Traditional values. Visionary thinking.2006 ABM Industries Annual Report to the Stockholders

Table of Contents

Five-Year Selected Financial Data 1

President’s Letter 2

Operations Reports

ABMJanitorialServices 18

ABMSecurityServices 20

AmpcoSystemParking 22

ABMFacilityServices 24

AmtechLightingServices 26

Financial Reports 28

Board and Executive Officers 33

Traditional values. Visionary thinking.

“As we stand here today, a Fortune 1000, New York Stock Exchange listed company with $2.7 billion in sales, we must always keep in mind the values that allowed us to reach this level of success. These values – integrity, trade competence, respect for people, whether they are customers, employees, stockholders or the general public, and recognition of our responsibilities to these people – will always be the cornerstones of our operations and planning.

But “Traditional Values” does not imply traditional structure or traditional processes and methods. The world of today has changed in many ways from the world that Morris Rosenberg faced in 1909. Corporate outsourcing was an undeveloped concept, single sourcing on a regional or national level was not practical, technology and communications were limited and the demands placed on organizations by government regulation were far less extensive. Had the past “visionaries” of ABM not recognized the need to evolve, it is unlikely that we would exist as a company today. Indeed most of the companies that ABM considered major national competitors as recently as the 1980’s do not exist today.”

— Henrik C. Slipsager President and Chief Executive Officer

Year ended October 31 2006 2005 2004 2003 2002(Inthousands,exceptpersharedataandratios)

Salesandotherincome $ 2,712,668 $2,586,566 $2,375,149 $2,222,367 $2,021,698Incomefromcontinuingoperations 93,205 43,554 29,644 34,598 41,489Netincome $ 93,205 $ 57,941 $ 30,473 $ 90,920 $ 44,354Incomefromcontinuingoperationspercommonshare Basic $ 1.90 $ 0.88 $ 0.61 $ 0.71 $ 0.84 Diluted $ 1.88 $ 0.86 $ 0.59 $ 0.69 $ 0.81Averagecommonandcommonequivalentshares Basic 49,054 49,332 48,641 49,065 49,116 Diluted 49,678 50,367 50,064 50,004 51,015Dividendsdeclaredpercommonshare $ 0.44 $ 0.42 $ 0.40 $ 0.38 $ 0.36Stockholders’equity $ 541,247 $ 475,926 $ 442,161 $ 430,022 $ 372,194Commonsharesoutstanding 48,635 49,051 48,707 48,367 48,997Stockholders’equitypercommonshare $ 11.13 $ 9.70 $ 9.08 $ 8.89 $ 7.60Workingcapital $ 312,456 $ 246,379 $ 230,698 $ 244,671 $ 214,876Netoperatingcashflowsfromcontinuingoperations $ 130,367 $ 44,799 $ 64,412 $ 50,746 $ 95,583Currentratio 1.98 1.90 $ 1.91 $ 1.95 $ 1.94Totalassets $ 1,016,274 $ 903,710 $ 842,524 $ 804,306 $ 712,550Tradeaccountsreceivable–net $ 383,977 $ 345,104 $ 307,237 $ 278,330 $ 285,827Goodwill $ 247,888 $ 243,559 $ 225,495 $ 186,857 $ 162,057Property,plantandequipment–net $ 32,185 $ 34,270 $ 31,191 $ 31,738 $ 35,533Capitalexpenditures $ 14,065 $ 17,738 $ 11,460 $ 11,535 $ 7,212Depreciation $ 14,981 $ 13,918 $ 13,024 $ 13,673 $ 13,674

Five-year Selected Financial Data

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$ 0.50

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02 03 04 05 060

$ 500

$ 1,000

$ 1,500

$ 2,000

$ 2,500

$ 3,000

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Intra-day Stock Price High

Dividends Declared per

Common ShareSales ($ millions)

Income from Continuing

Operations per Diluted Share (1)

(1)IncomefromContinuingOperationsperDilutedShareforthefiscalyearendedOctober31,2006is$1.88,whichincludes$0.91fromthesettlementoftheWorldTradeCenter(WTC)insuranceclaims.

WTCsettlementincomeper

dilutedshare

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Dear Stockholders, Employees and Other Friends of ABM:

The President’s Perspective

Fiscal2006wasanexcellentyearforABM.Weenteredtheyear facingchallenges in thefirstquarter,mostof them lingeringissuesfromfiscal2005.HoweverIampleasedtosaythatoverthecourseof 2006theCompanydemonstratedsteadygrowthandim-provement,notonlydeliveringsolidfinancialresults,butestablish-ingorcontinuingtrendsinallbusinesssegmentsthatareverystrongandbodewellforanexcitingandsuccessfulfiscal2007.Wecontinuetostriveforimprovedmargins,asdemonstratedbytheresultsthatmanyof thebusinessunitshavereported,andcontinuetofocusonthestrategicinitiativesthatwillpositionustoremainintheforefrontof ourindustry.Ourorganicgrowthisstrongerthanithasbeeninyearsandwecontinuetoincreasedividends.

TheCompanyreportedincomefromcontinuingoperationsduringthefiscalyearwhichendedOctober31,2006of $93.2mil-lion($1.88perdilutedshare)onsalesandotherincomeof $2.71bil-lion,comparedto$43.6million($0.86perdilutedshare)onsalesandotherincomeof $2.59billionforlastyear.Theincreaseinincomeincludesthe$45.1millionforthesettlementof theWorldTradecen-terinsuranceclaims.

The Year in ReviewABM Janitorial Services, long a cornerstone of the ABM

family,continueditsstrongperformancebydeliveringdoubledigitbottom linegrowth infiscal2006aspartof a continuingperfor-mance trend.Therewas substantial successpenetratingcustomerbasesrequiringspecializedormoretechnicalservices,suchashigh-tech,pharmaceuticalandfinancialservices.JanitorialServicesalsocontinued todevelopandrollout innovativenewprograms, suchastheQMS24-7qualityprogramandourGreenCareprogram.Fiscal2006sawanincreaseinmajornationalengineeringsubcon-tractingawards.ABMFacilityServicesthroughitsengineeringunit,ABMEngineeringServices,posteddoubledigittopandbottomlinegrowthforthethirdyearinarow.ABMEngineeringistheonlyfa-cilitymaintenancecompanytohaveachievedandmaintainedISOcertification for all services nationally. At Ampco System Parkingtheanticipatedgrowththatbeganwiththeoverallimprovementof theeconomyin2004hascontinuedthroughfiscal2005and2006andtheyarewellpositionedforanexcellentyearin2007.AmpcocontinuestobeanindustrypioneerandleaderinitsinvestmentinbothpeopleandtechnologythroughprogramssuchasSCORE4,asophisticatedautomatedfeecollectionsystem(whichoptimizesrev-enueandreportingtechnology)andSOP(ournewesttrainingtoolandreferenceguideformanagers).TheSecuritysegmentbeganfis-cal2006withcontinuingchallengestiedtotheissuesidentifiedwith

oursubsidiary–SecurityServicesof America(SSA).Oureffortstoconsolidateoperations,restructurecontracts,closebranches,andre-alignmanagement,restoredmomentum,whichenabledthisopera-tiontoreturntoprofitabilitybythesecondhalf of theyear.AmtechLightingServicesexperiencedadifficultyear.However,theywereabletobuildpositivemomentumthroughtheyearandendonahighnote,withindividualsuccessesbuildingtocreatethelargestbacklogof workinthehistoryof theCompanyatyear’sclose.Thismilestoneisasignificantsignof healththatservestoheightenmyoptimismforareturntosolidperformancein2007forAmtechLighting.

