UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 1-6003

Federal Signal Corporation

(Exact name of Company as specified in its charter)

Delaware		36-1063330
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

1415 West 22nd Street
Oak Brook, IL 60523

(Address of principal executive offices) (Zip code)

(630) 954-2000

(Company’s telephone number including area code)

Not applicable

(Former name, former address, and former fiscal year, if changed since last report)

     Indicate by check mark whether the Company (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the Company has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Company was required to submit and post such files). Yes o No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

     Indicate by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     Indicate the number of shares outstanding of each of the Company’s classes of common stock, as of the latest practicable date.

Title
Common Stock, $1.00 par value		62,215,297 shares outstanding at October 13, 2010

 

 

FEDERAL SIGNAL CORPORATION

INDEX TO FORM 10-Q

		Page
Part I. Financial Information			3
Item 1. Condensed Consolidated Financial Statements (unaudited)			3
Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2010 and 2009			4
Condensed Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009			5
Condensed Consolidated Statement of Shareholders’ Equity for the Nine Months Ended September 30, 2010			6
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2010 and 2009			7
Notes to Condensed Consolidated Financial Statements			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			24
Item 3. Quantitative and Qualitative Disclosures About Market Risk			32
Item 4. Controls and Procedures			32
Part II. Other Information			32
Item 1. Legal Proceedings			32
Item 1A. Risk Factors			32
Item 5. Other Information			32
Item 6. Exhibits			32
Signatures			33

Part I. Financial Information

Item 1. Financial Statements

FORWARD-LOOKING STATEMENTS

This Form 10-Q, reports filed by Federal Signal Corporation and its subsidiaries (“the Company”) with the Securities and Exchange Commission (“SEC”) and comments made by management may contain words such as “may,” “will,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “project,” “estimate” and “objective” or the negative thereof or similar terminology concerning the Company’s future financial performance, business strategy, plans, goals and objectives. These expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning the Company’s possible or assumed future performance or results of operations and are not guarantees. While these statements are based on assumptions and judgments that management has made in light of industry experience as well as perceptions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances, they are subject to risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different.

These risks and uncertainties, some of which are beyond the Company’s control, include the cyclical nature of the Company’s industrial, municipal, government and commercial markets; availability of credit and third-party financing for customers; the Company’s ability to achieve expected savings from integration, synergy and other cost-control initiatives; volatility in securities trading markets; economic downturns; risks associated with suppliers, dealers and other partner alliances; changes in cost competitiveness including those resulting from foreign currency movements; technological advances by competitors; increased competition and pricing pressures in the markets served by the Company; the ability of the Company to expand into new geographic markets and to anticipate and meet customer demands for new products and product enhancements; increased warranty and product liability expenses; compliance with environmental and safety regulations; restrictive debt covenants; disruptions in the supply of parts or components from sole source suppliers and subcontractors; domestic and foreign governmental policy change; unforeseen developments in contingencies such as litigation; protection and validity of patent and other intellectual property rights; retention of key employees; and general changes in the competitive environment. These risks and uncertainties include, but are not limited to, the risk factors described under “Risk Factors” in the Company’s Annual Report on Form 10-K, Form 10-Qs and other filings with the SEC. These factors may not constitute all factors that could cause actual results to differ materially from those discussed in any forward-looking statement. The Company operates in a continually changing business environment and new factors emerge from time to time. The Company cannot predict such factors nor can it assess the impact, if any, of such factors on its financial position or results of operations. Accordingly, forward-looking statements should not be relied upon as a predictor of actual results. The Company disclaims any responsibility to update any forward-looking statement provided in this Form 10-Q.

ADDITIONAL INFORMATION

The Company makes its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, other reports and information filed with the SEC and amendments to those reports available, free of charge, through its Internet website (http://www.federalsignal.com) as soon as reasonably practical after it electronically files or furnishes such materials to the SEC. All of the Company’s filings may be read or copied at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, DC 20549. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically.

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

		Three months ended September 30,								Nine months ended September 30,
(in millions, except per share data)		2010				2009				2010				2009
Net revenue		$	182.0			$	162.2			$	547.2			$	545.1
Costs and expenses
Cost of sales			136.3				121.9				406.4				406.5
Selling, general and administrative			40.0				32.8				123.4				118.2
Acquisition and integration related costs			0.1				—				3.8				—
Restructuring charges			0.1				0.4				4.0				0.4
Operating income			5.5				7.1				9.6				20.0
Interest expense			2.2				2.6				8.3				8.8
Other income (expense), net			0.5				0.7				(0.9	)			(0.3	)
Income before income taxes			3.8				5.2				0.4				10.9
Income tax (expense) benefit			(0.8	)			(0.8	)			1.1				(1.7	)
Income from continuing operations			3.0				4.4				1.5				9.2
Loss from discontinued operations and disposal, net of income tax benefit (expense) of $1.7, ($0.2), $2.9, and ($0.8), respectively			(0.5	)			—				(3.1	)			(8.8	)
Net income (loss)		$	2.5			$	4.4			$	(1.6	)		$	0.4
COMMON STOCK DATA:
Basic and diluted earnings (loss) per share:
Earnings from continuing operations		$	0.05			$	0.09			$	0.03			$	0.19
Loss from discontinued operations and disposal			(0.01	)			—				(0.06	)			(0.18	)
Earnings (loss) per share		$	0.04			$	0.09			$	(0.03	)		$	0.01
Weighted average common shares outstanding:
Basic			62.2				48.0				56.1				48.5
Diluted			62.3				48.0				56.2				48.5
Cash dividends per share of common stock		$	0.06			$	0.06			$	0.18			$	0.18

See notes to condensed consolidated financial statements.

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

		September 30,				December 31,
( in millions, except per share data)		2010				2009
ASSETS
Current assets
Cash and cash equivalents		$	16.0			$	21.1
Accounts receivable, net of allowances for doubtful accounts of $2.3 and $2.5, respectively			115.5				119.8
Inventories, net			124.0				111.5
Other current assets			25.6				26.0
Total current assets			281.1				278.4
Properties and equipment, net			65.8				65.5
Other assets
Goodwill			380.3				319.6
Intangible assets, net of accumulated amortization			97.6				50.5
Deferred tax assets			16.6				17.5
Deferred charges and other assets			3.7				1.7
Total assets of continuing operations			845.1				733.2
Assets of discontinued operations			10.2				12.2
Total assets		$	855.3			$	745.4
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Short-term borrowings		$	1.4			$	—
Current portion of long-term borrowings and capital lease obligations			9.8				41.9
Accounts payable			53.4				45.2
Customer deposits			12.1				10.4
Accrued liabilities
Compensation and withholding taxes			20.8				20.8
Other			50.1				48.4
Total current liabilities			147.6				166.7
Long-term borrowings and capital lease obligations, less current portion			218.1				159.7
Long-term pension liabilities			38.2				39.6
Deferred gain			22.8				24.2
Other long-term liabilities			11.8				12.2
Total liabilities of continuing operations			438.5				402.4
Liabilities of discontinued operations			13.6				14.3
Total liabilities			452.1				416.7
Shareholders’ equity
Common stock, $1 par value per share, 90.0 million shares authorized, 63.1 million and 49.6 million shares issued, respectively			63.1				49.6
Capital in excess of par value			165.2				93.8
Retained earnings			228.4				240.4
Treasury stock, 0.9 million and 0.8 million shares at cost, respectively			(15.8	)			(15.8	)
Accumulated other comprehensive loss			(37.7	)			(39.3	)
Total shareholders’ equity			403.2				328.7
Total liabilities and shareholders’ equity		$	855.3			$	745.4

See notes to condensed consolidated financial statements.

