not included in Part I under "Executive Officers"“Executive Officers” is incorporated by reference to the information set forth under the captions "Election“Election of Directors"Directors” and "Section“Section 16(a) Beneficial Ownership Compliance Reporting"Reporting” contained in the Proxy Statement to be used by the CompanyABM in connection with its 20022003 Annual Meeting of Stockholders.

ITEM 11. 
ITEM 11.EXECUTIVE COMPENSATION
      The information required by this item is incorporated by reference to the information set forth under the caption "Executive Compensation"“Executive Compensation” contained in the Proxy Statement to be used by the CompanyABM in connection with its 20022003 Annual Meeting of Stockholders.

ITEM 12. 
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
      The information required by this item is incorporated by reference to the information set forth under the caption "Principal Stockholders"“Principal Stockholders” contained in the Proxy Statement to be used by the CompanyABM in connection with its 20022003 Annual Meeting of Stockholders.

ITEM 13. Stockholders, and in the table below.
      Equity Compensation Plan Information as of October 31, 2002:
              
Number of
Number ofsecurities remaining
securities to beWeightedavailable for future
issued uponaverage exerciseissuance under
exercise ofprice ofequity compensation
outstandingoutstandingplans (excluding
options, warrantsoptions, warrantssecurities reflected
and rightsand rightsin column(a))
Plan Category(a)(b)(c)
Equity compensation plans approved by security holders:            
 Time-Vested Incentive Stock Option Plan  2,628,000  $11.86   1,308,000 
 Price-Vested Performance Stock Option Plans  3,060,000  $13.70   3,070,000 
 Age-Vested Career Stock Option Plan  1,771,000  $11.72   819,000 
Equity compensation plans not approved by security holders:            
 None  —   —   — 
Total  7,459,000  $12.58   5,197,000 
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
      The information required by this item is incorporated by reference to the information set forth under the captions "Executive Compensation"“Executive Compensation” and "Further“Further Information Concerning the Board of Directors"Directors” contained in the Proxy Statement to be used by the CompanyABM in connection with the 20022003 Annual Meeting of Stockholders.
35
PART IV

ITEM 14. 
ITEM 14.CONTROLS AND PROCEDURES
      (a) Evaluation of disclosure controls and procedures.ABM’s chief executive officer and ABM’s chief financial officer, after evaluating the effectiveness of the Company’s “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15-d-14(c) as of a date (the “Evaluation Date”) within 90 days before the filing date of this Form 10-K, have concluded that as of the Evaluation Date the Company’s disclosure controls and procedures were adequate and designed to ensure that material information relating to the Company would be made known to them by others within those entities.
      (b) Changes in internal controls.There were no significant changes in the Company’s internal controls or, to the Company’s knowledge, in other factors that could significantly affect these controls subsequent to their date of evaluation.
ITEM 15.EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
      (a) The following documents are filed as part of this Form 10-K:

              1.     Consolidated Financial Statements of ABM Industries
                     Incorporated and Subsidiaries (see Item 8):

                     Independent Auditors' Report

                     Consolidated Balance Sheets -- October 31, 2001 and 2000

                     Consolidated Statements of Income -- Years ended October
                     31, 2001, 2000 and 1999


                                       33


                     Consolidated Statements of Stockholders' Equity and
                     Comprehensive Income -- Years ended October 31, 2001, 2000
                     and 1999

                     Consolidated Statements of Cash Flows -- Years ended
                     October 31, 2001, 2000 and 1999

                     Notes to Consolidated Financial Statements.

