-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MZ6+7wnEk3+gabNQbxx9lchmXHaHJ9O5zNlS36RkHAUNlkaukL5TDiQ4sMkBVhJj R1lD19ONxBbbensLQSFhFQ== 0000277509-03-000019.txt : 20030723 0000277509-03-000019.hdr.sgml : 20030723 20030723171058 ACCESSION NUMBER: 0000277509-03-000019 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030722 ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030723 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDERAL SIGNAL CORP /DE/ CENTRAL INDEX KEY: 0000277509 STANDARD INDUSTRIAL CLASSIFICATION: MOTOR VEHICLES & PASSENGER CAR BODIES [3711] IRS NUMBER: 361063330 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06003 FILM NUMBER: 03798895 BUSINESS ADDRESS: STREET 1: 1415 W 22ND ST STE 1100 CITY: OAK BROOK STATE: IL ZIP: 60523 BUSINESS PHONE: 7089542000 MAIL ADDRESS: STREET 1: 1415 W 22ND ST STE 1100 CITY: OAK BROOK STATE: IL ZIP: 60523 FORMER COMPANY: FORMER CONFORMED NAME: FEDERAL SIGN & SIGNAL CORP /DE/ DATE OF NAME CHANGE: 19600201 8-K 1 fs8-k2q.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 22, 2003 Federal Signal Corporation (Exact name of registrant as specified in its charter) Delaware 0-693 36-1063330 (State or other jurisdiction (Commission File (IRS Employer of incorporation) Number) Identification No.) 1415 W. 22nd Street, Oak Brook, Illinois 60523 (Address of principal executive offices) (Zip Code) (630) 954-2000 (Registrant's telephone number, including area code) Item 7. Financial Statements and Exhibits (c) Exhibits 99.1 Earnings Release dated July 22, 2003. Item 9. Regulation FD Disclosure The following information is being furnished pursuant to "Item 12. Results of Operations and Financial Condition" of form 8-K in accordance with SEC Release Nos. 33-8216 and 34-47583. The information in this Current Report is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended. On July 22, 2003, Federal Signal Corporation issued an earnings release announcing its financial results for the second quarter ended June 30, 2003. A copy of the earnings release is attached as Exhibit 99.1. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FEDERAL SIGNAL CORPORATION Dated: July 22, 2003 By: /s/ Joseph J. Ross Joseph J. Ross Chairman and Chief Executive Officer EXHIBIT INDEX Exhibit No. Description ---------- ------------------------------------------- 99.1 Earnings Release dated July 22, 2003 EX-99.1 3 ex9907.txt EXHIBIT 99.1 FEDERAL SIGNAL CORPORATION ANNOUNCES SECOND QUARTER EPS OF $.21 PER SHARE - -- Second Quarter Highlights -- - - Earnings from continuing operations of $.21 exceed consensus estimates - - Sales increase 21% reflecting improved Fire Rescue throughput - - Year-to-date operating cash flow strong at $47 million - on target to meet $90 million in 2003 - ------------------------------------------------------------------------------- Oak Brook, Illinois, July 22, 2003 -- Federal Signal Corporation reported diluted earnings per share of $.21 from continuing operations for the second quarter of 2003 on sales of $311 million. These results compare to the $.24 per share earned on sales of $258 million in 2002's second quarter. Sales rose 21% as three of the company's four groups showed significant increases, led by Fire Rescue Group's 36% increase and the additional sales associated with the company's refuse truck body acquisitions in late 2002. The $.21 earnings per share figure reported for 2003 was adversely affected by $.03 per share of restructuring costs associated primarily with the closure of two manufacturing facilities. Versus 2002, strong earnings increases in Fire Rescue were more than offset by declines in the company's other groups reflecting a lower margin sales mix and these restructuring costs. For the first six months, diluted earnings per share from continuing operations was $.34 on sales of $603 million. This compares to earnings per share of $.45 in the first six months of 2002 on sales of $504 million. Although sales increased 20% in 2003, earnings declined, reflecting a sales shift within the Environmental Products and Safety Products groups, and costs associated with the manufacturing facilities shutdowns. Joseph J. Ross, chairman and chief executive officer, stated, "Improvements