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY (unaudited)

		Common				Capital in												Accumulated
		Stock				Excess of												Other
		Par				Par				Retained				Treasury				Comprehensive
($ in millions)		Value				Value				Earnings				Stock				Loss				Total
Balance at December 31, 2009		$	49.6			$	93.8			$	240.4			$	(15.8	)		$	(39.3	)		$	328.7
Net loss											(1.6	)											(1.6	)
Foreign currency translation																			(1.2	)			(1.2	)
Unrealized gains on derivatives, net of tax expense of $0.3																			0.5				0.5
Change in unrecognized gains related to pension benefit plans, net of tax expense of $1.2																			2.3				2.3
Shares issued for acquisition			1.2				9.0																10.2
Equity offering, net of fees			12.1				59.1																71.2
Cash dividends declared											(10.4	)											(10.4	)
Share based payments:
Non-vested stock and options							2.9																2.9
Stock awards			0.2				0.4																0.6
Balance at September 30, 2010		$	63.1			$	165.2			$	228.4			$	(15.8	)		$	(37.7	)		$	403.2

See notes to condensed consolidated financial statements.

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

		Nine months ended September 30,
($ in millions)		2010				2009
Operating activities:
Net (loss) income		$	(1.6	)		$	0.4
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Loss on discontinued operations and disposal			3.1				8.8
Depreciation and amortization			14.8				11.3
Stock-based compensation expense			2.9				3.3
Pension contributions			(0.8	)			(0.5	)
Changes in other assets and liabilities, exclusive of the effects of businesses acquired and disposed:			(5.3	)			16.2
Net cash provided by continuing operating activities			13.1				39.5
Net cash (used for) provided by discontinued operating activities			(0.5	)			0.5
Net cash provided by operating activities			12.6				40.0
Investing activities:
Purchases of properties and equipment			(10.4	)			(11.8	)
Proceeds from sales of properties, plant and equipment			1.8				1.2
Payments for acquisitions, net of cash acquired			(97.3	)			—
Other, net			—				10.0
Net cash used for continuing investing activities			(105.9	)			(0.6	)
Net cash provided by discontinued investing activities			0.2				14.1
Net cash (used for) provided by investing activities			(105.7	)			13.5
Financing activities:
Increase in debt outstanding under revolving credit facilities			82.5				33.8
Proceeds on short-term borrowings			18.2				3.2
Payments on short-term borrowings			(17.2	)			—
Payments on long-term borrowings			(56.7	)			(78.1	)
Cash dividends paid to shareholders			(10.4	)			(8.7	)
Proceeds from equity offering, net of fees			71.2				—
Other, net			1.1				0.2
Net cash provided by (used for) continuing financing activities			88.7				(49.6	)
Net cash used for discontinued financing activities			(0.7	)			(7.1	)
Net cash provided by (used for) financing activities			88.0				(56.7	)
Effects of foreign exchange rate changes on cash and cash equivalents			—				0.9
Decrease in cash and cash equivalents			(5.1	)			(2.3	)
Cash and cash equivalents at beginning of period			21.1				23.4
Cash and cash equivalents at end of period		$	16.0			$	21.1

See notes to condensed consolidated financial statements.

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Description of the Business

Federal Signal Corporation was founded in 1901 and was reincorporated as a Delaware corporation in 1969. References herein to the “Company,” “we,” “our,” or “us” refer collectively to Federal Signal Corporation and its subsidiaries.

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements represent the consolidation of Federal Signal Corporation and subsidiaries included herein and have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to ensure the information presented is not misleading. These condensed consolidated financial statements have been prepared in accordance with the Company’s accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2009 and should be read in conjunction with the consolidated financial statements and the notes thereto.

These statements include all adjustments (consisting of normal recurring accruals) that we considered necessary to present a fair statement of our results of operations, financial position and cash flows. The results reported in these condensed consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year. We recommend that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in our 2009 Form 10-K. We label our quarterly information using a calendar convention, that is, first quarter is labeled as ending on March 31, second quarter as ending on June 30, and third quarter as ending on September 30. It is our longstanding practice to establish interim quarterly closing dates using a 5-4-4 calendar with the fiscal year ending on December 31. The effects of this practice are modest and only exist within a reporting year.

Effective June 6, 2010, the Company reorganized its segments to better align the Company’s intelligent transportation and public safety businesses for future growth. As a result of this reorganization, the Company created a new operating segment called Federal Signal Technologies (“FSTech”) that includes vehicle classification software, automated license plate recognition (“ALPR”) and parking systems businesses from our Safety and Security Systems operating segment and the newly acquired businesses, Sirit Inc. and subsidiaries (“Sirit”) and VESystems, LLC and subsidiaries (“VESystems”). The Safety and Security Systems operating segment retained the businesses that offer systems for campus and community alerting, emergency vehicles, first responder interoperable communications, industrial communications and command and municipal security.

As a result of this reorganization, our four operating segments as of June 6, 2010 are as follows:

Federal Signal Technologies — Our Federal Signal Technologies Group is a provider of technologies and solutions to the intelligent transportation systems and public safety markets and other applications. These products and solutions provide end users with the tools needed to automate data collection and analysis, transaction processing and asset tracking. FSTech provides technology platforms and services to customers in the areas of radio frequency identification systems, transaction processing vehicle classification, electronic toll collection, automated license plate recognition, electronic vehicle registration, parking and access control, cashless payment solutions, congestion charging, traffic management, site security solutions and supply chain systems. Products are sold under PIPS ^TM, Idris ^®, Sirit ^TM and VESystems ^TM brand names. The group operates manufacturing facilities in North America and Europe.

Safety and Security Systems— Our Safety and Security Systems Group is a leading manufacturer and supplier of comprehensive systems and products that law enforcement, fire rescue, emergency medical services, campuses, military facilities and industrial sites use to protect people and property. Offerings include systems for campus and community alerting, emergency vehicles, first responder interoperable communications, industrial communications and command and municipal networked security. Specific products include lightbars and sirens, public warning sirens and public safety software. Products are sold under the Federal Signal ^TM, Federal Signal VAMA ^TM, Target Tech ^® and Victor ^TM brand names. The group operates manufacturing facilities in North America, Europe, China and South Africa.

