Good morning. My name is Cindy and I will be your conferenceoperator today. At this time, I would like to welcome everyone to the ABMIndustries Incorporated fourth quarter earnings results conference call.(Operator Instructions) Mr. Slipsager, you may begin your conference.

Thank you. Good morning. I’m Henrik Slipsager, President andCEO of ABM. Joining me today are George Sundby, Executive VP and CFO; and LindaAuwers, our Senior VP and General Counsel. On the call today, I will provide an overview of our achievementas a company for fiscal 2007. George will discuss our financials and then Iwill conclude our prepared remarks with an update on our recent OneSourceacquisition, as well as provide guidance for fiscal ’08. Linda.

Thank you, Henrik. Our presentation today containspredictions, estimates, and other forward-looking statements. Our use of thewords estimates, expects and similar expressions are intended to identify thesestatements. These statements represent our current judgment of what the futureholds. While we believe them to be reasonable, these statements are subject torisks and uncertainties that could cause our actual results to differmaterially. Some of the important factors relating to our business aredescribed in our annual report on Form 10-K, Form 8-K, and the forms 10-Q thatwe file with the SEC. In addition, we’ll be providing non-GAAP guidance in today’scall. A reconciliation of non-GAAP guidance can be found in our fourth quarterand fiscal year 2007 financial results press release and on our website atwww.abm.com, investor relations.

Thank you, Linda. Before we review our consolidatedfinancial results and operating performance for the fourth quarter and year, Iwould like to highlight a few of ABM's accomplishments in fiscal ’07. We completed two meaningful acquisitions that willaccelerate our growth in the increasingly competitive and global serviceprovider marketplace. In April, we acquired HealthCare Parking Systems ofAmerica, HPSA, a leader in the parking management services for hospitals,health centers, and medical office buildings nationwide, along with theirmanagement team. HPSA provide an important and strategic entry into the healthrelated segment of the parking industry and immediate expansion into 10 newstates, primarily in the East Coast. Our parking division now serves 39 statesand we plan to leverage HPSA’s expertise and our existing regional operatinginfrastructures to further grow this segment. In October, we announced plans to acquire facility serviceprovider OneSource and we closed this transaction in November. OneSource is theleader in janitorial, landscape, and other specialized services for more than10,000 commercial, industrial, institutional, and retail accounts in the U.S.,Puerto Rico, and British Columbia. Our janitorial division has been ABM's best and mostconsistent performer in recent years and this investment provides that team abroader based continued expansion domestically, as well as open newinternational opportunities as well. In fact, OneSource will truly change the profile of ABM,increasing our annual revenue by nearly 30%, adding more than 30,000 employees,and enhancing our overall scale, breadth, and financial strength. We continue to strengthen our balance sheet and recentlyestablished a new $450 million credit facility, replacing our existing $300million facility. In fiscal ’07, net cash from continuing operations was $54.3million, and that included a $34.9 million income tax payment related to the$80 million settlement for the World Trade Center insurance claim in fiscal’06. Our working capital increased by $40.6 million to $353.1million from $312.5 million due to record revenue and incremental incomegenerated in fiscal ’07. We increased our dividend in ’07 by 9.1% to an all-time highquarterly rate of $0.12. Through these and other achievements, we have furtherstrengthened our position as the leader in the facility services and enhancedshareholder value. I would like to turn the call over to George for a review ofour fourth quarter and fiscal ’07 financial results. George.