              2.     Consolidated Financial Statement Schedule of ABM Industries
                     Incorporated and Subsidiaries (see Item 8):

                     Schedule II -- Consolidated Valuation Accounts -- Years
                     ended October 31, 2001, 2000 and 1999
      1. Consolidated Financial Statements of ABM Industries Incorporated and Subsidiaries (see Item 8):
      Independent Auditors’ Report
      Consolidated Balance Sheets — October 31, 2002 and 2001
      Consolidated Statements of Income — Years ended October 31, 2002, 2001 and 2000
      Consolidated Statements of Stockholders’ Equity and Comprehensive Income — Years ended October 31, 2002, 2001 and 2000
      Consolidated Statements of Cash Flows — Years ended October 31, 2002, 2001 and 2000
      Notes to Consolidated Financial Statements.
      2. Consolidated Financial Statement Schedule of ABM Industries Incorporated and Subsidiaries
      Schedule II — Consolidated Valuation Accounts — Years ended October 31, 2002, 2001 and 2000
      All other schedules are omitted because they are not applicable or because the required information is included in the consolidated financial statements or the notes thereto.
      The individual financial statements of the registrant'sregistrant’s subsidiaries have been omitted since the registrant is primarily an operating company and all subsidiaries included in the consolidated financial statements are wholly owned subsidiaries.
      3. Exhibits:
      See Exhibit Index.
      (b) Reports on Form 8-K:
      No reports on Form 8-K were filed during the fourth quarter of fiscal year 2001.


                                       34
2002.
36
SIGNATURES
      Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ABM INDUSTRIES INCORPORATED


                 By:         /s/ Industries Incorporated
By: /s/Henrik C. Slipsager
Henrik C. Slipsager
                    -----------------------------------------
                               Henrik C. Slipsager
                 
President, Chief Executive Officer and Director
December 21, 200116, 2002
      Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

          /s/
/s/ Henrik C. Slipsager                           /s/ Martinn H. Mandles
- --------------------------------------------     ---------------------------------------------
       
Henrik C. Slipsager
President,                        Martinn H. Mandles Chief Executive Officer and Director                    Chairman of the Board,
       (Principal
(Principal Executive Officer)               Chief Administrative Officer and Director
              
December 21, 2001                               December 21, 2001


            /s/16, 2002
/s/ George B. Sundby                             /s//s/ Maria Placida Y. de la Pena
- --------------------------------------------     ---------------------------------------------
              
George B. Sundby                                 Maria de la Pena
          
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
December 16, 2002		Maria Placida Y. de la Pena
Vice President, Controller and
           Chief Financial Officer                         
Chief Accounting Officer
        (Principal Financial Officer)                   (Principal
(Principal Accounting Officer)
December 21, 2001                               16, 2002
/s/ Linda Chavez/s/ Luke S. Helms
Linda Chavez, Director
December 21, 2001


         /s/16, 2002		Luke S. Helms, Director
December 16, 2002
/s/ Maryellen C. Herringer                            /s/ Linda Chavez
- --------------------------------------------     ---------------------------------------------
      /s/ Charles T. Horngren
Maryellen C. Herringer, Director                      Linda Chavez, Director
              
December 21, 2001                               December 21, 2001


              /s/ Luke S. Helms                            /s/ Charles T. Horngren
- --------------------------------------------     ---------------------------------------------
           Luke S. Helms, Director                      16, 2002		Charles T. Horngren, Director
December 21, 2001                               December 21, 2001


          /s/16, 2002
/s/ Henry L. Kotkins, Jr.                        /s/ Theodore Rosenberg
- --------------------------------------------     ---------------------------------------------
      /s/ Martinn H. Mandles
Henry L. Kotkins, Jr., Director              Theodore Rosenberg, Vice 
December 16, 2002		Martinn H. Mandles
Chairman of the December 21, 2001                          Executive CommitteeBoard and Director
December 21, 2001

            /s/16, 2002
/s/ Theodore Rosenberg/s/ William W. Steele                           /s/ William E. Walsh
- --------------------------------------------     ---------------------------------------------
     