Environmental Solutions — Our Environmental Solutions Group is a leading manufacturer and supplier of a full range of street sweeper and vacuum trucks and high-performance waterblasting equipment for municipal and industrial customers. We also manufacture products for the newer markets of hydro-excavation, glycol recovery and surface cleaning for utility and industrial customers. Products are sold under the Elgin ^®, Vactor ^®, Guzzler ^® and Jetstream ^TM brand names. The group primarily manufactures its vehicles and equipment in the United States.

Fire Rescue — Our Fire Rescue Group is a leading manufacturer and supplier of sophisticated, vehicle-mounted, aerial platforms for fire fighting, rescue, electric utility and industrial uses. End customers include fire departments, industrial fire services, electric utilities, maintenance rental companies for applications such as fire fighting and rescue, transmission line maintenance, and installation and maintenance of wind turbines. The group’s telescopic/articulated aerial platforms are designed in accordance with various regulatory codes and standards, such as European Norms (EN), National Fire Protection Association (NFPA) and American National Standards Institute (ANSI). In addition to equipment sales, the group sells parts, service and training as part of a complete offering to its customer base. The group manufactures in Finland and sells globally under the Bronto Skylift ^® brand name.

Reclassifications

We have reclassified certain prior-period amounts to conform to the current-period presentation. Included with reclassifications are restatements for both discontinued operations and the reorganization of certain operating segments, as described above.

Recent Accounting Pronouncements and Accounting Changes

In October 2009, the FASB issued Accounting Standard Update (“ASU”) No. 2009-14, Topic 985- Certain Revenue Arrangements That Include Software Elements, which amended the accounting standards for revenue recognition to remove tangible products containing software components and non-software components that function together to deliver the products’ essential functionality from the scope of industry-specific software revenue recognition guidance.

In October 2009, the FASB also issued ASU No. 2009-13, Topic 605- Multiple-Deliverable Revenue Arrangement, which changes the level of evidence of standalone selling price required to separate deliverables in a multiple deliverable revenue arrangement by allowing a company to make its best estimate of the selling price of deliverables when more objective evidence of selling price is not available and eliminates the use of residual method. ASU No. 2009-13 applied to multiple deliverable revenue arrangements that are not accounted for under other accounting pronouncements and retains the use of vendor-specific objective evidence of selling price (‘VSOE”) if available and third-party evidence of selling price, when VSOE is unavailable.

ASU No. 2009-14 and ASU No. 2009-13 are effective prospectively for revenue arrangements entered into or materially modified in fiscal year beginning on or after June 15, 2010, with early adoption permitted. If adoption is elected in a period other than the beginning of a fiscal year, the amendments in these standards must be applied retrospectively to the beginning of the fiscal year. The Company is currently assessing the timing of adoption and effects that ASU No. 2009-14 and ASU No. 2009-13 will have on its consolidated results of operations and financial condition.

No other new accounting pronouncements issued or effective during the first nine months of 2010 has had or is expected to have a material impact on the consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses. Significant estimates and assumptions are used for, but are not limited to, revenue recognition, pension and other postretirement benefits, allowance for doubtful accounts, income tax contingency accruals and valuation allowances, product warranty accruals, asset impairment, purchase price allocation and litigation-related accruals. Actual results could differ from our estimates.

2. ACQUISITIONS

The estimated fair values of assets acquired and liabilities assumed included below are preliminary and are based on the information that was available as of the acquisition date and prior to the filing of this Form 10-Q. The Company believes that the information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed; however, the Company is awaiting the finalization of certain third-party valuations to finalize those fair values. Thus, the preliminary measurements of fair value set forth below are subject to change. The Company expects to finalize the valuation and complete the purchase price allocations as soon as practicable, but no later than one year from the respective acquisition dates.

Sirit Inc. and Subsidiaries

On March 5, 2010, the Company acquired all of the issued and outstanding common shares of Sirit for total cash consideration of CDN $77.1 million (USD $74.9 million). Sirit designs, develops and manufactures radio frequency identification device technology for applications such as tolling, electronic vehicle registration, parking and access control, cashless payments, supply chain management and asset tracking solutions. The acquisition of Sirit supports the Company’s long-term strategy by creating growth opportunities and revenue synergies. The results of Sirit are included within the FSTech operating segment.

The following table summarizes the fair values of the assets acquired and liabilities assumed from the acquisition of Sirit. Since the acquisition and the initial preliminary purchase price allocation included in the Company’s Form 10-Q for the first quarter ended March 31, 2010, net adjustments of $0.6 million were made to the fair values of the assets acquired and liabilities assumed with a corresponding adjustment to goodwill. These adjustments are summarized in the table presented below.

						2010
						Adjustments
		Initial				to Fair				September 30,
($ in millions)		Valuation				Value				2010
Purchase Price		$	74.9			$	—			$	74.9
Fair Value of Assets Acquired:
Current assets			7.0				—				7.0
Fixed assets			1.6				—				1.6
Intangible assets			37.1				—				37.1
Other assets			0.4				—				0.4
Total Assets Acquired			46.1				—				46.1
Fair Value of Liabilities Assumed:
Current liabilities			12.6				0.2				12.8
Deferred revenue			0.6				—				0.6
Deferred tax liabilities, net			2.4				0.4				2.8
Total Liabilities Assumed			15.6				0.6				16.2
Goodwill (1)			44.4				0.6				45.0

VESystems, LLC and Subsidiaries

On March 2, 2010, the Company acquired all of the equity interests in VESystems for an aggregate purchase price of $34.8 million. The consideration transferred consisted of cash in the amount of approximately $24.6 million and 1,220,311 shares of Federal Signal common stock with an acquisition date fair value of $10.2 million. VESystems designs, develops and deploys advanced software applications and customer management systems and services for the electronic toll collection and port industries. The acquisition of VESystems supports the Company’s long-term strategy by creating growth opportunities and revenue synergies. The results of VESystems are included within the FSTech operating segment.

The following table summarizes the fair values of the assets acquired and liabilities assumed from the acquisition of VESystems. Since the acquisition and the initial preliminary purchase price allocation included in the Company’s Form 10-Q for the first quarter ended March 31, 2010, net adjustments of $0.3 million were made to the fair values of the assets acquired and liabilities assumed with a corresponding adjustment to goodwill. These adjustments are summarized in the table presented below.

						2010
						Adjustments
		Initial				to Fair				September 30,
($ in millions)		Valuation				Value				2010
Purchase Price		$	34.8			$	—			$	34.8
Fair Value of Assets Acquired:
Current assets			2.2				—				2.2
Fixed assets			0.1				—				0.1
Intangible assets			16.1				—				16.1
Other assets			0.5				—				0.5
Total Assets Acquired			18.9				—				18.9
Fair Value of Liabilities Assumed:
Current liabilities			1.9				0.2				2.1
Deferred revenue			—				0.1				0.1
Total Liabilities Assumed			1.9				0.3				2.2
Goodwill (2)			17.8				0.3				18.1

Diamond Consulting Services Ltd.

