Federal Signal Corporation Reports 12% Increase in both Net Sales and Operating Income for Fourth Quarter

    Federal Signal Corporation Reports 12% Increase in both Net Sales and
                     Operating Income for Fourth Quarter

PR Newswire

OAK BROOK, Ill., March 15, 2013

OAK BROOK, Ill., March 15, 2013 /PRNewswire/ --Federal Signal Corporation
(NYSE: FSS), a leader in environmental and safety solutions, today reported
results for the fourth quarter ended December 31, 2012.

  oQ4 net sales of $218 million, up 12% from the prior year;
  oQ4 operating income from continuing operations increased to $13 million, a
    12% increase over the prior year;
  oNet cash provided by continuing operating activities was $49 million
    during 2012, compared to $14 million in the prior year;
  oQ4 earnings per share from continuing operations of $0.08 versus $0.11
    last year;
  oVersus last year, Q4 2012 earnings per share from continuing operations
    include $0.02 per share higher interest expense, $0.02 per share higher
    income tax expense and $0.01 per share in 2012 for restructuring charges;
  oFull year earnings per share from continuing operations of $0.35 compared
    to $0.21 for 2011;
  oFull year 2012 results include ($0.06) per share impact of debt settlement
    charges and ($0.02) impact of restructuring charges;
  oBacklog generated by continuing operations increased to $318 million, an
    8% increase over the same prior year period, while Q4 orders declined 13%
    to $208 million;
  oCompany debt to EBITDA ratio finished 2012 at 2.4, a substantial
    improvement from 4.8 at the end of the prior year.

Dennis J. Martin, President and Chief Executive Officer, stated, "Our fourth
quarter performance demonstrated our commitment to disciplined growth,
delivering 12% revenue and operating income growth." Mr. Martin continued,
"Working capital management improved significantly during the quarter and the
year, as we generated $49 million in operating cash flow during the year, an
over three-fold improvement from 2011."

Orders of $826.3 million in 2012 decreased by 1% compared to 2011 as strong
municipal demand for sewer cleaners and market share gains in police and fire
markets were offset by lower order volumes for Vactor industrial trucks. U.S.
municipal and government orders increased 8% in 2012, driven by a $14.4
million increase in orders for sewer cleaners and a $10.4 million increase in
police and fire markets and outdoor warning systems. U.S. industrial and
commercial orders decreased 7% primarily due to decreases in Vactor industrial
truck orders relative to peak orders experienced late in 2011. This was
partially offset by increased industrial safety and security product orders of
$5.4 million due to higher market demand, and increased waterblaster orders of
$8.6 million. Non-U.S. orders decreased 3% compared to 2011, with decreases
across most segments, partially offset by a $2.6 million increase in U.S.
export orders to Canada and Asia.

Net sales increased $114.5 million or 17% compared to 2011, with increases
across all segments.

Operating income increased $18.3 million or 55% compared to 2011, primarily
due to higher sales volume and favorable product mix, partially offset by
restructuring charges of $1.4 million that were recorded in 2012.

Interest expense increased $5.0 million compared to 2011, primarily due to an
increase in interest rates on the Company's debt financing agreements entered
into in February 2012.

Mr. Martin concluded, "We accomplished a number of critical objectives in 2012
and early 2013 that will position the Company for improved earnings through
reduced interest expense and the benefits of our 80/20 initiatives. Progress
on attainment of our stated operating margin goals continued during Q4,
particularly at the Safety and Security Systems Group, where our operating
margins expanded by more than four percentage points over the prior year. All
of our segments increased operating margins during the full fiscal year.
Despite the uncertain outlook in some of our markets, our backlog remains
healthy at $318 million, positioning us to make continued gains toward
approaching our stated operating margin goals."

