12.

Income Taxes

The effective tax rates on income from continuing operations for the three months ended July 31, 2011 and 2010 were 26.1% and 38.6%, respectively. The effective tax rates on income from continuing operations for the nine months ended July 31, 2011 and 2010 were 32.2% and 38.9%, respectively. The provision for income taxes for the three and nine months ended July 31, 2011 includes a benefit of $4.7 million related to the re-measurement of certain unrecognized tax benefits based on new information available.

At July 31, 2011, the Company had unrecognized tax benefits of $97.4 million, of which $97.2 million, if recognized in the future, would affect its effective tax rate. Approximately $1.0 million of the Company’s unrecognized tax benefits has been recognized as a current liability. The Company’s unrecognized tax benefits decreased by $4.3 million during the nine months ended July 31, 2011, primarily due to the re-measurement discussed above. It is reasonably possible that the Company’s unrecognized tax benefits could decrease between $1.0 million and $6.0 million over the next twelve months. The Company includes interest and penalties related to unrecognized tax benefits in income tax expense. As of July 31, 2011, the Company had accrued interest related to uncertain tax positions of $1.0 million.

The Company’s major tax jurisdiction is the United States. ABM, OneSource Services, Inc. and the Linc C Corporation’s U.S. federal income tax returns remain open for examination for the periods ending October 31, 2006 through October 31, 2010, March 31, 2000 through November 14, 2007 and December 31, 2007 through December 31, 2010, respectively. ABM is currently being examined by the Internal Revenue Service (“IRS”) for the tax years 2006 – 2008 and REEP, Inc. (a Linc C Corporation) is currently being examined by the Internal Revenue Service for the tax years 2008 – 2009. The IRS field audit related to the 2006 – 2008 ABM Federal income tax returns was completed during the three months ended July 31, 2011. Due to an income tax refund generated from a carry-back claim, the audit has been submitted to the Joint Committee on Taxation (“Committee”) for review. Although the Company expects review and approval by the Committee within the next twelve months, there can be no assurance about the timing or ultimate outcome. The Company does business in all 50 states, significantly in California, Texas, and New York, as well as in various foreign jurisdictions. In major state jurisdictions, the tax years 2006 – 2010 remain open and subject to examination by the appropriate tax authorities. The Company is currently being examined by Illinois, Michigan, Utah, New Jersey, Massachusetts, New York, California, Texas, and Puerto Rico.