On December 9, 2009, the Company acquired all equity interests of Diamond Consulting Services Ltd. (“Diamond”) for total consideration of $13.9 million. In addition to the consideration paid, the Company may be required to pay up to $3.2 million of retention payments in future years. Diamond specializes in vehicle classification systems for tolling and other Intelligent Transportation Systems. The acquisition supports the Company’s long-term strategy by creating growth opportunities and revenue synergies. The results of Diamond are included in the FSTech operating segment.

The following table summarizes the fair values of the assets acquired and liabilities assumed from the acquisition of Diamond. Since the acquisition and the initial preliminary purchase price allocation included in the Company’s Form 10-K for the year ended December 31, 2009, net adjustments of ($0.1) million were made to the fair values of the assets acquired and liabilities assumed with a corresponding adjustment to goodwill. These adjustments are summarized in the table presented below.

						2010
						Adjustments
		Initial				to Fair				September 30,
($ in millions)		Valuation				Value				2010
Purchase Price		$	13.5			$	0.4			$	13.9
Fair Value of Assets Acquired:
Current assets			0.7				—				0.7
Fixed assets			—				—				—
Intangible assets			6.9				(0.5	)			6.4
Other assets			0.2				—				0.2
Total Assets Acquired			7.8				(0.5	)			7.3
Fair Value of Liabilities Assumed:
Current liabilities			0.9				(0.1	)			0.8
Deferred revenue			0.1				—				0.1
Deferred tax liabilities, net			2.8				(0.9	)			1.9
Total Liabilities Assumed			3.8				(1.0	)			2.8
Goodwill (3)			9.5				(0.1	)			9.4

The following table summarizes the preliminary fair value of amortizable and indefinite-lived intangible assets as of their respective acquisition dates:

		Sirit at								VESystems at
		March 5, 2010								March 2, 2010
						Estimated useful								Estimated useful
($ in millions)		Fair Value				life (in years)				Fair Value				life (in years)
Amortizable intangible assets:
Customer relationships		$	18.0				18			$	9.5				17
Technology			12.1				9				4.9				16
Non-compete			2.9				5				0.4				5
Total amortizable intangible assets		$	33.0							$	14.8
Indefinite-lived intangibles:
Trade names		$	4.1							$	1.3
Total intangible assets		$	37.1							$	16.1

The above estimated fair values of assets acquired and liabilities assumed are preliminary and are based on the information that was available as of the acquisition dates and the subsequent filing of this Form 10-Q. The Company believes that information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, however the Company is awaiting the finalization of certain third-party valuations to finalize those fair values. Thus, the preliminary measurements of fair value set forth above are subject to change. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable, but no later than one year from the respective acquisition dates.

Pro Forma Condensed Combined Financial Information

The following unaudited pro forma condensed combined financial information presents the results of operations of the Company as they may have appeared if the closing of Sirit and VESystems, presented in the aggregate, had been completed on January 1, 2010 and January 1, 2009.

		Three months ended								Nine months ended
		September 30,								September 30,
($ in millions, except per share data)		2010				2009				2010				2009
Net revenue		$	182.0			$	173.1			$	555.5			$	577.9
Income from continuing operations			3.0				3.5				1.9				6.5
Earnings from continuing operations — per basic and diluted share		$	0.05			$	0.07			$	0.04			$	0.13

The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not indicate the actual financial results of the Company had the closing of Sirit and VESystems been completed on January 1, 2010 and January 1, 2009, respectively, nor is it indicative of the results of operations in future periods. Included in the unaudited pro forma combined financial information for the quarters ended September 30, 2010 and September 30, 2009 were pro forma adjustments to reflect the results of operations of Sirit and VESystems as well as the impact of amortizing certain acquisition accounting adjustments such as amortizable intangible assets. The pro forma condensed financial information does not indicate the impact of possible business model changes, nor does it consider any potential impacts of current market conditions, expense efficiencies or other factors. As of September 30, 2010, the combined net revenue and net loss for the nine month period ended September 30, 2010 was $23.7 million and $(2.5) million, respectively.

Acquisition and Integration Related Expenses

For the three and nine months ended September 30, 2010, pretax charges totaling $0.1 million and $3.8 million, respectively, were recorded for acquisition and integration related costs. For the three and nine months ended September 30, 2009, there were no charges recorded for acquisitions and integration related costs. These charges, which were expensed in accordance with the accounting guidance for business combinations, were recorded in “Acquisition and integration related costs” and reflected in Corporate.

3. INVENTORIES, NET

Inventories are summarized as follows:

		September 30,				December 31,
($ in millions)		2010				2009
Raw materials		$	56.0			$	53.5
Work in progress			34.1				28.0
Finished goods			33.9				30.0
Total inventories, net		$	124.0			$	111.5

4. GOODWILL AND OTHER INTANGIBLE ASSETS

The following table provides the changes in carrying value of goodwill by operating segment through the nine months ended September 30, 2010:

						Acquisitions/
						Acquisition				Other
						Accounting				Adjustments
		December 31,				Adjustments				Including Currency				September 30,
($ in millions)		2009*				(Note 2)				Translations				2010
Environmental Solutions		$	120.4			$	—			$	—			$	120.4
Fire Rescue			34.7				—				(0.5	)			34.2
Safety and Security Systems			120.9				—				(1.5	)			119.4
Federal Signal Technologies			43.6				63.0				(0.3	)			106.3
Total		$	319.6			$	63.0			$	(2.3	)		$	380.3

The following table provides the gross carrying value and accumulated amortization for each major class of intangible assets:

						September 30, 2010												December 31, 2009
		Average				Gross								Net				Gross								Net
		Useful Life				Carrying				Accumulated				Carrying				Carrying				Accumulated				Carrying
($ in millions)		(Years)				Value				Amortization				Value				Value				Amortization				Value
Amortizable Intangible Assets:
Developed software			6			$	22.5			$	(17.0	)		$	5.5			$	21.6			$	(15.6	)		$	6.0
Patents			8				1.7				(0.6	)			1.1				0.7				(0.5	)			0.2
Customer relationships			13				47.3				(6.8	)			40.5				19.0				(4.2	)			14.8
Technology			11				21.8				(2.5	)			19.3				5.6				(1.2	)			4.4
Other			5				5.6				(1.8	)			3.8				1.8				(1.1	)			0.7
Total							98.9				(28.7	)			70.2				48.7				(22.6	)			26.1
Indefinite-lived Intangible Assets:
Trade names							27.4				—				27.4				24.4				—				24.4
Total						$	126.3			$	(28.7	)		$	97.6			$	73.1			$	(22.6	)		$	50.5

Amortization expense for the three and nine month periods ended September 30, 2010 totaled $2.7 million and $6.1 million, respectively, and for the three and nine month periods ended September 30, 2009 totaled $1.3 million and $4.2 million, respectively. The Company estimates that the total amortization expense will be $8.4 million in 2010, $9.6 million in 2011, $8.5 million in 2012, $7.2 million in 2013, $7.2 million in 2014, $6.4 million in 2015, and $29.0 million thereafter.