Thank you and good morning and happy holidays to everyone. Iwould like to review the consolidated results for the fourth quarter endedOctober 31, as reported in yesterday’s earnings release. We expect to file ourannual report on Form 10-K with the Securities and Exchange Commission laterthis month, hopefully before Christmas. Turning to the fourth quarter results, as Henrik indicatedfor the quarter, net income was $15 million, or $0.30 per diluted share,compared to $61.6 million or $1.24 per diluted share a year ago. The decline isdue primarily to the fourth quarter of 2006 benefiting from the $80 millionpretax or $0.91 per diluted share World Trade Center insurance settlement. Quarterly comparisons are also adversely impacted by the2006 fourth quarter, including an insurance benefit of $9.4 million pretax, or$0.11 per diluted share, from the take-down of prior year insurance reserves,as compared to $2.5 million, or $0.03 per diluted share benefit in 2007. Fourth quarter 2007 insurance benefits is from the receiptof updated actuarial studies and includes a $1.7 million benefit primarily fromthe continued favorable impact of the California 2004 worker comp reform. Thatis included in the corporate expense segment; a $200,000 pretax benefit inparking from its smaller airport specialty program; and a $600,000 benefit injanitorial from its Midwest worker compensation program. Total revenue was $723.9 million compared to last year’sfourth quarter of $776.7 million. That includes that previously mentioned WorldTrade settlement of $80 million. Sales and other income which totaled $723.9 million for thequarter was up $3.9 million and this increase is primarily from internalgrowth. Turning to gross margin as a percent of sales, gross margin,which is defined as sales minus operating expenses and cost of goods sold, was11.1% for the quarter compared to a 12.4% in the fourth quarter of ’06. Thepreviously discussed insurance adjustments are included in operating expensesand cost of goods…

Thank you, George. I will briefly review the operationalresults for the fourth quarter and year as well as provide guidance for fiscal’08. Our janitorial operation posted a fourth quarter revenueincrease of $14 million, or 3.5%, compared to the same period in ’06. For thefiscal year, janitorial sales were up $57.8 million, or 3.7% to $1.6 billionwith growth across the U.S. Our janitorial segment enters into fiscal ’08 with solidsales momentum. Operating profits for janitorial increased by $2 million or8.8% compared to the fourth quarter of ’06. Operating profit increased by $5.9million or 7.2% for the full year. Operating margins for the year were 5.4%, up20 basis points from fiscal ’06 -- a very, very good year for the janitorialteam. With the addition of OneSource and the initial progress weare making on achieving the $45 million to $50 million of cost synergy savings,this organization is very well positioned for ’08. Parking sales increased $10.5 million, or 9.3%, whileoperating profit increased $0.5 million, or 11.6% during the fourth quarter of’07 compared to ’06. Sales increased by $39.3 million, or 8.9% during ’07compared to ’06, primarily due to HPSA, reimbursement for out-of-pocketexpenses for managed parking lot clients, than due to new contracts and growthof existing contracts, and a $5 million gain in connection with the terminationof the airport leasing garage lease. HPSA accounted for [$80 million] ofrevenue for the year. Operating profit increased $6.5 million, or 47.9% during’07, comparing to 2006 operating results, were favorably impacted by leasetermination, additional profits from HPSA, and increased sales. Security sales increased $4.5 million, or 5.8% during thefourth quarter of ’07 compared to the fourth quarter of ’06. Operating profitincreased by $300,000, or 14%, from the comparable period. For the year, salesincreased by $13.6 million, or [404%], primarily due new business and increasedservice to existing clients. Operating…

(Operator Instructions) Your first question comes from the line ofJeff Kessler.

Thank you. First, George, it’s been great working with youthese years and congratulations and I hope you do well in whatever you aredoing, staying on the West Coast and having an easier time with it over there. I guess we have a few questions here. In your 2008 guidance,what sort of top line numbers and growth rates are you assuming in thesegments? Roughly adding on, are we just roughly adding on $800 million fromOneSource, or what are the other areas that you are looking at? And also, just to clarify about OneSource, are you going tobe -- can you give us any other -- are there any other segments inside ofOneSource, which I used to cover, obviously, that might be adding on to theother segments as well?

Okay. There’s a couple of questions there, Jeff.

Well, it’s all around OneSource.

Let me start with OneSource. Fiscal ’07, or the ’07 revenue[that we did with this] $827 million, I actually think the run-rate is around$840 million based upon the last one or two months, but you have to understandwe are still looking into it. But it looks to be a very positive surprise, nota negative surprise. Talking about growth, also for ’08, we’ve had a very, verystrong sales month, which hopefully will reflect the higher-than-normal growthfor the fiscal ’08. It’s early in the year but I’d rather start with somethingpositive than try to catch up later on in the year. On the segment side, we will be looking at engineering. Theyhave a small engineering piece as part of OneSource. If it’s truly what wedefine as engineering and facility services, we will eventually move it over tothat line of business during the course of the year. We should know that beforethe end of the first quarter what exactly is part of that particular line ofbusiness. Did I answer all of your questions?

Can you talk about the landscaping business?

