Table of Contents


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________  
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2017
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number: 1-6003
    ___________________________________
  FSSLOGOCOVERQ22015A07.JPG
FEDERAL SIGNAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
36-1063330
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
1415 West 22nd Street,
Oak Brook, Illinois
 
60523
(Address of principal executive offices)
 
(Zip code)
Registrant’s telephone number including area code: (630) 954-2000  
    ___________________________________
Indicate by check mark whether the registrant (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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   þ     No   ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   þ     No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
þ
 
 
 
Accelerated filer
¨
 
 
 
 
 
 
 
 
 
Non-accelerated filer
¨  
 
 (Do not check if a smaller reporting company)
 
Smaller reporting company
¨
 
 
 
 
 
 
 
 
 
Emerging growth company
¨
 
 
 
 
 
 
 
 
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   þ
As of July 31, 2017 , the number of shares outstanding of the registrant’s common stock was 59,947,603.
 

Table of Contents


FEDERAL SIGNAL CORPORATION
TABLE OF CONTENTS
Page
Item 1.
Item 2.
Item 3.
Item 4.
 
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Form 10-Q”) is being filed by Federal Signal Corporation and its subsidiaries (referred to collectively as the “Company,” “we,” “our” or “us” herein, unless the context otherwise indicates) with the United States (“U.S.”) Securities and Exchange Commission (the “SEC”), and includes comments made by management that may contain words such as “may,” “will,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “project,” “estimate” and “objective” or similar terminology, or the negative thereof, 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 Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and 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 risk factors described under Part I, Item 1A, Risk Factors , of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 , which was filed with the SEC on February 28, 2017. 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 results of operations, financial condition or cash flow. 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 is subject to the reporting and information requirements of the Exchange Act and, as a result, is obligated to file Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports and information with the SEC, as well as amendments to those reports. The Company makes these filings available free of charge through our website at www.federalsignal.com as soon as reasonably practicable after such materials are filed with, or furnished to, the SEC. Information on our website does not constitute part of this Form 10-Q. In addition, the SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically. All materials that we file with, or furnish to, the SEC may also be read or copied at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.

1
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PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements (Unaudited).
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(in millions, except per share data)
2017

2016
 
2017
 
2016
Net sales
$
224.4


$
172.3

 
$
402.2

 
$
345.1

Cost of sales
169.7


127.3

 
303.9

 
252.7

Gross profit
54.7


45.0

 
98.3

 
92.4

Selling, engineering, general and administrative expenses
34.9


30.3

 
66.4

 
59.9

Acquisition and integration-related expenses
1.0

 
0.4

 
1.5

 
0.9

Restructuring
0.1

 
—

 
0.4

 
1.2

Operating income
18.7

 
14.3

 
30.0

 
30.4

Interest expense
1.3

 
0.4

 
1.9

 
0.8

Debt settlement charges
—

 
—

 
—

 
0.3

Other income, net
(0.2
)

(0.3
)
 
(0.5
)
 
(1.0
)
Income before income taxes
17.6


14.2

 
28.6

 
30.3

Income tax expense
6.1


4.8

 
9.9

 
10.5

Income from continuing operations
11.5


9.4

 
18.7

 
19.8

(Loss) gain from discontinued operations and disposal, net of income tax (benefit) expense of $(0.1), $(0.3), $0.0 and $4.1, respectively
(0.1
)

(0.3
)
 
—

 
2.9

Net income
$
11.4


$
9.1

 
$
18.7

 
$
22.7

Basic earnings per share:



 
 
 
 
Earnings from continuing operations
$
0.19


$
0.16

 
$
0.31

 
$
0.32

(Loss) earnings from discontinued operations and disposal, net of tax
—


(0.01
)
 
—

 
0.05

Net earnings per share
$
0.19


$
0.15

 
$
0.31

 
$
0.37

Diluted earnings per share:



 
 
 
 
Earnings from continuing operations
$
0.19


$
0.15

 
$
0.31

 
$
0.32

(Loss) earnings from discontinued operations and disposal, net of tax
—


—

 
—

 
0.05

Net earnings per share
$
0.19


$
0.15

 
$
0.31

 
$
0.37

Weighted average common shares outstanding:



 
 
 
 
Basic
59.7


60.1

 
59.7

 
61.1

Diluted
60.3


60.9

 
60.3

 
61.9

Cash dividends declared per common share
$
0.07


$
0.07

 
$
0.14

 
$
0.14

See notes to condensed consolidated financial statements.

2
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FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(in millions)
2017
 
2016
 
2017
 
2016
Net income
$
11.4

 
$
9.1

 
$
18.7

 
$
22.7

Other comprehensive income (loss):
 
 
 
 
 
 
 
Change in foreign currency translation adjustment
5.0

 
(3.1
)
 
6.2

 
6.0

Change in unrecognized net actuarial losses related to pension benefit plans, net of income tax expense of $0.3, $0.7, $0.5 and $1.5, respectively
(0.1
)
 
2.0

 
0.1

 
3.8

Change in unrealized net gain on derivatives, net of income tax expense of $0.2, $0.0, $0.2 and $0.0, respectively
0.2

 
—

 
0.2

 
(0.1
)
Total other comprehensive income (loss)
5.1

 
(1.1
)
 
6.5

 
9.7

Comprehensive income
$
16.5

 
$
8.0

 
$
25.2

 
$
32.4

See notes to condensed consolidated financial statements.

3
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FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
June 30,
2017
 
December 31,
2016
(in millions, except per share data)
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
37.0

 
$
50.7

Accounts receivable, net of allowances for doubtful accounts of $1.0 and $0.8, respectively
117.5

 
81.3

Inventories
139.7

 
120.1

Prepaid expenses and other current assets
8.7

 
7.5

Total current assets
302.9

 
259.6

Properties and equipment, net of accumulated depreciation of $106.7 and $101.3, respectively
63.9

 
42.9

Rental equipment, net of accumulated depreciation of $15.2 and $9.7, respectively
83.8

 
80.8

Goodwill
372.2

 
236.5

Intangible assets, net of accumulated amortization of $1.3 and $0.5, respectively
162.8

 
10.2

Deferred tax assets
6.7

 
8.2

Deferred charges and other assets
4.2

 
3.9

Long-term assets of discontinued operations
1.1

 
1.1

Total assets
$
997.6

 
$
643.2

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Current portion of long-term borrowings and capital lease obligations
$
0.3

 
$
0.5

Accounts payable
66.7

 
35.3

Customer deposits
6.5

 
4.5

Accrued liabilities:
 
 
 
Compensation and withholding taxes
17.6

 
13.8

Other current liabilities
40.8

 
28.7

Current liabilities of discontinued operations
0.8

 
2.1

Total current liabilities
132.7

 
84.9

Long-term borrowings and capital lease obligations
288.9

 
63.5

Long-term pension and other postretirement benefit liabilities
57.5

 
61.1

Deferred gain
9.7

 
10.7

Deferred tax liabilities
67.4

 
—

Other long-term liabilities
27.0

 
26.9

Long-term liabilities of discontinued operations
2.0

 
2.0

Total liabilities
585.2

 
249.1

Stockholders’ equity:
 
 
 
Common stock, $1 par value per share, 90.0 shares authorized, 65.9 and 65.4 shares issued, respectively
65.9

 
65.4

Capital in excess of par value
204.4

 
200.3

Retained earnings
312.1

 
301.8

Treasury stock, at cost, 6.0 and 5.8 shares, respectively
(84.5
)
 
(81.4
)
Accumulated other comprehensive loss
(85.5
)
 
(92.0
)
Total stockholders’ equity
412.4

 
394.1

Total liabilities and stockholders’ equity
$
997.6

 
$
643.2

See notes to condensed consolidated financial statements.

4
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FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 
Six Months Ended 
 June 30,
(in millions)
2017
 
2016
Operating activities:



Net income
$
18.7

 
$
22.7

Adjustments to reconcile net income to net cash provided by operating activities:



Loss (gain) from discontinued operations and disposal
—


(2.9
)
Depreciation and amortization
12.3


7.2

Deferred financing costs
0.2


0.5

Deferred gain
(1.0
)

(0.9
)
Stock-based compensation expense
2.7


2.2

Pension expense, net of funding
(2.8
)

(2.2
)
Deferred income taxes
2.8


7.0

Changes in operating assets and liabilities, net of effects of acquisitions and discontinued operations
12.9


(29.7
)
Net cash provided by continuing operating activities
45.8


3.9

Net cash (used for) provided by discontinued operating activities
(0.3
)

1.3

Net cash provided by operating activities
45.5


5.2

Investing activities:



Purchases of properties and equipment
(2.7
)
 
(3.6
)
Payments for acquisitions, net of cash acquired
(269.2
)
 
(102.6
)
Other, net
0.1

 
(0.5
)
Net cash used for continuing investing activities
(271.8
)
 
(106.7
)
Net cash (used for) provided by discontinued investing activities
(1.1
)
 
88.0

Net cash used for investing activities
(272.9
)

(18.7
)
Financing activities:



Increase in revolving lines of credit, net
223.0


64.8

Payments on long-term borrowings
—


(43.4
)
Payments of debt financing fees
(0.2
)

(1.1
)
Purchases of treasury stock
—


(33.1
)
Redemptions of common stock to satisfy withholding taxes related to stock-based compensation
(2.4
)

(2.6
)
Cash dividends paid to stockholders
(8.4
)

(8.6
)
Proceeds from stock-based compensation activity
1.2


0.2

Other, net
(0.2
)

(0.4
)
Net cash provided by (used for) continuing financing activities
213.0


(24.2
)
Net cash provided by discontinued financing activities
—


0.7

Net cash provided by (used for) financing activities
213.0


(23.5
)
Effects of foreign exchange rate changes on cash and cash equivalents
0.7


(0.3
)
Decrease in cash and cash equivalents
(13.7
)

(37.3
)
Cash and cash equivalents at beginning of year
50.7


76.0

Cash and cash equivalents at end of period
$
37.0


$
38.7

See notes to condensed consolidated financial statements.

5
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FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
(in millions)
Common
Stock
 
Capital in
Excess of
Par
Value
 
Retained
Earnings
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Loss
 
Total
Balance at January 1, 2017
$
65.4

 
$
200.3

 
$
301.8

 
$
(81.4
)
 
$
(92.0
)
 
$
394.1

Net income
 
 
 
 
18.7

 
 
 
 
 
18.7

Total other comprehensive income
 
 
 
 
 
 
 
 
6.5

 
6.5

Cash dividends declared
 
 
 
 
(8.4
)
 
 
 
 
 
(8.4
)
Stock-based payments:
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation
 
 
2.1

 
 
 
 
 
 
 
2.1

Stock option exercises and other
0.3

 
2.2

 
 
 
(1.2
)
 
 
 
1.3

Performance share unit transactions
0.2

 
(0.2
)
 
 
 
(1.9
)
 
 
 
(1.9
)
Balance at June 30, 2017
$
65.9

 
$
204.4

 
$
312.1

 
$
(84.5
)
 
$
(85.5
)
 
$
412.4

(in millions)
Common
Stock
 
Capital in
Excess of
Par
Value
 
Retained
Earnings
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Loss
 
Total
Balance at January 1, 2016
$
64.8

 
$
195.6

 
$
274.9

 
$
(40.9
)
 
$
(88.8
)
 
$
405.6

Net income
 
 
 
 
22.7

 
 
 
 
 
22.7

Total other comprehensive income
 
 
 
 
 
 
 
 
9.7

 
9.7

Cash dividends declared
 
 
 
 
(8.6
)
 
 
 
 
 
(8.6
)
Stock-based payments:
 
 
 
 
 
 
 
 
 
 
 
Stock-based compensation

 
1.7

 

 

 

 
1.7

Stock option exercises and other
0.1

 
0.5

 

 
(0.2
)
 

 
0.4

Performance share unit transactions
0.4

 
(0.4
)
 

 
(2.4
)
 

 
(2.4
)
Stock repurchase program


 


 


 
(33.1
)
 


 
(33.1
)
Balance at June 30, 2016
$
65.3

 
$
197.4

 
$
289.0

 
$
(76.6
)
 
$
(79.1
)
 
$
396.0

See notes to condensed consolidated financial statements.

6
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FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 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.
Products manufactured and supplied, and services rendered by the Company are divided into two major operating segments: the Environmental Solutions Group and the Safety and Security Systems Group. The individual operating businesses are organized as such because they share certain characteristics, including technology, marketing, distribution and product application, which create long-term synergies. The Company’s reportable segments are consistent with its operating segments. These segments are discussed in Note 11 – Segment Information.
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements represent the consolidation of Federal Signal Corporation and its subsidiaries included herein and have been prepared by the Company pursuant to the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) 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 Company’s Annual Report on Form 10-K for the year ended December 31, 2016 , and should be read in conjunction with those consolidated financial statements and the notes thereto.
In addition, as discussed in Note 2 – Acquisitions, on June 2, 2017 , the Company completed the acquisition of all of the outstanding shares of capital stock of GenNx/TBEI Intermediate Co., a Delaware corporation (“TBEI”). TBEI is a leading U.S. manufacturer of dump truck bodies and trailers serving maintenance and infrastructure end-markets. The Condensed Consolidated Balance Sheet as of June 30, 2017 includes preliminary fair values assigned to the assets acquired and liabilities assumed in connection with the acquisition, whereas the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2017 include the post-acquisition operating results of TBEI.
These condensed consolidated financial statements include all normal and recurring adjustments that we considered necessary to present a fair statement of our results of operations, financial condition and cash flow. Intercompany balances and transactions have been eliminated in consolidation.
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. While we label our quarterly information using a calendar convention whereby our first, second and third quarters are labeled as ending on March 31, June 30 and September 30, respectively, it is our longstanding practice to establish interim quarterly closing dates based on a 13-week period ending on a Saturday, with our fiscal year ending on December 31. The effects of this practice are not material and exist only within a reporting year.
Recent Accounting Pronouncements and Accounting Changes
In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) , which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, Revenue Recognition . This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. The ASU allows either a “full retrospective” adoption, in which the standard is applied to all periods presented in the financial statements, or a “modified retrospective” adoption, in which the guidance is applied retrospectively only to the most current period presented in the financial statements, with the cumulative effect of initially applying the new standard being recognized as an adjustment to the opening balance of retained earnings at the date of initial application. As originally proposed, this guidance was effective for annual reporting periods beginning on or after December 15, 2016, including interim periods within that reporting period, and

7
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

early adoption was not permitted. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date , which deferred the effective date of the new revenue recognition requirements to annual reporting periods beginning on or after December 15, 2017, including interim periods within that reporting period. Under ASU 2015-14, companies are permitted to adopt the guidance early, but no earlier than the original effective date outlined in ASU 2014-09. The FASB has issued a number of amendments to ASU 2014-09 that are intended to address implementation issues that were raised by stakeholders and provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard. These amendments have the same effective date as ASU 2014-09.
The new revenue standard will be effective for the Company beginning January 1, 2018, and we expect to apply the “modified retrospective” method of adoption. In preparation for the adoption of the new standard, the Company has established a project management team responsible for analyzing the impact of ASU 2014-09, and the related amendments, across all revenue streams. The project management team is currently reviewing current accounting policies and practices, including a representative sample of contracts with customers, to identify potential differences that would result from applying the requirements under the new standard. In addition, the Company is in the process of designing and implementing the appropriate controls over gathering and reporting the information required to support the expanded disclosure requirements. The Company’s revenue is primarily generated from the sale of finished products to customers. Those sales predominantly contain a single delivery element and revenue is recognized at a single point in time when ownership, risks and benefits transfer. The timing of revenue recognition for these transactions is not expected to be significantly impacted by the new standard. While the Company has not yet completed its assessment of the impact of the new standard and is in the early stages of analyzing accounting policies and contracts for its recent acquisition, based on the analysis completed to date, the Company does not expect that the adoption of the revised guidance will have a material impact on its financial position, results of operations, or cash flows. We anticipate the primary impact to be the additional required disclosures around revenue recognition in the notes to the consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02,  Leases (Topic 842) , which requires organizations that are lessees in operating leases to recognize right-of-use assets and lease liabilities on the balance sheet and requires disclosure of key qualitative and quantitative information about leasing agreements by both lessors and lessees. For a lease to meet the requirements for accounting under a sale-leaseback transaction, it must meet the criteria for a sale in ASC 606, Revenue from Contracts with Customers . Entities are required to recognize and measure operating leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Payments , which provides additional guidance on the financial statement presentation of certain activities in the statement of cash flows. The activities addressed by this guidance that may be relevant to the Company include cash payments for debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims and proceeds from the settlement of corporate-owned life insurance policies, and the application of the predominance principle. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The amendments in this ASU should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. The Company currently expects to adopt this guidance effective January 1, 2018 and does not expect that its adoption will have a material impact on its historical cash flow presentation.
In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740) , Intra-Entity Transfers of Assets Other Than Inventory . This guidance requires the income tax consequences of an intra-entity transfer of an asset other than inventory to be recognized when the transfer occurs, instead of when the asset is sold to an outside party. The pronouncement is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods, with early adoption permitted. The amendments in this ASU should be applied on a modified retrospective basis, with an adjustment reflecting the cumulative effect of adoption being recorded directly to retained earnings as of the beginning of the period of adoption. The Company currently expects to adopt this guidance effective January 1, 2018 and does not expect that its adoption will have a material impact on its consolidated financial statements.
In March 2017, the FASB issued ASU No. 2017-07, Compensation – Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . This guidance requires that only the service cost component is included on the same line as other compensation costs on the statements of operations. All other components of net periodic pension cost should be reported separately from the service cost component and outside a subtotal

8
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

of operating income. The guidance also specifies that only the service cost component of net periodic pension cost is eligible for capitalization. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The amendments related to the presentation of the service cost and other components of net periodic pension cost included in this ASU should be applied retrospectively, whereas the amendments relating to the capitalization of the service cost component of net periodic pension cost should be applied prospectively. The Company currently expects to adopt this guidance effective January 1, 2018 and does not expect that its adoption will have a material impact on its consolidated financial statements.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and (iii) the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are used for, but are not limited to, revenue recognition, workers’ compensation and product liability reserves, asset impairment, pension and other post-retirement benefit obligations, income tax contingency accruals and valuation allowances, and litigation-related accruals. Actual results could differ from those estimates.
As described in Note 2 – Acquisitions, amounts allocated to certain assets acquired and liabilities assumed in connection with current-year acquisitions are considered preliminary as of June 30, 2017 and are subject to change during the measurement period.
Significant Accounting Policies
There have been no changes to the Company’s significant accounting policies as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 .
NOTE 2 – ACQUISITIONS
Acquisition of TBEI
On June 2, 2017 , the Company completed the acquisition of all of the outstanding shares of capital stock of TBEI. TBEI is a leading U.S. manufacturer of dump truck bodies and trailers serving maintenance and infrastructure end markets. The Company expects that the acquisition of TBEI will enable it to strengthen its market position as a specialty vehicle manufacturer in maintenance and infrastructure markets, leverage its expertise in building chassis-based vehicles and balance the mix of revenues it generates from municipal and industrial markets. As the acquisition closed on June 2, 2017 , the assets and liabilities of TBEI have been consolidated into the Condensed Consolidated Balance Sheet as of June 30, 2017 , while the post-acquisition results of operations have been included in the Condensed Consolidated Statements of Operations, within the Environmental Solutions Group.
The initial cash consideration paid by the Company to acquire TBEI was approximately $271.8 million , inclusive of cash acquired and a preliminary working capital adjustment. Any additional working capital adjustment is expected to be finalized before the end of the fourth quarter of 2017.
The acquisition is being accounted for in accordance with ASC 805,  Business Combinations . Accordingly, the total purchase price has been allocated on a preliminary basis to assets acquired and liabilities assumed in connection with the acquisition based on their estimated fair values as of the completion of the acquisition. A single estimate of fair value results from a complex series of judgments about future events and uncertainties and relies heavily on estimates and assumptions. The Company’s judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results of operations. Due to the proximity of the date of acquisition to the date of issuance of the condensed consolidated financial statements, the Company’s purchase price allocation as of June 30, 2017 reflects various provisional estimates that were based on the information that was available as of the acquisition date and the subsequent filing date 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 determination of those fair values is not yet finalized. Thus, the preliminary measurements of fair value set forth in the table below are subject to change during the measurement period as valuations are finalized, including those performed by a third-party valuation specialist related to certain of the acquired tangible and intangible assets. The Company expects to finalize the valuations and complete the purchase price allocation as soon as practicable.