Theodore Rosenberg, Director
December 16, 2002		William W. Steele, ChairmanDirector
December 16, 2002
37
Certifications
I, Henrik C. Slipsager, certify that:
1. I have reviewed this annual report on Form 10-K of ABM Industries Incorporated;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the William E. Walsh, Directorcircumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
6. The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
/s/ Henrik C. Slipsager
Henrik C. Slipsager
Chief Executive CommitteeOfficer
(Principal Executive Officer)
Date: December 16, 2002
38
I, George B. Sundby, certify that:
1. I have reviewed this annual report on Form 10-K of ABM Industries Incorporated;
2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3. Based on my knowledge, the financial statements, and Directorother financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the “Evaluation Date”); and
c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
6. The registrant’s other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
/s/ George B. Sundby
George B. Sundby
Chief Financial Officer
(Principal Financial Officer)
Date: December 21, 2001
            December 21,16, 2002
39
Schedule II
CONSOLIDATED VALUATION ACCOUNTS
Years ended October 31, 2002, 2001 


                                       35


EXHIBIT INDEX

and 2000
                     
(in thousands)
BalanceCharges toDeductionsOtherBalance
BeginningCosts andNet ofAdditionsEnd of
of YearExpensesRecoveries(Reductions)Year
Allowance for Doubtful Accounts
Years ended October 31,                    
2002 $9,420  $11,910  $(14,725)  —  $6,605 
2001  8,825   6,134   (5,539)  —   9,420 
2000  7,490   2,971   (1,636)  —   8,825 
40
Exhibit Index
Exhibit NumberDescription
- -------        ------------------------------------------------------------------------------------------------

  3.1 [a]      
3.1[a]��Restated Certificate of Incorporation of ABM Industries Incorporated, dated March 22, 2000
3.2 [u]      By-laws,Bylaws, as amended July 23, 2001

  4.1 [k]      September 10, 2002
4.1[k]Credit Agreement, dated June 25, 1997, between Bank of America National Trust and Savings Association and the Company

  4.2 [q]      
4.2[q]First Amendment to Credit Agreement dated as of October 31, 1997

  4.3 [t]      
4.3[t]Second Amendment to Credit Agreement dated as of September 22, 1999

  4.5 [c]      
4.5[c]Business Loan Agreement dated February 13, 1996

 10.3 [b]
4.6Credit Agreement dated as of June 28, 2002, between ABM Industries Incorporated and bank syndicate
10.3[b]*Supplemental Medical and Dental Plan

 10.4 [j]
10.4[j]*1984 Executive Stock Option Plan as amended effective December 19, 1995 (now known as "Age-Vested"“Age-Vested” Career Stock Option Plan)

10.13 [j]
10.13[j]*1987 Stock Option Plan as amended effective December 19, 1995 (now known as "Time-Vested"“Time-Vested” Incentive Stock Option Plan)

10.16 [d]      
10.16[d]Rights Agreement, dated as of March 17, 1998, between the Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent

10.19 [e]
10.19[e]*Service Award Plan

10.21 [f]
10.21[f]*Amended and Restated Retirement Plan for Outside Directors

10.22 [f]
10.22[f]*Amendment No. 1 to Service Award Plan

10.23 [g]
10.23[g]*Form of Outside Director Retirement Agreement (dated June 16, 1992)

10.27 [h]      
10.27[h]Guaranty of American Building Maintenance Industries, Inc.

10.28 [i]
10.28[i]*Deferred Compensation Plan

10.29 [i]
10.29[i]*Form of Existing Executive Employment Agreement Other Than Those Specifically Named

10.30 [l]
10.35[l]*     Executive Employment Agreement with Martinn H. Mandles, as amended by Amendments
               One and Two

10.35 [l]*     Form of Amendments of Corporate Executive Employment Agreements with Other Than Those Named

10.36 [m]
10.36[m]*Form of Indemnification for Directors

10.39 [n]
10.40[p]*     Third Amendment of Corporate Executive Employment Agreement with Martinn H. Mandles

10.40 [p]*     1996 ABM Industries Incorporated Long-Term Senior Executive Stock Option Plan (now known as "Price-Vested"“Price-Vested” Performance Stock Option Plan)

10.40 [o]
10.47[t]*     Fourth Amendment of Corporate Executive Employment Agreement with Martinn H. Mandles