I’ll be happy to talk about the landscaping business. As welook at it now, we have a very small piece of landscaping business that we atone point in time will merge into the existing landscaping business andOneSource was a major operator of landscaping compared to [our two companies],and I look forward to learning much more about their landscaping operation inthe future than I know about it right now.

Okay, your --

-- very much on the janitorial.

Okay, your pro forma $1.15 to $125 guidance I’m assumingincludes the synergies that you are talking about. We’re talking 28 to 32 andultimately $45 million to $50 million I guess of synergies. Clearly this is --let me just put it as mildly conservative from any way, shape, or form. Somebodymight say it’s disappointing. I’ll just describe it as conservative. Howconservative are you, especially since it’s below the street and our estimateswith regard to adding on -- if you just add on the savings on to what ourestimates have been?

I think the key thing you have here, you have two factors.If you just looked at the $28 million to $32 million, you do have to subtractthe interest on the $365 million and also you do have an impact if you lowerearnings per share of depreciation of value of contracts, so I won’t call thattoo conservative. I think it’s pretty realistic from that perspective. We [willhave] a negative impact in the first quarter, but we are going to have apositive impact already starting quarter number two. But if you take 6%-plus of $365 million, I’m adding $20million of interest per year that I didn’t have before and some of thereductions, even though we are slightly ahead of plan, are taking place todayand yesterday and we continue with some of the space consolidation in thesecond or third quarter. So we are moving as fast as we can but I think themajor, major, major benefit, you will see that in year two and three.

Okay, just a couple more questions; the self insurancereserve adjustment, clearly a cause of confusion for the last couple of yearsand yet again in the fourth quarter I think again. Can you go through withoutgoing through it in too much detail, going through the reserve adjustments andshould we have -- should we basically be taking out that, the benefit that youreceived in the fourth quarter from your -- from what we deem to be thenormalized earnings? In other words, how do you look at these insuranceadjustments? Because we -- are these a normal course of business that we aregoing to have to -- that obviously we deal with and as an analyst, are we justgoing to excise these every single quarter? Or is it something that -- is therea way for us to put a trendline through this?

Trust me -- I’m as frustrated with the way we do it asanybody else. It seems like people covering us, looking at us are penalizing uswhen it’s bad and we don’t get the benefit when it’s good. If you look across the year, it’s amazingly flat. We wentfrom doing one actuary study a year to up to now we are doing three actuals ayear, one major study and two minor studies. And that was in order to minimizethe variation in the old years. And if you look at the [ultimate refurb], which I think isrunning $800 million to $900 million -- I’ll let George talk a little bit moreabout it afterwards -- a 1% variance in the actuarial numbers is $8 million onold years. And unfortunately, that has a major impact on our quarter. The accounting rules are very clear. I don’t like them butthey are very clear and that means that we have to accrue to a point estimate,if you have a better estimate than a range. I prefer the range but theaccounting rules doesn’t exactly necessarily go as to what I prefer. I’ll let George go through it again but I think overall,Jeff, the old years, you will see we are accruing exactly what the actuarytells us what to accrue and it is as frustrating for us as it is for them, butif you ask me if you should exclude it, I think if you exclude it in yourevaluation [when I’ve got damage], yes, you should exclude it when I getbenefits. You have to give me benefit if you penalize to [inaudible].

Okay. Finally, a question I ask every quarter about cross-sellingand up-selling of the divisions and how that may help or hopefully help youroperating margin. Are you satisfied with what is going on in that area?

Well, I will be satisfied with what’s going on in thecross-selling area. I think I’ve been crying about that for years. I am very pleased with the overall improvement in ouroperating profit percentage I think is moving up. It’s a very stable move andit’s been a constant move, especially in the janitorial world. And I thinkyou’ll see that continue, especially with the addition of OneSource where sizeis going to be very, very important. And I think the cross-selling might not bethe biggest asset as part of this, but the multi-state and multi-national andmulti-regional sales as part of this deal is going to hopefully add some morebusiness than we expected to those deals.