Insummary,for2006weachieveddoubledigitgrowthinfouroutof fiveof ouroperatingsegments.Weendedtheyearwithastrongfourthquarterandthroughanumberof keyprograms,en-hancedourleadershippositionandcompetitivestaturewithinthefacilityservicesindustry.InmytenureaspresidentandCEO,Ihaveneverfeltbetteraboutthefutureof ourcompany.

Transitions InMarchof 2006,MartinnMandlesresignedasChairman

of theBoardof Directorsof ABMIndustriesIncorporated.Martinnremainsamemberof theBoardof Directors.HeissucceededasChairmanbyMaryellenHerringer,amemberof andvaluablecon-tributortotheBoardof Directorssince1993.IcongratulateMaryel-lenandlookforwardtohercontinuedguidanceandsupport.

Thisisalsoatimeof significantchangeformanyotherlongtermleadersof ABM.TomBarnett,Presidentof AmpcoSystemParkingandanABMexecutive for35years,retiredthisyear.Hewasreplacedbyhislong-timeprotégé,RichKindorf.Tomplayedavitalrole in thegrowthof AmpcoandABM,wewishhimtheverybest.JamesScranton,Presidentof ABMEngineeringServices,madethedecisiontoretireinfiscal2007.Jimisanotheroneof thoseleaderswhose30plusyearsof serviceandcontributionshelpedtakeuswherewearetoday,andweareextremelygratefulforthatlead-ership.JimwillbereplacedbyMikeLathaminMayof 2007.WeexpectEngineeringtocontinueitsrapidgrowthandtoenhanceitsstatusasthepremierthirdpartyproviderof on-siteengineers.Tofurther the consolidation of American Commercial Security Ser-vicesandSSA,wehavenamedLarrySmithasthenewPresidentof thecombinedABMSecuritybusinesses.LarrywasformerlytheSe-niorVicePresidentof AmericanBuildingMaintenanceCompany,headingABM’sJanitorialbusinessintheSouthwest.Larry’sstrongcustomerrelationshiphistorycoupledwithhispriorsecurityexperi-encewillservetohelphimasheexpandsthesebusinesses,andIamconfidentof hissuccess.

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Important Milestones and Moving into the Future

ThereisnodoubtthatthecomingyearswillbeexcitingonesforABM,andwehavepassedsomeimportantmilestonesthatposi-tionus for that future.Certainlyputting theWorldTradeCenterinsuranceissuesfirmlybehindusandsettlingthoseclaimsnotonlyenhancesourcashpositionbutallowsagreaterdegreeof focusbyseniormanagementaswemoveahead.Of greatimportancetousisourcertificationthisyearunderSection404of theSarbanes-OxleyAct.Thisisakeyindicatorof ourstressonethicsandaccountability.Inbusiness,asinpersonallife,entitiesareknownbythecompanytheykeepandsurroundingoneself withhighcaliberstrategicpart-nersisnotonlydesirabletoday,itiscritical.Wewishtobeknownasthebestof partnersforallof ourcustomers.

Anothercornerturnedisoursteadilyimprovingcompeti-tivenessthroughthecombinedeffortsof ourinternalRiskMan-agementgroup,ourfieldteamsinthesubsidiariesandanewand better managed third party administrator, allof whichcombinewithnewlegislationtoimproveourinsurancepicturegoingforward.AsIplanforthefutureIcantellyouthatwewillcontinuetobuildorganizationsfocusedonorganicgrowth.Wewillalsobeaggressiveinourapproachtoac-quisitions.Aswelookaheaditisalsoimportanttonotethatwemustfollowourcustomersasglobalizationaccelerates.IampleasedtosaythatourBoardof Directorsapprovedastrategythatcallsforcustomerdriveninternationalexpansion.

Thank youI would very much like to thank our employees across the

countryfortheircontributionsthispastyear.Asisalwaysthecase,itiswhatyoudothatmakesallthingspossible.IwouldalsoliketothanktheBoardof Directorsandthestockholdersforthesupportthat Ihavereceived.Aspecialnoteof thanks toour Chairman,MaryellenHerringer,forherguidanceandsupport.

Traditional Values. Visionary Thinking.Ihavewrittenoftenandat length fromtimeto timeabout

howthisconceptisimportanttoallof usatABM.Butthetruetestiswhetheryouseeitinaction.Ihopethatyourecognizeitinourwillingnesstoinvestinourpeopleandprocesses,whetheritisanewtrainingprogramorthesignificantinvestmentwearenowmakinginITtechnology.IhopeyouseeitintheobviouspridewetakeinourABMfamily.Ialsohopethatyouwilltakenotewhenothersapplaudit,suchasourrecentrecognitionasa“Top25”CaliforniaCorpora-

tionforWomenDirectorsandExecutiveOfficers.OnthefollowingpagesIwouldliketosharewithyoua

senseof whatthosevaluesmeantous.

Sincerely,

HenrikC.SlipsagerPresidentand

Chief ExecutiveOfficer

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Integrity

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“Integrity is not a 90 percent thing, not a 95 percent thing; either you have it or you don’t.”

– Peter Scotese

In1908attheheightofadevastatingfinancialdepressionthathittheentire

countryandespeciallythecityofSanFrancisco.Integrityandhisgoodnamewas

essentiallyallthatABMfounderMorrisRosenberghadtokeephimgoing.Itwas

duringthistimethatMorrisbuilthisbusinessfromahumblestart–justafew

simpletoolsandanunflinchingbeliefthathecouldbuildacompanyunlikeany

otheronafoundationofhonestyandintegrity.

The ABM Industries of today is proud to uphold Morris’ early tradition and

uncompromisingethicalstandards.“Doingtherightthing”isnotjustanoptionaswe

goaboutthedailyoperationofourbusiness,fromoverseeingthefinancialreporting

process in ABM’s corporate controller’s department to ABM employee-customer

interactionsatthesubsidiarycompanylevel.Wetreatourcustomersandeachother

withaclearlydefinedsenseofintegrity.

MorrispainstakinglybuiltABM’sbusinessrelationshipsoneatatime,andweareproud

tosaythatmanyofthoseoriginalrelationshipsstillexisttoday,underscoringthefact

thatABMremains100percentcommittedtohisidealofdoingbusinesswithhonesty,

integrityandvision.

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Trade competence

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“The quality of your work, in the long run, is the deciding factor on how much your services are valued by the world.”

— Orison Swett Marden

ThevalueweplaceontradecompetenceatABMisunequivocally

high.Asakeyprovideroffacilityservicestocustomersallover

theUnitedStates,thecontinuedsuccessofourorganizationis

directlylinkedtotheprofessionalismandexpertiseofourserviceemployees.

Being merely “competent” does not meet expectations atABM.