9
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the acquisition date:
(in millions)
 
Purchase price, inclusive of preliminary working capital adjustment (a)
$
271.8

Total consideration
271.8

 
 
Cash
2.6

Accounts receivable
23.4

Inventories
24.7

Prepaid expenses and other current assets
0.8

Rental equipment
0.8

Properties and equipment
23.4

Customer relationships (b)
90.0

Trade names (c)
60.0

Other intangible assets
3.0

Accounts payable
(18.7
)
Accrued liabilities
(5.6
)
Deferred tax liabilities
(65.4
)
Net assets acquired
$
139.0

 
 
Goodwill (d)
$
132.8

(a)
$243.0 million of the purchase price was funded through borrowings under the Company’s revolving credit facility, with the remainder being funded with existing cash on hand. The purchase price is subject to a final working capital adjustment that is expected to be finalized before the end of the fourth quarter of 2017 .
(b)
Represents the preliminary fair value assigned to customer relationships, which are considered to be definite-lived intangible assets, with a preliminary estimated useful life of approximately 10 years.
(c)
Represents the preliminary fair value assigned to trade names, which are considered to be indefinite-lived intangible assets.
(d)
Goodwill, which is not deductible for tax purposes, has been allocated to the Environmental Solutions Group on the basis that the synergies identified will primarily benefit this segment.

In the period between the June 2, 2017 closing date and June 30, 2017 , TBEI generated approximately  $18.1 million  of net sales and  $0.8 million  of operating income. The Company has included the operating results of TBEI within the Environmental Solutions Group in its condensed consolidated financial statements since the closing date.
Under ASC 805-10, acquisition-related costs (i.e., advisory, legal, valuation and other professional fees) are not included as a component of consideration transferred, but are accounted for as expenses in the periods in which the costs are incurred. Primarily due to the TBEI acquisition, the Company incurred  $0.7 million and $1.0 million  of acquisition-related costs in the three and six months ended June 30, 2017 , which have been recorded in Acquisition and integration-related expenses on the Condensed Consolidated Statement of Operations. The Company expects to incur additional integration expenses during the remainder of 2017.

In the three and six months ended June 30, 2016 , the Company incurred  $0.4 million and $0.9 million  of acquisition and integration-related costs in connection with acquisitions completed in the prior-year.

Unaudited pro forma financial information
The following table presents the unaudited pro forma combined results of operations of the Company and TBEI for the three and six months ended June 30, 2017 and 2016 , after giving effect to certain pro forma adjustments including: (i) elimination of the costs recognized related to the step-up in fair value of TBEI’s inventory that will not have a continuing impact, (ii) amortization of acquired intangible assets, (iii) the impact of certain fair value adjustments such as depreciation on the acquired property, plant and equipment, (iv) interest expense for historical long-term debt of TBEI that was repaid and interest expense on additional borrowings by the Company to fund the acquisition and (v) elimination of non-recurring acquisition and

10
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

integration-related expenses. The unaudited pro forma statement of operations of the Company assuming this transaction occurred at January 1, 2016 is as follows:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(in millions, except per share data)
2017
 
2016
 
2017
 
2016
Net sales
$
261.8

 
$
232.1

 
$
491.3

 
$
456.3

Income from continuing operations
14.8

 
13.0

 
25.2

 
26.4

Diluted earnings from continuing operations (per share)
$
0.25

 
$
0.21

 
$
0.42

 
$
0.43


The unaudited pro forma financial information is presented for informational purposes only and is not intended to represent or be indicative of the consolidated results of operations of the Company that would have been reported had the acquisition been completed as of the beginning of the periods presented, and should not be taken as being representative of the future consolidated results of operations of the Company.
NOTE 3 – INVENTORIES
The following table summarizes the components of Inventories :
(in millions)
June 30,
2017
 
December 31,
2016
Finished goods
$
82.4

 
$
77.6

Raw materials
51.8

 
35.3

Work in process
5.5

 
7.2

Total inventories
$
139.7

 
$
120.1

NOTE 4 – GOODWILL AND OTHER INTANGIBLE ASSETS
The following table summarizes the carrying amount of goodwill, and the changes in the carrying amount of goodwill in the six months ended June 30, 2017 , by segment:
(in millions)
Environmental
Solutions
 
Safety & Security
Systems
 
Total
Balance at January 1, 2017
$
127.2

 
$
109.3

 
$
236.5

Translation adjustments
0.2

 
2.7

 
2.9

Acquisitions
132.8

 
—

 
132.8

Balance at June 30, 2017
$
260.2

 
$
112.0

 
$
372.2

The following table summarizes the gross carrying amount and accumulated amortization of intangible assets for each major class of intangible assets:
 
June 30, 2017
 
December 31, 2016
(in millions)
Gross Carrying Value
 
Accumulated Amortization
 
Net Carrying Value
 
Gross Carrying Value
 
Accumulated Amortization
 
Net Carrying Value
Definite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
Customer relationships  (a)
$
90.8

 
$
(0.7
)
 
$
90.1

 
$
0.8

 
$
(0.1
)
 
$
0.7

Other  (a)
4.1

 
(0.6
)
 
3.5

 
1.1

 
(0.4
)
 
0.7

Total definite-lived intangible assets
94.9

 
(1.3
)
 
93.6

 
1.9

 
(0.5
)
 
1.4

Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
Trade names
69.2

 
—

 
69.2

 
8.8

 
—

 
8.8

Total indefinite-lived intangible assets
69.2

 
—

 
69.2

 
8.8

 
—

 
8.8

Total intangible assets
$
164.1

 
$
(1.3
)
 
$
162.8

 
$
10.7

 
$
(0.5
)
 
$
10.2

(a)
Average useful life of customer relationships and other definite-lived intangible assets are estimated to be approximately 10 years and 5 years , respectively. The average useful life across all definite-lived intangible assets is estimated to be approximately 10 years .

11
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

The table above includes preliminary estimates of the fair value and useful lives of certain definite and indefinite-lived intangible assets related to the TBEI acquisition completed during 2017 . As further described in Note 2 – Acquisitions, the preliminary measurements of fair value included in the table above are subject to change during the measurement period as valuations are finalized.
Amortization expense for the three months ended June 30, 2017 and 2016 was $0.7 million and $0.1 million , respectively. Amortization expense for the six months ended June 30, 2017 and 2016 was $0.8 million and $0.1 million , respectively.
The Company currently estimates that aggregate amortization expense will be approximately $4.3 million for the remainder of 2017 , $8.7 million in 2018 , $8.7 million in 2019 , $8.1 million in 2020 , $7.7 million in 2021 , and $56.1 million thereafter. Actual amounts of amortization may differ from estimated amounts due to additional intangible asset acquisitions, changes in foreign currency rates, measurement period adjustments for the TBEI acquisition, impairment of intangible assets and other events.
NOTE 5 – DEBT
The following table summarizes the components of Long-term borrowings and capital lease obligations :
(in millions)
June 30,
2017
 
December 31, 2016
2016 Credit Agreement:
 
 
 
Revolving credit facility
$
288.6

 
$
63.2

Capital lease obligations
0.6

 
0.8

Total long-term borrowings and capital lease obligations, including current portion
289.2

 
64.0

Less: Current capital lease obligations
0.3

 
0.5

Total long-term borrowings and capital lease obligations
$
288.9

 
$
63.5

As more fully described within Note 13 – Fair Value Measurements, the Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The fair value of long-term debt is based on interest rates that we believe are currently available to us for issuance of debt with similar terms and remaining maturities (Level 2 input).
The following table summarizes the carrying amounts and estimated fair values of the Company’s long-term borrowings:
 
June 30, 2017
 
December 31, 2016
  (in millions)
Notional
Amount
 
Fair
Value
 
Notional
Amount
 
Fair
Value
Long-term borrowings  (a)
$
289.2

 
$
289.2

 
$
64.0

 
$
64.0

(a)
Long-term borrowings includes current portions of long-term debt and current portions of capital lease obligations of $0.3 million and $0.5 million as of June 30, 2017 and December 31, 2016 , respectively.
On January 27, 2016 , the Company entered into an Amended and Restated Credit Agreement (the “2016 Credit Agreement”), by and among the Company and certain of its foreign subsidiaries (collectively, the “Borrowers”), Wells Fargo Bank, National Association, as administrative agent, swingline lender and issuing lender, JPMorgan Chase Bank, N.A. as syndication agent, KeyBank National Association, as documentation agent, Wells Fargo Securities, LLC and J.P. Morgan Securities LLC, as joint lead arrangers and joint bookrunners, and the other lenders and parties signatory thereto.
The 2016 Credit Agreement is a $325.0 million revolving credit facility, maturing on January 27, 2021 , that provides for borrowings in the form of loans or letters of credit up to the aggregate availability under the facility, with a sub-limit of $50.0 million for letters of credit. In addition, the 2016 Credit Agreement includes an accordion feature, whereby the Company may cause the commitments to increase by up to an additional $75.0 million , subject to the approval of the applicable lenders providing such additional financing. 
On June 2, 2017 , the Company executed an amendment to the 2016 Credit Agreement (the “Amended 2016 Credit Agreement”), which included provisions to exercise this accordion feature, thereby increasing the borrowing capacity under the Amended 2016 Credit Agreement to $400.0 million .

12
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

The Amended 2016 Credit Agreement allows for the Borrowers to borrow in denominations of U.S. Dollars, Canadian Dollars (up to a maximum of C $100.0 million ) or Euros (up to a maximum of € 20.0 million ). Borrowings under the Amended 2016 Credit Agreement may be used for working capital and general corporate purposes, including permitted acquisitions.
The Company’s domestic subsidiaries provide guarantees for all obligations of the Borrowers under the Amended 2016 Credit Agreement, which is secured by a first priority security interest in all now or hereafter acquired domestic property and assets and the stock or other equity interests in each of the domestic subsidiaries and 65% of the outstanding voting capital stock of certain first-tier foreign subsidiaries, subject to certain exclusions.
Borrowings under the Amended 2016 Credit Agreement bear interest, at the Company’s option, at a base rate or a LIBOR rate, plus, in each case, an applicable margin. The applicable margin ranges from 0.00% to 1.25% for base rate borrowings and 1.00% to 2.25% for LIBOR borrowings. The Company must also pay a commitment fee to the lenders ranging between 0.15% to 0.30%  per annum on the unused portion of the $400.0 million revolving credit facility along with other standard fees. Letter of credit fees are payable on outstanding letters of credit in an amount equal to the applicable LIBOR margin plus other customary fees.
The Company is subject to certain leverage ratio and interest coverage ratio financial covenants under the Amended 2016 Credit Agreement that are to be measured at each fiscal quarter-end. The Company was in compliance with all such covenants as of June 30, 2017 . The Amended 2016 Credit Agreement also includes a “covenant holiday” period, which allows for the temporary increase of the minimum leverage ratio following the completion of a permitted acquisition, or a series of permitted acquisitions, when the total consideration exceeds a specified threshold. In addition, the Amended 2016 Credit Agreement includes customary negative covenants, subject to certain exceptions, restricting or limiting the Company’s and its subsidiaries’ ability to, among other things: (i) make non-ordinary course dispositions of assets, (ii) make certain fundamental business changes, such as merge, consolidate or enter into any similar combination, (iii) make restricted payments, including dividends and stock repurchases, (iv) incur indebtedness, (v) make certain loans and investments, (vi) create liens, (vii) transact with affiliates, (viii) enter into sale/leaseback transactions, (ix) make negative pledges and (x) modify subordinated debt documents.
Under the Amended 2016 Credit Agreement, restricted payments, including dividends and stock repurchases, shall be permitted if (i) the Company’s leverage ratio is less than or equal to 2.50 , (ii) the Company is in compliance with all other financial covenants and (iii) there are no existing defaults under the Amended 2016 Credit Agreement. If its leverage ratio is more than 2.50 , the Company is still permitted to fund (i) up to $30.0 million of dividend payments, (ii) stock repurchases sufficient to offset dilution created by the issuance of equity as compensation to its officer, directors, employees and consultants and (iii) an incremental $30.0 million of other cash payments.
The Amended 2016 Credit Agreement contains customary events of default. If an event of default occurs and is continuing, the Borrowers may be required immediately to repay all amounts outstanding under the Amended 2016 Credit Agreement and the commitments from the lenders may be terminated.
In connection with its debt refinancing in the six months ended June 30, 2016 , the Company repaid the remaining $43.4 million of principal outstanding under the Company’s March 13, 2013 Credit Agreement (the “2013 Credit Agreement”) and wrote off approximately $0.3 million of unamortized deferred financing fees associated with the 2013 Credit Agreement. The Company incurred $1.1 million of debt issuance costs in connection with the execution of the 2016 Credit Agreement. Such fees have been deferred and are being amortized over the five-year term.
As of June 30, 2017 , there was $288.6 million of cash drawn and $18.0 million of undrawn letters of credit under the Amended 2016 Credit Agreement, with $93.4 million of net availability for borrowings. As of December 31, 2016 , there was $63.2 million cash drawn and $18.0 million of undrawn letters of credit under the 2016 Credit Agreement, with $243.8 million of net availability for borrowings.
As of June 30, 2017 and December 31, 2016 , there were no borrowings against the Company’s non-U.S. lines of credit which provide for borrowings of up to $0.2 million .
For the six months ended June 30, 2017 , gross borrowings under the Amended 2016 Credit Agreement were $243.0 million , while there were $20.0 million of gross payments. For the six months ended June 30, 2016 , gross borrowings and gross payments under the 2016 Credit Agreement were $69.8 million and $5.0 million , respectively.

13
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

Interest Rate Swap
On June 2, 2017 , the Company entered into an interest rate swap (the “Swap”) with a notional amount of $150.0 million , as a means of fixing the floating interest rate component on $150.0 million of its variable-rate debt. The Swap is designated as a cash flow hedge, with a termination date of June 2, 2020 . As a result of the application of hedge accounting treatment, all unrealized gains and losses related to the derivative instrument are recorded in Accumulated other comprehensive loss and are reclassified into operations in the same period in which the hedged transaction affects earnings. Hedge effectiveness is tested quarterly. We do not use derivative instruments for trading or speculative purposes.
As more fully described within Note 13 – Fair Value Measurements, the Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The fair value of the Swap is derived from a discounted cash flow analysis based on the terms of the contract and the interest rate curve (Level 2 inputs) and measured on a recurring basis in our Consolidated Balance Sheet. At June 30, 2017 , the fair value of the Swap, included in Deferred charges and other assets on the Condensed Consolidated Balance Sheets, was $0.4 million and no ineffectiveness was recorded. The associated unrealized pre-tax gain of $0.4 million was recorded in Accumulated other comprehensive loss during the three and six months ended June 30, 2017 .
NOTE 6 – INCOME TAXES
The Company recognized income tax expense of $6.1 million and $4.8 million for the three months ended June 30, 2017 and 2016 , respectively. The increase in tax expense in the current-year quarter is largely due to higher pre-tax income levels. The effective tax rate for the three months ended June 30, 2017 was 34.7% , compared to 33.8% in the prior-year quarter.
For the  six months ended June 30, 2017  and  2016 , the Company recognized income tax expense of  $9.9 million  and  $10.5 million , respectively. The decrease in tax expense in the first half of 2017 is largely due to lower pre-tax income levels. The effective tax rate was  34.6%  and  34.7%  for the  six months ended June 30, 2017  and  2016 , respectively.
NOTE 7 – PENSIONS
The following table summarizes the components of net postretirement pension expense:  
 
U.S. Benefit Plan
 
Non-U.S. Benefit Plan
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(in millions)
2017
 
2016
 
2017
 
2016
 
2017
 
2016
 
2017
 
2016
Service cost
$
—

 
$
—

 
$
—

 
$
—

 
$
0.1

 
$
0.1

 
$
0.1

 
$
0.1

Interest cost
1.9

 
1.9

 
3.8

 
3.9

 
0.4

 
0.5

 
0.7

 
1.0

Amortization of actuarial loss
0.6

 
1.4

 
1.2

 
2.8

 
0.1

 
0.1

 
0.3

 
0.3

Expected return on plan assets
(2.4
)
 
(2.6
)
 
(4.8
)
 
(5.2
)
 
(0.5
)
 
(0.7
)
 
(1.0
)
 
(1.3
)
Net postretirement pension expense
$
0.1

 
$
0.7

 
$
0.2

 
$
1.5

 
$
0.1

 
$
—

 
$
0.1

 
$
0.1

In the six months ended June 30, 2017 and 2016 , the Company contributed $2.7 million and $3.1 million to its U.S. defined benefit plan, respectively, and $0.4 million and $0.7 million to its non-U.S. defined benefit plan, respectively.
For the year ended December 31, 2017 , the Company expects to contribute up to $5.0 million to the U.S. benefit plan and up to $0.9 million to the non-U.S. benefit plan.
NOTE 8 – COMMITMENTS AND CONTINGENCIES
Financial Commitments
The Company provides indemnifications and other guarantees in the ordinary course of business, the terms of which range in duration and often are not explicitly defined. Specifically, the Company is occasionally required to provide letters of credit and bid and performance bonds to various customers, principally to act as security for retention levels related to casualty insurance policies and to guarantee the performance of subsidiaries that engage in export and domestic transactions. At June 30, 2017 , the Company had outstanding performance and financial standby letters of credit, as well as outstanding bid and performance bonds, aggregating $21.7 million . If any such letters of credit or bonds are called, the Company would be obligated to reimburse the issuer of the letter of credit or bond. The Company believes the likelihood of any currently outstanding letter of

