Attached files
file | filename |
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10-K - FORM 10-K - FEDERAL SIGNAL CORP /DE/ | c62191e10vk.htm |
EX-23 - EX-23 - FEDERAL SIGNAL CORP /DE/ | c62191exv23.htm |
EX-21 - EX-21 - FEDERAL SIGNAL CORP /DE/ | c62191exv21.htm |
EX-4.E - EX-4.E - FEDERAL SIGNAL CORP /DE/ | c62191exv4we.htm |
EX-4.F - EX-4.F - FEDERAL SIGNAL CORP /DE/ | c62191exv4wf.htm |
EX-31.2 - EX-31.2 - FEDERAL SIGNAL CORP /DE/ | c62191exv31w2.htm |
EX-31.1 - EX-31.1 - FEDERAL SIGNAL CORP /DE/ | c62191exv31w1.htm |
EX-10.Z - EX-10.Z - FEDERAL SIGNAL CORP /DE/ | c62191exv10wz.htm |
EX-32.2 - EX-32.2 - FEDERAL SIGNAL CORP /DE/ | c62191exv32w2.htm |
EX-32.1 - EX-32.1 - FEDERAL SIGNAL CORP /DE/ | c62191exv32w1.htm |
EX-10.AA - EX-10.AA - FEDERAL SIGNAL CORP /DE/ | c62191exv10waa.htm |
EX-99.2 - EX-99.2 - FEDERAL SIGNAL CORP /DE/ | c62191exv99w2.htm |
Exhibit 99.1
News From
REGENCY TOWERS, 1415 W. 22ND ST., OAK BROOK, ILLINOIS 60523
FOR IMMEDIATE RELEASE
Federal Signal Corporation Announces 2010 Fourth Quarter Results
Highlights
| Orders increased 10% sequentially over the third quarter |
| Non-cash goodwill and other intangible asset impairment charge of $79 million |
| Non-cash tax charge of $85 million for establishment of valuation allowance against deferred tax assets |
| Hearing loss settlement charge of $3.8 million |
| Restructuring charges of $1 million |
| Loss per share from continuing operations of ($2.55) |
Oak Brook, Ill., Federal Signal Corporation (NYSE: FSS), a leader in environmental, safety and
transportation solutions, announced today a loss per share from
continuing operations of ($2.55)
for the fourth quarter and a loss from continuing operations of
($158.4) million on net sales of
$186.7 million. For the same period of 2009, the Company reported earnings per share of $0.19 on
income of $9.4 million from continuing operations on net sales of $205.6 million. Included in the
results for the fourth quarter of 2010 is a non-cash charge to recognize a valuation allowance of
$85.0 million against deferred tax assets, a non-cash goodwill and other intangible asset
impairment charge of $78.9 million in the Federal Signal Technologies Group, and a charge of $3.8
million to settle a significant portion of the Companys existing hearing loss litigation. The
deferred tax asset valuation allowance does not impact the Companys ability to use the related tax
benefits in the future. The ($2.55) loss per share from continuing
operation for the fourth quarter of 2010 included goodwill and other
assets impairment charges of ($1.15) per share, restructuring charges of ($0.01) per share, hearing
loss settlement charge of ($0.04), and ($1.37) per share tax charges, primarily related
to the establishment of a deferred tax valuation allowance resulting from the cumulative domestic
losses reported by the Company. Earnings per share for the fourth quarter of 2009 included
restructuring charges of ($0.01) per share.
Year to
date, the Company reported a loss per share from continuing operations of ($2.79) on net
sales of $726.5 million as compared to earnings per share from continuing operations in 2009 of
$0.41 on net sales of $750.4 million. The year over year reduction is primarily related to the
non-cash tax valuation allowance and goodwill and other intangible asset impairment charge
discussed above, restructuring charges of $5.0 million, acquisition and integration related costs
of $3.9 million, and a settlement charge of $3.8 million for the hearing loss litigation.
The
Company recorded a net loss of ($169.2) million including a loss from discontinued operations
of ($10.8) million in the fourth quarter of 2010 compared to net
income of $22.7 million including a gain from
discontinued operations of $13.3 million in the
same prior year period.
Fourth quarter 2010 discontinued operations included a $2.7 million loss associated with the
closing of a wholly-owned China based business, a $2.9 million charge primarily related to an
environmental remediation liability at a Texas facility that was previously used by the
discontinued Pauluhn business, a $2.2 million charge to the product liability reserve and a $2.9
million tax expense associated with the deferred tax asset valuation allowance, compared to the
gain on sale of the Pauluhn business of $14.3 million recorded in the fourth quarter of 2009.