Beinghighlyskilledandthebestinallthatwedoaremandatory.For

itistheoverallqualityofourwork,dayinanddayout,thatmakesthe

differencetoourcustomers.Itisadifferencethatcanbeexperienced

wheneveryoucomeintocontactwithoneofourtradespeople–from

thesenseofpridewithwhichtheyperformtheirresponsibilitiestothe

confidentattitudeofahighlytrainedprofessionalwhichtheybringto

everytask.ItistheABMdifference.

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Investment

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“Treat people as they are, and they will remain as they are. Treat them as they could be, and they will become what they should be.”

– Jimmy Johnson

Weinvest inthebesttoolsandinternalsupportsystemsto

ensurethatourcompanyremainsaleader,butweunderstand

thatthesethingsremainjusttools.Ourgreatestinvestmentis

theonethatwemakeinouremployees.

AtABM,everydayisanewbeginning,andeverymomentanew

possibility.Ouremployeesarethelifeforceofourcompany,andour

commitmenttothemisevidencedbythewaywerunourbusiness.

Every employee who joins our company brings a particular work

history.Withouremphasisontraining,educationandcommunication

skills,ABM supports employees in attaining their current goals and

establishingfar-reachingnewones.

We continue to invest in the professional development of our

employees.Webelieveinthegreatnessthatresidesinsideeveryhuman

being.Stayingconnectedwithouremployees—helpingthemachieve

theirfullpotentialandrealizetheirdreams—isnotonlyourpriority,

butalsoourmission.

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Respect for people

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Every human being, of whatever origin, of whatever station, deserves respect. We must each respect others even as we respect ourselves.

— U Thant

Havingatruesenseoftheinherentworthofeveryindividual,

even in a company with approximately 75,000 employees,

isessential toABM’s long-termwellbeing,aswellas to the

continuedhealthofourworld.

Whileagoodcompanyisbuiltonqualityserviceandasolid

infrastructure,exceptionalpeoplecancreateagreatcompany.

Fromitsverybeginningnearlyacenturyago,ourorganization

hasoperatedfromaplaceofdeeprespectfortheemployees

whoworksopurposefullytoachievethegreatergoodforour

customersandtobringoutthebestineachother.

Webelievethatcorporationscanpositivelychangetheworldwe

livein,andthattheverybasisofhumangrowthandprogress

comes from the respect we have for ourselves and for each

other.We respectouremployees for theirdiversity, creativity,

visionandworkethic.

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Recognition of Responsibilities

“The price of greatness is responsibility.”

— Winston Churchill

Thelargeranorganizationis,thegreatertheresponsibilities.Asoneofthelargest

facilityservicesproviderslistedontheNewYorkStockExchange,ABMIndustries’

listofresponsibilitiesisdetailedandeverexpanding.

Weareresponsiblenotonlyforensuringthesatisfactionofourcustomers,butalsofor

runningacompanythatisfiscallyandethicallysound.Also,asaproviderofjanitorial,

engineering,parking,security,lightingandotherfacilityservices,weareresponsiblefor

thesafetyof thousandsofemployees.Recognizing these typesof responsibilitiesand

adaptingourbusinessplantocarrythemoutensuresnotonlyourownsuccess,butour

customers’successaswell.

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13

Responsiveness

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”The golden rule for every businessman is this: Put yourself in your customer’s place.”

— Orison Swett Marden

Whatdoesacustomerexpect?It’sasimplequestiontoask,buttheansweris

sometimescomplicated.

AtABMwetrytoexamineeveryservicesituationfromtheperspectiveofevery

customer.Weknow thatexpectations change,and thata client’s concernsand

needsmaybedifferentfromonedaytothenext.AndthatplaysintooneofABM’s

greateststrengths,ourabilitytoanticipatetrendsandplanourserviceresponses

accordingly.

Whatdoourcustomersreallyexpect?Thatwewillapproacheverytaskwithaquiet

confidenceandingenuity,andwithopenlinesofcommunicationandresponsiveness

ineveryinteraction.Theywantustosharetheirvision,theirgoals,andtoanticipatetheir

long-termneeds.Additionally,theyalsoneedustomanagetheirday-to-dayconcerns,

evenasweworkwiththemtodevelopmeanstocustomizeourserviceinwaysthatwill

meettheirspecificandoften-changingrequirements.

Inthisworldofconstantmotionandrapidinteraction,itmaybeeasytotakethecustomer’s

needsforgranted.ButnotatABM.Meetingclientneedsisthefoundation

ofourserviceplatformandthebackboneofourbusiness.

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Operations Reports

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We’ve developed our service expertise by evolving and adapting to the changing needs of our customers over the course of nearly a century.

Subsidiary OverviewWith 50,000 employees operating from 111 branch offices

locatedacrosstheUnitedStates,ABMJanitorialServicesprovidesinnovativecleaningprogramstoadiversecustomerpopulation.Cus-tomersincludeClassAcommercialofficeproperties,high-techin-dustrial,pharmaceutical,collegeanduniversitycampuses,medical,datacentersandfinancialinstitutions,amongothers.

While2005wasayearmarkedbyseveralacquisitions,in2006ABMJanitorialServicesgrewprimarilyfromwithin,andinthepro-cessexperienceda20percentprofitgrowth;duemostlytosuccesseswithhigh-tech,pharmaceuticalandfinancialmarketclients.Thesesaleswinshaveoutpacedlossesexperiencedinourtraditional,lower-marginclientbase,andareattributableinlargemeasuretobetterriskmanagementandlowerinsurancecosts.

Top AchievementsInJuneABMJanitorialServicescelebratedamulti-year,multi-

milliondollarcontractrenewalwithSaltRiverProject(SRP)inAri-zona,thenation’sthird-largestpublicpowerutility.Theprojectcov-erscomprehensivejanitorialserviceandmaintenanceformorethan1millionsquarefeetatmultipleSaltRiverProjectfacilitiesthrough-outa100-squaremileradiusinPhoenix,anddramaticallyillustratesourgrowthcapabilityinunique,complexcleaningenvironments.

Industry TrendsWecontinuedtobenefitfromtheindustrytrendof outsourc-

ing facility services to a multiple-service provider. ABM JanitorialServices worked closely with ABM’s other operating segments inprovidingavarietyof custodialservicesinmajormarkets,whileuti-lizingproven,andqualifiedsubcontractors inoutlyingareas.Thishasbeenaparticularlystrongtrendinthemanufacturingandtele-communicationsindustries.

Theconsolidationof vendorsandservicesintonationalac-countstoachievecostreductionswasalsoarisingtrendthatwepre-paredforandembraced.Ourextensivebranchnetworkremainstheindustryprototype,servingcustomerswithanalreadyestablishedna-tionalsupplyandequipmentvendornetworkaswellasutilizingtheessentialdistributionsystemsalreadyinplace.Customersbenefitedfromournationalbuyingpowerandestablishedprocedurestopro-videconsistent,high-levelservicethroughoutourbranchnetwork.

In2006wecontinuedourprogressinanotherareaof growingcustomerinterest—themovementtowardenvironmentallyfriendlycleaningprograms.Whilecompaniesareunderincreasingscrutinytoprovidebuildingtenantswithenhancedindoorairqualitythroughhealthycleaningsolutions,ABMJanitorialServicesintroduceditsin-novativeGreenCareprogram.GreenCaresupportsandemphasiz-esenvironmentallyresponsiblecleaning,andutilizeshighefficiencyequipment,tools,suppliesandeco-friendlycleaningmethods.

