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Acquisitions
 9 Months Ended
Jul. 31, 2018
Business Combinations [Abstract]  
Acquisitions
ACQUISITIONS
 
 
Acquisition of GCA during 2017
On September 1, 2017, we acquired all of the outstanding stock of GCA, a provider of integrated facility services to educational institutions and commercial facilities, for a purchase price of approximately $1.3 billion. As described in Note 12, “Segment Information,” we integrated GCA’s operations into our industry group model effective November 1, 2017. As a result of the acquisition, we are now a leading facilities services provider in the education market.

Consideration Transferred
(in millions, except per share data)
 
 
Shares of ABM common stock, net of shares withheld for taxes
 
9.4

ABM common stock closing market price at acquisition date
 
$
44.63

Fair value of ABM common stock at closing
 
421.3

Cash consideration(1)
 
837.5

Total consideration transferred
 
$
1,258.8

(1) Revised during the second quarter of 2018 to reflect a post-closing purchase price adjustment related to a net working capital settlement.
Preliminary Purchase Price Allocation
Our preliminary purchase price allocation is based on information that is currently available, and we are continuing to evaluate the underlying inputs and assumptions used in our valuations. Accordingly, the purchase price allocation is subject to, among other items: further analysis of tax accounts, including deferred tax liabilities, and final valuation of identifiable intangible assets. During the nine months ended July 31, 2018, we refined our valuation of customer relationships and certain other estimates.

The following table presents our preliminary estimates of fair values of the assets we acquired and the liabilities we assumed on the date of acquisition as previously reported at year-end 2017 and at the end of the third quarter of 2018.

 
As reported at
 

 
As reported at
(in millions)
 
October 31, 2017
 
Adjustments
 
July 31, 2018
Cash and cash equivalents
 
$
2.5

 
$
(2.3
)
 
$
0.2

Trade accounts receivable(1)
 
118.1

 
(0.4
)
 
117.7

Prepaid expenses and other current assets
 
10.3

 
(0.3
)
 
10.1

Property, plant and equipment
 
41.4

 
0.1

 
41.5

Customer relationships(2)
 
340.0

 
(10.0
)
 
330.0

Trade names(2)
 
9.0

 
—

 
9.0

Goodwill(3)
 
933.9

 
0.3

 
934.2

Other assets
 
4.2

 
(0.2
)
 
4.0

Trade accounts payable
 
(9.1
)
 
(0.4
)
 
(9.6
)
Insurance reserves
 
(35.5
)
 
(0.6
)
 
(36.1
)
Income taxes payable
 
(16.5
)
 
8.2

 
(8.3
)
Accrued liabilities
 
(36.5
)
 
3.3

 
(33.1
)
Deferred income tax liability, net
 
(92.6
)
 
—

 
(92.6
)
Other liabilities
 
(8.1
)
 
—

 
(8.1
)
Net assets acquired
 
$
1,261.3

 
$
(2.4
)
 
$
1,258.8

(1) The gross amount of trade accounts receivable was $122.0 million, of which $4.3 million is currently expected to be uncollectible.
(2) The amortization periods for the acquired intangible assets are 15 years for customer relationships and 2 years for trade names.
(3) Goodwill is largely attributable to value we expect to obtain from long-term business growth, the established workforce, and buyer-specific synergies. This goodwill is not deductible for income tax purposes.
Financial Information
For the three and nine months ended July 31, 2018, we recorded revenue related to GCA of $260.0 million and $768.0 million, respectively, and operating profit of $9.8 million and $22.3 million, respectively. The following table presents our unaudited pro forma results as though the GCA acquisition occurred on November 1, 2015. The pro forma results include adjustments for the estimated amortization of intangible assets, interest expense, and the income tax impact of the pro forma adjustments at the statutory rate of 41%. These pro forma results do not reflect the cost of integration activities or benefits from expected revenue enhancements and synergies. Accordingly, the pro forma information is not necessarily indicative of the results that would have been achieved if the acquisition had been effective on November 1, 2015.
 
 
Three Months Ended
 
Nine Months Ended
(in millions)
 
July 31, 2017
 
July 31, 2017
Pro forma revenue
 
$
1,573.2

 
$
4,712.5

Pro forma income from continuing operations
 
36.1

 
82.6


These pro forma results were adjusted to exclude $2.2 million of acquisition-related costs incurred during the three and nine months ended July 31, 2017, which are included in selling, general and administrative expenses in the accompanying unaudited consolidated statements of comprehensive income (loss).
Other 2017 Acquisitions
Effective December 1, 2016, we acquired all of the outstanding stock of Mechanical Solutions, Inc. (“MSI”), a provider of specialized HVAC, chiller, and plumbing services, for a purchase price of $12.6 million. The purchase price includes up to $1.0 million of undiscounted contingent consideration that is based on the expected achievement of certain pre-established revenue goals. See Note 6, “Fair Value of Financial Instruments,” regarding our valuation of contingent consideration liabilities. As of December 1, 2016, the operations of MSI are included in our Technical Solutions segment.

Effective December 1, 2016, we also acquired all of the outstanding stock of OFJ Connections Ltd (“OFJ”), a provider of airport transportation services in the United Kingdom, for a purchase price of $6.3 million. As of December 1, 2016, the operations of OFJ are included in our Aviation segment.
Pro Forma and Other Supplemental Financial Information
Except for GCA, we do not present pro forma and other financial information for our other acquisitions, as they are not considered material business combinations individually or on a combined basis.