SecProbe.io

CORRESP
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Correspondence

    551 Fifth Avenue • Suite 300

New York, NY 10176

Telephone: 212-297-9871

Facsimile: 866.422.0963

    e-mail: jim.lusk@abm.com

    James S. Lusk

Executive Vice President

and Chief Financial Officer

VIA EDGAR

June 25, 2010

Division of Corporation Finance

Securities and Exchange Commission

100 F. Street, N.E.

Washington, D.C. 20549

Attention: Cicely LaMothe, Accounting Branch Chief

    Re:

    ABM Industries Incorporated

Form 10-K as of October 31, 2008

Filed on December 22, 2008

Form 10-K for the year ended October 31, 2009

Filed December 22, 2009

Schedule 14A

Filed February 1, 2010

File No. 001-08929

Ladies and Gentlemen:

On behalf of ABM Industries Incorporated (the “Company”), this letter responds to comments raised
by the staff (the “Staff”) of the Securities and Exchange Commission with respect to the
above-referenced filing in a letter dated May 11, 2010. All references to years made in the
responses are based on the Company’s fiscal year that ends on
October 31. For your convenience, the Company’s
responses are keyed to the comments in the Staff’s letter.

Form 10-K for the year ended October 31, 2008

    1.

    We considered your responses to comment one and previous comments as they relate to the IBM
transition costs. The staff is unable to agree with the Company’s conclusion that the upfront
transition costs represent an asset that should be deferred and expensed over the term of the
agreement. If you continue to believe that a correction is not necessary, please provide a
materiality analysis under SAB 99 and SAB 108 for this specific issue.

ABM Industries Incorporated

June 25, 2010

Page 2

Response:

While the Company respects the Staff’s views about the appropriate pattern of expense recognition
for these costs, the Company continues to believe that a correction for this specific issue is not
necessary. Accordingly, at the Staff’s request, the Company has provided the following materiality
analysis under SAB 99 and SAB 108 for this specific issue as proposed by the Staff. The Company has
adjusted the previously reported 2007 financial statements to expense incurred IBM transition costs
(“Transition Costs”) of $4.8 million, reduced by the previously expensed deferred Transition Costs of $0.7
million and the income tax expense impact of such adjustments of $1.6 million. The Company has also
adjusted the previously reported 2008 financial statements to reverse the previous write-off of
Transition Costs of $2.5 million and previously expensed deferred Transition Costs of $0.7 million,
reduced by the income tax expense impact of such amounts of $1.2 million.

Quantitative Assessment

    2008

    2007

    Adjust-

    Adjust-

    (in thousands, except for per share data)

    As reported

    ment

    As adjusted

    %

    As reported

    ment

    As adjusted

    %

    Income from continuing ops

    $
    52,731

    $
    1,938

    $
    54,669

    3.7
    %

    $
    50,647

    $
    (2,525
    )

    $
    48,122

    -5.0
    %

    Net income

    45,434

    1,938

    47,372

    4.3
    %

    52,440

    (2,525
    )

    49,915

    -4.8
    %

    EPS — ContOps — Basic

    1.04

    0.04

    1.08

    3.8
    %

    1.02

    (0.05
    )

    0.97

    -4.9
    %

    EPS — ContOps — Diluted

    1.03

    0.03

    1.06

    2.9
    %

    1.00

    (0.05
    )

    0.95

    -5.00
    %

    Adjusted EBITDA from ContOps

    133,456

    672

    134,128

    0.5
    %

    91,493

    672

    92,165

    0.7
    %

    Adjusted income from ContOps

    56,401

    410

    56,811

    0.7
    %

    48,800

    410

    49,210

    0.8
    %

    Adjusted diluted EPS

    1.10

    0.01

    1.11

    0.9
    %

    0.96

    0.01

    0.97

    1.0
    %

    Total assets

    1,575,944

    (588
    )

    1,575,356

    0.0
    %

    1,132,198

    (2,525
    )

    1,129,673

    -0.2
    %

    Total equity

    $
    644,051

    $
    (588
    )

    $
    643,463

    -0.1
    %

    $
    605,758

    $
    (2,525
    )

    $
    603,233

    -0.4
    %

The adjustments in 2008 represent the reversal of the Transition Costs that were written-off in
2008 and the annual expense charge related to the Transition Costs that was recorded. The
adjustments in 2007 represent the Staff’s proposed expensing of the Transition Costs as incurred,
offset by the reversal of the annual expense charge that was recorded. The adjustments made to
adjusted EBITDA and adjusted income from continuing operations in both 2008 and 2007 exclude the
adjustments to expense the Transition Costs as incurred, as those charges would have been excluded
from the Company’s presentation of adjusted EBITDA and adjusted income from continuing operations. This is consistent with the Company’s treatment of Transition Costs that
were expensed as incurred in 2006. However, adjusted EBITDA and adjusted income from continuing
operations includes the reversal of the annual Transition Costs expense of $0.7 million and $0.4
million (net of income taxes of $0.3 million), respectively, in both 2008 and 2007, since these
expenses were previously included in earnings. The impact on total assets and equity in 2008 relates
to the proposed write-off of the remaining deferred Transition Costs of $0.6 million, net of taxes
of $0.3 million, at October 31, 2008.