Greatest StrengthsWeareworkingdiligentlytostrategicallyutilizeourvastgeo-

graphicnetworkof fullystaffedbranchandregionalofficesnation-wide.Thisvastnetworkisoneof ABMJanitorialServices’majorstrengths in its’ ability to provide customers with responsive localmanagement, coupled with regional and national oversight. Thisstructureallowsforbranchpersonneltofocuslocallyonservicedeliv-eryandcustomersatisfaction,whileregionalandnationalpersonneloverseecontractmanagement,customerrelationsanddeliveryof standardizedtraining,safetyandhumanresourceprograms.

Exceptional TrainingTheABMQualityManagementSystem,QMS24-7,isour

proprietary,web-basedquality control program.QMSautomateswork order management and periodic maintenance scheduling,communicationsandresponses.Thesystemallowsforaquickerandmorepreciseresponsetoourclients’needs,monitorsworkcomple-tionandquality,anddeliverscarefullytailoredcustomerreports.In-spectionresultsareenteredintothesystem,andcustomizedqualitycontrolinspectionreportsshowingresultsandtrendsaremadeavail-ableon-line,andcanbedownloadedasanExcelspreadsheet.

Future PlansOursalesobjectivesfor2006weretofocusoncriticalclean-

ingneedsforourclientsinmanufacturing,high-techandfinancialmarkets.Thishaspaidoff withlargercontractsandhighermargins.Wewillcontinuetobolstersalesandoperationsexpertise intheseandothercriticalmarkets,withaconcentrationonclientswithcom-plex,andspecializedcleaningneeds,suchasthepharmaceuticalandeducationmarkets.

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Based on years of experience gained by providing cleaning services in a variety of markets, ABM has

developed best practice cleaning procedures and methods for all markets, from clean rooms in

high-tech and pharmaceutical markets to warehouse and industrial specialization

in the automotive field. We have the in-house expertise to produce a

customized program, resulting in maximum efficiencies and cost

containment for each market.

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We are qualified, capable, dependable and prepared to respond to the unique requirements of our diverse security customers.Subsidiary Overview

Withmore than13,000employeesoperatingcoast-to-coastin34statesfrom61branchoffices,ABMSecurityServicesbusinessachievedrevenueinexcessof $300millionforfiscalyear2006.AkeyfocusforABM’ssecuritysubsidiarieswastofurthergrowitscus-tomerbaseandmarkets,whichnowincludeClassAcommercialofficebuildings,officeparks,high-techcampuses,agriculturalcen-ters,hospitalsandmedicalcenters,educationalinstitutions,religiousorganizations,retailcenters,patroloperations,industrialmanufac-turing,ports, residential communities,background screening,andinvestigation.

Key PromotionsTofurthertheconsolidationof AmericanCommercialSecurity

ServicesandSSASecurity,ABMnamedanewpresidentof thecom-binedABMSecuritybusinesses,LarryT.Smith.SmithwasformerlySeniorVicePresidentof AmericanBuildingMaintenanceCompanyandheadedABM’sJanitorialbusinessintheSouthwest.WithstrongtiestomanyABMcustomersandpriorexperienceinABM’ssecuritybusi-nessSmithwillhelpexpandthenationalfootprintof ABMSecurity.

Top AchievementsByunifyingmultiplesecurityoperationsintoasinglecohesive

unit,ABMsecuritybusinessinvigorateditsnationalsalesopportuni-

“Our core strengths are the professional experience of our management team combined with the unique security programs we’ve designed to be flexible to meet the changing security requirements of our diverse customer base.”

— Larry T. Smith President, ABM Security Services,

American Security Services, and SSA Security

tiesin2006.Withthegoalof introducingnationalcapabilitytolocalandregionalcustomers,ABMSecurityhelpedguidelocalizedclientrelationshipsintogrowth-orientednationalsecurityprograms.

LarryT.Smith,Presidentof ABMsecuritybusiness,notes“Ascompaniesleanmoretowardnationalprocurementinitiatives,wehaveincreasedourabilitytocompetenationallywhilewecontinuetosuccess-fullyandefficientlydeliverservicesonalocalandmorepersonalbasis.”

Greatest StrengthsFromhelpingcustomerssurviveandcomebackfromnation-

aldisasterssuchashurricanesandfloodstoofferingoneof themostexperienced management teams found in the security industry,

SECURITY SERVICES

OF AMERICA

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ABMSecurityServicesfurtheradvanceditsinherentcorestrengthsinfiscalyear2006.

“Ournationaldisasterresponsivenessprogram,trainingcapa-bilities,andthelongevityandexperienceof ourmanagementteamarestrengthsourcustomershavecometorelyupon,”notedSmith.Additionally,bydesigningsecurityprogramsthatarecustomizedtomeettheuniqueneedsof individualclientsandmarkets,ABMSe-curitycontinuedtomeet thechangingsecurityrequirementsof adiverseandevolvingcustomerbase.

Technology UpdateInfiscalyear2006,ABMSecurityServicesintroducedanewweb-

basedtrainingprogramincollaborationwithPrivateSecurityTelevisionNetwork (PTSN) a professional training development company. Thisstate-of-the-artprogramprovides employeeswith24-houraccess toacomprehensivetraininglibrarythatisunmatchedintheindustry.

Future OutlookABM Security Services business will continue to focus on

organicsalesgrowthinbothcurrentmarketsandintargetednewgeographicareasthroughtheexpansionof existingservicesandthedevelopmentof newservices.

“Ourfirstpriority is to serviceourcustomersneedsand toanticipatetheirevolvingrequirements,”concludedSmith.

We are qualified, capable, dependable and prepared to respond to the unique requirements of our diverse security customers.

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“Our immediate plans are to continue to expand our base of operations strategically across the

U.S. into non-saturated markets, where our business model and operating

philosophy mirrors that of many of our national and regional

customers.”

— Rich Kindorf President of Ampco

System Parking

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From Florida to California, Ampco System Parking experienced the best sales growth in its history in fiscal 2006.

Subsidiary Overview More than 8,000 employees operate and manage parking

facilities coast-to-coast for hundreds of Ampco System Parkingcustomers,includingairports,amusementparks,educationalandfi-nancialinstitutions,governmententities,hospitality,medicalcenters,multi-usedevelopments,officebuildings,shoppingmalls,andsportsandentertainmentvenues.

AmpcoSystemParkingcollectedmorethan$440millioninrevenueforcustomersthispastfiscalyear,producingagrowthrateof 7percent.

Executive Promotions Tom Barnett, President of Ampco System Parking and an

ABMexecutivefor35years,retiredin2006.RichKindorf,whohadworkedunderBarnettfor23years,succeededhim.Inothermanage-mentnews,AmpcoSystemParking’sMarkMuglichwaspromotedtoExecutiveVicePresident.

Top Achievements Ampco System Parking signed a multi-year, multi-million-

dollaragreementwiththeCityof Minneapolistooverseeoff-streetmunicipalparkingoperationsinthecity.With30parkingfacilitiesandmorethan25,000parkingspaces,theMinneapolisoperationisoneof thelargestmunicipallyownedparkingsystemsintheUnitedStates.