The company accounts for goodwill and identifiable intangible assets in accordance with ASC 360 “Intangibles – Goodwill and Other.” Under this standard, the company assesses the impairment of goodwill and indefinite-lived intangible assets at least annually, or October 31, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

In the event the Company encounters a significant adverse change in the business climate may accelerate a reduction in demand for certain Federal Signal products. This could result in reduced demand, along with lower-than-projected profits across certain Federal Signal brands. Management may revise its future cash flow expectations in the future, which could lower the fair value estimates of certain businesses.

5. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS

The Company manages the volatility of cash flows caused by fluctuations in currency rates by entering into foreign exchange forward contracts and options. These derivative instruments may be designated as cash flow hedges that hedge portions of the Company’s anticipated third-party purchases and forecasted sales denominated in foreign currencies. The Company also enters into foreign exchange contracts that are not intended to qualify for hedge accounting, but are intended to offset the effect on earnings of foreign currency movements on short and long term intercompany transactions. Gains and losses on these derivative instruments are recorded through earnings.

For assets and liabilities measured at fair value on a recurring basis, the Company uses an income approach to value the assets and liabilities for outstanding derivative contracts, which include interest rate swap and foreign currency forward contracts. The income approach consists of a

discounted cash flow model that takes into account the present value of future cash flows under the terms of the contracts using current market information as of the reporting date, such as prevailing interest rates and foreign currency spot and forward rates. The following table provides a summary of the fair values of assets and liabilities:

Fair Value Measurements at September 30, 2010

Quoted Prices

in Active

Significant

Markets for

Other

Significant

Identical

Observable Inputs

Unobservable Inputs

($ in millions)

Total

Assets (Level 1)

(Level 2)

(Level 3)

Assets

Derivatives

$

0.3

$

—

$

0.3

$

—

Fair Value Measurements at September 30, 2010

Quoted prices in

Active

Significant

Markets for

Other

Significant

Identical

Observable Inputs

Unobservable Inputs

Total

Assets (Level 1)

(Level 2)

(Level 3)

Liabilities

Derivatives

$

—

$

—

$

—

$

—

At September 30, 2010 and December 31, 2009, the fair value of the Company’s derivative instruments was recorded as follows:

		Asset Derivatives						Liability Derivatives
		September 30, 2010						September 30, 2010
		Balance Sheet						Balance Sheet
($ in millions)		Location		Fair Value				Location		Fair Value
Derivatives designated as hedging instruments:											—
Foreign exchange		Other current assets		$	—			Other accrued liabilities		$	—
Total derivatives designated as hedging instruments					—						—
Derivatives not designated as hedging instruments:											—
Foreign exchange		Accounts receivable, net			0.3			Other accrued liabilities			—
Total derivatives not designated as hedging instruments					0.3						—
Total derivatives				$	0.3					$	—

Asset Derivatives

Liability Derivatives

December 31, 2009

December 31, 2009

Balance Sheet

Balance Sheet

($ in millions)

Location

Fair Value

Location

Fair Value

Derivatives designated as hedging instruments:

Other accrued liabilities

$

0.5

Foreign exchange

Other current assets

—

Other accrued liabilities

0.1

Total derivatives designated as hedging instruments

—

0.6

Derivatives not designated as hedging instruments:

Foreign exchange

Accounts receivable, net

—

Other accrued liabilities

0.4

Total derivatives not designated as hedging instruments

—

0.4

Total derivatives

$

—

$

1.0

The effect of derivative instruments on the condensed consolidated statement of operations for the three months ended September 30, 2010, was as follows:

						Location of		Amount of Gain
		Amount of				Gain/(Loss)		Reclassified
		Gain/(Loss)				Reclassified from		from Accumulated
($ in millions)		Recognized in OCI on				Accumulated OCI into		OCI into
Derivatives in Cash Flow		Derivative				Income (Effective		Income (Effective
Hedging Relationships		(Effective Portion)				Portion)		Portion)
Interest rate contracts		$	0.0			Interest expense		$	0.0
Foreign exchange			(0.1	)		Net sales			0.5
Total		$	(0.1	)				$	0.5

Derivatives Not		Location of Gain		Amount of Gain
Designated as		Recognized in		Recognized in
Hedging Instruments		Income on Derivative		Income on Derivative
Foreign exchange		Other income (expense)		$	1.8
Total				$	1.8

The effect of derivative instruments on the condensed consolidated statement of operations for the nine months ended September 30, 2010, was as follows:

						Location of		Amount of Gain
		Amount of				Gain/(Loss)		Reclassified
		Gain/(Loss)				Reclassified from		from Accumulated
($ in millions)		Recognized in OCI on				Accumulated OCI into		OCI into
Derivatives in Cash		Derivative				Income (Effective		Income (Effective
Flow Hedging Relationships		(Effective Portion)				Portion)		Portion)
Interest rate contracts		$	0.3			Interest expense		$	0.4
Foreign exchange			(0.9	)		Net sales			1.0
Total		$	(0.6	)				$	1.4

Derivatives Not		Location of Gain		Amount of Gain
Designated as		Recognized in		Recognized in
Hedging Instruments		Income on Derivative		Income on Derivative
Foreign exchange		Other income (expense)		$	3.3
Total				$	3.3

At September 30, 2010 and December 31, 2009, accumulated other comprehensive loss associated with interest rate swaps and foreign exchange contracts qualifying for hedge accounting treatment was $0.2 million and $0.7 million, net of income tax effects, respectively. The Company expects $0.2 million of pre-tax net gain on cash flow hedges that are reported in accumulated other comprehensive loss as of September 30, 2010, to be reclassified into earnings within the next 12 months as the respective hedged transactions affect earnings.

The following table summarizes the carrying amounts and fair values of the Company’s financial instruments:

		September 30, 2010								December 31, 2009
		Notional				Fair				Notional				Fair
($ in millions)		Amount				Value				Amount				Value
Short-term debt		$	1.4			$	1.4			$	—			$	—
Long-term debt (1)			229.6				227.0				204.1				205.0
Interest rate contracts			—				—				70.0				(0.5	)
Foreign exchange (2)			30.6				(0.8	)			24.1				(0.5	)

The carrying value of short-term debt approximates fair value due to its short maturity. The fair value of long-term debt is based on interest rates that are currently available to us for issuance of debt with similar terms and remaining maturities.