in our Fire Rescue operations are beginning to contribute to the company's operating margins. We expect their operating progress to gain momentum, and earnings for the group in the second half of the year will be significantly above first-half results. The consistency of our cash flow generation remains strong. However, U.S. municipal markets are weaker than last year, and some of our industrial markets continue to give concern, particularly our tool sales into the automotive sector. We have not yet seen evidence of a sustained improvement in the U.S. economy, and we continue to focus on our cost structure and cash generation. As we have stated, the high end of our previous earnings guidance range of $1.05 to $1.15 was dependent on economic improvement. Having not seen this yet, we are tightening our full-year earnings estimate to a range of $1.05 to $1.10 per share." SECOND QUARTER GROUP RESULTS Environmental Products sales increased 25% in the quarter to $88 million while operating margin declined to 6.0% from 8.4%. Sales and orders increased in the quarter, primarily reflecting the acquisition of two refuse truck body businesses in late 2002. Although these acquisitions contributed to a year-over-year sales increase, continued weak demand resulted in low throughput and cost absorption for these businesses, which adversely affected segment margins. We expect markets for municipal products to remain weak for the balance of the year. Although lower than the prior year, second quarter operating margins improved sequentially from the first quarter for all operating units, including refuse. We continue to reduce operating and materials costs and expect to generate further margin improvements during the remainder of the year. Fire Rescue sales rose 36% to $113 million with operating margins improving to 4.8% from last year's 4.3%. Second quarter sales rose significantly as the group increased production throughput in its U.S. plants and benefited from higher international sales. U.S. operating units improved margins and earnings as production throughput rose and manufacturing efficiencies improved. U.S. municipal orders declined from the prior year's unusually strong quarter. Safety Products sales increased 10% to $71 million while operating margin declined to 11.1% from 13.7% in 2002. Sales and orders rose from prior year, particularly in our airport parking and municipal vehicular lights and sirens markets. Operating margins remained lower than last year due mainly to costs associated with the shutdown of a production facility in the U.K. With the completion of this shutdown in the second quarter, margins will rise during the second half of 2003 and beyond. Tool sales declined 3% from last year to $39 million. Operating margin fell to 10.8% from 12.5%. Tool Group sales declined as weak U.S. automotive markets continued to adversely affect cutting tool sales. While strengthening foreign currencies lifted sales slightly, non-U.S. markets showed real improvements in weak economies, particularly in Europe, Canada and Japan. Operating margins declined in light of the lower sales level and higher pension costs. CORPORATE AND OTHER Corporate expense in the second quarter increased to $3.7 million, up as expected from the prior year due to increases in various expense categories. Interest expense was essentially flat with the prior year. During the quarter, the company successfully replaced its $300 million bank credit facility, a portion of which expired in June, with a combination of commercial bank and private placement financing. A new 3-year bank commitment for $250 million was closed on June 6th. A $50 million floating rate private placement was completed on June 30th; terms range from 5-10 years. Both transactions were oversubscribed. The effective tax rate increased slightly from 28% last year to 29% reflecting our estimate of the tax rate for the balance of the year. We expect the full-year effective tax rate to be about 27%; this includes the first quarter effect of a one-time benefit of a tax deduction associated with the closure of a production facility in the U.K. The company also completed the sale of its discontinued sign operations