ABM Industries Incorporated

June 25, 2010

Page 3

The Company does not believe that the adjustments to expense the Transition Costs is quantitatively
material in 2008 or 2007. Further, consistent with the provisions of SAB 99, quantifying a
misstatement, in percentage terms, is only the first step in evaluating materiality, and cannot be
used as a substitute for a full analysis of all relevant considerations. Accordingly, the Company
has assessed the qualitative considerations below.

Qualitative Considerations

In evaluating the total mix of information available, the Company notes the absence of any
qualitative factors that would cause the adjustment to be material. The qualitative factors
believed by the Company to be relevant to this assessment are summarized below.

    •

    The adjustment does not mask a change in earnings or other trends, as illustrated below.
Expensing the Transition Costs as incurred would not have meaningfully impacted any of the
Company’s key financial metrics in 2008 and 2007. In addition, this adjustment would not
change reported income into a loss.

Income from Continuing Operations

    *

    Includes a non-recurring benefit of approximately
$37 million related to the World Trade Center insurance
gain.

ABM Industries Incorporated

June 25, 2010

Page 4

Net Income

    *

    Includes a non-recurring
benefit of approximately $45 million related to the World Trade
Center insurance gain, of which
approximately $8 million related to discontinued operations.

    •

    The adjustment does not hide a failure to meet analysts’ consensus expectations. The
analysts that followed the Company during 2007 and 2008 developed their estimates
predominantly on adjusted continuing earnings and continuing operating cash flows and did
not provide estimates based on net income. The adjustments had no impact on previously
reported operating cash flows. Further, as noted above, since the Transition Costs would
have been excluded from adjusted income from continuing operations and adjusted EBITDA, the
related adjustments to the Company’s adjusted earnings would not have impacted the
analysts’ consensus expectations.

    •

    The Transition Costs are considered corporate overhead and thus are allocated to the
Company’s corporate segment. Analysts assess the Company’s performance primarily based on
the results of its operating segments, excluding Corporate, which is not viewed as having a
significant role in determining the Company’s expected future performance.

    •

    The Staff’s proposed accounting for the Transition Costs would essentially accelerate
the recognition of expenses from 2008 to 2007. The Company believes that investors were
primarily focused on the long-term transformational importance of the costs incurred under
the IBM contract rather than the impact of those costs on the Company’s earnings in any
single period. From the beginning of the IT transformation in 2006, investors have been
transparently informed about the Company’s significant upfront and ongoing expenditures
under the IT outsourcing arrangement with IBM, since such cash flows and commitments have
been appropriately recognized and disclosed.

ABM Industries Incorporated

June 25, 2010

Page 5

    •

    The Company’s historical accounting was based upon its good faith interpretation of GAAP
in the absence of a prescriptive authoritative accounting model for executory contracts,
and not the result of an intentional misstatement.

    •

    Other qualitative considerations:

    •

    The amount of the Transition Costs was based on an agreement with IBM and was
not subject to an estimate;

    •

    Expensing Transition Costs would not affect compliance with any of the
Company’s loan covenants or conceal an unlawful transaction; and

    •

    Recognizing the Transition Costs would not have resulted in a significant
overall increase to management’s compensation during the period from 2007 through 2008.
It should be noted that management’s compensation is based on both financial and
non-financial objectives. These adjustments would have resulted in an decrease to the
financial objectives aspect of management’s compensation in 2007, which would have been
substantially offset by an increase in 2008. Additionally, the Company can not predict
the reaction that the adjustments would have had on the compensation committee’s
decisions related to non-financial objectives.

Conclusion

The Company believes that it is not probable that the judgment of a reasonable person relying on
the information would have been changed or be influenced by expensing the Transition Costs as
incurred. Accordingly, the Company does not believe that the previously issued 2008 and 2007
financial statements would be materially impacted (quantitatively or qualitatively) by expensing
the Transition Costs as incurred, as proposed by the Staff.

    2.

    We considered your responses to comment one and previous comments as they relate to the
goodwill impairment analysis associated with your Lighting division during 2007. The staff is
unable to agree with the Company’s single scenario methodology for assessing goodwill
impairment as of October 31, 2007, and we continue to question your conclusions. Please
confirm or advise whether your auditors concurred with your methodology. Additionally, if you
continue to believe that a correction is not necessary, please provide a materiality analysis
under SAB 99 and SAB 108 for this specific issue.