14
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

credit or bond being called is remote.
Following the June 3, 2016 acquisition of substantially all of the assets and operations of Joe Johnson Equipment, Inc. and Joe Johnson Equipment (USA), Inc. (collectively, “JJE”), the Company has transactions involving the sale of equipment to certain of its customers which include (i) guarantees to repurchase the equipment for a fixed price at a future date and (ii) guarantees to repurchase the equipment from the third-party lender in the event of default by the customer. As of June 30, 2017 , the single year and maximum potential cash payments the Company could be required to make to repurchase equipment under these agreements were $3.5 million and $4.1 million , respectively. The Company’s risk under these repurchase arrangements would be partially mitigated by the value of the products repurchased as part of the transaction. In addition, the former owners of JJE have agreed to reimburse the Company for certain losses incurred resulting from the requirement to repurchase equipment that was sold prior to the acquisition date. Any such reimbursement would be withheld from the C $8.0 million deferred payment to be made to the former owners of JJE on the third anniversary of the acquisition date. The Company has recorded an immaterial accrual for potential losses related to the repurchase exposures, which represents the expected losses that could result from obligations to repurchase products, after giving effect to proceeds anticipated to be received from the resale of those products to alternative customers, as well as to the reimbursement of any losses incurred. The Company has recorded its estimated net liability associated with losses from these guarantee and repurchase obligations on its Consolidated Balance Sheet based on historical experience and current facts and circumstances. Historical cash requirements and losses associated with these obligations have not been significant, but could increase if customer defaults exceed current expectations.
Product 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 does business, with warranty periods generally ranging from one to five 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 (i) the number of units under warranty, (ii) historical and anticipated rates of warranty claims and (iii) costs per claim. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary.
The following table summarizes the changes in the Company’s warranty liabilities:
(in millions)
2017
 
2016
Balance at January 1
$
6.4

 
$
7.4

Provisions to expense
2.3

 
2.8

Acquisitions
1.5

 
—

Payments
(2.8
)
 
(3.0
)
Balance at June 30
$
7.4

 
$
7.2


Environmental Liabilities
In May 2012, the Company sold a facility in Pearland, Texas. The facility was previously used by the Company’s discontinued Pauluhn business, which manufactured marine, offshore and industrial lighting products. It is probable that the site will require remediation and as such, as of June 30, 2017 and December 31, 2016 , environmental remediation reserves of $0.5 million and $0.6 million , respectively, have been included in liabilities of discontinued operations on the Condensed Consolidated Balance Sheets. The recorded reserves are based on an undiscounted estimate of the range of costs to remediate the site, depending upon the remediation approach and other factors. 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 cash flow.
Legal Proceedings
The Company is subject to various claims, including pending and possible legal actions for product liability and other damages, and other matters arising in the ordinary course of the Company’s business. On a quarterly basis, the Company reviews uninsured material legal claims against the Company and accrues for the costs of such claims as appropriate in the exercise of management’s best judgment and experience. However, due to a lack of factual information available to the Company about a claim, or the procedural stage of a claim, it may not be possible for the Company to reasonably assess either the probability of a

15
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

favorable or unfavorable outcome of the claim or to reasonably estimate the amount of loss should there be an unfavorable outcome. Therefore, for many claims, the Company cannot reasonably estimate a range of loss.
The Company believes, based on current knowledge and after consultation with counsel, that the outcome of such claims and actions will not have a material adverse effect on the Company’s results of operations or financial condition. However, in the event of unexpected future developments, it is possible that the ultimate resolution of such matters, if unfavorable, could have a material adverse effect on the Company’s results of operations, financial condition or cash flow.
Hearing Loss Litigation
The Company has been sued for monetary damages by firefighters who claim 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 of 1999 through 2004, involving a total of 2,443 plaintiffs, in the Circuit Court of Cook County, Illinois. These cases involved more than 1,800 firefighter plaintiffs from locations outside of Chicago. In 2009, six additional cases were filed in Cook County, involving 299 Pennsylvania firefighter plaintiffs. During 2013, another case was filed in Cook County involving 74 Pennsylvania firefighter plaintiffs.
The trial of the first 27 of these plaintiffs’ claims occurred in 2008, whereby a Cook County jury returned a unanimous verdict in favor of the Company.
An additional 40 Chicago firefighter plaintiffs were selected for trial in 2009. Plaintiffs’ counsel later moved to reduce the number of plaintiffs from 40 to nine . The trial for these nine plaintiffs concluded with a verdict against the Company and for the plaintiffs in varying amounts totaling $0.4 million . The Company appealed this verdict. On September 13, 2012, the Illinois Appellate Court rejected this appeal. The Company thereafter filed a petition for rehearing with the Illinois Appellate Court, which was denied on February 7, 2013. The Company sought further review by filing a petition for leave to appeal with the Illinois Supreme Court on March 14, 2013. On May 29, 2013, the Illinois Supreme Court issued a summary order declining to accept review of this case. On July 1, 2013, the Company satisfied the judgments entered for these plaintiffs, which has resulted in final dismissal of these cases.
A third consolidated trial involving eight Chicago firefighter plaintiffs occurred during November 2011. The jury returned a unanimous verdict in favor of the Company at the conclusion of this trial.
Following this trial, on March 12, 2012 the trial court entered an order certifying a class of the remaining Chicago Fire Department firefighter plaintiffs for trial on the sole issue of whether the Company’s sirens were defective and unreasonably dangerous. The Company petitioned the Illinois Appellate Court for interlocutory appeal of this ruling. On May 17, 2012, the Illinois Appellate Court accepted the Company’s petition. On June 8, 2012, plaintiffs moved to dismiss the appeal, agreeing with the Company that the trial court had erred in certifying a class action trial in this matter. Pursuant to plaintiffs’ motion, the Illinois Appellate Court reversed the trial court’s certification order.
Thereafter, the trial court scheduled a fourth consolidated trial involving three firefighter plaintiffs, which began in December 2012. Prior to the start of this trial, the claims of two of the three firefighter plaintiffs were dismissed. On December 17, 2012, the jury entered a complete defense verdict for the Company.
Following this defense verdict, plaintiffs again moved to certify a class of Chicago Fire Department plaintiffs for trial on the sole issue of whether the Company’s sirens were defective and unreasonably dangerous. Over the Company’s objection, the trial court granted plaintiffs’ motion for class certification on March 11, 2013 and scheduled a class action trial to begin on June 10, 2013. The Company filed a petition for review with the Illinois Appellate Court on March 29, 2013 seeking reversal of the class certification order.

16
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

On June 25, 2014, a unanimous three-judge panel of the First District Illinois Appellate Court issued its opinion reversing the class certification order of the trial court. Specifically, the Appellate Court determined that the trial court’s ruling failed to satisfy the class-action requirements that the common issues of the firefighters’ claims predominate over the individual issues and that there is an adequate representative for the class. During a status hearing on October 8, 2014, plaintiffs represented to the Court that they would again seek to certify a class of firefighters on the issue of whether the Company’s sirens were defective and unreasonably dangerous. On January 12, 2015, plaintiffs filed motions to amend their complaints to add class action allegations with respect to Chicago firefighter plaintiffs as well as the approximately 1,800 firefighter plaintiffs from locations outside of Chicago. On March 11, 2015, the trial court granted plaintiff’s motions to amend their complaints. Plaintiffs have indicated that they will now file motions to certify classes in these cases. On April 24, 2015, the cases were transferred to Cook County chancery court, which will decide all class certification issues. The Company intends to continue its objections to any attempt at certification. The Company has also filed motions to dismiss cases involving firefighters who worked for fire departments located outside of the state of Illinois based on improper venue. On February 24, 2017, the Circuit Court of Cook County entered orders dismissing the cases of 1,770 such firefighter plaintiffs from the jurisdiction of the state of Illinois. These cases may be refiled in jurisdictions where these firefighters are located. The Company also has filed a venue motion seeking to transfer to DuPage County cases involving 10 plaintiffs who reside and work in Illinois but outside of
Cook County. The Court granted this motion on June 28, 2017.
The Company has also been sued on this issue outside of the Cook County, Illinois venue. Many of these cases have involved lawsuits filed by a single attorney in the Court of Common Pleas, Philadelphia County, Pennsylvania. During 2007 and through 2009, this attorney filed a total of 71 lawsuits involving 71 plaintiffs in this jurisdiction. Three of these cases were dismissed pursuant to pretrial motions filed by the Company. Another case was voluntarily dismissed. Prior to trial in four cases, the Company paid nominal sums to obtain dismissals.
Three trials occurred in Philadelphia involving these cases filed in 2007 through 2009. The first trial involving one of these plaintiffs occurred in 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 nine Philadelphia firefighter plaintiffs, also occurred in 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, also involving nine Philadelphia firefighter plaintiffs, was completed during 2010 when the jury returned a defense verdict for the Company as to all claims and all plaintiffs involved in that trial.
Following defense verdicts in the last two Philadelphia trials, the Company negotiated settlements with respect to all remaining filed cases in Philadelphia at that time, as well as other firefighter claimants represented by the attorney who filed the Philadelphia cases. On January 4, 2011, the Company entered into a Global Settlement Agreement (the “Settlement Agreement”) with the law firm of the attorney representing the Philadelphia claimants, on behalf of 1,125 claimants the firm represented (the “Claimants”) and who had asserted product claims against the Company (the “Claims”). Three hundred eight of the Claimants had lawsuits pending against the Company in Cook County, Illinois.
The Settlement Agreement, as amended, provided that the Company pay a total amount of $3.8 million (the “Settlement Payment”) to settle the Claims (including the costs, fees and other expenses of the law firm in connection with its representation of the Claimants), subject to certain terms, conditions and procedures set forth in the Settlement Agreement. In order for the Company to be required to make the Settlement Payment: (i) each Claimant who agreed to settle his or her claims had to sign a release acceptable to the Company (a “Release”), (ii) each Claimant who agreed to the settlement and who was a plaintiff in a lawsuit, had to dismiss his or her lawsuit with prejudice, (iii) by April 29, 2011, at least 93% of the Claimants identified in the Settlement Agreement must have agreed to settle their claims and provide a signed Release to the Company and (iv) the law firm had to withdraw from representing any Claimants who did not agree to the settlement, including those who filed lawsuits. If the conditions to the settlement were met, but less than 100% of the Claimants agreed to settle their Claims and sign a Release, the Settlement Payment would be reduced by the percentage of Claimants who did not agree to the settlement.
On April 22, 2011, the Company confirmed that the terms and conditions of the Settlement Agreement had been met and made a payment of $3.6 million to conclude the settlement. The amount was based upon the Company’s receipt of 1,069 signed releases provided by Claimants, which was 95.02% of all Claimants identified in the Settlement Agreement.
The Company generally denies the allegations made in the claims and lawsuits by the Claimants and denies that its products caused any injuries to the Claimants. Nonetheless, the Company entered into the Settlement Agreement for the purpose of minimizing its expenses, including legal fees, and avoiding the inconvenience, uncertainty and distraction of the claims and lawsuits.

17
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

During April through October 2012, 20 new cases were filed in the Court of Common Pleas, Philadelphia County, Pennsylvania. These cases were filed on behalf of 20 Philadelphia firefighters and involve various defendants in addition to the Company. Five of these cases were subsequently dismissed. The first trial involving these 2012 Philadelphia cases occurred during December 2014 and involved three firefighter plaintiffs. The jury returned a verdict in favor of the Company. Following this trial, all of the parties agreed to settle cases involving seven firefighter plaintiffs set for trial during January 2015 for nominal amounts per plaintiff. In January 2015, plaintiffs’ attorneys filed two new complaints in the Court of Common Pleas, Philadelphia, Pennsylvania on behalf of approximately 70 additional firefighter plaintiffs. The vast majority of the firefighters identified in these complaints are located outside of Pennsylvania. One of the complaints in these cases, which involves 11 firefighter plaintiffs from the District of Columbia, was removed to federal court in the Eastern District of Pennsylvania. Plaintiffs voluntarily dismissed all claims in this case on May 31, 2016. The Company thereafter moved to recover various fees and costs in this case, asserting that plaintiffs’ counsel failed to properly investigate these claims prior to filing suit. The Court granted this motion on April 25, 2017, awarding $0.1 million to the Company, Plaintiffs’ counsel has appealed this Order. With respect to claims of other out-of-state firefighters involved in these two cases, the Company moved to dismiss these claims as improperly filed in Pennsylvania. The Court granted this motion and dismissed these claims on November 5, 2015. During August through December 2015, another nine new cases were filed in the Court of Common Pleas, Philadelphia County, Pennsylvania. These cases involve a total of 193 firefighters, most of whom are located outside of Pennsylvania. The Company again moved to dismiss all claims filed by out-of-state firefighters in these cases as improperly filed in Pennsylvania. On May 24, 2016, the Court granted this motion and dismissed these claims. Plaintiffs have filed a notice of appeal regarding this decision. On May 13, 2016, four new cases were filed in Philadelphia state court, involving a total of 55 Philadelphia firefighters who live in Pennsylvania. During August 2016, the Company settled a case involving four Philadelphia firefighters that had been set for trial in Philadelphia state court during September 2016. During January 2017, plaintiffs filed a motion to consolidate and bifurcate, similar to a motion filed in the Pittsburgh hearing loss cases, as described below. The Company has filed an opposition to this motion. Currently, there is one case involving one plaintiff scheduled for trial in Philadelphia that may begin in early September.
During April through July 2013, additional cases were filed in Allegheny County, Pennsylvania. These cases involve 247 plaintiff firefighters from Pittsburgh and various defendants, including the Company. During May 2016, two additional cases were filed against the Company in Allegheny County involving 19 Pittsburgh firefighters. After the Company filed pretrial motions, the Court dismissed claims of 55 Pittsburgh firefighter plaintiffs. The Court scheduled the first trials of these Pittsburgh firefighters to occur in May, September and November 2016. Each trial will involve eight firefighters. Prior to the first scheduled trial in Pittsburgh, the Court granted the Company’s motion for summary judgment and dismissed all claims asserted by plaintiff firefighters involved in this trial. Plaintiffs have appealed this dismissal. The next trial involving six Pittsburgh firefighters started on November 7, 2016. Shortly after this trial began, plaintiffs’ counsel moved for a mistrial because a key witness suddenly became unavailable. The Court granted this motion and rescheduled this trial for March 6, 2017. During January 2017, plaintiffs also moved to consolidate and bifurcate trials involving Pittsburgh firefighters. In particular, plaintiffs seek one trial involving liability issues which will apply to all Pittsburgh firefighters who have filed suit against the Company. The Company filed an opposition to this motion. On April 18, 2017, the trial court granted plaintiffs’ motion to bifurcate the next Pittsburgh trial. Pursuant to a motion for clarification filed by the Company, the Court ruled that the bifurcation order will only apply to six plaintiffs who are part of the next trial group in Pittsburgh. The Company thereafter sought an interlocutory appeal of the Court’s bifurcation order. The appellate court declined to accept the appeal at this time. A bifurcated trial involving six plaintiffs is scheduled to begin on September 27, 2017. During March 2014, an action also was brought in the Court of Common Pleas of Erie County, Pennsylvania on behalf of 61 firefighters. This case likewise involves various defendants in addition to the Company. After the Company filed pretrial motions, 33 Erie County firefighter plaintiffs voluntarily dismissed their claims.

On September 17, 2014, 20 lawsuits, involving a total of 193 Buffalo Fire Department firefighters, were filed in the Supreme Court of the State of New York, Erie County. All of the cases filed in Erie County, New York have been removed to federal court in the Western District of New York. Plaintiffs have filed a motion to consolidate and bifurcate these cases, similar to the motion filed in the Pittsburgh hearing loss cases, as described above. The Company has filed an opposition to the motion. During February 2015, a lawsuit involving one New York City firefighter plaintiff was filed in the Supreme Court of the State of New York, New York County. The plaintiff named the Company as well as several other parties as defendants. That case has been transferred to federal court in the Northern District of New York. Plaintiffs agreed to voluntarily dismiss this case during May 2016. The Company also is aware that a lawsuit involving eight New York City firefighters was filed in New York County, New York, on April 24, 2015. The Company has not yet been served in that case. During November 2015 through January 2016, 28 new cases involving a total of 227 firefighters were filed in various counties in the New York City area. During December 2016 through June 2017, three additional cases, involving a total of 13 New York firefighters, were filed in New York County state court. A total of 453 firefighters are currently involved in cases filed in the state of New York.

18
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

During November 2015, the Company was served with a complaint filed in Union County, New Jersey state court, involving 34 New Jersey firefighters. This case has been transferred to federal court in the District of New Jersey. During the period from January through May 2016, eight additional cases were filed in various New Jersey state courts. Most of the firefighters in these cases reside in New Jersey and work or worked at New Jersey fire departments. During December 2016, a case involving one New Jersey firefighter was filed in the United States District Court of New Jersey. A total of 105 firefighters are currently involved in cases filed in New Jersey. On May 2, 2017, plaintiffs filed a motion to consolidate and bifurcate in the pending federal court case in New Jersey. This motion is similar to bifurcation motions filed by plaintiffs in Pittsburgh, Buffalo and Philadelphia. The Company has filed an opposition to this motion.
During May through October 2016, nine cases were filed in Suffolk County, Massachusetts state court, naming the Company as a defendant. These cases involve 194 firefighters who lived and worked in the Boston area.
From 2007 through 2009, firefighters also brought hearing loss claims against the Company in New Jersey, Missouri, Maryland and Kings County, New York. All of those cases, however, were dismissed prior to trial, including four cases in the Supreme Court of Kings County, New York that were dismissed upon the Company’s motion in 2008. On appeal, the New York 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, if filed.
The Company’s ongoing negotiations with its insurer, CNA, over insurance coverage on these claims have resulted in reimbursements of a portion of the Company’s defense costs. These reimbursements are recorded as a reduction of corporate operating expenses. For the six months ended June 30, 2017 and 2016 , the Company recorded $0.3 million and $0.1 million of reimbursements from CNA related to legal costs, respectively.
Latvian Commercial Dispute
On June 12, 2014, a Latvian trial court issued a summary ruling against the Company’s former Bronto subsidiary in a lawsuit relating to a commercial dispute. The dispute involves a transaction for the 2008 sale of three Bronto units that were purchased by a financing company for lease to a Latvian fire department. The lessor and the Latvian fire department sought to rescind the contract after delivery, despite the fact that an independent third party, selected by the lessor, had certified that the vehicles satisfied the terms of the contract. The adverse judgment required Bronto to refund the purchase price and pay interest and attorneys’ fees. The trial court denied the lessor’s claim against Bronto for alleged damages relating to lost lease income.
Believing that the claims against Bronto were invalid and that Bronto fully satisfied the terms of the subject contract, on July 10, 2014, the Company filed an appeal with the Civil Chamber of the Supreme Court of Latvia seeking a reversal of the trial court’s ruling.
At December 31, 2015, the Company had not accrued any liability within its consolidated financial statements for this lawsuit. In evaluating whether a charge to record a reserve was previously necessary, the Company analyzed all of the available information, including the legal reasoning applied by the judge of the trial court in reaching its decision. Based on the Company’s analysis, and consultations with external counsel, the Company assessed the likelihood of a successful appeal to be more likely than not and therefore did not believe that a probable loss had been incurred.
In connection with the sale of Bronto to Morita Holdings Corporation (“Morita”), completed in January 2016, the Company and Morita agreed that the Company would remain in control of negotiations and proceedings relating to the appeal and fund the legal costs associated therewith. The Company also agreed to compensate Morita for 50% of any liability resulting from a final and non-appealable decision of a court of competent jurisdiction, net of any actual income tax benefit to Bronto as a result of the judgment, and less 50% of legal fees incurred by the Company, relating to the defense of this matter, subsequent to the January 29, 2016 closing date of the sale.
In April 2016, the Civil Chamber of the Supreme Court of Latvia heard the Company’s appeal and upheld the trial court’s ruling against Bronto. As the Company’s appeal of the trial judgment was unsuccessful, a charge of $1.5 million was recorded as a component of (Loss) gain from discontinued operations and disposal, net of tax in the six months ended June 30, 2016 , to reflect the Company’s share of the liability. The Company decided not to further appeal the Supreme Court’s ruling and, during the six months ended June 30, 2017 , settled the liability due to Morita.