Just to give you a little further information on theinsurance reserves, if you look over the year, first quarter we had a $4.2million benefit, then we had a $4.9 million adverse development, and then the$2.5 million in the fourth quarter. I think you’ll see those numbers continue to shrink as theportfolio of claims is under now one third party administrator and I think wewere getting our hands better around those claims going forward. But as Henrik said, we do an actuarial study three times ayear. It’s projecting losses since 1986, which is now over $1 billion inultimate, and so minor movements by the actuary, or what the actuary doesbelieve is minor, does impact ourselves. So I would concur with Henrik that those results shouldcontinue to dwindle in the size and the magnitude but they definitely are apart of our earnings.

Okay, thanks and again, it’s been great working with you.

Your next question comes from the line of David Gold withSidoti. David Gold - Sidoti& Company: Good morning. George, definitely concur with Jeff on thatone; it has been a lot of fun and certainly best of luck. A couple ofquestions, hopefully you can help me out; first of all, the $20 million or so,the one-time, can you give us a sense for how much of that is related toOneSource versus some of the other initiatives you are undertaking?

Yeah, I can give you some sense of this. Of the $20 million,around $5 million is specifically expected to be OneSource related. Anothermajor chunk -- don’t want to give you a specific number but I think around $12million is associated with project transform, which also includes -- no, I’msorry, JD Edwards conversion and it’s something we are looking at right now,David, because one of the major, major positive surprises as part of theOneSource acquisition is that they -- as a matter of fact, they might have anolder system but they have a better functional system than we do and they mighthave a system that’s more efficient than our existing system. So we have planned, as we mentioned when we went to IBM, todo a major transformation this year to a much greater JD Edwards platform. Butthe findings as part of the acquisition has led us to now investigate to see ifthe direction that we already decided is the proper direction, to make sure wedo it in the most economic and for operations, the best possible way. So the biggest chunk of the whole thing is probably 60% ofthe whole thing is associated with the conversion of IT and then you’ve got a$5 million, or 25% of that whole thing associated with OneSource and that isassociated primarily with severance costs as well as elimination of leases.Those are the major factors there and lastly, the last piece is related to themove to New York and [one other thing]. David Gold - Sidoti& Company: And on the IT conversion/JD Edwards, are you viewing that atthis point as a one-year project or does it continue?

The conversion? No, we expect the project to be done -- ifwe continue the direction we are going right now, the project will be finalizedsome time late ’09 but right now, based upon our findings, I can’t give you --if we decided to go with the OneSource route, if that’s going to change anytiming, it’s too early for me to tell you that. As I said, we are looking intoit now and as a matter of fact, my new CFO is going through a two-day full-daymeeting discussing exactly the direction of the company going forward. David Gold - Sidoti& Company: And then a question for George on the G&A; even if Iblend back in the I think you said $1.7 million that would have been there inthe quarter, you still had a lower showing or a better showing than would haveexpected and certainly on a year-to-year basis, you’re making progress there. Anything I’m missing or not thinking about or are you guysjust making real good progress there?

In our cost of -- in our SG&A? David Gold - Sidoti& Company: Right.

No, I think we continue to make good progress in that area.Just on the -- going back to the OneSource, the accounting rules are a littlebit unique in that as we consolidate, if we eliminate a OneSource branch, thatgoes to purchase accounting but if we decide to eliminate the ABM branchbecause the OneSource branch is better suited for our operations, then thatgoes through P&L. That’s why we’ve put up a $5 million target for nextyear, is some of those costs on the ABM side. David Gold - Sidoti& Company: Interesting. And then just a couple of others; can you givea sense for what you’d expect D&A and CapEx to be for 2008?

For 2007, depreciation and amortization is going to be about$18 million. That excludes the share-based compensation, which we typically addback in there and that’s another 8. Going forward with OneSource now being inthere, I would say it will probably be close to $25 million. David Gold - Sidoti& Company: Twenty-five --

Depreciation and amortization. David Gold - Sidoti& Company: And then the share-based will be on top of that?

Share-based should return back probably to a $5 millionlevel. Last year we had accelerated in the first three quarters from our pricevested options that are now behind us. David Gold - Sidoti& Company: And then just a sense on CapEx, if you might.

I’m sorry. CapEx for the year was $22 million. With theproject on the JD Edwards, it probably will be closer to $27 million, $28million next year. David Gold - Sidoti& Company: Very good. Appreciate the help from you both.

There are no further questions at this time.

Thank you very much for listening to us. Have a happyholiday and we will see you after the first quarter of ’08. Thank you.

This concludes today’s conference call. You may nowdisconnect.