For the
full year, the 2010 net loss was ($175.7) million compared to 2009 net income of $23.1 million in the
prior year.
As of December 31, 2010, the Company was not in compliance with its interest coverage ratio under
its existing credit and private placement note agreements. The Company has received a waiver of
this event of default from its lenders. In addition, the credit and private placement note
agreements have been amended to include new financial and other covenants. Certain new restrictions
have also been added to the agreements which will limit the Companys ability to incur additional
indebtedness, make investments, pay dividends and engage in other transactions. As a result, the
Company will not pay a dividend for the first quarter 2011.
Dennis J. Martin, President and Chief Executive Officer, stated, We recognized significant
charges in the fourth quarter. Some will result in improved future profitability, and some were
non-cash charges driven by accounting guidelines. With the fourth quarter now behind us, we are
focused on delivering improved results both earnings and cash flow as we move through 2011.
Many of our industrial businesses performed well in 2010, with solid growth at good margins
while our municipal-focused businesses faced a challenging environment.
Mr. Martin continued, My goal is to drive margin and cash flow improvement across all of the
businesses in our portfolio. We have begun the process of segmenting, simplifying and improving our
lower-margin businesses, while identifying ways to further enhance our better-performing
businesses. Orders for the fourth quarter increased $17 million, or 10%, versus the third quarter,
with most of those gains coming in our longer lead-time businesses at Bronto and ESG. This is an
encouraging sign for 2011 as these orders will be turned into higher sales and profits in the
second quarter and beyond, and our margin improvement initiatives will gain traction as we move
through the year.
GROUP RESULTS
Safety and Security Systems
The following table summarizes the Safety and Security Systems Groups operating results for the
three month period ended December 31, 2010 and 2009, respectively:
($ in millions) | 2010 | 2009 | Change | |||||||||
Orders |
$ | 52.3 | $ | 54.0 | $ | (1.7 | ) | |||||
Net sales |
54.8 | 57.9 | (3.1 | ) | ||||||||
Operating income |
7.1 | 6.3 | 0.8 | |||||||||
Operating margin |
13.0 | % | 10.9 | % | 2.1 | % | ||||||
Depreciation and amortization |
$ | 0.9 | $ | 1.0 | (0.1 | ) |
| Orders decreased $1.7 million in the fourth quarter compared to the respective prior year period. U.S. orders decreased $0.4 million due to lower municipal spending in the police, fire and outdoor warning markets, partially offset by stronger industrial demand of $1.4 million. Non-U.S. orders decreased $1.3 million as strong demand for industrial and outdoor warnings systems were offset by weak demand in the municipal market. |
| Net sales decreased $3.1 million in the fourth quarter compared to the respective prior year period caused by lower municipal spending, partially offset by strong industrial demand. |
| Operating income increased $0.8 million in the fourth quarter compared to the respective prior year period driven by cost reduction initiatives, which resulted in a 2% improvement to the operating margin compared to the same period prior year. |
Fire Rescue
The following table summarizes the Fire Rescue Groups operating results for the three month period
ended December 31, 2010 and 2009, respectively:
($ in millions) | 2010 | 2009 | Change | |||||||||
Orders |
$ | 28.6 | $ | 28.4 | $ | 0.2 | ||||||
Net sales |
34.0 | 58.6 | (24.6 | ) | ||||||||
Operating income |
4.3 | 9.6 | (5.3 | ) | ||||||||
Operating margin |
12.6 | % | 16.4 | % | (3.8 | )% | ||||||
Depreciation and amortization |
$ | 0.6 | $ | 0.6 | $ | |
| Orders increased $2.8 million, excluding the currency impact in the fourth quarter, compared to the respective prior year period. This was primarily due to an increase in the industrial market. |
| Net sales decreased $24.6 million in the fourth quarter compared to the respective prior year period as a result of lower volumes and an unfavorable currency impact of $2.6 million. |
| Operating income decreased by $5.3 million in the fourth quarter compared to the respective prior year period due to lower volumes and unfavorable currency impact. Operating margin decreased by 4% compared to the respective prior year period due to lower gross profit margin and an unfavorable currency impact, partially offset by cost reduction activities. |
Environmental Solutions
The following table summarizes the Environmental Solutions Groups operating results for the three
month period ended December 31, 2010 and 2009, respectively:
($ in millions) | 2010 | 2009 | Change | |||||||||
Orders |
$ | 84.1 | $ | 73.2 | $ | 10.9 | ||||||
Net sales |
71.9 | 68.9 | 3.0 | |||||||||
Operating income |
1.8 | 3.0 | (1.2 | ) | ||||||||