during the quarter and recorded an after-tax charge of $.4 million, which includes an estimate of future costs associated with retained liabilities. Proceeds were used to pay down debt. CASH FLOW AND DEBT Operating cash flow totaled $47 million year to date. We saw improvements in working capital through the reduction in inventories and receivables during the second quarter. Days sales of receivables outstanding and inventory turnover both improved during the quarter, as did payables management. During the quarter, inventory turns improved to 4.8, up from an average of 4.3 in 2002, due to improvements associated with lean enterprise initiatives. Compared to the first six months of 2002, operating cash flow was $10 million lower, in large part, because of a significant reduction in customer receivables during the comparable period of 2002. The company remains on track to generate at least $90 million of operating cash flow in 2003. Manufacturing debt was reduced in the quarter to $274 million, or 42% of capitalization, comparing favorably to the 44% level at year-end 2002. Federal Signal will host its second quarter conference call Tuesday, July 22, 2003 at 11:00 a.m. Eastern Time to highlight results of the second quarter, and discuss the company's outlook. The call will last approximately one hour. You may listen to the conference call over the Internet through Federal Signal's website at http://www.federalsignal.com. To listen to the call live, we recommend you go to the website at least fifteen minutes in advance to register and to download and install (if necessary) the required free audio software. If you are unable to listen to the live broadcast, a replay accessible from our website will be available shortly after the call concludes through 5:00 p.m. Eastern Time, Tuesday, July 29, 2003. Federal Signal Corporation is a global manufacturer of leading niche products in four operating groups: environmental vehicles and related products, fire rescue vehicles, safety and signaling products, and consumable industrial tooling. Based in Oak Brook, Illinois, the company's shares are traded on the New York Stock Exchange under the symbol FSS. This release contains various forward-looking statements as of the date hereof and we undertake no obligation to update these 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, litigation results, legal and regulatory developments such as the FIRE Act grant program and other risks and uncertainties described in filings with the Securities and Exchange Commission. FEDERAL SIGNAL CORPORATION (NYSE) Consolidated Financial Data For the Second Quarter and First Six Months 2003 and 2002 (Unaudited) (in thousands except per share data) Percent 2003 2002 change ---- ---- ------ Quarter June 30: Revenues $ 311,041 $ 257,864 21% Income: Income from continuing operations 9,947 10,712 -7% Income from discontinued operations, loss on sale net of tax (369) ========== ========== Net income 9,578 10,712 -11% ========== ========== Share earns (diluted): Income from continuing operations .21 .24 -13% Income from discontinued operations, loss on sale net of tax (.01) ========== ========== Net income* .20 .24 -17% ========== ========== * amounts may not add due to rounding Average common shares outstanding 48,016 45,461 Sales $ 311,041 $ 257,864 21% Cost of sales (227,950) (183,117) Operating expenses (63,981) (54,345) ---------- ---------- Operating income 19,110 20,402 -6% Interest expense (5,140) (5,064) Other income (expense) 62 (440) Minority interest 36 (43) ---------- ---------- Income before income taxes 14,068 14,855 Income taxes (4,121) (4,143) ---------- ---------- Income from continuing operations 9,947 10,712 -7% Income from discontinued operations, loss on sale net of tax (369) ========== ========== Net income $ 9,578 $ 10,712 -11% ========== ========== Gross margin on sales 26.7% 29.0% Operating margin on sales 6.1% 7.9% Comprehensive income 13,912 16,570 Percent 2003 2002 change ---- ---- ------ 6 months: Revenues $ 602,992 $ 503,508 20% Income: Income from continuing operations 16,414 20,506 -20% Income from discontinued operations, loss on sale net of tax (369) Cumulative effect of change in accounting (7,984) ========== ========== Net income 16,045 12,522 28% ========== ========== Share earns (diluted): Income from continuing operations .34 .45 -24% Income from discontinued operations, loss on sale net of tax (.01) Cumulative effect of change in accounting (.18) ========== ========== Net income* .33 .28 18% ========== ========== * amounts may not add due to rounding Average common shares outstanding 47,940 45,394 Sales $ 602,992 $ 503,508 20% Cost of sales (445,552) (358,871) Operating expenses (127,115) (105,622) ---------- ---------- Operating income 30,325 39,015 -22% Interest expense (10,035) (9,847) Other income (expense) 192 (286) Minority interest 209 (15) ---------- ---------- Income before income taxes 20,691 28,867 Income taxes (4,277) (8,361) ---------- ---------- Income from continuing operations 16,414 20,506 -20% Income from discontinued operations, loss on sale net of tax (369) Cumulative effect of change in accounting (7,984) ========== ========== Net income $ 16,045 $ 12,522 28% ========== ========== Gross margin on sales 26.1% 28.7% Operating margin on sales 5.0% 7.7% Net cash provided by operations: Net income $ 16,045 $ 12,522 Cumulative effect of change in accounting 7,984 Depreciation 11,911 10,565 Amortization 1,041 977 Working capital changes and other 18,251 25,101 ========== ========== Net cash provided by operations 47,248 57,149 -17% ========== ========== Capital expenditures 8,777 8,347 Comprehensive income 24,861 17,336 Percent 2003 2002 change ---- ---- ------ Group results: Quarter June 30: Revenues Environmental Products $ 88,226 $ 70,540 25% Fire Rescue 112,619 82,735 36% Safety Products 71,054 64,322 10% Tool 39,142 40,267 -3% ========== ========== Total group revenues $ 311,041 $ 257,864 21% ========== ========== Operating income Environmental Products $ 5,270 $ 5,931 -11% Fire Rescue 5,393 3,551 52% Safety Products 7,904 8,831 -10% Tool 4,214 5,046 -16% ---------- ---------- Total group operating income $ 22,781 $ 23,359 -2% ========== ========== 6 months: Revenues Environmental Products $ 172,938 $ 145,292 19% Fire Rescue 211,281 149,984 41% Safety Products 138,242 128,967 7% Tool 80,531 79,265 2% ========== ========== Total group revenues $ 602,992 $ 503,508 20% ========== ========== Operating income Environmental Products $ 6,875 $ 12,518 -45% Fire Rescue 7,516 5,220 44% Safety Products 14,434 18,098 -20% Tool 8,686 9,170 -5% ---------- ---------- Total group operating income $ 37,511 $ 45,006 -17% ========== ========== June 30, December 31, 2003 2002 (unaudited) Assets Manufacturing activities:- Current assets: Cash and cash equivalents $ 9,455 $ 9,782 Trade accounts receivable, net of allowances for doubtful accounts 210,138 181,843 Inventories 173,257 183,802 Prepaid expenses 19,317 19,390 ----------- ----------- Total current assets 412,167 394,817 Properties and equipment 139,668 143,932 Intangible assets, net of accumulated amortization 353,882 348,435 Other deferred charges and assets 55,108 44,046 ----------- ----------- Total manufacturing assets 960,825 931,230 Net assets of discontinued operations, including financial assets 10,392 Financial services activities - Lease financing receivables, net of allowances for doubtful accounts 227,483 226,788 =========== =========== Total assets $ 1,188,308 $ 1,168,410 =========== =========== Liabilities Manufacturing activities:- Current liabilities: Short-term borrowings $ 45,463 $ 16,432 Trade accounts payable 89,057 76,082 Accrued liabilities and income taxes 139,103 129,370 ----------- ----------- Total current liabilities 273,623 221,884 Long-term borrowings 228,707 279,544 Long-term pension liabilities 39,127 32,656 Deferred income taxes 39,779 33,495 ----------- ----------- Total manufacturing liabilities 581,236 567,579 ----------- ----------- Financial services activities - Borrowings 198,934 202,022 Minority interest in subsidiary 535 744 Shareholders' equity 407,603 398,065 =========== =========== Total liabilities and shareholders' equity $ 1,188,308 $ 1,168,410 =========== =========== Supplemental data: Manufacturing debt 274,170 295,976 Debt-to-capitalization ratio: Manufacturing 42% 44% Financial services 87% 87% -----END PRIVACY-ENHANCED MESSAGE-----