OntheWestCoast,AmpcoSystemParkingwasawardeda multi-year, multi-million-dollar contract with Sacramento In-ternational Airport. The contract covers parking managementserviceandshuttleoperationsfortheairport’smorethan12,000parkingspaces.

Thetransportationsegmentof ourbusinessalsoexpandedintheformof shuttleservicestoamajoraerospaceindustryemployerinElSegundo,California.Eightbusestransportmorethan550employ-eesadayacrossthe7-square-blockcampus.AndinaserviceadditiontotheJohnWayneAirportinOrangeCounty,morethan1,800em-ployeesareshuttleddailyfromanoff-sitelottotheterminal.

Inthehigh-endretailmarketsegment,AmpcoSystemPark-ingwasawardedtheparkingmanagementcontractfor“TheShipsatMidtown”inMiami,Florida.Whencompleted,thismega-de-

velopmentwill include600,000square feetof retail space,3,000condominiumsand350apartments.The fullyautomated3,000-spaceparkingstructurewillusethelatesttechnology,including20paystations.

Industry Trends Automatedfeecollectionisanothergrowingindustrytrend.

Wehaverespondedbyoverseeingtheconversionof existingcashier-basedfeecollectionsystemstoautomatedparkingfeecollectionsys-tems,andbyconsultingintheredesignandconversionprocessof newparkinggaragesinthedevelopmentstage.

Technology Update Ensuringaccurateandtimelyfinancialaccountabilityhasbeen

criticaltooursuccessandisakeyingredientintheparkingindustry’sprovider-customer relationship.AmpcoSystemParkingcontinuedtoenhanceitsproprietarysoftwareSCORE4(SimplifiedComputerOn-SiteRevenueEntry)system,whichpropelledustoaleadershippositioninrevenueoptimizationandreportingtechnology.

Training Update We completed a substantial updating in fiscal 2006 of the

Company’skey training tool, theStandardOperatingProcedures(SOP) program. This comprehensive manual standardizes everyprocedureusedinparkingfacilityoperation.Fromproperaccount-ingandreportingprocedurestorevenuecontrolsystemsandsite-specificoperationsquestions,theSOPfunctionsasastudyguideandreferencemanualforallfacilitymanagers.

Future Outlook “Ourimmediateplansaretocontinuetoexpandourbaseof

operationsstrategicallyacrosstheU.S.intonon-saturatedmarkets,whereourbusinessmodelandoperatingphilosophymirrorsthatof manyof ournationalandregionalcustomers,”notesRichKindorf,Presidentof AmpcoSystemParking.

“Secondarily,wewill focusonexpandingthetransportationsegment of our business through shared-ride services, on-airportshuttleservices,campusshuttleservices,andthroughoutthehospi-talitymarket.”

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Our long-term investment in critical training, safety and human

resources programs and protocols support our employees,

shareholders and customers.

Subsidiary OverviewServingthousandsof sitesacrosstheU.S.,ABMFacilitySer-

vicesdeliveredauniquecombinationof best-in-classmaintenanceservices,supportresourcesandmanagementtalentforavarietyof propertiesandclientsin2006.With16branchescoveringpropertiesin40states,keycustomermarketsincludedcorporaterealestate,in-dustrialandmanufacturingsites,corporatefacilities,bankingbranchoffices, data centers and critical systems, government and publicfacilities, education, retail, healthcare, airports, hospitality, centralplantsandtelecommunications.

Through a well-defined integrated facility services’ solutionthatofferedcustomerssevenlinesof servicesandaccessto66,000professionals nationally, ABM Facility Services realized businessgrowthof 19percentinfiscalyear2006.AccordingtoStevenZac-cagnini,ExecutiveVicePresidentof ABMandPresidentof ABMFacilityServices, thisrobustgrowthwasachievedthrough“strongsaleseffortsbackedbyanationalnetworkof operatingmanagers.”

Key PromotionsToddRichardsonandCharlesBoothwereappointedSenior

VicePresidentsof ABMFacilityServicesinearly2006.“Withtheirrespective,extensiveexpertiseinsales,marketingandbuildingmain-tenance, they furtherstrengthenourFacilityServicesoperationtocontinuedeliveringthehighstandardsourcustomershavecometoexpect,”saidZaccagnini.

Top TrendThe facility services’ industry,and inparticularengineering

maintenance services, saw an increase in major national subcon-tractingawards.ABMFacility’sengineeringunit,ABMEngineeringServices,furtherexpandedanddevelopedastrongnationalteamtoaddresschangingcustomerneeds.

“Ourfacilitymanagementprogramsallowourclientstofo-cusmoreondrivingtheircorebusinesswhileweruntheirfacilitiesefficientlyandkeepthemcost-competitiveintoday’smarketplace,”saidZaccagnini.

“Designing innovative, cost-effective consolidation solutionsforclientsisourcorebusiness,andonethatisincrediblyrelevant.”

Greatest StrengthsOverthecourseof theyearthroughacomprehensivenational

networkof technicalmanagers,subcontractorsandstate-of-the-artoperatingprograms,location-specificclientneedsrepresentingava-rietyof diverseclientindustrieswerefullymet.

ABMEngineeringServicescontinuedtomaintainitsqualitycontrolInternationalOrganizationforStandardization(ISO)certifi-cationstatus.In2006,ISOcontinuedtorecognizeABMEngineer-ingforitscommitmenttosafetyandquality.ABMEngineeringistheonlyfacilitymaintenancecompanytohaveachievedandmaintainedISO certification for all operations nationally. ABM EngineeringServicesfirstreceivedthedesignationin1999.

Technology UpdateTechnologyenhancementswereakeyfocusof ABMFacil-

ityServices’client-drivenstrategy.ABMFacilityServicesbuiltuponanexceptionallystronggroupingof proprietaryweb-basedsupportprograms,includingtheprimaryclient-friendlytechnologiesof web-basedpreventivemaintenanceandworkordermanagementsystems,aNationalServiceCenter,atechnicalintranetsite,costaccountingandreportingsystemsaswellaslivecustomersupport.

Future OutlookWithanetworkof morethan25regionalanddistrictman-

agersensuringcomprehensivegeographiccoverage,ABMFacilityServices is committed to expanding nationally. Anticipated addi-tionalofficeopeningsareplannedforDallasandSeattle.

SaidZaccagnini, “We remaincommitted to the long-termdevelopmentof ourmanagementteamandoperationsteam.Weanticipateourclientswillcontinuetobenefitfromourinvestmentinouremployees,technologyandcustomers.”

24

“Designing an innovative, cost-effective consolidation solution for clients is an incredibly rewarding experience. Our facility management programs allow our clients to focus on driving their core business, while we run their facilities efficiently and keep them cost competitive in today’s marketplace.”

— Linda Peralta ABM Facility Services

National Sales and Marketing

2�

“With an operating team that has the most experience in the industry, our strengths cover all the major

bases that are important to clients. We offer national clients full-service coverage with the

ability of servicing multi-location accounts as a one-stop shop.”

— Steven Zaccagnini Executive Vice President of ABM

and President of Amtech Lighting Services

2626

Our reputation for exhibiting trade excellence is a distinction we work diligently to maintain.