19
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

NOTE 9 – EARNINGS PER SHARE
The Company computes earnings per share (“EPS”) in accordance with ASC 260, Earnings per Share , which requires that non-vested restricted stock containing non-forfeitable dividend rights should be treated as participating securities pursuant to the two-class method. Under the two-class method, net income is reduced by the amount of dividends declared in the period for common stock and participating securities. The remaining undistributed earnings are then allocated to common stock and participating securities as if all of the net income for the period had been distributed. The amounts of distributed and undistributed earnings allocated to participating securities for the three and six months ended June 30, 2017 and 2016 were insignificant and did not materially impact the calculation of basic or diluted EPS.
Basic EPS is computed by dividing income or loss available to common stockholders by the weighted average number of shares of common stock and non-vested restricted stock awards outstanding for the period.
Diluted EPS is computed using the weighted average number of shares of common stock and non-vested restricted stock awards outstanding for the year plus the effect of dilutive potential common shares outstanding during the period. The dilutive effect of common stock equivalents is determined using the more dilutive of the two-class method or alternative methods. The Company uses the treasury stock method to determine the potentially dilutive impact of our employee stock options and restricted stock units, and the contingently issuable method for our performance-based restricted stock unit awards.
For the three and six months ended June 30, 2017 , options to purchase 0.7 million and 1.2 million shares, respectively, of the Company’s common stock had an anti-dilutive effect on EPS, and accordingly, are excluded from the calculation of diluted EPS. For the three and six months ended June 30, 2016 , options to purchase 1.3 million shares of the Company’s common stock had an anti-dilutive effect on EPS, and accordingly, are excluded from the calculation of diluted EPS.
The following table reconciles Net income to basic and diluted EPS:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(in millions, except per share data)
2017
 
2016
 
2017
 
2016
Income from continuing operations
$
11.5

 
$
9.4

 
$
18.7

 
$
19.8

(Loss) gain from discontinued operations and disposal, net of tax
(0.1
)
 
(0.3
)
 
—

 
2.9

Net income
$
11.4

 
$
9.1

 
$
18.7

 
$
22.7

Weighted average shares outstanding – Basic
59.7

 
60.1

 
59.7

 
61.1

Dilutive effect of common stock equivalents
0.6

 
0.8

 
0.6

 
0.8

Weighted average shares outstanding – Diluted
60.3

 
60.9

 
60.3

 
61.9

Basic earnings per share:
 
 
 
 
 
 
 
Earnings from continuing operations
$
0.19

 
$
0.16

 
$
0.31

 
$
0.32

(Loss) earnings from discontinued operations and disposal, net of tax
—

 
(0.01
)
 
—

 
0.05

Net earnings per share
$
0.19

 
$
0.15

 
$
0.31

 
$
0.37

Diluted earnings per share:
 
 
 
 
 
 
 
Earnings from continuing operations
$
0.19

 
$
0.15

 
$
0.31

 
$
0.32

(Loss) earnings from discontinued operations and disposal, net of tax
—

 
—

 
—

 
0.05

Net earnings per share
$
0.19

 
$
0.15

 
$
0.31

 
$
0.37

NOTE 10 – STOCKHOLDERS’ EQUITY
Dividends
On February 17, 2017 , the Company’s Board of Directors (the “Board”) declared a quarterly cash dividend of $0.07 per common share. The dividend totaled $4.2 million and was distributed on March 31, 2017 to holders of record at the close of business on March 10, 2017 .
On April 21, 2017 , the Board declared a quarterly cash dividend of $0.07 per common share. The dividend totaled $4.2 million and was distributed on June 2, 2017 to holders of record at the close of business on May 12, 2017 . During the three and six months ended June 30, 2016 , dividends of $4.3 million and $8.6 million , respectively, were paid to stockholders.

20
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

On July 25, 2017 , the Board declared a quarterly cash dividend of $0.07 per common share payable on September 6, 2017 to holders of record at the close of business on August 15, 2017 .
Stock Repurchase Program
In November 2014, the Board authorized a stock repurchase program (the “November 2014 program”) of up to $75.0 million of the Company’s common stock. The November 2014 program is intended primarily to facilitate opportunistic purchases of Company stock as a means to provide cash returns to stockholders, enhance stockholder returns and manage the Company’s capital structure.
During the three and six months ended June 30, 2016 , the Company repurchased 1,288,751 and 2,580,725 shares for a total of $16.8 million and $33.1 million , respectively, under the November 2014 program. No shares were repurchased in the three and six months ended June 30, 2017 .
Under its stock repurchase programs, the Company is authorized to repurchase, from time to time, shares of its outstanding common stock in the open market or through privately negotiated transactions. Stock repurchases by the Company are subject to market conditions and other factors and may be commenced, suspended or discontinued at any time.
Accumulated Other Comprehensive Loss
The following tables summarize the changes in each component of Accumulated other comprehensive loss , net of tax:
(in millions) (a)
Actuarial Losses
 
Foreign
Currency Translation
 
Unrealized
Gain on
Derivatives
 
Total
Balance at April 1, 2017
$
(78.8
)
 
$
(11.8
)
 
$
—

 
$
(90.6
)
Other comprehensive (loss) income before reclassifications
(0.6
)
 
5.0

 
0.2

 
4.6

Amounts reclassified from accumulated other comprehensive loss
0.5

 
—

 
—

 
0.5

Net current-period other comprehensive (loss) income
(0.1
)
 
5.0

 
0.2

 
5.1

Balance at June 30, 2017
$
(78.9
)
 
$
(6.8
)
 
$
0.2

 
$
(85.5
)
(in millions) (a)
Actuarial Losses  (b)
 
Foreign
Currency Translation  (c)
 
Unrealized
Gain on
Derivatives
 
Total
Balance at April 1, 2016
$
(73.8
)
 
$
(4.2
)
 
$
—

 
$
(78.0
)
Other comprehensive income (loss) before reclassifications
1.0

 
(2.8
)
 
—

 
(1.8
)
Amounts reclassified from accumulated other comprehensive loss
1.0

 
(0.3
)
 
—

 
0.7

Net current-period other comprehensive income (loss)
2.0

 
(3.1
)
 
—

 
(1.1
)
Balance at June 30, 2016
$
(71.8
)
 
$
(7.3
)
 
$
—

 
$
(79.1
)
(in millions) (a)
Actuarial Losses
 
Foreign
Currency Translation
 
Unrealized
Gain on
Derivatives
 
Total
Balance at January 1, 2017
$
(79.0
)
 
$
(13.0
)
 
$
—

 
$
(92.0
)
Other comprehensive (loss) income before reclassifications
(0.9
)
 
6.2

 
0.2

 
5.5

Amounts reclassified from accumulated other comprehensive loss
1.0

 
—

 
—

 
1.0

Net current-period other comprehensive income
0.1

 
6.2

 
0.2

 
6.5

Balance at June 30, 2017
$
(78.9
)
 
$
(6.8
)
 
$
0.2

 
$
(85.5
)

21
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

(in millions) (a)
Actuarial Losses  (b)
 
Foreign
Currency Translation  (c)
 
Unrealized
Gain on
Derivatives
 
Total
Balance at January 1, 2016
$
(75.6
)
 
$
(13.3
)
 
$
0.1

 
$
(88.8
)
Other comprehensive income (loss) before reclassifications
1.4

 
(1.4
)
 
—

 
—

Amounts reclassified from accumulated other comprehensive loss
2.4

 
7.4

 
(0.1
)
 
9.7

Net current-period other comprehensive income (loss)
3.8

 
6.0

 
(0.1
)
 
9.7

Balance at June 30, 2016
$
(71.8
)
 
$
(7.3
)
 
$
—

 
$
(79.1
)
(a)
Amounts in parentheses indicate debits.
(b)
In connection with the sale of Bronto, the Company recognized an actuarial loss of $0.4 million attributable to Bronto’s defined benefit plan and included it in the calculation of the associated gain on disposal in the six months ended June 30, 2016 .
(c)
The Company recognized a foreign currency gain of $0.3 million and a foreign currency translation loss of $7.4 million in the three and six months ended June 30, 2016 , respectively, in connection with the sale of Bronto. The recognition of the translation gain (loss), which represented the cumulative translation effects attributable to the Fire Rescue Group, was included in Gain (loss) from discontinued operations and disposal for the applicable period.
The following table summarizes the amounts reclassified from  Accumulated other comprehensive loss , net of tax, in the three months ended June 30, 2017 and 2016 and the affected line item in the Condensed Consolidated Statements of Operations:
Details about Accumulated Other Comprehensive Loss Components
 
Amount Reclassified from Accumulated Other Comprehensive Loss
 
Affected Line Item in Condensed Consolidated Statements of Operations  (a)
 
2017
 
2016
 
 
 
(in millions)  (b)
 
 
Amortization of actuarial losses of defined benefit pension plans
 
$
(0.7
)
 
$
(1.5
)
 
  (c)
Total before tax
 
(0.7
)
 
(1.5
)
 
 
Income tax benefit
 
0.2

 
0.5

 
Income tax expense
Total reclassifications for the period, net of tax
 
$
(0.5
)
 
$
(1.0
)
 
 
(a)
Continuing operations only.
(b)
Amounts in parentheses indicate debits to profit/loss.
(c)
The actuarial loss components of Accumulated other comprehensive loss are included in the computation of net periodic pension cost for the three months ended June 30, 2017 and 2016 , as disclosed in Note 7 – Pensions.
The following table summarizes the amounts reclassified from  Accumulated other comprehensive loss , net of tax, in the six months ended June 30, 2017 and 2016 and the affected line item in the Condensed Consolidated Statements of Operations:
Details about Accumulated Other Comprehensive Loss Components
 
Amount Reclassified from Accumulated Other Comprehensive Loss
 
Affected Line Item in Condensed Consolidated Statements of Operations  (a)
 
2017
 
2016
 
 
 
(in millions)  (b)
 
 
Amortization of actuarial losses of defined benefit pension plans
 
$
(1.5
)
 
$
(3.1
)
 
  (c)
Recognition of deferred gain on interest rate swap
 
—

 
0.1

 
Other income, net
Total before tax
 
(1.5
)
 
(3.0
)
 
 
Income tax benefit
 
0.5

 
1.0

 
Income tax expense
Total reclassifications for the period, net of tax
 
$
(1.0
)
 
$
(2.0
)
 
 
(a)
Continuing operations only.
(b)
Amounts in parentheses indicate debits to profit/loss.
(c)
The actuarial loss components of Accumulated other comprehensive loss are included in the computation of net periodic pension cost for the six months ended June 30, 2017 and 2016 , as disclosed in Note 7 – Pensions.

22
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

NOTE 11 – SEGMENT INFORMATION
The Company has two operating segments, and the Company’s reportable segments are consistent with those operating segments. 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:
Environmental Solutions  — Our Environmental Solutions Group is a leading manufacturer and supplier of a full range of street sweeper vehicles, sewer cleaner and vacuum loader trucks, hydro-excavation trucks and high-performance waterblasting equipment. The Group manufactures vehicles and equipment in the U.S. and Canada that are sold under the Elgin ® , Vactor ® , Guzzler ® , Westech TM and Jetstream ® brand names. Products are sold to both municipal and industrial customers either through a dealer network or direct sales to service customers generally depending on the type and geographic location of the customer. The acquisition of JJE extends the Environmental Solutions Group’s existing sales channel and increases the number of service centers through which its parts, service and rental offerings can be provided to current and potential customers. The acquisition also broadens the Environmental Solutions Group’s product offerings to include other products, such as refuse and recycling collection vehicles, camera systems, ice-making equipment and snow-removal equipment.
In addition, as discussed in Note 2 – Acquisitions, on June 2, 2017 , the Company completed the acquisition of TBEI. TBEI is a leading U.S. manufacturer of dump truck bodies and trailers serving maintenance and infrastructure end-markets. The Company expects that the acquisition will enable it to strengthen the Environmental Solutions Group’s market position as a specialty vehicle manufacturer in maintenance and infrastructure end-markets, leveraging its expertise in building chassis-based vehicles.
As discussed in Note 2 – Acquisitions, the assets and liabilities of TBEI have been consolidated into the Condensed Consolidated Balance Sheet as of June 30, 2017 , while the post-acquisition results of operations have been included in the Condensed Consolidated Statements of Operations, within the Environmental Solutions Group, subsequent to the June 2, 2017 closing date. We are in the process of determining the impact, if any, that the TBEI acquisition may have on our reportable segments.
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 and industrial communications, as well as command and municipal networked security. Specific products include vehicle lightbars and sirens, public warning sirens, general alarm systems, public address systems and public safety software. Products are sold under the Federal Signal TM , Federal Signal VAMA ® and Victor ® brand names. The Group operates manufacturing facilities in the U.S., Europe and South Africa.
Corporate contains those items that are not included in our operating segments.
Net sales by operating segment reflect sales of products and services to external customers, as reported in the Company’s Consolidated Statements of Operations. Intersegment sales are insignificant. 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. In determining operating segment income, neither corporate nor interest expenses are included. The accounting policies of each operating segment are the same as those described in Note 1 – Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . The results for the interim periods are not necessarily indicative of results for a full year.

23
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

The following tables summarize the Company’s continuing operations by segment, including Net sales , Operating income (loss), and Total assets :
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(in millions)
2017
 
2016
 
2017
 
2016
Net sales:
 
 
 
 
 
 
 
Environmental Solutions
$
174.3

 
$
119.4

 
$
302.1

 
$
234.8

Safety and Security Systems
50.1

 
52.9

 
100.1

 
110.3

Total net sales
$
224.4

 
$
172.3

 
$
402.2

 
$
345.1

Operating income (loss):
 
 
 
 
 
 
 
Environmental Solutions
$
21.0

 
$
14.9

 
$
31.3

 
$
31.4

Safety and Security Systems
5.6

 
6.6

 
12.0

 
11.5

Corporate and eliminations
(7.9
)
 
(7.2
)
 
(13.3
)
 
(12.5
)
Total operating income
18.7

 
14.3

 
30.0

 
30.4

Interest expense
1.3

 
0.4

 
1.9

 
0.8

Debt settlement charges
—

 
—

 
—

 
0.3

Other income, net
(0.2
)
 
(0.3
)
 
(0.5
)
 
(1.0
)
Income before income taxes
$
17.6

 
$
14.2

 
$
28.6

 
$
30.3

(in millions)
As of 
 June 30, 2017
 
As of December 31, 2016
Total assets:
 
 
 
Environmental Solutions
$
763.4

 
$
393.3

Safety and Security Systems
205.8

 
200.1

Corporate and eliminations
27.3

 
48.7

Total assets of continuing operations
996.5

 
642.1

Total assets of discontinued operations
1.1

 
1.1

Total assets
$
997.6

 
$
643.2

NOTE 12 – RESTRUCTURING
The Company continues to review its businesses for opportunities to reduce operating expenses and focus on executing its strategy based on core competencies and cost efficiencies.
During the three and six months ended June 30, 2017 , the Company recorded expenses of $0.1 million and $ 0.4 million , respectively, related to the closure of a manufacturing facility within the Safety and Security Systems Group. The Company anticipates that the closure of the facility will be complete during 2017 and does not expect any related future costs to be material. During the six months ended June 30, 2016 , the Company recorded expenses of $1.2 million related to severance costs incurred in connection with a cost reduction plan within the Safety and Security Systems Group.
The following table summarizes the changes in the Company’s restructuring reserves, which are included within Other current liabilities on the Company’s Consolidated Balance Sheets:
 
2017
 
2016
Balance at January 1
$
0.4

 
$
—

Charge to expense
0.4

 
1.2

Cash payments
(0.5
)
 
(1.0
)
Balance at June 30
$
0.3

 
$
0.2


24
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

NOTE 13 – FAIR VALUE MEASUREMENTS
The Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. Observable inputs are developed based on market data obtained from independent sources, while unobservable inputs reflect the Company’s assumptions about valuation based on the best information available in the circumstances. The three levels of inputs are classified as follows:
•
Level 1 — quoted prices in active markets for identical assets or liabilities;
•
Level 2 — observable inputs, other than quoted prices included in Level 1, such as quoted prices for markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and
•
Level 3 — unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
In determining fair value, the Company uses various valuation approaches within the fair value measurement framework. The valuation methodologies used for the Company’s assets and liabilities measured at fair value and their classification in the valuation hierarchy are summarized below:
Cash Equivalents
Cash equivalents primarily consist of time-based deposits and interest-bearing instruments with maturities of three months or less. The Company classified cash equivalents as Level 1 due to the short-term nature of these instruments and measured the fair value based on quoted prices in active markets for identical assets.
Interest Rate Swap
As described in Note 5 – Debt, the Company entered into an interest rate swap as a means of fixing the floating interest rate component on a portion of its floating-rate debt. The Company classified the interest rate swap as Level 2 due to the use of a discounted cash flow model based on the terms of the contract and the interest rate curve (Level 2 inputs) to calculate the fair value of the swap.
Contingent Consideration
The Company has a contingent obligation to transfer cash to the former owners of JJE if specified financial results are met over future reporting periods (i.e., an earn-out). Liabilities for contingent consideration are measured at fair value each reporting period, with the acquisition-date fair value included as part of the consideration transferred. Subsequent changes in fair value are recorded as a component of Acquisition and integration-related expenses on the Condensed Consolidated Statements of Operations.
The Company uses an income approach to value the contingent consideration obligation based on future financial performance, which is determined based on the present value of expected future cash flows. Due to the lack of relevant observable market data over fair value inputs, the Company has classified the contingent consideration liability within Level 3 of the fair value hierarchy outlined in ASC 820, Fair Value Measurements . Increases in the expected payout under a contingent consideration arrangement contribute to increases in the fair value of the related liability. Conversely, decreases in the expected payout under a contingent consideration arrangement contribute to decreases in the fair value of the related liability. Changes in assumptions could have an impact on the fair value of the contingent consideration, which has a maximum payout of C $10.0 million (approximately $7.7 million ).

