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ACQUISITIONS AND DISPOSITIONS | 9 Months Ended
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Jul. 31, 2022
Business Combination and Asset Acquisition [Abstract] |
ACQUISITIONS AND DISPOSITIONS | ACQUISITIONS AND DISPOSITIONS Acquisition of Able On September 30, 2021, we acquired Able, a leading facilities services company headquartered in San Francisco, California, for a net cash purchase price of $741.7 million (the “Able Acquisition”). The purchase price was revised during the second quarter of 2022 to reflect a post-close purchase price adjustment related to a net working capital settlement. Pursuant to the terms of the purchase agreement, approximately $12.1 million of the cash consideration was placed into escrow accounts, of which approximately $8.2 million satisfies any applicable indemnification claims for a period of 12 months. 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 deferred taxes and the final valuation of insurance claims reserves. During the nine months ended July 31, 2022, we adjusted the purchase price allocation for a working capital adjustment, probable litigation losses (as described below), and refined certain other estimates. The following table summarizes the preliminary acquisition accounting on the date of acquisition as previously reported at year-end 2021 and at the end of the third quarter of 2022:
(in millions) |  | Preliminary Purchase Price Allocation |  | Adjustments |  | Updated Preliminary Purchase Price Allocation
Cash and cash equivalents |  | $ | 31.5 |  |  | $ | — |  |  | $ | 31.5 |
Trade accounts receivable(1) |  | 159.3 |  |  | (0.7) |  |  | 158.5 |
Other assets |  | 24.9 |  |  | (4.4) |  |  | 20.5 |
Customer relationships(2) |  | 220.0 |  |  | — |  |  | 220.0 |
Trade names(2) |  | 10.0 |  |  | — |  |  | 10.0 |
Goodwill(3) |  | 554.0 |  |  | 34.0 |  |  | 588.0 |
Trade accounts payable |  | (27.0) |  |  | (4.1) |  |  | (31.1) |
Accrued compensation |  | (38.2) |  |  | (2.1) |  |  | (40.3) |
Insurance claims |  | (91.6) |  |  | (1.1) |  |  | (92.7) |
Other liabilities |  | (41.7) |  |  | (16.0) |  |  | (57.7) |
Deferred income tax liability, net |  | (59.5) |  |  | 0.3 |  |  | (59.2) |
Net assets acquired |  | $ | 741.7 |  |  | $ | 5.8 |  |  | $ | 747.5 |
(1) The gross amount of trade accounts receivable was $160.5 million, of which $1.9 million was deemed uncollectible. (2) The amortization periods for the acquired intangible assets are 15 years for customer relationships and two 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 The unaudited Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended July 31, 2022, include revenue attributable to Able of $286.9 million and $878.4 million, respectively, and operating profit of $9.2 million and $36.0 million, respectively. For the three and nine months ended July 31, 2022, we also incurred acquisition-related and integration costs of $2.0 million and $10.7 million, respectively, which are included in “Selling, general and administrative expenses” in the accompanying unaudited Consolidated Statements of Comprehensive Income (Loss). The following table presents our unaudited pro forma results as though the acquisition occurred on November 1, 2020. These 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 28%. These unaudited pro forma results do not reflect the cost of integration activities or benefits from expected revenue enhancements and synergies.
(in millions) |  | Three Months Ended July 31, 2021 |  | Nine Months Ended July 31, 2021
Pro forma revenue |  | $ | 1,810.7 |  |  | $ | 5,338.4 |
Pro forma (loss) income from operations(1) |  | (12.9) |  |  | 94.4 |
(1) These results were adjusted to exclude $2.5 million of acquisition-related costs incurred during the three and nine months ended July 31, 2021, which are included in “Selling, general and administrative expenses” in the accompanying Consolidated Statements of Comprehensive Income (Loss). Legal Matters Related to Legacy Able Able is a party to a number of lawsuits, claims, and proceedings incident to the operation of the business, including those pertaining to labor and employment, contracts, personal injury, and other matters, some of which allege substantial monetary damages. Some of these actions may be brought as class actions on behalf of a class or purported class of employees. If, during the purchase price allocation period, we can reasonably determine the fair values of a pre-acquisition contingency, then we will include that amount in the purchase price allocation. Any adjustment to amounts recorded for a pre-acquisition contingency subsequent to the end of the measurement period will be included within “Selling, general and administrative expenses” in the period in which the adjustment is determined. During the nine months ended July 31, 2022, we adjusted our purchase price allocation for probable litigation losses in Able legal matters where a reasonable estimate of the loss could be made from $0.9 million to $19.3 million. We do not accrue for contingent losses that, in our judgment, are considered to be reasonably possible but not probable. The estimation of reasonably possible losses also requires the analysis of multiple possible outcomes that often depend on judgments about potential actions by third parties. Our management currently estimates the range of loss for all reasonably possible losses for which a reasonable estimate of the loss can be made for Able legal matters is between zero and $1.6 million. In some cases, although a loss is probable or reasonably possible, we cannot reasonably estimate the maximum potential losses for probable matters or the range of losses for reasonably possible matters. Therefore, our accrual for probable losses and our estimated range of loss for reasonably possible losses do not represent our maximum possible exposure. Acquisition of Momentum Effective April 7, 2022, we acquired Maybin Support Services Limited, Momentum Support Limited (UK), and Momentum Property Support Services Limited (collectively “Momentum”), a leading independent provider of facility services, primarily janitorial, across the Republic of Ireland and Northern Ireland, for a purchase price of approximately $54.8 million. The acquisition was accounted for under the acquisition method. Accordingly, the assets acquired and liabilities assumed were recognized on the date of acquisition at their estimated fair values, with the excess of the purchase price recorded as goodwill, which is not deductible for income tax purposes. As of July 31, 2022, we recorded preliminary goodwill and intangibles of $41.6 million and $10.4 million, respectively. The purchase price allocation is subject to adjustments within the measurement period not to exceed one year from the acquisition date. The unaudited Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended July 31, 2022, include revenues attributable to Momentum of $17.9 million and $22.8 million, respectively, and operating profit of $1.1 million and $1.4 million, respectively. Disposition of Assets On January 31, 2022, the Company sold a group of customer contracts for healthcare technology management within our Technical Solutions segment for $8.5 million and recognized a gain of $7.6 million during the nine months ended July 31, 2022, which is included in “Selling, general and administrative expenses” in the accompanying unaudited Consolidated Statements of Comprehensive Income (Loss).

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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