GROUP RESULTS

Safety and Security Systems
The following table summarizes the Safety and Security Systems Group's results
as of and for the three and twelve-month periods ended December31, 2012 and
2011, respectively:

                     ThreemonthsendedDecember31, Twelve
                                                     monthsendedDecember31,
($ in millions)      2012      2011      Change      2012     2011     Change
Orders               $ 59.8    $ 64.4    $ (4.6 )   $ 241.9  $ 235.3  $ 6.6
Backlog              31.2      31.7      (0.5)       31.2     31.7     (0.5)
Net sales            67.1      60.4      6.7         240.3    221.4    18.9
Operating income     9.2       5.6       3.6         27.9     21.5     6.4
Operating margin     13.7%     9.3 %     4.4 %       11.6%    9.7 %    1.9%
Depreciation and     $ 1.1    $  1.1   $  —      $  4.3  $  4.4  $ (0.1)
amortization

Orders of $59.8 million in the fourth quarter decreased $4.6 million compared
to the same quarter in 2011. U.S. orders decreased $0.9 million due to a
decline in outdoor warning markets, which benefited from one large order in
the fourth quarter of 2011, partially offset by improved spending in the
police, fire and industrial markets. Non-U.S. orders declined $3.7 million
primarily due to weak demand in the European and export markets. Orders in
2012 increased $6.6 million or 3% compared to the prior year due to market
share gains and modest market growth in most segments. U.S. orders increased
$15.7 million or 13%, including increases of $5.7 million in outdoor warning
systems due to improved municipal spending, $5.5 million in public safety
markets, and $4.5 million in industrial markets. Non-U.S. orders decreased
$9.1 million or 8%, primarily due to decreases in non-U.S. public safety
orders of $16.5 million, partially offset by increases in industrial product
exports of approximately $5.5 million.

Net sales increased $6.7 million for the three months ended December 31, 2012
compared to the respective prior-year period. Higher industrial sales of $6.3
million from increased shipments of outdoor warning products and pricing
improvements of $0.8 million were partially offset by unfavorable exchange
rate impacts of 1% of sales. Net sales in 2012 increased $18.9 million or 9%
compared to the prior year. Excluding foreign currency effects, sales
increased by $22.5 million and were offset by $3.6 million or 2% of
unfavorable exchange rates. U.S. sales grew by $23.4 million or 20% compared
to 2011, including $14.4 million in outdoor warning systems, $4.3 million in
public safety markets due to market share gains, $2.1 million in industrial
products, and price increases of approximately 1% of sales. Non-U.S. sales
decreased $4.5 million from the prior year, primarily due to decreases of
$11.8 million in the European and export markets for public safety products,
partially offset by higher industrial product export sales of $8.0 million,
primarily in the oil and gas markets, as well as some higher sales of mining
products in international markets.

Operating income increased $3.6 million for the three months ended December
31, 2012 compared to the respective prior-year period, primarily due to higher
sales volumes as well as higher gross profit, which more than offset higher
operating expenses to support the higher sales levels. Operating income in
2012 increased $6.4 million or 30% compared to the prior year primarily due to
higher sales and gross margins. These increases were offset by increased
selling costs of $2.6 million, higher variable sales commissions of $0.9
million, and higher incentive compensation expenses of $1.2 million, which
were offset by a $0.6 million decrease in legal expenses. The Safety and
Security Systems Group incurred restructuring costs of $0.9 million in 2012,
while there were no restructuring costs recorded in 2011.

Fire Rescue
The following table summarizes the Fire Rescue Group's results as of and for
the three and twelve-month periods ended December31, 2012 and 2011,
respectively:

                     ThreemonthsendedDecember31, Twelve
                                                     monthsendedDecember31,
($ in millions)      2012       2011       Change    2012     2011     Change
Orders               $24.2      $28.8      $ (4.6)   $ 136.5  $ 137.6 $ (1.1)
Backlog              83.6       80.1       3.5       83.6     80.1     3.5
Net sales            44.4       41.4       3.0       135.1    109.5    25.6
Operating income     4.5        4.9        (0.4)     8.9      6.6      2.3
Operating margin     10.1 %     11.8 %     (1.7)%    6.6%     6.0%     0.6%
Depreciation and     $  0.7    $  0.6    $ 0.1    $  2.6 $  2.5  $  0.1
amortization

Orders of $24.2 million in the fourth quarter decreased $4.6 million compared
to the same quarter in 2011. The decrease is due primarily to a decline in
orders for fire-lift products from customers in Asia. Orders in 2012 decreased
$1.1 million or 1% compared to the prior year.