10.47 [t]*     Amendment No. 1 to the 1987 Incentive Stock Option Plan 10.48 [t](now known as “Time-Vested” Incentive Stock Option Plan)
10.48[t]*Amendment No. 2 to the ABM Industries Incorporated 1987 Incentive Stock Option Plan (December 19, 1994 Restatement) 10.49 [t]Plan (now known as “Time-Vested” Incentive Stock Option Plan)
10.49[t]*Amendment No. 3 to the "Time-Vested"“Time-Vested” Incentive Stock Option Plan

10.50 [t]
10.50[t]*Amendment No. 4 to the ABM Industries Incorporated "Time-Vested"“Time-Vested‘ Incentive Stock Option Plan (December 19, 19941995 Restatement)

10.51 [t]
10.51[t]*Amendment No. 1 to the 1984 Executive Stock Option Plan 10.52 [t](now known as “Age-Vested” Career Stock Option Plan)
10.52[t]*Amendment No. 2 to the 1984 Executive Stock Option Plan (December 1994 Restatement) 10.53 [t](now known as “Age-Vested‘ Career Stock Option Plan)
10.53[t]*Amendment No. 3 to the ABM Industries Incorporated "Age-Vested"“Age-Vested‘ Career Stock Option Plan (December 19, 1995 Restatement)

10.54 [t]
10.54[t]*Amendment No. 1 to the Long-Term Senior Executive Incentive Stock Option Plan Adopted December 1996 10.55 [t](now known as “Price-Vested” Performance Stock Option Plan)
10.55[t]*Amendment No. 2 to the "Price-Vested"“Price-Vested” Performance Stock Option Plan

10.56 [t]
10.56[t]*Amendment No. 3 to the ABM Industries Incorporated "Price-Vested"“Price-Vested‘ Performance Stock Option Plan

10.58 [r]
10.59[r]*     Corporate Executive Employment Agreement with Henrik C. Slipsager

10.59 [r]*     Employee Stock Purchase Plan (as amended through May 1, 2000)

10.60 [s]
10.60[s]*Amendment No. 1 to Employee Stock Purchase Plan (May 2000 Restatement)

10.61 
10.67[u]*        Amendment of Division Executive Employment Agreement -- Increase in Supplemental Executive
               Retirement Pension ("SERP") -- with Martinn H. Mandles

10.62 *        Corporate Executive Employment Agreement with Harry H. Kahn

10.63 *        Corporate Executive Employment Agreement with Jess E. Benton




                                       36

10.65 *        First Amendment of Division Executive Employment Agreement dated November 1, 2000 with
               Henrik C. Slipsager

10.66 *        Corporate Executive Employment Agreement with George B. Sundby

10.67 *        
Corporate Executive Employment Agreement with Donna M. Dell

10.68 
10.68[u]*First Amendment of Corporate Executive Employment Agreement dated November 1, 1999 with Donna M. Dell
10.69[v]*2002 Price-Vested Performance Stock Option Plan
10.70[w]*Agreement with Harry H. Kahn
10.71*Agreement with Martinn H. Mandles
10.72*Corporate Executive Employment Agreement with Jess E. Benton, III, as of November 1, 2001
10.73*Corporate Executive Employment Agreement with Henrik C. Slipsager as of November 1, 2001
10.74*Corporate Executive Employment Agreement with George B. Sundby as of November 1, 2001
10.75*Division Executive Employment Agreement with James P. McClure as of November 1, 2001
10.76*First Amendment of Division Executive Employment Agreement, amended as of September 10, 2002
10.77First Amendment to Rights Agreement, dated as of May 6, 2002, between ABM Industries Incorporated and Mellon Investor Services LLC, as successor Rights Agent
21.1Subsidiaries of the Registrant
23.1Consent of Independent Certified Public Accountants
Auditors
99.1Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.2Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


- --------------------------------------------------------------------------------
[a]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's quarterly
       report on Form 10-Q for the fiscal quarter ended April 30, 2000.