6. DEBT

Short-term borrowings consisted of the following:

		September 30,				December 31,
($ in millions)		2010				2009
Non-U.S. lines of credit		$	1.4			$	—
Total short-term borrowings		$	1.4			$	—

Long-term borrowings consisted of the following:

		September 30,				December 31,
($ in millions)		2010				2009
Revolving Credit Facility		$	167.5			$	85.0
Alternative Currency Facility (within Revolving Credit Facility)			12.4				16.2
10.79% Unsecured Private Placement note with annual installments of $10.0 million due 2010-2011			1.3				11.4
10.60% Unsecured Private Placement note with annual installments of $7.1 million due 2010-2011			0.7				8.1
8.93% Unsecured Private Placement note with annual installments of $8.0 million due 2010-2012			5.9				14.8
9.24% Unsecured Private Placement note due 2012			31.9				42.7
Unsecured Private Placement note, floating rate (5.63% and 2.35% at September 30, 2010 and December 31, 2009, respectively) due 2010-2013			7.1				21.3
Subsidiary Loan Agreement			1.0				3.2
Capital Lease Obligations			1.1				—
			228.9				202.7
Unamortized balance of terminated fair value interest rate swaps			0.7				1.4
			229.6				204.1
Less current maturities, excluding financial services activities			(9.8	)			(41.9	)
Less financial services activities — borrowings (included in discontinued operations)			(1.7	)			(2.5	)
Total long-term borrowings and capital lease obligations, net		$	218.1			$	159.7

At September 30, 2010, €9.0 million (or $12.4 million), was drawn on the Alternative Currency Facility, a supplemental agreement under the Second Amended Credit Agreement and $167.5 million was drawn directly under the Second Amended Credit Agreement for a total of $179.9 million drawn under the Second Amended Credit Agreement, leaving available borrowings of $70.1 million not including $30.3 million of capacity used for existing letters of credit.

At September 30, 2010, $1.4 million was drawn against the Company’s non-U.S. lines of credit which provide for borrowings up to $18.1 million.

The outstanding unsecured Private Placement Notes’ coupon interest rates increased by a total of 3% from December 31, 2009. The coupon interest rates increased by 1% on January 1, 2010 as required per the April 2009 Global Amendment to the Note Purchase Agreements. The coupon rates also increased by an additional 2% on April 1, 2010 as a result of the Company’s private placement debt rating not improving by one rating level on or before April 1, 2010.

On September 1, 2010, the Company prepaid $20.0 million of principal at par with no prepayment penalty and related accrued interest of $0.4 million on the $66.9 million outstanding principal balance of its private placement debt. The prepayment was funded by the Company’s available capacity under its revolving credit facility. The remaining principal debt balance under the Private Placement Note Agreements was $46.9 million as of September 30, 2010.

The revolving credit facility and other debt instruments contain certain restrictive debt covenants and other customary events of default. Failure to comply with one or more of these restrictive covenants may result in an event of default. Given the current challenges that the Company faces in several markets, the Company could default on the interest coverage ratio in the fourth quarter of 2010. The Company continually monitors for compliance of its debt covenants. In the event of a future violation, the Company will work with its lenders to obtain a waiver or amend the existing debt instruments. However, upon an event of default, if not waived or the debt instruments are not amended by our lenders, our lenders may declare all amounts outstanding as due and payable.

7. SHAREHOLDERS’ EQUITY

In May 2010, the Company issued 12.1 million common shares at a price of $6.25 per share for total gross proceeds of $75.6 million. After deducting direct fees, net proceeds to the Company totaled $71.2 million. Proceeds from the equity offering were used to pay down debt.

8. INCOME TAXES

The Company’s effective tax rate was (275.0%) and 15.6% for the nine month periods ended September 30, 2010 and 2009, respectively.

The Company’s effective tax rate was 21.1% and 15.4% for the three month periods ended September 30, 2010 and 2009, respectively.

The lower tax rate in the nine month period ending September 30, 2010, compared to the nine month period ending September 30, 2009, is caused by a $0.6 million tax benefit recorded in the second quarter primarily related to the net effects of a release in reserves for state income taxes and an increase in reserves for certain foreign income taxes. In addition, a tax benefit of $0.4 million was recorded in the third quarter of 2010 for the revaluation of deferred taxes in the United Kingdom due to a reduction in the statutory rate.

The higher tax rate in the three month period ending September 30, 2010, compared to the three month period September 30, 2009, reflects research and development tax credit benefits that are not reflected in the three month period ended September 30, 2010 as Congress has not yet extended the credit. In addition, the three month period ending September 30, 2009 reflects a benefit of $0.4 million primarily related to the release of reserves due to expiration of federal and state statute of limitations. The tax rate in the three month period ended September 30, 2010 was favorably impacted by a change in the United Kingdom statutory rate. The United Kingdom rate was lowered which required a revision to our United Kingdom deferred tax liabilities and a 10% reduction in our third quarter tax rate.

The Company’s unrecognized tax benefits were $5.0 million at January 1, 2010 of which $4.7 million are tax benefits that if recognized, would reduce the annual effective tax rate. The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. Interest and penalties amounting to $0.5 million and $0.1 million, respectively, are included in the consolidated balance sheet at September 30, 2010. The Company expects the unrecognized tax benefits to decrease by $0.6 over the next 12 months. In the nine months ended September 30, 2010, the Company’s unrecognized tax benefits decreased by $0.6 million.

9. POSTRETIREMENT BENEFITS

The components of the Company’s net periodic pension expense for its defined benefit pension plans are summarized as follows:

		U.S. Benefit Plans																Non-U.S. Benefit Plan
		Three months ended								Nine months ended								Three months ended								Nine months ended
		September 30,								September 30,								September 30,								September 30,
($ in millions)		2010				2009				2010				2009				2010				2009				2010				2009
Service cost		$	—			$	—			$	—			$	—			$	—			$	—			$	0.1			$	0.1
Interest cost		$	2.0			$	2.0			$	5.9			$	6.0			$	0.7			$	0.7			$	2.0			$	1.9
Expected return on plan assets			(2.2	)			(2.4	)			(6.6	)			(7.2	)			(0.7	)			(0.7	)			(2.3	)			(1.9	)
Amortization of actuarial loss			0.9				0.5				2.8				1.5				0.2				0.3				0.6				0.8
Net periodic pension expense		$	0.7			$	0.1			$	2.1			$	0.3			$	0.2			$	0.3			$	0.4			$	0.9

During the nine month period ended September 30, 2010, no contributions were made to the U.S. defined benefit plans, and $0.8 million of contributions were made to the non-U.S. defined benefit plan. During the comparable prior period, the Company contributed 1.1 million shares of the Company’s common stock held in treasury to the U.S. pension plan. The stock was valued at $4.4 million based upon prices in the open market at the contribution date. In addition, the Company contributed $0.5 million during the nine months ended September 30, 2009 to its non-U.S. defined benefit plan.