25
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

The following tables summarize the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2017 :
 
Fair Value Measurement at Reporting Date Using
(in millions)
Level 1
 
Level 2
 
Level 3
 
Total
Assets:
 
 
 
 
 
 
 
Cash equivalents
$
5.0

 
$
—

 
$
—

 
$
5.0

Interest rate swap
—

 
0.4

 
—

 
0.4

Liabilities:
 
 
 
 
 
 
 
Contingent consideration
—

 
—

 
5.7

 
5.7

The following table provides a roll-forward of the fair value of recurring Level 3 fair value measurements in the three months ended June 30, 2017 and 2016 :
(in millions)
2017
 
2016
Contingent consideration liability, at April 1
$
5.4

 
$
—

Issuance of contingent consideration in connection with acquisitions
—

 
4.9

Settlements of contingent consideration liabilities
—

 
—

Foreign currency translation
—

 
0.1

Total losses included in earnings (a)
0.3

 
—

Contingent consideration liability, at June 30
$
5.7

 
$
5.0

(a)
Changes in the fair value of contingent consideration liabilities are included as a component of Acquisition and integration-related expenses within the Condensed Consolidated Statements of Operations.
The following table provides a roll-forward of the fair value of recurring Level 3 fair value measurements in the six months ended June 30, 2017 and 2016 :
(in millions)
2017
 
2016
Contingent consideration liability, at January 1
$
5.1

 
$
—

Issuance of contingent consideration in connection with acquisitions
—

 
4.9

Settlements of contingent consideration liabilities
—

 
—

Foreign currency translation
0.1

 
0.1

Total losses included in earnings (a)
0.5

 
—

Contingent consideration liability, at June 30
$
5.7

 
$
5.0

(a)
Changes in the fair value of contingent consideration liabilities are included as a component of Acquisition and integration-related expenses within the Condensed Consolidated Statements of Operations.
NOTE 14 – DISCONTINUED OPERATIONS
The Company recorded a net loss from discontinued operations and disposal of $0.1 million in the three months ended June 30, 2017 . In the three months ended June 30, 2016 , the Company recorded a net loss from discontinued operations and disposal of $0.3 million . The losses in both periods primarily related to adjustments of estimated product liability obligations of previously discontinued businesses, resulting from updated actuarial valuations.
The Company recorded a net loss from discontinued operations and disposal of less than $0.1 million in the six months ended June 30, 2017 . The Company recorded a net gain from discontinued operations and disposal of $2.9 million in the six months ended June 30, 2016 , primarily driven by the $4.0 million net gain on disposal of the Fire Rescue Group, which was discontinued in 2015, partially offset by the $0.6 million net loss that the Fire Rescue Group realized in its 2016 operations up to the January 29, 2016 sale completion date. The net gain on disposal includes a $1.5 million charge to recognize a liability in connection with a Latvian commercial dispute.

26
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)

The following table presents the operating results of the Company’s discontinued Fire Rescue Group for the six months ended June 30, 2016 :
 
Six Months Ended 
 June 30, 2016 (a)
(in millions)
Net sales
$
4.2

Cost of sales
3.9

Gross profit
0.3

Selling, engineering, general and administrative expenses
1.1

Operating loss
(0.8
)
Other (income) expense, net
—

Loss before income taxes
(0.8
)
Income tax benefit
(0.2
)
Net loss from operations
$
(0.6
)
(a)
Only includes activity in the period up to the completion of the sale on January 29, 2016 .
Assets and liabilities of discontinued operations
The following table presents the assets and liabilities of the Company’s discontinued operations, which include the Fire Rescue Group, as well as other operations discontinued in prior periods, as of June 30, 2017 and December 31, 2016 :
 
June 30, 2017
 
December 31, 2016
(in millions)
Fire Rescue
 
Other
 
Total
 
Fire Rescue
 
Other
 
Total
Deferred tax assets
$
—

 
$
1.1

 
$
1.1

 
$
—

 
$
1.1

 
$
1.1

Long-term assets of discontinued operations
$
—

 
$
1.1

 
$
1.1

 
$
—

 
$
1.1

 
$
1.1

 
 
 
 
 
 
 
 
 
 
 
 
Accrued liabilities:


 


 


 


 


 


Other current liabilities
$
—

 
$
0.8

 
$
0.8

 
$
1.3

 
$
0.8

 
$
2.1

Current liabilities of discontinued operations
$
—

 
$
0.8

 
$
0.8

 
$
1.3

 
$
0.8

 
$
2.1

 
 
 
 
 
 
 
 
 
 
 
 
Other long-term liabilities
$
—

 
$
2.0

 
$
2.0

 
$
—

 
$
2.0

 
$
2.0

Long-term liabilities of discontinued operations
$
—

 
$
2.0

 
$
2.0

 
$
—

 
$
2.0

 
$
2.0

The Company retains certain liabilities for other operations discontinued in prior periods, primarily for environmental remediation and product liability. Included in liabilities of discontinued operations at June 30, 2017 and December 31, 2016 is $0.5 million and $0.6 million , respectively, related to environmental remediation at the Pearland, Texas facility, and $1.8 million and $1.8 million , respectively, relating to estimated product liability obligations of the discontinued North American refuse truck body business.

27


Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide information that is supplemental to, and should be read together with, the condensed consolidated financial statements and the accompanying notes contained in this Form 10-Q, as well as the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . Information in MD&A is intended to assist the reader in obtaining an understanding of (i) the condensed consolidated financial statements, (ii) the Company’s business segments and how the results of those segments impact the Company’s results of operations and financial condition as a whole and (iii) how certain accounting principles affect the Company’s condensed consolidated financial statements. The Company’s results for interim periods are not necessarily indicative of annual operating results.
Executive Summary
The Company is a leading global manufacturer and supplier of (i) sewer cleaners, vacuum trucks, street sweepers and other environmental vehicles and equipment and (ii) safety, security and communication equipment. We also are a designer and supplier of technology-based products and services for the public safety market. Following the June 2016 acquisition of JJE, the Company also distributes and re-sells products manufactured by other companies, which include refuse and recycling collection vehicles, camera systems, ice resurfacing equipment and snow-removal equipment. In addition, we sell parts and provide service, repair, equipment rentals and training as part of a comprehensive offering to our customer base.
On June 2, 2017 , the Company completed the acquisition of all of the outstanding shares of capital stock of TBEI, a leading U.S. manufacturer of dump truck bodies and trailers serving maintenance and infrastructure end-markets. The Company expects that the acquisition of TBEI will enable it to strengthen its market position as a specialty vehicle manufacturer in maintenance and infrastructure markets, leverage its expertise in building chassis-based vehicles and balance the mix of revenues it generates from municipal and industrial markets.
We operate 14 manufacturing facilities in five countries around the world and provide products and integrated solutions to municipal, governmental, industrial and commercial customers in all regions of the world.
As described in Note 11 – Segment Information to the accompanying condensed consolidated financial statements, the Company’s business units are organized and managed in two operating segments: the Environmental Solutions Group and the Safety and Security Systems Group.
Net sales increased by $52.1 million , or 30% , in the three months ended June 30, 2017 as compared to the prior-year quarter. Our Environmental Solutions Group reported a net sales increase of $54.9 million , or 46% , largely due to $31.4 million of incremental net sales resulting from the JJE acquisition, which was completed in June 2016, the addition of $18.1 million of net sales from the TBEI acquisition, and an increase in shipments of sewer cleaners and vacuum trucks in the U.S. Within our Safety and Security Systems Group, net sales decreased by $2.8 million , or 5% , largely due to lower sales of public safety products.
For the six months ended June 30, 2017 , net sales increased by $57.1 million , or 17% , largely due to an increase of $67.3 million , or 29% , in sales within our Environmental Solutions Group, largely due to $54.7 million of incremental net sales resulting from the JJE acquisition, which was completed in June 2016, the addition of $18.1 million of net sales from the TBEI acquisition and improved domestic sales of vacuum trucks, partially offset by lower shipments of street sweepers in the U.S. In our Safety and Security Systems Group, net sales decreased by $10.2 million , or 9% , primarily due to lower sales into public safety markets.
Operating income increased by $4.4 million , or 31% , to $18.7 million in the three months ended June 30, 2017 as compared to the prior-year quarter, primarily driven by a $6.1 million increase within our Environmental Solutions Group associated with increased sales volumes, a $1.0 million favorable adjustment of product liability and workers compensation reserves, a $0.8 million operating income contribution from TBEI and the effects of a full quarter of operating income from JJE, compared to only one month in the prior-year quarter following the June 3, 2016 acquisition. Partially offsetting this improvement was a $2.0 million increase in purchase accounting expense effects, a $2.5 million increase in depreciation and amortization expense, largely resulting from depreciation on rental equipment acquired in the JJE transaction and amortization of intangible assets resulting from the TBEI acquisition and a $0.2 million increase in acquisition-related expenses. Within our Safety and Security Systems Group, operating income in the three months ended June 30, 2017 decreased by $1.0 million , while corporate expenses increased by $0.7 million , primarily due to higher acquisition-related expenses and legal costs. Consolidated operating margin for the three months ended June 30, 2017 , inclusive of the incremental depreciation and amortization, purchase accounting expense effects and acquisition costs, was 8.3% , unchanged from the prior-year quarter.
For the six months ended June 30, 2017 , operating income was $0.4 million lower than the corresponding period of the prior

28
Table of Contents


year. Within our Environmental Solutions Group, operating income for the six months ended June 30, 2017 was relatively unchanged from the first half of last year, with increased sales volumes, a $0.8 million operating income contribution from TBEI and the effects of including six months of operating income from JJE in 2017 , compared to only one month in the prior-year period being partially offset by a $5.2 million increase in depreciation and amortization expense, a $2.5 million increase in purchase accounting expense effects and a $0.4 million increase in acquisition-related costs. Within our Safety and Security Systems Group, operating income in the six months ended June 30, 2017 increased by $0.5 million , where reductions in selling, engineering, general and administrative (“SEG&A”) expenses and restructuring expenses of $0.2 million and $0.8 million , respectively, more than offset a $0.5 million decrease in gross profit. Corporate expenses in the six months ended June 30, 2017 increased by $0.8 million , primarily due to higher acquisition-related expenses and increased legal costs. Consolidated operating margin for the six months ended June 30, 2017 , inclusive of the incremental depreciation and amortization, purchase accounting expense effects and acquisition costs, was 7.5% , compared to 8.8% in the prior-year period.
Income before income taxes increased by $3.4 million , or 24% , to $17.6 million for the three months ended June 30, 2017 as compared to the prior-year quarter. The increase resulted from the higher operating income, partially offset by a $0.9 million increase in interest expense and a $0.1 million reduction in other income. For the six months ended June 30, 2017 , income before income taxes decreased by $1.7 million as compared to the prior-year period, primarily due to a $0.4 million decrease in operating income, and a $1.1 million increase in interest expense, associated with higher average debt levels.
Net income from continuing operations for the three months ended June 30, 2017 was impacted by a $1.3 million increase in income tax expense, largely due to higher pre-tax income levels. The effective tax rate for the three months ended June 30, 2017 was 34.7% , compared to 33.8% in the prior-year quarter. For the six months ended June 30, 2017 , net income from continuing operations benefited from a $0.6 million reduction in income tax expense, largely due to lower pre-tax income levels. The effective tax rate for the six months ended June 30, 2017 was  34.6% , compared to  34.7%  in the prior-year period.
Total orders for the three months ended June 30, 2017 were $271.1 million , an increase of $83.8 million , or 45% , compared to the prior-year quarter. Our Environmental Solutions Group reported total orders of $214.7 million in the second quarter of 2017 , an increase of $79.4 million , or 59% , compared to the prior-year quarter. The improvement was driven by the TBEI acquisition and organic order growth of approximately $22 million , or 24% , primarily represented by improved orders for sewer cleaners and vacuum trucks. Orders in the three months ended June 30, 2017 within our Safety and Security Systems Group were up $4.4 million , primarily due to higher domestic orders for public safety products and improved international orders for industrial products.
For the six months ended June 30, 2017 , total orders were $485.7 million , an increase of $162.7 million , or 50% , compared to the prior-year period. Our Environmental Solutions Group reported total orders of $381.3 million in the first half of 2017 , an increase of $162.8 million , or 75% , compared to the prior-year quarter. The improvement was driven by the TBEI acquisition, the effects of the inclusion of JJE orders for six months in 2017, and organic order growth of approximately $56 million , or 32% , primarily represented by improved orders for sewer cleaners and vacuum trucks. Orders in the six months ended June 30, 2017 within our Safety and Security Systems Group of $104.4 million were unchanged from the same period of the prior year.
Our consolidated backlog at June 30, 2017 was $222.7 million , up $72.9 million , compared to $149.8 million at June 30, 2016 , largely as a result of the increase in orders received in the six months ended June 30, 2017 as well as the addition of the backlog of orders acquired in the TBEI acquisition.

29
Table of Contents


Results of Operations
The following table summarizes our Condensed Consolidated Statements of Operations and illustrates the key financial indicators used to assess our consolidated financial results:  
 
Three Months Ended June 30,
 
Six Months Ended June 30,
($ in millions, except per share data)
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Net sales
$
224.4

 
$
172.3

 
$
52.1

 
$
402.2

 
$
345.1

 
$
57.1

Cost of sales
169.7

 
127.3

 
42.4

 
303.9

 
252.7

 
51.2

Gross profit
54.7

 
45.0

 
9.7

 
98.3

 
92.4

 
5.9

Selling, engineering, general and administrative expenses
34.9

 
30.3

 
4.6

 
66.4

 
59.9

 
6.5

Acquisition and integration-related expenses
1.0

 
0.4

 
0.6

 
1.5

 
0.9

 
0.6

Restructuring
0.1

 
—

 
0.1

 
0.4

 
1.2

 
(0.8
)
Operating income
18.7

 
14.3

 
4.4

 
30.0

 
30.4

 
(0.4
)
Interest expense
1.3

 
0.4

 
0.9

 
1.9

 
0.8

 
1.1

Debt settlement charges
—

 
—

 
—

 
—

 
0.3

 
(0.3
)
Other income, net
(0.2
)
 
(0.3
)
 
0.1

 
(0.5
)
 
(1.0
)
 
0.5

Income before income taxes
17.6

 
14.2

 
3.4

 
28.6

 
30.3

 
(1.7
)
Income tax expense
6.1

 
4.8

 
1.3

 
9.9

 
10.5

 
(0.6
)
Income from continuing operations
11.5

 
9.4

 
2.1

 
18.7

 
19.8

 
(1.1
)
(Loss) gain from discontinued operations and disposal, net of tax
(0.1
)
 
(0.3
)
 
0.2

 
—

 
2.9

 
(2.9
)
Net income
$
11.4

 
$
9.1

 
$
2.3

 
$
18.7

 
$
22.7

 
$
(4.0
)
Operating data:
 
 
 
 
 
 
 
 
 
 
 
Operating margin
8.3
%
 
8.3
%
 
—
%
 
7.5
%
 
8.8
%
 
(1.3
)%
Diluted earnings per share – Continuing operations
$
0.19

 
$
0.15

 
$
0.04

 
$
0.31

 
$
0.32

 
$
(0.01
)
Total orders
271.1

 
187.3

 
83.8

 
485.7

 
323.0

 
162.7

Backlog
222.7

 
149.8

 
72.9

 
222.7

 
149.8

 
72.9

Depreciation and amortization
6.6

 
4.2

 
2.4

 
12.3

 
7.2

 
5.1

Net sales
Net sales increased by $52.1 million , or 30% , in the three months ended June 30, 2017 as compared to the prior-year quarter. The Environmental Solutions Group reported a net sales increase of $54.9 million , or 46% , largely due to $31.4 million of incremental net sales resulting from the JJE acquisition, which was completed in June 2016, the addition of $18.1 million of net sales from the TBEI acquisition, and an increase in shipments of sewer cleaners and vacuum trucks in the U.S. Within the Safety and Security Systems Group, net sales decreased by $2.8 million , or 5% , largely due to lower sales of public safety products.
For the six months ended June 30, 2017 , net sales increased by $57.1 million , or 17% , largely due to an increase of $67.3 million , or 29% , in sales within the Environmental Solutions Group, largely due to $54.7 million of incremental net sales resulting from the JJE acquisition, which was completed in June 2016, the addition of $18.1 million of net sales from the TBEI acquisition and improved domestic sales of vacuum trucks, partially offset by lower shipments of street sweepers in the U.S. In the Safety and Security Systems Group, net sales decreased by $10.2 million , or 9% , primarily due to lower sales into public safety markets.
Cost of sales
Cost of sales increased by $42.4 million , or 33% , for the three months ended June 30, 2017 compared to the prior-year quarter, largely due to an increase of $45.0 million , or 48% , within the Environmental Solutions Group, primarily driven by increased sales volumes, additional cost of sales from the TBEI acquisition and the effects of three months of JJE activity in the current-year quarter compared with one month last year, recognition of approximately $2.0 million more expense associated with purchase accounting effects and a $1.9 million increase in depreciation expense, largely resulting from depreciation on rental