Net sales increased $3.0 million for the three months ended December31, 2012
compared to the respective prior-year period. The net sales increase is a
result of increased Asian and Australian business together with some increased
shipments to European markets, partially offset by unfavorable currency
impacts of $1.5 million. The strong backlog and improvements in manufacturing
processes also contributed to the growth in sales. Net sales in 2012 increased
$25.6 million or 23% compared to the prior year, primarily due to increased
sales volume of $28.8 million, pricing increases of $2.5 million, and
favorable product mix of $4.8 million, partially offset by unfavorable
currency impacts of $10.5 million.

Operating income decreased $0.4 million for the three months ended
December31, 2012, compared to the respective prior-year periods. The
operating income decreased due to unfavorable product mix of $0.9 million,
higher Selling, General, and Administrative ("SG&A") expenses of $0.2 million
and unfavorable currency impacts of $0.2 million, partially offset by higher
sales volume impacts of $1.1 million. Operating income in 2012 increased $2.3
million or 35% compared to the prior year primarily due to higher sales
volumes impacts of $6.5 million, partially offset by higher SG&A expenses of
$1.5 million, unfavorable product mix of $2.0 million, and unfavorable
currency impacts of $0.7 million.

Environmental Solutions
The following table summarizes the Environmental Solutions Group's operating
results as of and for the three and twelve-month periods ended December31,
2012 and 2011, respectively:

              ThreemonthsendedDecember31, TwelvemonthsendedDecember31,
($ in         2012        2011       Change   2012        2011       Change
millions)
Orders        $124.0      $ 146.2    $(22.2)  $ 447.9    $ 458.5   $ (10.6)
Backlog       203.6       183.4      20.2     203.6       183.4      20.2
Net sales     106.2       93.2       13.0     427.8       357.8      70.0
Operating     8.2         6.7        1.5      42.0        24.5       17.5
income
Operating     7.7 %      7.2 %     0.5%     9.8 %       6.8 %      3.0%
margin
Depreciation
and           $   1.5   $   1.4  $  0.1  $   5.4   $   5.2  $  0.2
amortization

Orders decreased $22.2 million for the three months ended December 31, 2012
compared to the respective prior-year period. U.S. orders decreased $25.0
million from the prior-year period primarily due to declines in vacuum trucks
of $24.8 million. Non-U.S. orders increased $2.6 million from the prior-year
period due to market increases in Latin America and Middle East, partially
offset by declines in Canada and Mexico. Orders in 2012 decreased $10.6
million or 2% compared to the prior year. U.S. orders decreased $13.2 million
or 4% from the prior year, primarily due to decreases in vacuum trucks of
$35.1 million and sweepers of $2.7 million, partially offset by increases in
sewer cleaners of $14.4 million and waterblasters of $8.6 million. Non-U.S.
orders increased $2.6 million or 3% compared to the prior year, with increases
in U.S. export orders to Canada and Asia.

Net sales increased $13.0 million for the three months ended December 31, 2012
compared to the respective prior-year period. U.S. sales increased $12.0
million primarily resulting from municipal sewer cleaner and street sweeper
shipments. Non-U.S. sales were up $1.0 million due to strength in Canada. Net
sales in 2012 increased $70.0 million or 20% compared to the prior year. U.S.
sales increased $56.7 million with increases in all product lines as a result
of strong opening backlog and solid orders during the year. Non-U.S. sales
were up $13.3 million resulting from an increase in shipments to Canada and
Asia, partially offset by declines in shipments to the Middle East.

Operating income increased $1.5 million for the three months ended December
31, 2012, compared to the respective prior-year period. Operating income
increases are a result of higher gross margins of $1.5 million. Operating
income in 2012 increased $17.5 million or 71%, primarily as a result of higher
gross margins of $18.9 million, partially offset by increased SG&A expenses of
$1.4 million. The increase in SG&A expenses was related to additional
commission expense associated with increased sales and increases in salary and
benefit programs.

Corporate Expenses
Corporate expenses were $8.9 million and $5.6 million for the three months
ended December31, 2012 and 2011, respectively. The increase primarily was due
to higher incentive compensation expense of $1.3 million in 2012 and a $1.5
million reduction in an insurance reserve associated with carrier paid claims
in 2011.

Corporate expenses totaled $27.3 million and $19.4million in 2012 and 2011,
respectively. The 41% increase in 2012 compared to 2011 is primarily due to
higher incentive compensation expense of $4.2 million, restructuring charges
of $0.6 million recorded in 2012, and a $1.3 million reduction in an insurance
reserve associated with carrier-paid claims recorded in 2011. Corporate
expenses include depreciation and amortization expense of $0.9 million and
$0.9 million for 2012 and 2011, respectively.