10. EARNINGS (LOSS) PER SHARE

Earnings (Loss) per share — basic is computed by dividing income or loss available to common stockholders by the weighted average number of shares of common stock outstanding for the period. Earnings (loss) per share — diluted reflects the potential dilution that could occur if options issued under stock-based compensation awards were exercised and converted into common stock. For the three month periods ended September 30, 2010 and 2009, options to purchase 2.0 million and 1.8 million shares of the Company’s common stock had exercise prices that were greater than the average market price of those shares during the respective reporting periods. For the nine months ended September 30, 2010 and 2009, options to purchase 1.5 million and 1.9 million shares of the Company’s common stock had exercise prices that were greater

than the average market price of those shares during the respective reporting periods. As a result, these shares are excluded from the earnings (loss) per share calculation as they are anti-dilutive.

The following is a computation of earnings (loss) per share — basic and diluted — for the three and nine months ended September 30, 2010 and 2009:

Computation of Earnings (Loss) per Common Share
(in millions, except per share data)

		Three months ended								Nine months ended
		September 30,								September 30,
		2010				2009				2010				2009
Income from continuing operations		$	3.0			$	4.4			$	1.5			$	9.2
Loss from discontinued operations and disposal, net of tax			(0.5	)			—				(3.1	)			(8.8	)
Net income (loss)		$	2.5			$	4.4			$	(1.6	)		$	0.4
Average shares outstanding — basic			62.2				48.0				56.1				48.6
Dilutive effect of stock options and other			0.1				—				0.1				—
Diluted shares outstanding			62.3				48.0				56.2				48.6
Basic and diluted earnings (loss) per share:
Earnings from continuing operations		$	0.05			$	0.09			$	0.03			$	0.19
Loss from discontinued operations and disposal			(0.01	)			—				(0.06	)			(0.18	)
Earnings (loss) per share		$	0.04			$	0.09			$	(0.03	)		$	0.01
Weighted average common shares outstanding:
Basic			62.2				48.0				56.1				48.5
Diluted			62.3				48.0				56.2				48.5

11. COMMITMENTS, CONTINGENCIES AND WARRANTIES

Warranties

The Company issues product performance warranties to customers with the sale of its products. The specific terms and conditions of these warranties vary depending upon the product sold and country in which the Company conducts business, with warranty periods generally ranging from one to ten years. The Company estimates the costs that may be incurred under its basic limited warranty and records a liability in the amount of such costs at the time the sale of the related product is recognized. Factors that affect the Company’s warranty liability include the number of units under warranty from time to time, historical and anticipated rates of warranty claims and costs per claim. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.

Changes in the Company’s warranty liabilities in the nine month periods ended September 30, 2010 and 2009 were as follows:

($ in millions)		2010				2009
Balance at January 1		$	6.2			$	5.8
Provisions to expense			5.2				6.7
Actual costs incurred			(5.0	)			(6.2	)
Balance at September 30		$	6.4			$	6.3

Environmental Liabilities

The Company retained an environmental consultant to conduct an environmental risk assessment at its Pearland, Texas facility. While the Company has not completed the risk assessment analysis, it appears probable the site will require remediation. A reasonable estimate of the range of costs to remediate the site is $0.7 million to $2.4 million, depending upon the remediation approach and other factors of which $0.2 million of remediation costs were incurred to date. As of September 30, 2010 and December 31, 2009, $0.5 million and $0.7 million, respectively, is included in other accrued liabilities within the Safety and Security Systems Group. The Company’s estimate may change in the near term as more information becomes available; however the costs are not expected to have a material adverse effect on the Company’s results of operations, financial position or liquidity.

Legal Proceedings

The Company has been sued by firefighters seeking damages claiming that exposure to the Company’s sirens has impaired their hearing and that the sirens are therefore defective. There were 33 cases filed during the period 1999-2004, involving a total of 2,443 plaintiffs pending in the Circuit Court of Cook County, Illinois. The trial of the first 27 of these plaintiffs’ claims began on March 18, 2008 and ended on April 25, 2008, when a Cook County jury returned a unanimous verdict in favor of the Company. An additional 40 firefighter plaintiffs were selected for trial to begin on January 5, 2009. Plaintiffs’ counsel later moved to reduce the number of plaintiffs from 40 to 9. Trial of these nine plaintiffs began on February 6, 2009 and concluded on February 20, 2009 with a verdict returned against the Company and for the plaintiffs in varying amounts totaling $0.4 million. The Company is appealing this verdict. All trials previously scheduled in Cook County during 2009 and 2010 are stayed pending the result of this appeal. Since February 20, 2009, the Company is aware of six additional cases that have been filed in Cook County, involving 299 plaintiffs.

The Company has also been sued on this issue outside of the Cook County, Illinois venue. Most of these cases involve lawsuits filed in the Court of Common Pleas, Philadelphia County, Pennsylvania. Since September 2007, a total of 65 lawsuits, involving 65 plaintiffs, have been filed in this jurisdiction. Three of these cases have been dismissed pursuant to pretrial motion filed by the Company. Another case has been voluntarily dismissed. Three trials have occurred in Philadelphia involving these cases. The first trial involving one of these plaintiffs began on February 16, 2010 and ended on March 2, 2010, when the jury returned a verdict for the plaintiff. In particular, the jury found that the Company’s siren was not defectively designed, but that the Company negligently constructed the siren. The jury awarded damages in the amount of $0.1 million which was subsequently reduced to $0.08 million. The Company appealed this verdict. Another trial, involving 9 Philadelphia firefighter plaintiffs, began on June 14, 2010 and ended on June 25, 2010 when the jury returned a defense verdict for the Company as to all claims and all plaintiffs involved in that trial. The third trial, involving 9 Philadelphia firefighter plaintiffs, began on July 19, 2010 and ended on July 30, 2010 when the jury returned a defense verdict for the Company as to all claims and all plaintiffs involved in that trial. After these two favorable verdicts, the Company, was able to obtain dismissal of all remaining filed cases in Philadelphia, including the case on appeal, for an average nominal sum paid to each firefighter plaintiff. This settlement also included reimbursement of expenses. Prior to the initial trial in these cases, the Company also paid nominal sums, which included reimbursement of expenses, to obtain dismissals in four other cases The Company has been sued in jurisdictions other than Philadelphia, but those cases have also been dismissed, including four cases in the Supreme Court of Kings County, New York which were dismissed on January 25, 2008 after the court granted the Company’s motion to dismiss. The trial court subsequently denied reconsideration of its ruling. On appeal, the appellate court affirmed the trial court’s dismissal of these cases. Plaintiffs’ attorneys have threatened to file additional lawsuits. The Company intends to vigorously defend all of these lawsuits.