Subsidiary OverviewWithagrowingcustomerbaseincommercial,industrial,re-

tail,governmentmunicipalities,andcollegeanduniversitymarkets,AmtechLightingServices continued toevolve infiscal year2006with27full-servicebranchesand64satelliteoperationsnationally,andwithwell-establishedbasesintheNortheast,Southeast,SouthCentralandWestCoastregions.

Asoneof thenation’sleadinglightingmanagementcompa-nies,AmtechLightingServicesprovidesserviceforinteriorandex-teriorlightingmaintenance,includingsignsandelectricalrepairs,forsome35,000customerslocatedthroughouttheUnitedStates.

Top AchievementsAmtechLighting reported severalkeyachievements for the

pastfiscalyear,suchasthecreationof auniqueenergysolutionpro-gram,aswellascompletinghurricanedisasterrecoveryservicesforseverallargeclients.

Toeffectivelyaddressthecurrentindustry-wideconcernwithenergyconservationandenvironmentalstewardship,ABMandAm-techLightingestablished“ABMEnergySolutions,”acomprehen-siveproviderof innovativeenergyservices.

This program offers a variety of solutions that address thegrowingenvironmentalconcernsof everyABMsubsidiarycompa-nyaswellastheconcernsof ABMcustomerswhoarecommittedtotakingagreaterroleinprotectingtheworld’snaturalresources.

Otheraccomplishments includethecompletionof ade-tailedandextensiveproject foranational client that includedservicing8,000 individual locations.Thiswasaccomplished injust120days.

Industry TrendsEnergycostscontinuedtorise steadily infiscal2006,creat-

inganurgentneedforadditionalenergyconservationprogramsandresources throughout the lighting industry.Ascostawarenessandconcernsaboutglobalwarmingrosethroughourclientpopulation,

wefocusedoureffortsondevelopingnewprogramsthatdecreasedourclients’ totalenergyconsumption through lighting technologyupgrades.Someof theseprogramsspecificallytiedintotheEnergyPolicyActof 2005,whichallowedfortaxdeductionsforenergy-sav-ingupgradestocommercialbuildings,beginningJanuary1,2006.TheActoffersapartial lightingtaxdeductionbasedonqualifiedlightingupgradesthatwereputintoplaceduringthefirsttwoyearsof theAct.

Other technology-related changes for2006 includedan in-creasedfocusonLEDapplications.BypartneringwithseveralLEDtechnologyleaders,AmtechLightingServiceswasabletosuccess-fullyintroduceandpromotethisresourcetoclients.

Greatest Strengths“Withanoperatingteamthathasthemostexperienceinthe

industry,ourstrengthscoverallthemajorbasesthatareimportanttoclients,”notesStevenZaccagnini,ExecutiveVicePresidentof ABMandPresidentof AmtechLightingServices.“Weoffernationalcli-entsfull-servicecoveragewiththeabilityof servicingmulti-locationaccountsasaone-stopshop.

“Additionally, we successfully manage national roll-outprojectsandassigndedicatedaccountrepresentativestoactasavitalcommunicationresourcetokeepclientsupdatedwithdailyprogressreports.”

Future OutlookGiventhecontinuingriseinenergycostsandconcernsabout

theenvironment,AmtechLightingplanstodevelopandpresentthebestenergy-efficientsolutionstocustomersandtohelpthemlowertheirenergyconsumption.Wewillcontinuetoleadthewayinnewtechnologyofferingsandpartnerstrategicallywiththemanufactur-ersanddistributorsthatofferthemostsuitablesolutionsforourcli-ents’energyneeds.InpartnershipwithABMEnergySolutions,wewilldelivereffectiveandresponsibleturnkeyenergyprograms,usingabroadspectrumof potentialenergyconservationmeasures.

2�2�

Financial Reports

28

Consolidated Balance SheetsOctober31 2006 2005 Inthousands,exceptpersharedata

Assets Cashandcashequivalents $ 134,001 $ 56,793Tradeaccountsreceivable(lessallowancesof$8,041and$7,932) 383,977 345,104Inventories 22,783 21,280Deferredincometaxes 43,945 46,795Prepaidexpensesandothercurrentassets 47,035 44,690Prepaidincometaxes — 6,791 Totalcurrentassets 631,741 521,453Investmentsandlong-termreceivables 14,097 12,955Property,plantandequipment(lessaccumulateddepreciationof $86,837and$80,370) 32,185 34,270Goodwill(lessaccumulatedamortizationof$67,557) 247,888 243,559Otherintangibles(lessaccumulatedamortizationof$15,550and$13,478) 23,881 24,463Deferredincometaxes 42,120 46,426Otherassets 24,362 20,584 Totalassets $ 1,016,274 $903,710

Liabilities Tradeaccountspayable $ 66,336 $ 47,605Incometaxespayable 36,712 2,349Accruedliabilities: Compensation 78,673 72,034 Taxes–otherthanincome 20,587 18,832 Insuranceclaims 66,364 71,455 Other 50,613 62,799 Totalcurrentliabilities 319,285 275,074Retirementplansandothernon-currentliabilities 26,917 25,596Insuranceclaims 128,825 127,114 Totalliabilities 475,027 427,784

Stockholders’ equityPreferredstock,$0.01parvalue;500,000sharesauthorized;noneissued — —Commonstock,$0.01parvalue;100,000,000sharesauthorized;55,663,472 and54,650,514sharesissuedatOctober31,2006and2005,respectively 557 547Additionalpaid-incapital 225,796 206,369Accumulatedothercomprehensiveincome(loss) 149 (68)Retainedearnings 437,083 365,455Costoftreasurystock(7,028,500and5,600,000sharesatOctober31,2006 andOctober31,2005,respectively) (122,338 ) (96,377) Totalstockholders’equity 541,247 475,926 Totalliabilitiesandstockholders’equity $ 1,016,274 $903,710

2�

Consolidated Statements of Stockholders’ Equity (Condensed)

Accumulated Other CommonStock TreasuryStock Additional Comprehensive RetainedInthousands Shares Amount Shares Amount Paid-inCapital Income(Loss) Earnings Total

Balance November 1, 2003 51,767 $518 (3,400) $(53,986) $166,497 $(268) $317,261 $430,022Netincome — — — — — — 30,473 30,473Foreigncurrencytranslation — — — — 160 — 160Dividends: Commonstock — — — — — — (19,476) (19,476)Stockpurchases — — (600) (11,073) — — — (11,073)Stockissued 940 9 — — 12,046 — — 12,055

Balance October 31, 2004 52,707 $527 (4,000) $(65,059) $178,543 $(108) $328,258 $442,161Netincome — — — — — — 57,941 57,941Foreigncurrencytranslation — — — — — 40 — 40Dividends: Commonstock — — — — — — (20,744) (20,744)Stockpurchases — — (1,600) (31,318) — — — (31,318)Stockissued 1,944 20 — — 27,826 — — 27,846

Balance October 31, 2005 54,651 $547 (5,600) $(96,377) $206,369 $(68) $365,455 $475,926Netincome — — — — — — 93,205 93,205Foreigncurrencytranslation — — — — — 217 — 217Dividends: Commonstock — — — — — — (21,577) (21,577)Stockpurchases — — (1,428) (25,961) — — — (25,961)Stockissued 1,012 10 — — 16,183 — — 16,193Share-basedcompensationexpense — — — — 3,244 — — 3,244