DEBT TO EBITDA RATIO
The Company uses the ratio of total debt to EBITDA to measure its ability to
repay its outstanding debt obligations. The Company believes that total debt
to EBITDA is a meaningful metric to investors in evaluating the Company's long
term financial performance and may be different than the method used by other
companies to calculate total debt to EBITDA. The ratio of total debt to EBITDA
represents total debt divided by income from continuing operations before
interest expense, debt settlement charges, other expense, income tax
provision, and depreciation and amortization on a trailing twelve month basis.

Total debt to EBITDA for the years ended December31, 2012 and 2011 was as
follows ($ in millions):

                                  2012        2011
Total debt                        $  157.8  $  222.2
Income from continuing operations $   22.0 $   13.1
Add:
Interest expense                  21.4        16.4
Debt settlement charges           3.5         -
Other expense                     0.7         0.2
Income tax provision              3.9         3.5
Depreciation and amortization     13.2        13.0
EBITDA                            $   64.7 $   46.2
Total debt to EBITDA ratio        2.4         4.8

CONFERENCE CALL
Federal Signal will host its fourth quarter conference call on Friday, March
15, 2013 at 10:00 a.m. Eastern Time. The call will last approximately one
hour. The call may be accessed over the internet through Federal Signal's
website at http://www.federalsignal.com. A replay will be available on Federal
Signal's 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 commercial
customers. Headquartered in Oak Brook, IL, with manufacturing facilities
worldwide, the Company operates three groups: Safety and Security Systems,
Fire Rescue, and Environmental Solutions. 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.





FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
                                                             Twelvemonths
                                          Threemonthsended
                                                             ended
                                          December31,
                                                             December31,
(in millions, except per share data)      2012     2011      2012     2011
Net sales                                 $ 217.7  $ 195.0   $ 803.2  $ 688.7
Cost of sales                             168.0    149.3     613.4    533.3
Gross profit                              49.7     45.7      189.8    155.4
Selling, engineering, general and         36.1     34.1      136.9    122.2
administrative
Restructuring charge                      0.6      —         1.4      —
Operating income                          13.0     11.6      51.5     33.2
Interest expense                          5.7      4.5       21.4     16.4
Debt settlement charges                   —        —         3.5      —
Other (income) expense, net               0.4      (0.1)     0.7      0.2
Income before income taxes                6.9      7.2       25.9     16.6
Income tax expense                        (2.0)    (0.7)     (3.9)    (3.5)
Income from continuing operations         4.9      6.5       22.0     13.1
Loss from discontinued operations and
disposal, net of income tax benefit of    (0.1)    (21.7)    (49.5)   (27.3)
$0.1, $1.6, $3.6 and $2.0, respectively
Net (loss) income                         $  4.8  $ (15.2)  $ (27.5) $ (14.2)
Basic and diluted earnings (loss) per
share:
Income from continuing operations         $ 0.08  $ 0.11   $ 0.35   $ 0.21
Loss from discontinued operations and     —        (0.36)    (0.79)   (0.44)
disposal, net of tax
(Loss) earnings per share                 $ 0.08   $ (0.25)  $ (0.44) $ (0.23)
Weighted average common shares
outstanding:
Basic                                     62.4     62.2      62.3     62.2
Diluted                                   63.0     62.2      62.7     62.2



FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
                                                               December31,
                                                               2012    2011
                                                               ($ in millions)
ASSETS
Current assets:
Cash and cash equivalents                                      $ 29.7  $  9.5
Restricted cash                                                1.0     -
Accounts receivable, net of allowances for doubtful accounts
of $2.4million and                                            96.9    105.0