Operating margin |
2.5 | % | 4.4 | % | (1.9 | )% | ||||||
Depreciation and amortization |
$ | 1.2 | $ | 1.2 | $ | |
| Orders increased $10.9 million in the fourth quarter compared to the respective prior year period. U.S. orders increased $13.4 million in the fourth quarter compared to the respective prior year period due to an increase of $8.4 million in the industrial market and $5.0 million in the municipal and government markets. Non-U.S. orders in the fourth quarter compared to the respective prior year period decreased $2.6 million. |
| Net sales increased $3.0 million in the fourth quarter compared to the respective prior year period as a result of higher sales volumes in sewer cleaners and parts, offset by lower sales volumes in street sweepers. |
| Operating income decreased $1.2 million compared to the respective prior year period, primarily due to lower sweeper sales volume. |
Federal Signal Technologies
The following table summarizes the Federal Signal Technologies Groups operating results for the
three month period ended December 31, 2010 and 2009, respectively:
($ in millions) | 2010 | 2009 | Change | |||||||||
Orders |
$ | 21.7 | $ | 18.1 | $ | 3.6 | ||||||
Net sales |
26.0 | 20.2 | 5.8 | |||||||||
Operating (loss) income |
(80.8 | ) | 3.1 | (83.9 | ) | |||||||
Operating margin |
(310.8 | )% | 15.3 | % | (326.1 | )% | ||||||
Depreciation and amortization |
$ | 1.6 | $ | 1.1 | $ | 0.5 |
| Orders increased $3.6 million in the fourth quarter compared to the respective prior year period. U.S. orders increased $6.0 million in the fourth quarter compared to the respective prior year period as a result of orders attributed to the newly acquired businesses, Sirit, VESystems and Diamond, partially offset by a decrease in both automated license plate recognition (ALPR) cameras and parking systems. Non-U.S. orders decreased $2.5 million in the fourth quarter compared to the respective prior year period due to weak demand of ALPR cameras in the European market as a result of soft municipal and government spending. |
| Net sales increased $5.8 million in the fourth quarter compared to the respective prior year period, primarily due to sales from the newly acquired businesses of Sirit, VESystems, and Diamond, offset by a decrease in the sales of ALPR cameras and parking systems as result of soft municipal government spending. |
| Operating loss was ($80.8) million in the fourth quarter compared to operating income of $3.1 million for the respective prior year period. The decrease in operating income was primarily due to non-cash goodwill and other intangible asset impairment charge of $78.9 million, higher amortization expense, higher research and development costs, and a deferred retention expense related to the acquisition of Diamond. |
CORPORATE EXPENSES
| Corporate expenses were $15.1 million and $7.6 million for the fourth quarter of 2010 and 2009, respectively. The increase was mainly due to a $3.8 million settlement charge in connection with the Companys ongoing hearing loss litigation, and a $2.8 million charge for severance expenses. |
CONFERENCE CALL
Federal
Signal will host its fourth quarter conference call on Wednesday,
March 16th, 2011 at 10:00
a.m. Eastern Time. The call will last approximately one hour. The call may be accessed over the
internet through Federal Signals website at http://www.federalsignal.com. A replay will be
available on Federal Signals website shortly after the call.
About Federal Signal
Federal Signal Corporation (NYSE: FSS) enhances the safety, security and well-being of communities
and workplaces around the world. Founded in 1901, Federal Signal is a leading global designer and
manufacturer of products and total solutions that serve municipal, governmental, industrial and
institutional customers. Headquartered in Oak Brook, Ill., with manufacturing facilities worldwide,
the Company operates four groups: Safety and Security Systems, Environmental Solutions, Federal
Signal Technologies, and Fire Rescue. For more information on Federal Signal, visit:
http://www.federalsignal.com.
This release contains unaudited financial information and various forward-looking statements as of
the date hereof and we undertake no obligation to update these forward-looking statements
regardless of new developments or otherwise. Statements in this release that are not historical are
forward-looking statements. Such statements are subject to various risks and uncertainties that
could cause actual results to vary materially from those stated. Such risks and uncertainties
include but are not limited to: economic conditions in various regions, product and price
competition, supplier and raw material prices, foreign currency exchange rate changes, interest
rate changes, increased legal expenses and litigation results, legal and regulatory developments
and other risks and uncertainties described in filings with the Securities and Exchange Commission.