Response:

The Company respects the Staff’s views about the timing of the recognition of the impairment charge
related to goodwill associated with the Company’s discontinued Lighting segment. The Company
continues to believe that a correction for this specific issue is not necessary. Accordingly, at
the Staff’s request, the Company has provided the following materiality analysis under SAB 99 and
SAB 108 for this specific issue, adjusting the Company’s previously reported financial statements
to assume that the timing of the goodwill impairment charge of $4.5 million ($4.0 million, net of
taxes), which was recorded during the quarter ended April 30, 2008, was recognized as of October
31, 2007, as proposed by the Staff.

ABM Industries Incorporated

June 25, 2010

Page 6

The Company has been informed by its auditors
that they did not object to the use of a discounted cash flow approach to estimate fair value or
to the Company’s conclusion that the goodwill relating to the Lighting reporting unit was not impaired as of October
31, 2007. However, the Company has also been informed that, although the auditors did not rely
solely on the Company’s valuation of the Lighting reporting unit (because they believed that
certain assumptions used in the Company’s valuation were not adequately supportable), their
conclusion was based upon the cumulative evidence evaluated (which included the unsolicited offer
and other indications of interest, as previously discussed with the Staff). The Company further
advises the Staff that this matter was not reported by its auditors as a disagreement in their 2007
SAS 61 communications. The Company reminds the Staff that the finance personnel responsible for the Company’s financial
statements in 2007 are no longer with the Company.

Quantitative Assessment

In the Company’s 2008 Form 10-K, the operating results of the Company’s Lighting segment were
presented as discontinued operations. Therefore, the adjustment would have no impact on income from
continuing operations, adjusted income from continuing operations, adjusted EBITDA, or cash flows.
From an income statement perspective, the adjustment would only impact discontinued operations and
net income as shown below.

    2008

    2007

    Adjust-

    Adjust-

(in thousands, except for per share data)

    As reported

    ment

    As adjusted

    %

    As reported

    ment

    As adjusted

    %

    Discontinued operations

    $
    (7,297
    )

    $
    4,000

    $
    (3,297
    )

    -54.8
    %

    $
    1,793

    $
    (4,000
    )

    $
    (2,207
    )

    -223.1
    %

    Net income

    45,434

    4,000

    49,434

    8.8
    %

    52,440

    (4,000
    )

    48,440

    -7.6
    %

    EPS — DiscOps — Basic

    (0.14
    )

    0.07

    (0.07
    )

    -50.0
    %

    0.04

    (0.08
    )

    (0.04
    )

    -223.1
    %

    EPS — DiscOps — Diluted

    (0.14
    )

    0.08

    (0.06
    )

    -57.1
    %

    0.04

    (0.08
    )

    (0.04
    )

    -223.1
    %

    Goodwill

    535,772

    —

    535,772

    0.0
    %

    234,177

    (4,500
    )

    229,677

    -1.9
    %

    Total assets

    1,575,944

    —

    1,575,944

    0.0
    %

    1,132,198

    (4,000
    )

    1,128,198

    -0.4
    %

    Total equity

    $
    644,051

    $
    —

    $
    644,051

    0.0
    %

    $
    605,758

    $
    (4,000
    )

    $
    601,758

    -0.7
    %

The Company believes that it is important to note that (i) the Company does not believe that the
dollar amount of the adjustment ($4.0 million, net of taxes) is quantitatively material, and (ii)
due to the small denominator, the percentage impacts of the adjustments related to discontinued
operations data are mathematically amplified. Further, consistent with the provisions of SAB 99,
quantifying a misstatement, in percentage terms, is only the first step in evaluating materiality,
and cannot be used as a substitute for a full analysis of all relevant considerations. Accordingly,
the Company has assessed the qualitative considerations below.

ABM Industries Incorporated

June 25, 2010

Page 7

Qualitative Considerations

In evaluating the total mix of information available, the Company notes the following qualitative
factors believed to be relevant to this assessment.

    •

    The proposed adjustment was not the result of an intentional misstatement, but rather
relates to a judgmental accounting estimate. In preparing its 2007 consolidated financial
statements, the Company made a good faith effort to make its best estimate of the fair
value of the Lighting reporting unit, considering all available facts and circumstances
believed to be relevant at that time.

    •

    The Company does not believe that the adjustment masks a change in earnings or other
trends, as illustrated below (which indicates that, except for the one-time benefit recognized
in 2006 related to the World Trade Center insurance gain, the Company generated approximately
$50 million of net income during