$2.4million, respectively
Inventories                                                    119.9   104.3
Prepaid expenses                                               13.8    14.6
Other current assets                                           5.1     5.6
Current assets of discontinued operations                      0.8     35.9
Total current assets                                           267.2   274.9
Properties and equipment                                       59.3    60.0
Other assets:
Goodwill                                                       272.3   270.6
Intangible assets, net                                         0.7     1.8
Deferred charges and other assets                              12.5    2.0
Long-term assets of discontinued operations                    1.2     97.4
Total assets                                                   $ 613.2 $ 706.7
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings                                          $  0.3 $  9.0
Current portion of long-term borrowings and capital lease      4.7     0.1
obligations
Accounts payable                                               52.5    49.5
Customer deposits                                              13.1    14.4
Deferred revenue                                               3.1     2.9
Deferred tax liability                                         10.6    2.7
Accrued liabilities:
Compensation and withholding taxes                             25.8    18.7
Other                                                          33.1    30.6
 Current liabilities of discontinued operations             6.4     24.1
Total current liabilities                                      149.6   152.0
Long-term borrowings and capital lease obligations             152.8   213.1
Long-term pension and other postretirement benefit liabilities 84.1    74.1
Deferred gain                                                  19.4    21.4
Deferred tax liabilities                                       35.8    41.0
Other long-term liabilities                                    16.0    14.5
Long-term liabilities of discontinued operations               8.6     15.9
Total liabilities                                              466.3   532.0
Shareholders' equity:
Common stock, $1par value per share, 90.0million shares
authorized, 63.4million and 63.1million shares issued,       63.4    63.1
respectively
Capital in excess of par value                                 171.1   167.7
Retained earnings                                              8.9     36.4
Treasury stock, 0.9million and 0.9million shares,            (16.4 ) (16.1 )
respectively, at cost
Accumulated other comprehensive loss                           (80.1 ) (76.4 )
Total shareholders' equity                                     146.9   174.7
Total liabilities and shareholders' equity                     $ 613.2 $ 706.7



FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              For the Years Ended December31,
                                              2012           2011
                                              ($ in millions)
Operating activities:
Net loss                                      $  (27.5)     $ (14.2)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Loss on discontinued operations and disposal  49.5           27.3
Restructuring charges, net of cash payments   0.9            -
Depreciation and amortization                 13.2           13.0
Debt settlement charges                       2.5            -
Stock-based compensation expense              2.6            1.8
Pension expense, net of funding               (5.7)          1.5
Provision for doubtful accounts               0.6            0.4
Deferred income taxes, including change in    (4.8)          1.8
valuation allowance
Changes in operating assets and liabilities,
net of effects from acquisitions and
dispositions of companies:
Accounts receivable                           8.7            (27.3)
Inventories                                   (14.5)         3.4
Other current assets                          0.5            (2.3)
Accounts payable                              2.6            3.7
Customer deposits                             (1.5)          4.6
Accrued liabilities                           16.4           (1.5)
Income taxes                                  8.6            2.7
Other                                         (2.9)          (0.8)
Net cash provided by continuing operating     49.2           14.1
activities
Net cash (used for) provided by discontinued  (26.0)         (10.3)
operating activities
Net cash provided by operating activities     23.2           3.8
Investing activities:
Purchases of properties and equipment         (13.0)         (13.5)
Proceeds from sales of properties and         1.8            1.9
equipment
Proceeds from sale of FSTech Group            82.1           -
Increase in restricted cash                   (1.0)          -
Net cash provided by (used for) investing     69.9           (11.6)
activities
Financing activities:
(Decrease) increase in revolving lines of     (173.3)        (34.6)
credit
(Decrease) increase in short-term borrowings, (9.5)          7.6
net
Proceeds from issuance of long-term           215.0          -
borrowings
Payments on long-term borrowings              (99.5)         (13.2)
Payments of debt financing fees               (6.9)          (2.3)
Cash dividends paid to shareholders           -              (3.7)
Other, net                                    2.4            1.3
Net cash (used for) provided by continuing    (71.8)         (44.9)
financing activities
Net cash used for discontinued financing      (0.9)          (0.6)
activities
Net cash (used for) provided by financing     (72.7)         (45.5)
activities
Effects of foreign exchange rate changes on   (0.2)          0.7
cash
Increase (decrease) in cash and cash          20.2           (52.6)
equivalents
Cash and cash equivalents at beginning of     9.5            62.1
year
Cash and cash equivalents at end of year      $ 29.7         $  9.5

SOURCE Federal Signal Corporation

Website: http://www.federalsignal.com
Contact: Braden Waverley +1-630-954-2000, bwaverley@federalsignal.com
 
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