Contact:
William Barker +1-630-954-2000,
wbarker@federalsignal.com
# # #
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three months ended December 31, | For the Years Ended December 31, | |||||||||||||||
(in millions, except per share data) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Net sales |
$ | 186.7 | $ | 205.6 | $ | 726.5 | $ | 750.4 | ||||||||
Costs and expenses |
||||||||||||||||
Cost of sales |
138.5 | 151.3 | 542.3 | 557.3 | ||||||||||||
Selling, general and administrative |
50.9 | 38.8 | 173.3 | 155.8 | ||||||||||||
Acquisition and integration related costs |
0.1 | | 3.9 | | ||||||||||||
Goodwill and intangible assets impairment |
78.9 | | 78.9 | | ||||||||||||
Restructuring charges |
1.0 | 1.1 | 5.0 | 1.5 | ||||||||||||
Operating (loss) income |
(82.7 | ) | 14.4 | (76.9 | ) | 35.8 | ||||||||||
Interest expense |
2.0 | 2.6 | 10.3 | 11.4 | ||||||||||||
Other (expense) income, net |
(0.2 | ) | 1.0 | 1.2 | (0.7 | ) | ||||||||||
(Loss) income before income taxes |
(84.9 | ) | 12.8 | (88.4 | ) | 25.1 | ||||||||||
Income tax expense |
(73.5 | ) | (3.4 | ) | (72.3 | ) | (5.3 | ) | ||||||||
(Loss) income from continuing operations |
(158.4 | ) | 9.4 | (160.7 | ) | 19.8 | ||||||||||
Loss from discontinued operations and disposal, net of
tax |
(10.8 | ) | 13.3 | (15.0 | ) | 3.3 | ||||||||||
Net (loss) income |
$ | (169.2 | ) | $ | 22.7 | $ | (175.7 | ) | $ | 23.1 | ||||||
COMMON STOCK DATA: |
||||||||||||||||
Basic and diluted earnings (loss) per share: |
||||||||||||||||
(Loss) earnings from continuing operations |
$ | (2.55 | ) | $ | 0.19 | $ | (2.79 | ) | $ | 0.41 | ||||||
(Loss) earnings from discontinued operations and disposal |
(0.17 | ) | 0.27 | (0.26 | ) | 0.06 | ||||||||||
(Loss) earnings per share |
$ | (2.72 | ) | $ | 0.46 | $ | (3.05 | ) | $ | 0.47 | ||||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic |
62.2 | 48.9 | 57.6 | 48.6 | ||||||||||||
Diluted |
62.2 | 48.9 | 57.6 | 48.6 | ||||||||||||
Cash dividends per share of common stock |
$ | 0.06 | $ | 0.06 | $ | 0.24 | $ | 0.24 | ||||||||
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
December 31, | December 31, | |||||||
( in millions, except per share data) | 2010 | 2009 | ||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 62.1 | $ | 21.1 | ||||
Accounts receivable, net of allowances for doubtful accounts of $2.8 and $2.4, respectively |
100.4 | 119.7 | ||||||
Inventories, net |
119.6 | 110.7 | ||||||
Other current assets |
17.9 | 25.9 | ||||||
Total current assets |
300.0 | 277.4 | ||||||
Properties and equipment, net |
63.2 | 64.2 | ||||||
Other assets |
||||||||
Goodwill |
310.4 | 319.6 | ||||||
Intangible assets, net of accumulated amortization |
84.4 | 50.5 | ||||||
Deferred tax assets |
| 17.2 | ||||||
Deferred charges and other assets |
3.4 | 1.7 | ||||||
Total assets of continuing operations |
761.4 | 730.6 | ||||||
Assets of discontinued operations |
3.1 | 13.9 | ||||||
Total assets |
$ | 764.5 | $ | 744.5 | ||||
LIABILITIES AND SHAREHOLDERS EQUITY |
||||||||
Current liabilities |
||||||||
Short-term borrowings |
$ | 1.8 | $ | | ||||
Current portion of long-term borrowings |
76.2 | 41.9 | ||||||
Accounts payable |
53.5 | 44.8 | ||||||
Accrued liabilities |
||||||||
Compensation and withholding taxes |
21.2 | 20.8 | ||||||
Customer deposits |
10.2 | 10.4 | ||||||
Deferred revenue |
10.6 | 4.3 | ||||||
Other |
41.1 | 42.0 | ||||||
Total current liabilities |
214.6 | 164.2 | ||||||
Long-term borrowings and capital lease obligations |
184.4 | 159.7 | ||||||
Long-term pension and other postretirement benefit liabilities |
41.3 | 39.6 | ||||||
Deferred gain |
23.5 | 24.2 | ||||||
Deferred tax liabilities |
45.8 | | ||||||
Other long-term liabilities |