E-One, a former subsidiary of the Company, has been named as a defendant in a product liability case in Massachusetts involving a firefighter who claims to have been injured as a result of an accident involving an E-One pumper firetruck. In particular, plaintiff required amputation of a leg resulting from this accident. The accident allegedly occurred on August 7, 2005 when the firetruck was inadvertently placed into drive during pumping operations and “ran away,” pinning plaintiff against another firetruck. Plaintiff alleges, among other things, that the truck was defective and unreasonably dangerous because it failed to include certain alleged safety devices. After the accident, the Massachusetts Department of Labor investigated the accident and concluded various errors and omissions by the Fire Department and driver/operator of the pumper contributed to causing the accident. In addition to damages recoverable under typical product liability cases, plaintiff has also sought recovery under the Massachusetts Deceptive Trade Practices Act. At a mediation on October 5, 2010, the parties tentatively agreed to settle this case. The settlement will be funded by contributions from Federal Signal (on behalf of E-One), E-One’s insurance carrier, and an insurance carrier for E-One’s dealer who was also named as a defendant in the case. This settlement is subject to negotiation of and approval of a settlement agreement by the parties as well as court approval of the settlement. The company has recorded an accrual as of September 30, 2010 within current liabilities of discontinued operations, which represents management’s best estimate of the settlement amount.

12. SEGMENT INFORMATION

Effective June 6, 2010, the Company reorganized its segments to better align the Company’s intelligent transportation and public safety businesses for future growth. As a result of this reorganization, the Company created a new operating segment called Federal Signal Technologies that includes the vehicle classification software, automated license plate recognition and parking systems businesses from our Safety and Security Systems operating segment and the newly acquired businesses, Sirit and VESystems. The Safety and Security Systems operating segment retained the businesses that offer systems for campus and community alerting, emergency vehicles, first responder interoperable communications, industrial communications and command and municipal security. Results for prior periods have been restated to reflect the June 2010 reorganization described above.

The Company has four operating segments as defined under ASC Topic 280, “Segment Reporting” (SFAS No. 131). Business units are organized under each segment because they share certain characteristics, such as technology, marketing, distribution and product application, which create long-term synergies. The principal activities of the Company’s operating segments are as follows:

Federal Signal Technologies — Our Federal Signal Technologies Group is a provider of technologies and solutions to the Intelligent Transportation Systems and public safety markets and other applications. These products and solutions provide end users with the tools needed to automate data collection and analysis, transaction processing and asset tracking. FSTech provides technology platforms and services to customers in the areas of radio frequency identification systems, transaction processing vehicle classification, electronic toll collection, automated license plate recognition, electronic vehicle registration, parking and access control, cashless payment solutions, congestion charging, traffic management, site security solutions and supply chain systems. Products are sold under PIPS ^TM, Idris ^®, Sirit ^TM and VESystems ^TM brand names. The group operates manufacturing facilities in North American and Europe.

Safety and Security Systems— Our Safety and Security Systems Group is a leading manufacturer and supplier of comprehensive systems and products that law enforcement, fire rescue, emergency medical services, campuses, military facilities and industrial sites use to protect people and property. Offerings include systems for campus and community alerting, emergency vehicles, first responder interoperable communications, industrial communications and command and municipal networked security. Specific products include lightbars and sirens, public warning sirens and public safety software. Products are sold under the Federal Signal ^TM, Federal Signal VAMA ^TM, Target Tech ^® and Victor ^TM brand names. The group operates manufacturing facilities in North America, Europe, China and South Africa.

Environmental Solutions — Our Environmental Solutions Group is a leading manufacturer and supplier of a full range of street sweeper and vacuum trucks and high-performance waterblasting equipment for municipal and industrial customers. We also manufacture products for the newer markets of hydro-excavation, glycol recovery and surface cleaning for utility and industrial customers. Products are sold under the Elgin ^®, Vactor ^® , Guzzler ^® and Jetstream ^TM brand names. The group primarily manufactures its vehicles and equipment in the United States.

Fire Rescue — Our Fire Rescue Group is a leading manufacturer and supplier of sophisticated, vehicle-mounted, aerial platforms for fire fighting, rescue, electric utility and industrial uses. End customers include fire departments, industrial fire services, electric utilities, maintenance rental companies for applications such as fire fighting and rescue, transmission line maintenance, and installation and maintenance of wind turbines. The group’s telescopic/articulated aerial platforms are designed in accordance with various regulatory codes and standards, such as European Norms (EN), National Fire Protection Association (NFPA) and American National Standards Institute (ANSI). In addition to equipment sales, the group sells parts, service and training as part of a complete offering to its customer base. The group manufactures in Finland and sells globally under the Bronto Skylift ^® brand name.

Corporate contains those items that are not included in our other operating segments.

The Company evaluates performance based on operating income of the respective segment. Operating income includes all revenues, costs and expenses directly related to the segment involved, and excludes acquisition and integration related costs, corporate expenses and interest expenses. These costs are contained at Corporate. Operating segment depreciation expense, identifiable assets and capital expenditures relate to those assets that are utilized by the respective operating segment. Corporate assets consist principally of cash and cash equivalents, short-term investments, notes and other receivables and fixed assets. The accounting policies of each operating segment are the same as those described in the summary of significant accounting policies in the Company’s December 31, 2009 Form 10-K.

We have reclassified certain prior-period amounts to conform to the current-period presentation. Included with reclassifications are restatements for both discontinued operations and the reorganization of certain operating segments. Information regarding the Company’s discontinued operations is included in Note 15 — Discontinued Operations. The segment information included herein has been reclassified to reflect such discontinued operations.

The following table summarizes the Company’s net revenue, operating income (loss), and total assets by segment. The results for the interim periods are not necessarily indicative of results for a full year. Selected financial information is as follows:

		Safety
		and																Corporate
		Security				Fire				Environmental				Federal Signal				and
($ in millions)		Systems				Rescue				Solutions				Technologies*				Eliminations				Total
Three months ended September 30, 2010:
Net revenue		$	51.0			$	20.3			$	83.5			$	27.2			$	—			$	182.0
Operating income (loss)			5.7				1.4				4.7				(1.1	)			(5.2	)			5.5
Three months ended September 30, 2009:
Net revenue			54.2				27.4				65.4				15.2				—				162.2
Operating income (loss)			5.2				2.3				2.7				1.1				(4.2	)			7.1
		Safety
		and																Corporate
		Security				Fire				Environmental				Federal Signal				and
($ in millions)		Systems				Rescue				Solutions				Technologies*				Eliminations				Total
Nine months ended September 30, 2010:
Net revenue		$	160.5			$	74.8			$	238.3			$	73.6			$	—			$	547.2
Operating income (loss)			16.0				5.1				15.6				(3.6	)			(23.5	)			9.6
Nine months ended September 30, 2009:
Net revenue			168.1				101.4				230.7				44.9				—				545.1
Operating income (loss)			16.6				9.5				11.9				2.9				(20.9	)			20.0
		Safety
		and																Corporate
		Security				Fire				Environmental				Federal Signal				and
($ in millions)		Systems				Rescue				Solutions				Technologies				Eliminations				Total
As of September 30, 2010:
Total assets		$	235.8			$	123.0			$	205.3			$	271.6			$	19.6			$	855.3
As of December 31, 2009:
Total assets		$	239.0			$	141.9			$	191.7			$	134.3			$	38.5			$	745.4