30
Table of Contents


equipment acquired in the JJE transaction. This increase was partially offset by a decrease in cost of sales of $2.6 million , or 8% , within the Safety and Security Systems Group, largely driven by lower sales volumes.
For the six months ended June 30, 2017 , cost of sales increased by $51.2 million , or 20% , largely due to an increase of $60.9 million , or 34% , within the Environmental Solutions Group, primarily driven by increased sales volumes, additional cost of sales from the TBEI acquisition and the effects of six months of JJE activity in the current-year period compared with one month last year, recognition of approximately $2.5 million more expense associated with purchase accounting effects and a $4.5 million increase in depreciation expense. This increase was partially offset by a decrease in cost of sales of $9.7 million , or 13% , within the Safety and Security Systems Group, largely driven by lower sales volumes.
Gross profit
Gross profit increased by $9.7 million , or 22% , for the three months ended June 30, 2017 , compared to the prior-year quarter, primarily due to a $9.9 million improvement within the Environmental Solutions Group, partially offset by a $0.2 million reduction within the Safety and Security Systems Group. The increase in gross profit within the Environmental Solutions Group included the impact of the aforementioned increase in depreciation and purchase accounting expense effects. Gross margin for the three months ended June 30, 2017 decreased to 24.4% , from 26.1% in the prior-year quarter, largely due to incremental depreciation expense and purchase accounting expense effects, partially offset by gross margin improvement within the Safety and Security Systems Group related to the savings associated with previously implemented material cost reduction initiatives and reductions in employee labor costs.
For the six months ended June 30, 2017 , gross profit increased by $5.9 million , or 6% , primarily due to a $6.4 million improvement in the Environmental Solutions Group. Gross margin for the six months ended June 30, 2017 was 24.4% , compared to 26.8% in the prior-year period, primarily driven by the same factors referenced above in the three-month period.
Selling, engineering, general and administrative expenses
SEG&A expenses for the three months ended June 30, 2017 increased by $4.6 million , or 15% , compared to the prior-year quarter, largely due to increases of $3.6 million and $0.7 million within the Environmental Solutions Group and Safety and Security Systems Group, respectively. The increase in SEG&A expenses within the Environmental Solutions Group was largely the result of the addition of expenses of businesses acquired in the current and prior year and a $0.6 million increase in amortization expense, partially offset by a $1.0 million favorable adjustment of product liability and workers compensation reserves. The increase in SEG&A expenses within the Safety and Security Systems Group primarily related to strategic investments in support of new product development initiatives.
For the six months ended June 30, 2017 , SEG&A expenses increased by $6.5 million , or 11% , primarily represented by a $6.1 million increase within the Environmental Solutions Group, largely the result of the addition of expenses of businesses acquired in the current and prior year and a $0.7 million increase in amortization expense, partially offset by a $1.0 million favorable adjustment of product liability and workers compensation reserves, and a $0.6 million increase in corporate expenses, largely associated with increased legal costs.
Operating income
Operating income increased by $4.4 million , or 31% , to $18.7 million in the three months ended June 30, 2017 as compared to the prior-year quarter, primarily driven by a $6.1 million increase within the Environmental Solutions Group associated with increased sales volumes, a $1.0 million favorable adjustment of product liability and workers compensation reserves, a $0.8 million operating income contribution from TBEI and the effects of a full quarter of operating income from JJE, compared to only one month in the prior-year quarter following the June 3, 2016 acquisition. Partially offsetting this improvement was a $2.0 million increase in purchase accounting expense effects, a $2.5 million increase in depreciation and amortization expense, largely resulting from depreciation on rental equipment acquired in the JJE transaction and amortization of intangible assets resulting from the TBEI acquisition and a $0.2 million increase in acquisition-related expenses. Within the Safety and Security Systems Group, operating income in the three months ended June 30, 2017 decreased by $1.0 million , while corporate expenses increased by $0.7 million , primarily due to higher acquisition-related expenses and legal costs. Consolidated operating margin for the three months ended June 30, 2017 , inclusive of the incremental depreciation and amortization, purchase accounting expense effects and acquisition costs, was 8.3% , unchanged from the prior-year quarter.
For the six months ended June 30, 2017 , operating income was $0.4 million lower than the corresponding period of the prior year. Within the Environmental Solutions Group, operating income for the six months ended June 30, 2017 was relatively unchanged from the first half of last year, with increased sales volumes, a $0.8 million operating income contribution from TBEI and the effects of including six months of operating income from JJE in 2017 , compared to only one month in the prior-year period being partially offset by a $5.2 million increase in depreciation and amortization expense, a $2.5 million increase in

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purchase accounting expense effects and a $0.4 million increase in acquisition-related costs. Within the Safety and Security Systems Group, operating income in the six months ended June 30, 2017 increased by $0.5 million , where reductions in SEG&A expenses and restructuring expenses of $0.2 million and $0.8 million , respectively, more than offset a $0.5 million decrease in gross profit. Corporate expenses in the six months ended June 30, 2017 increased by $0.8 million , primarily due to higher acquisition-related expenses and increased legal costs. Consolidated operating margin for the six months ended June 30, 2017 , inclusive of the incremental depreciation and amortization, purchase accounting expense effects and acquisition costs, was 7.5% , compared to 8.8% in the prior-year period.
Interest expense
Interest expense for the three and six months ended June 30, 2017 increased by $0.9 million and $1.1 million , respectively, compared to the corresponding periods of the prior year, largely due to higher average debt levels.
Other income, net
For the three and six months ended June 30, 2017 , other income, net, totaled $0.2 million and $0.5 million , respectively. For the three and six months ended June 30, 2016 , other income, net, totaled $0.3 million and $1.0 million , respectively. The income in each of the periods was primarily represented by realized gains from foreign currency transactions.
Income tax expense
The Company recognized income tax expense of $6.1 million and $4.8 million for the three months ended June 30, 2017 and 2016 , respectively. The increase in tax expense in the current-year quarter is largely due to higher pre-tax income levels. The effective tax rate for the three months ended June 30, 2017 was 34.7% , compared to 33.8% in the prior-year quarter.
For the  six months ended June 30, 2017  and  2016 , the Company recognized income tax expense of  $9.9 million  and  $10.5 million , respectively. The decrease in tax expense in the first half of 2017 is largely due to lower pre-tax income levels. The effective tax rate was  34.6%  and  34.7%  for the  six months ended June 30, 2017  and  2016 , respectively.
Income from continuing operations
Income from continuing operations for the three months ended June 30, 2017 increased by $2.1 million compared to the prior-year period, largely due to the aforementioned increase in operating income, partially offset by the increase in interest expense, the $0.1 million reduction in other income and the $1.3 million increase in income tax expense.
For the six months ended June 30, 2017 , income from continuing operations decreased by $1.1 million compared to the corresponding period of the prior year, largely due to the reduction in operating income, the increase in interest expense and the $0.5 million decrease in other income, partially offset by the $0.6 million reduction in income tax expense and the absence of $0.3 million in debt settlement charges incurred in connection with the Company’s debt refinancing completed in the prior-year quarter.
(Loss) gain from discontinued operations and disposal, net of tax
The Company recorded a net loss from discontinued operations and disposal of $0.1 million in the three months ended June 30, 2017 . In the three months ended June 30, 2016 , the Company recorded a net loss from discontinued operations and disposal of $0.3 million . The losses in both periods primarily related to adjustments of estimated product liability obligations of previously discontinued businesses, resulting from updated actuarial valuations.
The Company recorded a net loss from discontinued operations and disposal of less than $0.1 million in the six months ended June 30, 2017 . The Company recorded a net gain from discontinued operations and disposal of $2.9 million in the six months ended June 30, 2016 , primarily driven by the $4.0 million net gain on disposal of the Fire Rescue Group, which was discontinued in 2015, partially offset by the $0.6 million net loss that the Fire Rescue Group realized in its 2016 operations up to the January 29, 2016 sale completion date. The net gain on disposal includes a $1.5 million charge to recognize a liability in connection with a Latvian commercial dispute.
Orders
The Company’s historical order information presented herein includes orders received from JJE. Subsequent to the completion of the acquisition of JJE on June 3, 2016 , orders from JJE are no longer included in the Company’s total orders. Instead, subsequent to the completion of the acquisition of JJE, total orders will include orders that JJE receives from end customers. These orders may include orders for products manufactured or supplied by the Company’s Environmental Solutions Group, as well as for products manufactured or supplied by third-party vendors.

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During the three and six months ended June 30, 2016 , orders that were received from JJE prior to the acquisition date, which were included in total orders, were $0.7 million and $3.7 million , respectively.
On the date of acquisition, JJE had a backlog of orders from its end customers of $33.4 million . These acquired orders were included in total orders reported for the three and six months ended June 30, 2016 . In addition, on the acquisition date, the Company’s backlog included $6.9 million of orders from JJE. Such orders were presented as a reduction of total orders for the three and six months ended June 30, 2016 .
On the date of acquisition, TBEI had a backlog of orders from its end customers of $44.8 million . These acquired orders were included in total orders reported for the three and six months ended June 30, 2017 .
Three months ended June 30, 2017 vs. three months ended June 30, 2016
Total orders for the three months ended June 30, 2017 were $271.1 million , an increase of $83.8 million , or 45% , compared to the prior-year quarter. Our Environmental Solutions Group reported total orders of $214.7 million in the second quarter of 2017 , an increase of $79.4 million , or 59% , compared to the prior-year quarter. The improvement was driven by the acquisition of TBEI, which contributed $57.9 million , and organic order growth of approximately $22 million , or 24% , primarily represented by improved orders for sewer cleaners and vacuum trucks. Orders in the three months ended June 30, 2017 within our Safety and Security Systems Group were up $4.4 million , primarily due to higher domestic orders for public safety products and improved international orders for industrial products.
U.S. municipal and governmental orders decreased by $3.4 million , or 4% , primarily due to a $5.8 million reduction within the Environmental Solutions Group, largely due to decreased street sweeper orders. These reductions were partially offset by a $2.4 million increase in municipal orders within the Safety and Security Systems Group, largely driven by the timing of orders received from public safety markets.
U.S. industrial orders increased by $88.8 million , or 231% , primarily due to an $87.8 million increase within the Environmental Solutions Group. The acquisition of TBEI added $57.9 million of orders in the quarter. In addition, higher demand for vacuum trucks and sewer cleaners resulted in order increases of $14.0 million and $5.0 million, respectively, and orders for acquired product lines, including rental equipment and refuse trucks, were up largely as a result of the prior-year JJE acquisition. The Safety and Security Systems Group reported a $1.0 million order increase due to improved demand for outdoor warning systems.
Non-U.S. orders decreased by $1.6 million , or 3% , primarily due to a $2.6 million decrease within the Environmental Solutions Group. This decrease was largely due to the net effect of the inclusion of the acquired JJE order backlog in the prior-year quarter, partially offset by having two additional months of JJE orders in the second quarter of 2017. Within the Safety and Security Systems Group, non-U.S. orders were up $1.0 million , primarily due to improved demand in global industrial markets.
Six months ended June 30, 2017 vs. six months ended June 30, 2016
Total orders for the six months ended June 30, 2017 were $485.7 million , an increase of $162.7 million , or 50% , compared to the prior-year period. Our Environmental Solutions Group reported total orders of $381.3 million in the first half of 2017 , an increase of $162.8 million , or 75% , compared to the prior-year period. The improvement was driven by the acquisition of TBEI, which contributed $57.9 million , the effects of the inclusion of JJE orders for six months in 2017, and organic order growth of approximately $56 million , or 32% , primarily represented by improved orders for sewer cleaners and vacuum trucks. Orders in the six months ended June 30, 2017 within our Safety and Security Systems Group of $104.4 million were relatively unchanged from the corresponding period of the prior year.
U.S. municipal and governmental orders increased by $10.9 million , or 7% , primarily due to a $12.3 million improvement within the Environmental Solutions Group, largely represented by a $13.4 million increase in orders for sewer cleaners. This improvement was partially offset by a $1.4 million reduction in municipal orders within the Safety and Security Systems Group, largely driven by the timing of orders received from public safety markets.
U.S. industrial orders increased by $121.0 million , or 155% , largely driven by a $119.2 million increase within the Environmental Solutions Group, primarily related to the acquisition of TBEI which contributed $57.9 million , the effects of the inclusion of JJE orders for six months in 2017, and improved orders for vacuum trucks and sewer cleaners, which contributed $23.3 million and $18.5 million of the increase, respectively. Within the Safety and Security Systems Group, industrial orders were up $1.8 million , primarily due to improved domestic orders of industrial products.

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Non-U.S. orders increased by $30.8 million , or 33% , largely due to a $31.3 million increase within the Environmental Solutions Group, reflecting increased Canadian orders received following the acquisition of JJE in the second quarter of 2016. Partially offsetting this increase was a $0.5 million decrease within the Safety and Security Systems Group.
Backlog
Backlog was $222.7 million at June 30, 2017 compared to $149.8 million at June 30, 2016 . The increase of $72.9 million , or 49% , was primarily due to an $80.8 million increase in backlog within the Environmental Solutions Group, largely due to the TBEI acquisition, whose backlog at June 30, 2017 was $39.8 million , and increased demand for vacuum trucks and sewer cleaners. These increases were partially offset by a $7.9 million reduction in backlog within the Safety and Security Systems Group, primarily due to a reduction in orders for public safety products.
Backlogs vary by group due to the nature of the Company’s products and the buying patterns of its customers. TBEI’s product lines typically experience average lead times ranging from one to three months. Following the acquisition of TBEI, the Environmental Solutions Group’s weighted average backlog is expected to range from three to five months of shipments. The Safety and Security Systems Group typically experiences an average backlog of approximately two months of shipments. Production of the Company’s June 30, 2017 backlog is expected to be substantially completed during the remainder of 2017 .
Environmental Solutions
The following table summarizes the Environmental Solutions Group’s operating results as of and for the three and six months ended June 30, 2017 and 2016 :  
 
Three Months Ended June 30,
 
Six Months Ended June 30,
($ in millions)
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Net sales
$
174.3

 
$
119.4

 
$
54.9

 
$
302.1

 
$
234.8

 
$
67.3

Operating income
21.0

 
14.9

 
6.1

 
31.3

 
31.4

 
(0.1
)
Operating data:
 
 
 
 
 
 
 
 
 
 
 
Operating margin
12.0
%
 
12.5
%
 
(0.5
)%
 
10.4
%
 
13.4
%
 
(3.0
)%
Total orders
$
214.7

 
$
135.3

 
$
79.4

 
$
381.3

 
$
218.5

 
$
162.8

Backlog
197.8

 
117.0

 
80.8

 
197.8

 
117.0

 
80.8

Depreciation and amortization
5.6

 
3.1

 
2.5

 
10.2

 
4.9

 
5.3

Three months ended June 30, 2017 vs. three months ended June 30, 2016
Total orders increased by $79.4 million , or 59% , for the three months ended June 30, 2017 . U.S. orders increased by $82.0 million , or 88% , primarily due to the acquisition of TBEI which contributed $57.9 million of orders, improvements in orders for vacuum trucks and sewer cleaners of $14.0 million and $5.0 million, respectively, and higher orders for acquired product lines, including rental equipment and refuse trucks, which were up largely as a result of the prior-year JJE acquisition. Partially offsetting these increases was a decrease in orders for street sweepers, due to fewer fleet orders. Non-U.S. orders decreased by $2.6 million , largely due to the net effect of the inclusion of the acquired JJE order backlog in the prior-year quarter, partially offset by having two additional months of JJE orders in the second quarter of 2017 as compared to the prior-year quarter.
N et sales increased by $54.9 million , or 46% , for the three months ended June 30, 2017 . U.S. sales increased by $35.3 million, or 37%, primarily due to the acquisition of TBEI which contributed $18.1 million of sales, increases in shipments of sewer cleaners, vacuum trucks and waterblasting equipment of $4.6 million, $2.3 million and $1.9 million, respectively, as well as higher sales from having three months of JJE sales in the current-year quarter, including a $5.0 million improvement in rental income. Partially offsetting these increases was a decrease in sales of street sweepers of $4.1 million. Non-U.S. sales increased by $19.6 million, or 80%, primarily as a result of having two additional months of JJE net sales in the second quarter of 2017 as compared to the prior-year quarter.
Cost of sales increased by $45.0 million , or 48% , for the three months ended June 30, 2017 , primarily attributable to increased sales volumes, additional cost of sales from the TBEI acquisition and the effects of three months of JJE activity in the current-year quarter compared with one month last year, recognition of approximately $2.0 million more expense associated with purchase accounting effects in connection with current and prior-year acquisitions and a $1.9 million increase in depreciation expense, largely resulting from depreciation on rental equipment acquired in the JJE transaction. Gross margin decreased to 20.8% from 22.1% in the prior-year quarter, largely due to incremental depreciation expense and purchase accounting expense effects.