15.8 | 12.2 | ||||||
Total liabilities of continuing operations |
525.4 | 399.9 | ||||||
Liabilities of discontinued operations |
18.2 | 15.9 | ||||||
Total liabilities |
543.6 | 415.8 | ||||||
Shareholders equity |
||||||||
Common stock, $1 par value per share, 90.0 million shares authorized, 63.0 million and 49.6
million shares issued, respectively |
63.0 | 49.6 | ||||||
Capital in excess of par value |
164.7 | 93.8 | ||||||
Retained earnings |
50.6 | 240.4 | ||||||
Treasury
stock, 0.9 million and 0.8 million shares at cost, respectively |
(15.8 | ) | (15.8 | ) | ||||
Accumulated other comprehensive loss |
(41.6 | ) | (39.3 | ) | ||||
Total shareholders equity |
220.9 | 328.7 | ||||||
Total liabilities and shareholders equity |
$ | 764.5 | $ | 744.5 | ||||
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
For the Years Ended | ||||||||
December 31, | ||||||||
2010 | 2009 | |||||||
Operating activities |
||||||||
Net (loss) income |
$ | (175.7 | ) | $ | 23.1 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
Loss (gain) on discontinued operations and disposal |
15.0 | (3.3 | ) | |||||
(Gain) loss on joint venture |
(0.1 | ) | (1.2 | ) | ||||
Goodwill and intangible assets impairment |
78.9 | | ||||||
Valuation allowance |
85.0 | | ||||||
Depreciation and amortization |
19.2 | 14.7 | ||||||
Stock option and award compensation expense |
2.3 | 3.1 | ||||||
Provision for doubtful accounts |
1.2 | 0.9 | ||||||
Deferred income taxes |
(13.7 | ) | 3.7 | |||||
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions of
companies |
||||||||
Accounts receivable |
19.6 | 17.8 | ||||||
Inventories |
(7.9 | ) | 21.8 | |||||
Other current assets |
2.6 | (0.7 | ) | |||||
Accounts payable |
4.0 | (3.3 | ) | |||||
Customer deposits |
| (7.4 | ) | |||||
Accrued liabilities |
(3.4 | ) | (5.8 | ) | ||||
Income taxes |
(1.2 | ) | 1.9 | |||||
Pension contributions |
(1.1 | ) | (1.0 | ) | ||||
Deferred revenue |
6.3 | 0.2 | ||||||
Other |
6.8 | (3.5 | ) | |||||
Net cash provided by (used for) continuing operating activities |
37.8 | 61.0 | ||||||
Net cash (used for) provided by discontinued operating activities |
(6.6 | ) | 1.4 | |||||
Net cash provided by operating activities |
31.2 | 62.4 | ||||||
Investing activities |
||||||||
Purchases of properties and equipment |
(12.8 | ) | (14.4 | ) | ||||
Proceeds from sales of properties and equipment |
1.9 | 4.0 | ||||||
Payments for acquisitions, net of cash acquired |
(97.3 | ) | (13.5 | ) | ||||
Other, net |
| 10.0 | ||||||
Net cash used for continuing investing activities |
(108.2 | ) | (13.9 | ) | ||||
Net cash provided by discontinued investing activities |
0.2 | 44.9 | ||||||
Net cash (used for) provided by investing activities |
(108.0 | ) | 31.0 | |||||
Financing activities |
||||||||
Increase (reduction) in short-term borrowings, net |
130.9 | (12.6 | ) | |||||
Proceeds from issuance of long-term borrowings |
| 12.5 | ||||||
Repayment of long-term borrowings |
(70.8 | ) | (77.6 | ) | ||||
Purchases of treasury stock |
| | ||||||
Cash dividends paid to shareholders |
(13.3 | ) | (11.7 | ) | ||||
Proceeds from Equity offering |
71.2 | | ||||||
Other, net |
0.6 | 0.2 | ||||||
Net cash provided by (used for) continuing financing activities |
118.6 | (89.2 | ) | |||||
Net cash used for discontinued financing activities |
(1.0 | ) | (7.3 | ) | ||||
Net cash provided by (used for) financing activities |
117.6 | (96.5 | ) | |||||
Effects of foreign exchange rate changes on cash |
0.2 | 0.8 | ||||||
Increase (decrease) in cash and cash equivalents |
41.0 | (2.3 | ) | |||||
Cash and cash equivalents at beginning of year |
21.1 | 23.4 | ||||||
Cash and cash equivalents at end of year |
$ | 62.1 | $ | 21.1 | ||||