Balance October 31, 2006 55,663 $557 (7,028) $(122,338) $225,796 $149 $437,083 $541,247

Consolidated Statements of Income (Condensed)

Years ended October 31 2006 2005 2004Inthousands,exceptpersharedata

Revenues Salesandotherincome $ 2,712,668 $ 2,586,566 $ 2,375,149 Gainoninsuranceclaim 80,000 1,195 — 2,792,668 2,587,761 2,375,149Expenses Operatingexpensesandcostofgoodssold 2,421,552 2,312,687 2,157,637 Selling,generalandadministrative 207,116 204,131 166,981 Intangibleamortization 5,764 5,673 4,519 Interest 495 884 1,016 2,634,927 2,523,375 2,330,153Incomefromcontinuingoperationsbeforeincometaxes 157,741 64,386 44,996Incometaxes 64,536 20,832 15,352Incomefromcontinuingoperations 93,205 43,554 29,644Incomefromdiscontinuedoperations,netofincometaxes — 166 829Gainonsaleofdiscontinuedoperations,netofincometaxes — 14,221 —Net income $ 93,205 $ 57,941 $ 30,473Net income per common share – Diluted Incomefromcontinuingoperations $ 1.88 $ 0.86 $ 0.59 Incomefromdiscontinuedoperations — — 0.02 Gainonsaleofdiscontinuedoperations — 0.29 — $ 1.88 $ 1.15 $ 0.61

30

Consolidated Statements of Cash FlowsYears ended October 31 2006 2005 2004Inthousands

Cash flows from operating activities: Netincome $ 93,205 $ 57,941 $ 30,473Lessincomefromdiscontinuedoperations — (14,387) (829)Incomefromcontinuingoperations 93,205 43,554 29,644Adjustments to reconcile income from continuing operations to net cash provided by continuing operating activities: Depreciationandintangibleamortization 20,745 19,591 17,543Share-basedcompensationexpense 3,244 — —Provisionforbaddebts 341 1,112 4,482Gainonsaleofassets (829 ) (419) (225)Decrease(increase)indeferredincometaxes 7,156 (4,465) (12,262)Increaseintradeaccountsreceivable (38,922 ) (31,844) (35,369)(Increase)decreaseininventories (1,503 ) (726) 9(Increase)decreaseinprepaidexpensesandothercurrentassets (2,255 ) (5,888) 6,643Increaseinotherassetsandlong-termreceivables (4,982 ) (2,132) (3,074)Increase(decrease)innetincometaxes 41,154 (11,304) 5,935Increase(decrease)inretirementplansandothernon-currentliabilities 1,321 (62) 1,483(Decrease)increaseininsuranceclaims (3,380 ) 10,630 37,622Increaseintradeaccountspayableandotheraccruedliabilities 15,072 26,752 11,981Totaladjustmentstoincomefromcontinuingoperations 37,162 1,245 34,768Netcashflowsfromcontinuingoperatingactivities 130,367 44,799 64,412Netoperationalcashflowsfromdiscontinuedoperations — (7,348) (30,722)Netcashprovidedbyoperatingactivities 130,367 37,451 33,690Cash flows from investing activities:Additionstoproperty,plantandequipment (14,065 ) (17,738) (11,460)Proceedsfromsaleofassets 2,253 1,775 795Purchaseofbusinesses (10,002 ) (26,884) (54,152)Proceedsfromsaleofbusiness — 32,250 —Other — (2,505) 4,064Netcashusedininvestingactivities (21,814 ) (13,102) (60,753)Cash flows from financing activities: Commonstockissued 16,193 21,137 10,034Commonstockpurchased (25,961 ) (31,318) (11,073)Dividendspaid (21,577 ) (20,744) (19,476)Netcashusedinfinancingactivities (31,345 ) (30,925) (20,515)Netincrease(decrease)incashandcashequivalents 77,208 (6,576) (47,578)Cashandcashequivalentsbeginningofyear 56,793 63,369 110,947Cash and cash equivalents end of year $ 134,001 $ 56,793 $ 63,369 Supplemental data: Cashpaidforincometaxes $ 13,166 $ 43,901 $ 52,723Taxbenefitfromexerciseofoptions $ 3,055 $ 3,203 $ 2,021Cashreceivedfromexerciseofoptions $ 13,138 $ 21,137 $ 10,034Non-cashinvestingactivities: Commonstockissuedforbusinessacquired $ — $ 3,506 $ —

31

Segment Information (Condensed) AssetsHeld ConsolidatedInthousands Janitorial Parking Security Engineering Lighting Corporate ForSale Totals

Year ended October 31, 2006 Salesandotherincome $1,563,756 $440,033 $307,851 $285,241 $113,014 $ 2,773 $ — $ 2,712,668Gainoninsuranceclaim — — — — — 80,000 — 80,000Totalrevenues $1,563,756 $440,033 $307,851 $285,241 $113,014 $ 82,773 $ — $ 2,792,668Operatingprofit $ 81,578 $ 13,658 $ 4,329 $ 16,736 $ 1,375 $(39,440) $ — $ 78,236Gainoninsuranceclaim — — — — — 80,000 — 80,000Interestexpense — — — — — (495) — (495)Incomefromcontinuingoperations beforeincometaxes $ 81,578 $ 13,658 $ 4,329 $ 16,736 $ 1,375 $ 40,065 $ — $ 157,741Identifiableassets $ 416,097 $ 86,541 $104,174 $ 69,467 $100,576 $239,419 $ — $ 1,016,274

Year ended October 31, 2005 Salesandotherincome $1,525,565 $409,886 $294,299 $238,794 $116,218 $ 1,804 $ — $ 2,586,566Gainoninsuranceclaim — — — — — 1,195 — 1,195Totalrevenues $1,525,565 $409,886 $294,299 $238,794 $116,218 $ 2,999 $ — $ 2,587,761Operatingprofit $ 67,754 $ 10,527 $ 3,089 $ 14,200 $ 3,805 $(35,300) $ — $ 64,075Gainoninsuranceclaim — — — — — 1,195 — 1,195Interestexpense — — — — — (884) — (884)Incomefromcontinuingoperations beforeincometaxes $ 67,754 $ 10,527 $ 3,089 $ 14,200 $ 3,805 $(34,989) $ — $ 64,386Identifiableassets $ 398,361 $ 87,663 $106,451 $ 50,875 $ 94,904 $165,456 $ — $ 903,710

Year ended October 31, 2004 Salesandotherincome $1,442,901 $384,547 $224,715 $209,156 $112,074 $ 1,756 $ — $ 2,375,149Operatingprofit $ 60,574 $ 9,514 $ 9,002 $ 12,096 $ 2,822 $(47,996) $ — $ 46,012Interestexpense — — — — — (1,016) — (1,016)Incomefromcontinuingoperations beforeincometaxes $ 60,574 $ 9,514 $ 9,002 $ 12,096 $ 2,822 $(49,012) $ — $ 44,996Identifiableassets $ 383,566 $ 78,548 $ 90,627 $ 38,715 $ 85,411 $151,216 $14,441 $ 842,524

Report of Independent Registered Public Accounting Firm

TheBoardofDirectorsandStockholdersABMIndustriesIncorporated:

Wehaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOver-sightBoard(UnitedStates),theconsolidatedbalancesheetsofABMIndustriesIncorporatedandsubsidiariesasofOctober31,2006and2005,andtherelatedconsolidatedstatementsofincome,stockholders’equityandcomprehensiveincome,andcashflowsforeachoftheyearsinthethree-yearperiodendedOctober31,2006;andinourreportdatedDecember21,2006,weexpressedanunqualifiedopiniononthoseconsolidatedfinancialstatements.