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SEG&A expenses increased by $3.6 million for the three months ended June 30, 2017 , largely due to the addition of expenses of businesses acquired in the current and prior year and a $0.6 million increase in amortization expense, partially offset by a $1.0 million favorable adjustment of product liability and workers compensation reserves.
Operating income for the three months ended June 30, 2017 increased by $6.1 million , largely due to a $9.9 million increase in gross profit, inclusive of the aforementioned purchase accounting expense effects, partially offset by the $3.6 million increase in SEG&A expenses and a $0.2 million increase in acquisition and integration-related expenses.
Six months ended June 30, 2017 vs. six months ended June 30, 2016
Total orders increased by $162.8 million , or 75% , for the six months ended June 30, 2017 . U.S. orders increased by $131.5 million , or 81% , largely due to the current-year acquisition of TBEI which contributed $57.9 million of orders. The prior-year acquisition of JJE also contributed $17.5 million of the order improvement. The organic growth in the U.S. was largely due to improvements in orders for sewer cleaners, vacuum trucks and street sweepers of $30.9 million, $19.3 million, and $5.9 million, respectively. Non-U.S. orders increased by $31.3 million , or 56% , reflecting increased Canadian orders received following the acquisition of JJE in the second quarter of 2016.
N et sales increased by $67.3 million , or 29% , for the six months ended June 30, 2017 . U.S. sales increased by $38.8 million, or 21%, primarily due to the current-year acquisition of TBEI which contributed $18.1 million of sales, increases in shipments of vacuum trucks and waterblasting equipment of $4.2 million and $2.6 million, respectively, as well as higher sales from having six months of JJE activity in the current-year period, including an $8.9 million improvement in rental income. These improvements were partially offset by a $10.8 million decrease in shipments of street sweepers. Non-U.S. sales increased by $28.5 million, or 62%, primarily as a result of the net effect of the JJE acquisition.
Cost of sales increased by $60.9 million , or 34% , for the six months ended June 30, 2017 , primarily attributable to higher sales volumes, additional cost of sales from the TBEI acquisition and the effects of six months of JJE activity in the current-year period compared with one month last year, recognition of approximately $2.5 million more expense associated with purchase accounting effects in connection with the TBEI and JJE acquisitions and a $4.5 million increase in depreciation expense. Gross margin decreased to 20.1% from 23.1% in the prior-year period, largely due to incremental depreciation expense, purchase accounting expense effects.
SEG&A expenses increased by $6.1 million for the six months ended June 30, 2017 , largely due to the addition of expenses of businesses acquired in the current and prior year and a $0.7 million increase in amortization expense, partially offset by $1.0 million favorable adjustment of product liability and workers compensation reserves.
Operating income for the six months ended June 30, 2017 decreased by $0.1 million , largely due to the $6.1 million increase in SEG&A expenses and the inclusion of $0.4 million of acquisition and integration-related expenses, partially offset by a $6.4 million increase in gross profit, inclusive of the aforementioned purchase accounting expense effects.
Backlog was $197.8 million at June 30, 2017 , up 68% compared to $117.0 million at June 30, 2016 . The increase is primarily due to the contribution of $39.8 million of backlog from TBEI, as well as the effects of improved demand for sewer cleaners and vacuum trucks, partially offset by lower street sweeper orders.
Safety and Security Systems
The following table summarizes the Safety and Security Systems Group’s operating results as of and for the three and six months ended June 30, 2017 and 2016 :  
 
Three Months Ended June 30,
 
Six Months Ended June 30,
($ in millions)
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Net sales
$
50.1

 
$
52.9

 
$
(2.8
)
 
$
100.1

 
$
110.3

 
$
(10.2
)
Operating income
5.6

 
6.6

 
(1.0
)
 
12.0

 
11.5

 
0.5

Operating data:
 
 
 
 
 
 
 
 
 
 
 
Operating margin
11.2
%
 
12.5
%
 
(1.3
)%
 
12.0
%
 
10.4
%
 
1.6
%
Total orders
$
56.4

 
$
52.0

 
$
4.4

 
$
104.4

 
$
104.5

 
$
(0.1
)
Backlog
24.9

 
32.8

 
(7.9
)
 
24.9

 
32.8

 
(7.9
)
Depreciation and amortization
1.0

 
1.1

 
(0.1
)
 
2.0

 
2.2

 
(0.2
)


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Three months ended June 30, 2017 vs. three months ended June 30, 2016
Total orders increased by $4.4 million or 8% , for the three months ended June 30, 2017 . In the aggregate, U.S. orders increased by $3.4 million, primarily driven by improvements in orders for public safety products and industrial products of $2.4 million and $1.0 million, respectively. Non-U.S. orders increased by $1.0 million, primarily due to a $3.0 million improvement in orders for industrial products, inclusive of the receipt of large orders in the current-year quarter from customers in the Middle East. Partially offsetting these increases was a $2.0 million reduction in orders from customers in international public safety markets.
Net sales decreased by $2.8 million , or 5% , for the three months ended June 30, 2017 . U.S. sales decreased by $0.8 million, or 2%, primarily due to a $1.4 million reduction in sales into domestic public safety markets, partially offset by a $0.4 million improvement in sales into domestic industrial markets and a $0.2 million improvement in sales of outdoor warning systems. Non-U.S. sales decreased by $2.0 million, or 11%, primarily due to reductions in sales into international public safety markets of $1.8 million and international outdoor warning systems of $0.5 million. Partially offsetting these decreases was a $0.3 million improvement in sales into international industrial markets.
Cost of sales decreased by $2.6 million , or 8% , for the three months ended June 30, 2017 , largely due to the effects of lower sales volume, as well as the effects of previously implemented material cost reduction initiatives and reductions in employee expenses and labor costs. These actions contributed to an improved gross margin for the three months ended June 30, 2017 of 36.7% , compared to 35.2% in the prior-year quarter.
SEG&A expenses for the three months ended June 30, 2017 increased $0.7 million compared to the prior-year quarter, primarily related to strategic investments in support of new product development initiatives.
Operating income decreased by $1.0 million for the three months ended June 30, 2017 , largely due to the $0.2 million reduction in gross profit, the $0.7 million increase in SEG&A expenses and a $0.1 million increase in restructuring charges.
Six months ended June 30, 2017 vs. six months ended June 30, 2016
Total orders decreased by $0.1 million for the six months ended June 30, 2017 . In the aggregate, U.S. orders increased by $0.4 million, primarily driven by increased orders for industrial products. Non-U.S. orders decreased by $0.5 million, primarily due to reductions in orders for public safety products and outdoor warning systems of $3.8 million and $1.0 million, respectively. Partially offsetting these decreases was a $4.3 million improvement in orders in international industrial markets.
Net sales decreased by $10.2 million , or 9% , for the six months ended June 30, 2017 . U.S. sales decreased by $4.6 million, or 7%, largely due to a reduction in sales into domestic public safety markets, largely due to the timing of sales to major municipalities in the prior-year period. Non-U.S. sales decreased by $5.6 million, or 14%, primarily due to reductions in sales into international public safety markets and industrial markets of $5.0 million and $0.9 million, respectively. Partially offsetting these decreases was a $0.3 million improvement in sales of outdoor warning systems.
Cost of sales decreased by $9.7 million , or 13% , for the six months ended June 30, 2017 , largely due to the effects of lower sales volume, as well as the effects of previously implemented material cost reduction initiatives. These actions contributed to an improved gross margin for the six months ended June 30, 2017 of 37.6% , compared to 34.5% in the prior-year quarter.
SEG&A expenses for the six months ended June 30, 2017 were $0.2 million lower than the prior-year quarter, with savings realized from prior year restructuring activities being partially offset by strategic investments in support of new product development initiatives.
Operating income increased by $0.5 million for the six months ended June 30, 2017 , largely due to the $0.8 million reduction in restructuring charges and $0.2 million reduction in SEG&A expenses, partially offset by a $0.5 million decrease in gross profit.
Backlog was $24.9 million at June 30, 2017 compared to $32.8 million at June 30, 2016 . The decrease was driven by lower orders for public safety products.

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Corporate Expenses
Corporate operating expenses for the three months ended June 30, 2017 were $7.9 million , compared to $7.2 million in the prior-year quarter. The increase was primarily driven by a $0.4 million increase in acquisition and integration-related expenses, and higher legal costs. In the prior-year quarter, the Company incurred $0.4 million in acquisition and integration-related expenses, primarily represented by professional service fees in connection with the JJE acquisition, whereas in the current-year quarter, the Company incurred $0.8 million of similar expenses in connection with the TBEI acquisition.
Corporate operating expenses for the six months ended June 30, 2017 were $13.3 million , compared to $12.5 million in the prior-year period. The increase was primarily driven by a $0.2 million increase in acquisition and integration-related expenses, as well as higher legal costs.
Seasonality of Company’s Business
Certain of the Company’s businesses are susceptible to the influences of seasonal factors, including buying patterns, delivery patterns and productivity influences from holiday periods and weather. In general, the Company tends to have lower sales in the first calendar quarter of each year compared to other quarters as a result of these factors.
Financial Condition, Liquidity and Capital Resources
The Company uses its cash flow from operations to fund growth and to make capital investments that sustain its operations, reduce costs, or both. Beyond these uses, remaining cash is used to pay down debt, repurchase shares, fund dividend payments and make pension contributions. The Company is also committed to pursuing additional strategic acquisitions of businesses. In the absence of significant unanticipated cash demands, we believe that the Company’s existing cash balances, cash flow from operations and borrowings available under the Amended 2016 Credit Agreement, will provide funds sufficient for these purposes. The net cash flows associated with the Company’s rental equipment transactions are included in cash flow from operating activities. Subsequent to the acquisition of JJE, such net cash flows may become more significant, and as such, cash flow from operating activities may not be directly comparable with amounts reported in periods prior to the acquisition.
The Company’s cash and cash equivalents totaled $37.0 million and $50.7 million as of June 30, 2017 and December 31, 2016 , respectively. As of June 30, 2017 , $16.8 million of cash and cash equivalents was held by foreign subsidiaries. Cash and cash equivalents held by subsidiaries outside the U.S. typically are held in the currency of the country in which it is located. This cash is used to fund the operating activities of our foreign subsidiaries and for further investment in foreign operations. Generally, we consider such cash to be permanently reinvested in our foreign operations and our current plans do not demonstrate a need to repatriate such cash to fund U.S. operations. However, in the event that these funds were needed to fund U.S. operations or to satisfy U.S. obligations, they generally could be repatriated. The repatriation of these funds may then cause us to incur additional U.S. income tax expense, which would be dependent on income tax laws and other circumstances at the time any such amounts were repatriated.
Net cash of $45.8 million was generated by continuing operating activities in the six months ended June 30, 2017 , compared to $3.9 million in the prior-year period. We began 2017 with a higher total primary working capital level (defined as accounts receivable and inventories, net, less accounts payable and customer deposits) than when entering the prior year, partly due to the acquisition of JJE, whose inventory levels at any point in time can fluctuate based on demand given the distribution model, as well as the advanced purchase of inventory to meet anticipated production requirements. In addition, the first half of 2017 included improved accounts receivable collections and extension of accounts payables, which were largely timing related. As a result of these factors, operating cash flow in the six months ended June 30, 2017 benefited from a reduction in primary working capital in comparison to the same period of the prior year. The operating cash flow in the prior-year period was also lower by approximately $11 million as a result of the non-cash settlement, in connection with the acquisition, of accounts receivable due from JJE.
Net cash of $271.8 million and $106.7 million was used for continuing investing activities in the six months ended June 30, 2017 and 2016 , respectively. In the six months ended June 30, 2017 , the Company paid an initial $269.2 million (net of cash acquired) to acquire TBEI. In the six months ended June 30, 2016 , the Company paid $102.6 million to acquire Westech Vac Systems, Ltd. and JJE. Capital expenditures in the six months ended June 30, 2017 and 2016 were $2.7 million and $3.6 million , respectively. Net cash provided by discontinued investing activities totaled $88.0 million in the six months ended June 30, 2016 , which represented the initial net proceeds received from the sale of Bronto.
Net cash of $213.0 million was provided by continuing financing activities in the six months ended June 30, 2017 , compared with a net cash usage of $24.2 million in the prior-year period. In the six months ended June 30, 2017 , in connection with the funding of the acquisition of TBEI, the Company borrowed $243.0 million against its revolving credit facility. Prior to June 30, 2017 , $20.0 million of those borrowings were paid down. In addition, the Company funded cash dividends of $8.4 million and

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redeemed $2.4 million of stock in order to remit funds to tax authorities to satisfy employees’ tax withholdings following the vesting of stock-based compensation. In the six months ended June 30, 2016 , the Company borrowed $64.8 million against its revolving credit facility, funded cash dividends of $8.6 million , repurchased $33.1 million of treasury stock, and redeemed $2.6 million of stock in order to remit funds to tax authorities to satisfy employees’ tax withholdings following the vesting of stock-based compensation. The Company also paid the remaining $43.4 million of term loan debt outstanding under a prior debt agreement and spent $1.1 million on fees in connection with its debt refinancing.
As described in Note 5 – Debt to the accompanying condensed consolidated financial statements, on June 2, 2017 , the Company executed an amendment to the 2016 Credit Agreement which increased the borrowing capacity under the Company’s credit facility to $400.0 million . The Amended 2016 Credit Agreement allows for the Borrowers to borrow in denominations of U.S. Dollars, Canadian Dollars (up to a maximum of C $100.0 million ) or Euros (up to a maximum of € 20.0 million ).
The Company is subject to certain leverage ratio and interest coverage ratio financial covenants under the Amended 2016 Credit Agreement that are to be measured at each fiscal quarter-end. The Company was in compliance with all such covenants as of June 30, 2017 .
As of June 30, 2017 , there was $288.6 million of cash drawn and $18.0 million of undrawn letters of credit under the Amended 2016 Credit Agreement, with $93.4 million of net availability for borrowings. As of June 30, 2017 , there were no borrowings against the Company’s non-U.S. lines of credit which provide for borrowings of up to $0.2 million .
The Company anticipates that capital expenditures for 2017 will be less than $10 million.
Contractual Obligations and Off-Balance Sheet Arrangements
During the six months ended June 30, 2017 , there have been no material changes in the Company’s contractual obligations and off-balance sheet arrangements as described in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 , with the exception of increased long-term debt and related estimated interest payments and purchase obligations related to the TBEI acquisition, as described below.
The Company’s purchase obligations, which primarily relate to commercial chassis, vehicle bodies and other contracts in the ordinary course of business, have increased from the $71.9 million reported in the Company’s Annual Report on Form 10-K as of December 31, 2016 to $116.2 million as of June 30, 2017 , with $107.1 million in payments due in less than one year and $9.1 million in payments due in two to three years.
In addition, the Company’s long-term debt increased from the $63.2 million reported in the Company’s Annual Report on Form 10-K as of December 31, 2016 to $288.6 million as of June 30, 2017 , which is payable in four to five years. The corresponding estimated contractual interest payments on long-term debt have increased from $5.0 million as of December 31, 2016 to $35.8 million as of June 30, 2017 , with $10.0 million due in less than a year, $20.0 million due in two to three years, and $5.8 million due in four to five years.
Critical Accounting Policies and Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the date of the consolidated financial statements and (iii) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company has disclosed the policies it considers to be the most critical in understanding the judgments that are involved in the preparation of the Company’s consolidated financial statements and the uncertainties that could impact the Company’s financial condition, results of operations or cash flow in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 .
As discussed in Note 2 – Acquisitions, on June 2, 2017 , the Company completed the acquisition of TBEI. The Company has added a critical accounting policy related to intangible assets based on the significance of the intangible assets recognized as part of the preliminary purchase price allocation.
There were no other material changes in the Company’s critical accounting policies and estimates as described in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 .

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Indefinite-lived Intangible Assets
An intangible asset determined to have an indefinite useful life is not amortized. Indefinite-lived intangible assets are tested for impairment on an annual basis at year-end, or more frequently if an event occurs or circumstances change that indicate the fair value of an indefinite-lived intangible asset could be below its carrying amount.
The impairment test consists of comparing the fair value of the indefinite-lived intangible asset with its carrying amount. An impairment loss would be recognized for the carrying amount in excess of its fair value.
Significant judgment is applied when evaluating whether an intangible asset has an indefinite useful life. In addition, for indefinite-lived intangible assets, significant judgment is applied in testing for impairment. This judgment includes developing cash flow projections, selecting appropriate discount rates, identifying relevant market comparables, and incorporating general economic and market conditions.
Although the Company believes its estimates of fair value are reasonable, actual financial results could differ from estimated financial results due to the inherent uncertainty involved in making such estimates. The use of alternative estimates and assumptions could increase or decrease the estimated fair value of the assets and potentially result in different impacts to the company's results of operations. Actual results may differ from the Company's estimates.
Item 3.
Quantitative and Qualitative Disclosures about Market Risk.
See Item 7A, Quantitative and Qualitative Disclosures about Market Risk , of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 . During the six months ended June 30, 2017 , there have been no significant changes in our exposure to market risk, with the exception of increased market risk associated with changes in interest rates based on the increase in fair value of the Company’s debt obligations as of June 30, 2017 as compared to December 31, 2016 .
Interest Rate Risk
Our debt instruments subject us to market risk associated with movements in interest rates. The fair value of the Company’s total debt obligations held at June 30, 2017 was $289.2 million . On June 2, 2017 , the Company entered into an interest rate swap with a notional amount of $150.0 million , as a means of fixing the floating interest rate component on $150.0 million of its variable-rate debt. See Note 5 – Debt to the accompanying condensed consolidated financial statements for a description of our debt agreements and related derivative financial instrument. A hypothetical 100 basis point increase or decrease in variable interest rates in 2017 would increase or decrease interest expense by approximately $0.7 million in the second half of 2017, based on current debt levels.
Item 4.
Controls and Procedures.
As required by Rule 13a-15 under the Exchange Act, the Company’s management, with the participation of the Company’s Chief Executive Officer and Interim Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act) as of June 30, 2017 . Based on that evaluation, the Company’s Chief Executive Officer and Interim Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2017 .
As a matter of practice, the Company’s management continues to review and document internal control and procedures for financial reporting. From time to time, the Company may make changes aimed at enhancing the effectiveness of the controls and ensuring that the systems evolve with the business. SEC guidance permits management to omit an assessment of internal control over financial reporting for an acquired business from management’s assessment of internal control over financial reporting for a period not to exceed one year from the date of the acquisition. During the three months ended June 30, 2017 , the Company completed the acquisition of TBEI. As of June 30, 2017 , management has not yet fully assessed TBEI’s internal control over financial reporting. Excluding the acquisition of TBEI, there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting during the three months ended June 30, 2017 .


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PART II. OTHER INFORMATION
Item 1.
Legal Proceedings.
The information set forth under the heading “Legal Proceedings” in Note 8 – Commitments and Contingencies to the accompanying condensed consolidated financial statements as included in Part I of this Form 10-Q is incorporated herein by reference.
Item 1A. Risk Factors.
There have been no material changes in the Company’s risk factors as described in Item 1A, Risk Factors , of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 .
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
Restrictions upon the Payment of Dividends
Under the terms of the Amended 2016 Credit Agreement, restricted payments, including dividends and stock repurchases, shall be permitted if (i) the Company’s leverage ratio is less than or equal to 2.50 , (ii) the Company is in compliance with all other financial covenants and (iii) there are no existing defaults under the Amended 2016 Credit Agreement. If the leverage ratio is more than 2.50 , the Company is still permitted to fund (i) up to $ 30.0 million of dividend payments, (ii) stock repurchases sufficient to offset dilution created by the issuance of equity as compensation to its officers, directors, employees and consultants and (iii) an incremental $ 30.0 million of other cash payments.
The Company is able to declare dividends at current levels under the restricted payment guidelines set forth above.
Purchases of Equity Securities
Period
 
Total Number of Shares Purchased
 
Average Price Paid Per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
 
Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (a)
April 2017 (4/2/17 – 5/6/17)
 
—

 
$
—

 
—

 
$
31,395,802

May 2017 (5/7/17 – 6/3/17)
 
—

 
—

 
—

 
31,395,802

June 2017 (6/4/17 – 7/1/17)
 
—

 
—

 
—

 
31,395,802

(a)
On November 4, 2014, the Board authorized a stock repurchase program of up to $75.0 million of the Company’s common stock.
Item 3.
Defaults upon Senior Securities.
None.
Item 4.
Mine Safety Disclosures.
Not applicable.
Item 5.
Other Information.
On August 8, 2017 , the Company issued a press release announcing its financial results for the three and six months ended June 30, 2017 . The full text of the second quarter financial results press release is attached hereto as Exhibit 99.1 to this Form 10-Q.

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Item 6.      Exhibits.
3.1
 
 
 
 
3.2
 
 
 
 
10.1
 
 
 
 
10.2
 
 
 
 
10.3 *
 
 
 
 
10.4*
 
 
 
 
10.5*
 
 
 
 
10.6*
 
 
 
 
10.7*
 
 
 
 
10.8*
 
 
 
 
10.9*
 
 
 
 
10.10*
 
 
 
 
10.11*
 
 
 
 
10.12*
 
 
 
 
10.13*
 
 
 
 
31.1
 
 
 
 
31.2
 
 
 
 
32.1
 
 
 
 
32.2
 
 
 
 
99.1
 
 
 
 
101.INS
 
XBRL Instance Document.
 
 
 
101.SCH
 
XBRL Taxonomy Extension Schema Document.
 