[b]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's annual report
       on Form 10-K for the fiscal year ended October 31, 1984.

[c]    Incorporated by reference to the exhibit bearing the same numeric
       description, which was filed as an exhibit to the Company's quarterly
       report on Form 10-Q for the fiscal quarter ended January 31, 1996.

[d]    Incorporated by reference to exhibit 4.1 to the Company's report on Form
       8-K dated March 17, 1998.

[e]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's annual report
       on Form 10-K for the fiscal year ended October 31, 1990.

[f]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's annual report
       on Form 10-K for the fiscal year ended October 31, 1991.

[g]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's quarterly
       report on Form 10-Q for the fiscal quarter ended July 31, 1992.

[h]    Incorporated by reference to the exhibit bearing the same numeric
       reference which was filed as an exhibit to the Company's quarterly report
       on Form 10-Q for the fiscal quarter ended July 31, 1993.

[i]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's annual report
       on Form 10-K for the fiscal year ended October 31, 1993.

[j]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's quarterly
       report on Form 10-Q for the fiscal quarter ended April 30, 1996.

[k]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's quarterly
       report on Form 10-Q for the fiscal quarter ended July 31, 1997.

[l]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's annual report
       on Form 10-K for the fiscal year ended October 31, 1994.

[m]    Incorporated by reference to exhibit 10.20 which was filed as an exhibit
       to the Company's quarterly report on Form 10-Q for the fiscal quarter
       ended April 30, 1991.

[n]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's annual report
       on Form 10-K for the fiscal year ended October 31, 1996.

[o]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's quarterly
       report on Form 10-Q for the fiscal quarter ended July 31, 1998.


                                       37


[p]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's quarterly
       report on Form 10-Q for the fiscal quarter ended April 30, 1997.

[q]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's annual report
       on Form 10-K for the fiscal year ended October 31, 1997.

[r]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's quarter report
       on Form 10-Q for the fiscal quarter ended January 31, 2001.

[s]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's quarter report
       on Form 10-Q for the fiscal quarter ended April 30, 2001.

[t]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's annual report
       on Form 10-K for the fiscal year ended October 31, 1999.

[u]    Incorporated by reference to the exhibit bearing the same numeric
       description which was filed as an exhibit to the Company's quarterly
       report on Form 10-Q for the fiscal quarter ended July 31, 2001.

* Management contract, compensatory plan or arrangement.


                                       38
[a]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended April 30, 2000.
[b]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 1984.
[c]Incorporated by reference to the exhibit bearing the same numeric description, which was filed as an exhibit to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended January 31, 1996.
[d]Incorporated by reference to exhibit 4.1 to the Company’s report on Form 8-K dated March 17, 1998.
[e]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 1990.
[f]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 1991.

41

[g]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended July 31, 1992.
[h]Incorporated by reference to the exhibit bearing the same numeric reference which was filed as an exhibit to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended July 31, 1993.
[i]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 1993.
[j]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended April 30, 1996.
[k]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended July 31, 1997.
[l]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 1994.
[m]Incorporated by reference to exhibit 10.20 which was filed as an exhibit to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended April 30, 1991.
[p]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s quarterly report on Form 10-Q for the fiscal quarter ended April 30, 1997.
[q]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 1997.
[r]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s quarter report on Form 10-Q for the fiscal quarter ended January 31, 2001.
[s]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s quarter report on Form 10-Q for the fiscal quarter ended April 30, 2001.
[t]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 1999.
[u]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s annual report on Form 10-K for the fiscal year ended October 31, 2001.
[v]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s quarter report on Form 10-Q for the fiscal quarter ended April 30, 2002.
[w]Incorporated by reference to the exhibit bearing the same numeric description which was filed as an exhibit to the Company’s quarter report on Form 10-Q for the fiscal quarter ended July 31, 2002.
 *Management contract, compensatory plan or arrangement.

42