Inouropinion,theinformationsetforthintheaccompanyingcondensedconsolidatedfinancialstatementsisfairlystated,inallmaterialrespects,inrelationtotheconsolidatedfinancialstatementsfromwhichithasbeenderived.

AsdiscussedinNote1totheconsolidatedfinancialstatementsincludedinthe2006annualreportonForm10-KfiledbytheCompanywiththeSecuritiesandExchangeCommission,effec-tiveNovember1,2005,theCompanyadoptedtheprovisionsofStatementofFinancialAccountingStandardsNo.123(R),Share-BasedPayment.

/s/KPMGLLP

SanFrancisco,California

December21,2006

Factors That May Affect Future Results

ThisAnnualReportcontainsforward-lookingstatementsthatsetforthmanagement’santicipatedresultsbasedonmanagement’splansandassumptions.AnynumberoffactorscouldcausetheCompany’sactualresultstodiffermateriallyfromthoseanticipated.Theserisksanduncertaintiesinclude,butarenotlimitedto:(1)achangeinthefrequencyorseverityofclaimsagainsttheCompany,adeteriorationinclaimsmanagement,thecancellationornon-renewaloftheCompany’sprimaryinsurancepoliciesorachangeinourcustomers’insuranceneeds;(2)achangeinactuarialanalysisthatcausesanunanticipatedchangeininsurancereserves;(3)inadequatetechnologysystemsthatcannotsupportthegrowthofthebusiness;(4)acquisitionactivityslowsorisunsuccessful;(5)labordisputesthatleadtoalossofsalesorexpensevariations;(6)adeclineincommercialofficebuildingoccupancyandrentalrateslowerssalesandprofitability;(7)financialdifficultiesorbankruptcyofamajorcustomer;(8)thelossoflong-termcustomers;(9)intensecompetitionthatlowersrevenueorreducesmargins;(10)anincreaseincoststhattheCompanycannotpassontocustomers;(11)naturaldisastersoractsofterrorismthatdisrupttheCompanyinprovidingservices;(12)significantaccountingandothercontrolcoststhatreducetheCompany’sprofitability; and (13) other issues and uncertainties that may include: new accounting pronouncements orchangesinaccountingpolicies,laborshortagesthatadverselyaffecttheCompany’sabilitytoemployentrylevelpersonnel, low levelsof capital investmentsby customers,which tend tobe cyclical innature, that adverselyimpacttheresultsoftheCompany’sLightingsegment,legislationorothergovernmentalactionthatdetrimentallyimpactstheCompany’sexpensesorreducessalesbyadverselyaffectingtheCompany’scustomers,unanticipatedadversejurydeterminations,judicialrulingsorotherdevelopmentsinlitigationtowhichtheCompanyissubject,areductionorrevocationoftheCompany’slineofcreditthatincreasesinterestexpenseandthecostofcapital,andtheresignation,termination,deathordisabilityofoneormoreoftheCompany’skeyexecutivesthatadverselyaffectscustomerretentionorday-to-daymanagementoftheCompany.Additionalinformationregardingtheseandother risksanduncertainties theCompany faces is contained in theCompany’sAnnualReporton Form10-KandinotherreportsitfilesfromtimetotimewiththeSecuritiesandExchangeCommission.TheCompanyundertakesnoobligationtopubliclyupdateforward-lookingstatements,whetherasaresultofnewinformation,futureeventsorotherwise.

32

Board of Directors

Maryellen C. Herringer(a,b)Chairmanof theBoardAttorneyatLaw

Linda L. Chavez (b,d)President,CenterforEqualOpportunity

Luke S. Helms (a,c,d)ManagingPartner,SonataCapitalManagement

Charles T. Horngren(c)EdmundW.Littlefield,Professorof Accounting,EmeritusStanfordBusinessSchool

Henry L. Kotkins, Jr. (b,d)ChairmanandChief ExecutiveOfficer,SkywayLuggageCompany

Martinn H. MandlesFormerChairmanof theBoard

Theodore T. Rosenberg (a)FormerChairmanof theBoard

Henrik C. Slipsager(a)PresidentandChief ExecutiveOfficer

William W. Steele (a,c)FormerPresidentandChief ExecutiveOfficer

Executive Officers

Henrik C. Slipsager(a)PresidentandChief ExecutiveOfficer

James P. McClureExecutiveVicePresidentandPresident,JanitorialServices

George B. Sundby ExecutiveVicePresidentandChief FinancialOfficer

Steven M. Zaccagnini ExecutiveVicePresidentandPresident,FacilityServicesandLightingServices

Erin M. AndreSeniorVicePresident,HumanResources

Linda S. AuwersSeniorVicePresident,GeneralCounselandSecretary

David L. FarwellSeniorVicePresident,Chief of Staff andTreasurer

Gary R. WallaceSeniorVicePresident,BusinessDevelopmentandChief MarketingOfficer

Maria De Martini VicePresident,ControllerandChief AccountingOfficer

Special Notices

Listing: NewYorkStockExchange

Ticker Symbol: ABM

Registrar and Transfer Agent MellonInvestorServicesLLC480WashingtonBoulevardJerseyCity,NJ07310-1900Tel:(800)850-3292WebAddress:www.melloninvestor.com/isd

AuditorsKPMGLLP55SecondStreetSuite1400SanFrancisco,CA94105

10-K ReportAdditionalcopiesavailabletostockholdersatnochargeuponrequestto:ABMCorporateCommunicationsPostOfficeBox193224,SanFrancisco,CA94119oratwww.abm.com

StockholdersAsof November30,2006,therewere3,669registeredholdersof theCompany’sCommonStock,inadditiontostockholdersinstreetname.

Annual MeetingTheAnnualMeetingof Stockholdersof ABMIndustriesIncorporatedwillbeheldonTuesday,March6,2007,at10:00a.m.intheBoardRoomBankof AmericaCenter,555CaliforniaStreet,51stFloorSanFrancisco,CA94104.

DividendsTheCompanyhaspaidquarterlycashdividendsonitsCommonStockwithoutinterruptionsince1965.TheBoardof Directorsconsidersthepaymentof cashdividendsonaquarterlybasis,subjecttotheCompany’searnings,financialconditionandotherfactors.

(a)ExecutiveCommittee(b)CompensationCommittee(c)AuditCommittee(d)GovernanceCommittee

33

ABM Corporate Headquarters160 Pacific Avenue, Suite 222 San Francisco, CA 94111

Tel: 415-733-4000 www.abm.com

ABM-934

10%

Cert no. SCS-COC-00648