 
 
101.CAL
 
XBRL Taxonomy Calculation Linkbase Document.
 
 
 
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document.
 
 
 
101.LAB
 
XBRL Taxonomy Label Linkbase Document.
 
 
 
101.PRE
 
XBRL Taxonomy Presentation Linkbase Document.
*
Management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Item 15(a)(3) of Form 10-K.


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SIGNATURE
Pursuant to the requirements of Section 13 or 15 (d) 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
 
 
 
Date:
August 8, 2017
/s/ Ian A. Hudson
 
 
Ian A. Hudson
 
 
Vice President and Interim Chief Financial Officer
(Principal Financial Officer)

42
EXHIBIT 10.3 May 4, 2017 By E-Mail and Regular Mail Mr. Robert Fines 2305 English Village Lane Mountain Brook Al 35223 Re: Offer of Employment Dear Bob: On behalf of Federal Signal Corporation (the “Company”), it is with great pleasure that I present you with the following offer of employment in the position of Vice President and General Manager for the group of businesses within the corporate family of Truck Bodies & Equipment International, Inc. (“TBEI”). You will report to Jennifer Sherman, Chief Executive Officer of the Company. We are delighted to welcome you to Federal Signal and we look forward to the addition of your expertise to our executive leadership team. This offer is contingent upon the closing of the transaction contemplated in the Stock Purchase Agreement (the “Agreement”) between the Company and GenNx/TBEI Holdings, LLC, pursuant to which the Company has agreed to acquire all the outstanding shares of capital stock of GenNx/TBEI Intermediate Co., a Delaware corporation (“Target”), on the terms and conditions set forth in the Agreement (the “Transaction”). In the event the Transaction does not close, this offer is null and void and shall be of no force or effect. The precise terms of our offer are as follows: 1. Start Date. Your employment with the Company will begin upon the closing of the Transaction (the “Start Date”). 2. Duties. You shall perform such duties and responsibilities as are assigned or delegated to you from time to time by the Company’s Chief Executive Officer in her discretion. 3. Base Salary. Your annual base salary will be $400,000 per year, less taxes and withholdings, and will be paid on a semi-monthly basis, unless a more frequent pay period is required by applicable state law. Your annual base salary will remain unchanged during the first three years of your employment with the Company, provided you remain an employee of the Company (or a subsidiary of the Company) in good standing, as determined by the Company, in the same or substantially similar role. Nothing in this paragraph or offer letter alters the at-will nature of your employment.

 
Mr. Robert Fines May 4, 2017 Page 2 of 6 4. Annual Incentive Bonus. a. You shall continue to be eligible to earn an annual cash bonus at the conclusion of TBEI’s current fiscal year on September 30, 2017, under and pursuant to the current terms of your Fiscal Year 2017 Bonus Plan with TBEI as set forth in the letter to you from Tina Albright dated November 21, 2016. The bonus payment, if any, will not be made until after the Company’s receipt of audited financials and shall occur and no later than March 15, 2018. b. A partial-year bonus opportunity valued at target at $40,000, less taxes and withholdings, will be defined to cover the period from October 1, 2017, to December 31, 2017, which is the end of the Company’s fiscal year. This bonus will be determined by TBEI’s performance against a financial performance target represented by an earnings metric (e.g., EBITDA, operating income). The Company will work with you in good faith to establish the performance targets. The Company and the Compensation and Benefits Committee of its Board of Directors (“CBC”) retains final discretion to establish the precise terms of your partial-year bonus opportunity and applicable financial performance targets. In addition to satisfying applicable performance targets, you must be employed by the Company (or one of its subsidiaries) through the date on which the partial-year bonus is paid to earn and receive the partial-year bonus. The partial-year bonus will be paid in a lump sum no later than March 15, 2018. c. Effective January 1, 2018, you will be eligible to earn an annual cash incentive bonus, which is paid through the STIP in accordance with its terms. In your current position, your target bonus shall be 50% of your annual base salary (i.e., $200,000) with a maximum bonus opportunity of 100% of your annual base salary (i.e., $400,000). The STIP is designed to reward and motivate outstanding performance and is currently based on achievement of annual Company and individual objectives, weighted at 70% and 30% of the bonus opportunity respectively, the precise terms of which are determined in the discretion of the Company’s executive leadership team and the CBC. Generally speaking, for 2018, the Company-based financial objectives shall be determined by: (i) TBEI’s performance relative to financial performance targets represented by an earnings metric (e.g., EBITDA, operating income) established in the Company’s 2018 Annual Operating Plan (“2018 AOP”) (60% of the bonus opportunity); and (ii) the Company’s performance relative to financial performance targets established in the 2018 AOP (10% of the bonus opportunity). As stated, the remaining portion of the bonus opportunity will be determined by your individual performance against individual objectives established by the Company for 2018 in its discretion (30% of the bonus opportunity). In addition to satisfying applicable objectives, you must be employed by the Company on the date bonuses are paid to earn a bonus under the STIP. Bonus determinations and payments are subject to the discretion and approval of the Company’s executive leadership team and the CBC and generally occur in March of the calendar year following the calendar year to which the bonus applies.

 
Mr. Robert Fines May 4, 2017 Page 3 of 6 d. Your eligibility for an annual cash incentive bonus under the STIP in subsequent calendar years will be communicated to you in writing when such determinations are made by the Company in its discretion. 5. Long-Term Equity Incentive Awards. a. On or near the date the Transaction closes, you will receive an initial grant of performance share units (“PSUs”) under and pursuant to the Company’s 2015 Executive Incentive Compensation Plan (“2015 EICP”). These PSUs will be subject to the terms of the 2015 EICP and an award agreement including a performance and vesting period commencing at the beginning of the first quarterly period following the date on which the Transaction closes and ending three years later (“Performance Period”). At grant, the number of PSUs you will receive will be determined by dividing $750,000 by the closing stock price of a share of Company stock on the effective date of grant. The number of PSUs earned, if any, shall be based on TBEI’s performance against cumulative financial performance targets represented by an earnings metric (e.g., EBITDA, operating income) over the Performance Period, subject to adjustment for items that are not indicative of ongoing results such as extraordinary or non-recurring items, in the discretion of the CBC. The performance targets shall be determined by the CBC in its discretion. Attainment of 80% of the cumulative target will result in payout of 50% of the target PSUs, attainment of 100% of the cumulative target will result in payout of 100% of the target PSUs, and attainment of 120% of the cumulative target will result in payout of 200% of the target PSUs, with straight-line interpolation for performance between the same. In the event the Company terminates your employment other than for “Cause” (as that term is defined in your Amended and Restated Non- Competition and Severance Agreement dated September 30, 2015 with Crysteel Manufacturing, Inc., a subsidiary of TBEI (“Severance Agreement”)), you will be eligible to earn a pro-rata portion of the PSUs based on actual performance measured at the end of the performance period, paid in accordance with the terms of the applicable award agreement. b. In 2018, you will be eligible to receive a long-term equity incentive award under and pursuant to the 2015 EICP, subject to the discretion and approval of the CBC. As currently structured for executives at your level, these awards are split between PSUs (50% of the award), non-qualified stock options (25% of the award), and time-based restricted stock (25% of the award) and have an aggregate grant date value of $125,000. As currently awarded to executives at your level: (a) stock options vest ratably over three years; (b) time- based restricted stock cliff vests in three years; and (c) PSUs are subject to a three-year performance and vesting period. c. In subsequent years, incentive awards, the amount of such awards, and the terms and conditions applicable to such awards, will be made and announced in the discretion of the CBC in connection with its annual grant cycle. d. To receive the foregoing equity incentive awards, you must be employed by the Company and execute and return detailed award agreements which contain the precise terms and conditions of such awards and control in the event of any conflict with this offer letter. Award agreements will be presented to you as soon as administratively feasible prior to the

 
Mr. Robert Fines May 4, 2017 Page 4 of 6 date of such awards and include a companion Non-Competition, Non-Solicitation, & Confidentiality Agreement (copy enclosed), the execution and return of which is required to receive the awards. 6. Stay Bonus. Should you remain employed with the Company or a subsidiary of the Company in good standing, as determined by the Company, for a period of three years from the Start Date in the same or substantially similar position, you will be paid the sum of $250,000, less taxes and withholdings. For the avoidance of any doubt, should your employment with the Company end prior to such date for any reason or for no reason, whether initiated by the Company or you, you will not earn or be paid any portion of this bonus. In order to be eligible to earn this stay bonus you must also execute and return the enclosed Terms of Employment Agreement on or near the Start Date. Such amount will be paid in a lump sum on the third anniversary of the Start Date (or the first business day thereafter). 7. Car Allowance. You will receive a monthly car allowance of $750 in accordance with the Company’s policy and procedures, subject to modification from time to time in the discretion of the Company. 8. Paid Time Off. You will continue to accrue paid vacation days under TBEI’s policy at the rate of 1.67 vacation days per month worked, up to a maximum of 20 vacation days in a calendar year for your use in that same year of accrual. The Company encourages you to use all your vacation days. You will continue to be eligible for holidays and personal days consistent with TBEI’s policies, as the same may be modified from time to time. The foregoing paid time off may be modified from time to time in the discretion of the Company. Unused vacation days at the end of a calendar year are forfeited, do not carry-over, and are not compensable. 9. Benefits. Subject to the terms of the applicable benefit plan documents, you will continue to be eligible to participate in TBEI’s existing group health and welfare benefit programs. Your participation in these programs will be at cost to you equal to the rates in effect for other active employees, with no subsidy or reimbursement. TBEI’s current benefit plans will remain in effect for the remainder of 2017. Changes made in 2018 or thereafter, if any, will be communicated during the Company’s open enrollment period, which generally occurs in November. You also remain eligible to participate in TBEI’s 401(k) plan and any applicable successor plans in accordance with plan terms. All benefits plans may be discontinued or modified in the discretion of the Company. 10. Severance. You are party to the Severance Agreement. The Severance Agreement provides for the payment of certain severance pay in the event of certain specified employment termination events on or prior to September 30, 2018. On or near the Start Date, the Severance Agreement will be amended by mutual agreement per the amendment procedures contained therein to, among other things, extend the date of September 30, 2018 to the date three years after the Start Date. Except as so amended by mutual agreement, the Severance Agreement shall remain in full force and effect in accordance with its terms. During the three-year period described above, you are not eligible to participate in or receive any benefits under the Company’s Executive General Severance Plan, irrespective of whether the Severance Agreement is formally amended.

 
Mr. Robert Fines May 4, 2017 Page 5 of 6 11. Policies and Procedures. You shall be subject to the Company’s Standard Practices and Procedures and its policies, including but not limited to its Stock Ownership Guidelines for Executives and Directors and its Insider Trading Policy (copies enclosed), as the same may be modified, amended, discontinued, and/or introduced from time to time in the discretion of the Company. 12. At-Will Employment. This offer is for at-will employment. This means that either you or the Company may choose to end the employment relationship at any time with or without cause, for any lawful reason or for no reason. This offer is not, nor shall it be construed to be, a guarantee or promise of employment for any specified duration. This offer of employment, together with the grant of bonus and equity and cash incentive opportunities, and other consideration herein provided, is expressly conditioned upon you signing and adhering to the enclosed Terms of Employment Agreement and Non-Competition, Non-Solicitation, & Confidentiality Agreement, both of which include post-employment restrictions and obligations owed by you to the Company. By signing this Agreement, you acknowledge and agree that the terms and conditions of your existing contracts and other compensation and benefit arrangements and opportunities with Target and TBEI are superseded, null, and void, unless otherwise stated herein as continuing in effect. You further agree to the amendment of the Severance Agreement, which continues in full force and effect except as to be amended as set forth herein. Bob, we hope you will accept this offer and we look forward to you joining our team. To accept this offer, please return this signed offer letter and the Terms of Employment Agreement to me on or before May 6, 2017. If not accepted by you on or before that date, this offer shall be considered withdrawn. If you have any questions about this offer, please call me at 630-954-2007. Best regards, /s/ Shirley S. Paulson Director, Compensation and Benefits Enclosures: Terms of Employment Agreement, Non-Competition, Non-Solicitation & Confidentiality Agreement, Stock Ownership Guidelines for Executives and Directors, Insider Trading Policy Acceptance: I accept the offer of at-will employment and the other terms set forth above. I further represent and warrant that there were no promises or guarantees made to me that are not contained in this offer letter. /s/ Robert Fines ____May 5, 2017_______________________ Signature Date

 
Mr. Robert Fines May 4, 2017 Page 6 of 6 *** As amended by the Performance Share Unit Award Agreement dated July 25, 2017 ***

 
NQSO US 1/2017 EXHIBIT 10.4 _____ ___, 201__ Federal Signal Corporation 2015 Executive Incentive Compensation Plan Nonqualified Stock Option Award Agreement You have been selected to receive this Nonqualified Stock Option Award (“Award”) pursuant to the Federal Signal Corporation 2015 Executive Incentive Compensation Plan (the “Plan”), as specified below: Participant: Date of Grant: Date of Expiration: Number of Option Shares: Exercise Price: Vesting Schedule: Options shall vest at the times and in the amounts set forth below: ___ on __/__/20__ ___ on __/__/20__ ___ on __/__/20__ [3-year ratable] This Award is subject to the terms and conditions prescribed in the Plan and in the Federal Signal Corporation Nonqualified Stock Option Award Agreement No. 2017 attached hereto and incorporated herein. Together, this Award and the attached award agreement shall be referred to throughout each as the “Award Agreement.” IN WITNESS WHEREOF, the parties have caused this Award Agreement to be executed as of the Date of Grant. PARTICIPANT: FEDERAL SIGNAL CORPORATION By: Print Name Chief Executive Officer Signature Address Participant agrees to execute this Award Agreement and return one copy to Mike Basili at Federal Signal Corporation, 1415 W. 22nd Street, Suite 1100, Oak Brook, IL 60523 within 45 days of the above date or forfeit the stock option award. Note: If there are any discrepancies in the name or address shown above, please make the appropriate corrections on this form.

 
NQSO US 1/2017 2 This document constitutes part of the prospectus covering securities that have been registered under the Securities Act of 1933, as amended. FEDERAL SIGNAL CORPORATION NONQUALIFIED STOCK OPTION AWARD AGREEMENT NO. 2017 This Award Agreement, which includes the attached cover page, effective as of the Date of Grant, represents the grant of nonqualified stock options (the “Options”) by the Company to the Participant named in this Award Agreement, pursuant to the provisions of the Plan. The Company established the Plan pursuant to which, among other things, options, stock appreciation rights, restricted stock and stock units, stock bonus awards, dividend equivalents and/or performance compensation awards may be granted to eligible persons. The Plan and this Award Agreement provide a complete description of the terms and conditions governing the Options. If there is any inconsistency between the terms of this Award Agreement and the terms of the Plan, the Plan’s terms shall completely supersede and replace the conflicting terms of this Award Agreement. All capitalized terms shall have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein. The Board of Directors and the Committee have determined that the interests of the Company will be advanced by encouraging and enabling certain of its employees to own shares of the Stock and that Participant is one of those employees. NOW, THEREFORE, in consideration of services rendered and the mutual covenants herein contained, the parties agree as follows: Section 1. Certain Definitions As used in this Award Agreement, the following terms shall have the following meanings: A. “Affiliate” means with respect to any Person, any other Person (other than an individual) that controls, is controlled by, or is under common control with such Person. The term “control,” as used in this Award Agreement, means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. “Controlled” and “controlling” have meanings correlative to the foregoing. B. “Board of Directors” means the board of directors of the Company. C. “Code” means the Internal Revenue Code of 1986, as amended. D. “Committee” means the Compensation and Benefits Committee of the Board of Directors or a subcommittee or other committee appointed to administer the Plan in accordance with the Plan. E. “Company” means Federal Signal Corporation, a Delaware corporation. F. “Date of Expiration” means the date set forth on this Award Agreement. G. “Date of Grant” means the date set forth on this Award Agreement. H. “Disability” shall have the meaning ascribed to that term in the Company’s long-term disability plan applicable to Participant, or if no such plan exists, at the discretion of the Committee and as determined by the Committee. I. “Exercise Price” means the exercise price set forth on this Award Agreement. J. “Fair Market Value” shall have the meaning set forth in the Plan. K. “Option” means the Company’s nonqualified stock options.

 
NQSO US 1/2017 3 L. “Participant” means the individual shown as the recipient of an award of Options, as set forth on this Award Agreement. M. “Person” means a “person” as such term is used for purposes of 13(d) or 14(d), or any successor section thereto, of the Securities Exchange Act of 1934, as amended, and any successor thereto. N. “Stock” means the common stock of the Company. Section 2. Grant of Stock Options The Company hereby grants to Participant Options to purchase the number of shares of Stock (“Shares”) set forth in this Award Agreement, at the stated Exercise Price, which is equal to one hundred percent (100%) of the closing market value of a share of Stock on the Date of Grant, in the manner and subject to the terms and conditions of the Plan and this Award Agreement. Subject to Section 12, each Option shall be exercisable into one Share. This grant of Options shall not confer any right to Participant (or any other participant) to be granted Options or other awards in the future under the Plan. Section 3. Exercise of Stock Options Except as hereinafter provided, Participant may exercise Options held by Participant at any time after the Date of Grant, provided that any such Options have vested according to the vesting schedule set forth in this Award Agreement, and provided that no exercise may occur subsequent to the close of business on the Date of Expiration. Vested Options held by Participant may be exercised in whole or in part, but not for fewer than one hundred (100) Shares at any one time, unless fewer than one hundred (100) Shares then remain subject to the Options, and the Options are then being exercised as to all such remaining Shares. To the extent that the Fair Market Value of a share of Stock exceeds the Exercise Price on the trading day immediately preceding the Date of Expiration (the “Automatic Exercise Date”), the Company shall have the right and authority in its sole discretion to provide that any vested but unexercised Options that have not been forfeited or otherwise cancelled in accordance with the terms of this Award Agreement will be exercised automatically on Participant’s behalf on the Automatic Exercise Date using a “net exercise” method (described in Section 13 of this Award Agreement). Such automatic exercise shall only occur if, after withholding from the delivery of the Shares the number of Shares having a Fair Market Value equal to the aggregate Exercise Price and applicable taxes, Participant will net at least one Share. Participant at all times remains responsible for all taxes associated with any such automatic exercise, notwithstanding any withholding of Shares by the Company for taxes. Participant may elect not to have these Options automatically exercised as contemplated herein by giving written notice to the Company not less than 10 days prior to the Automatic Exercise Date. Notwithstanding the foregoing, there is no guarantee that such an automatic exercise will be effected on Participant’s behalf and neither the Company nor any other party will bear any responsibility or liability if such an automatic exercise is not effected and instead, these Options expire unexercised. Accordingly, Participant bears sole responsibility for ensuring that he or she exercises any vested Options prior to the expiration thereof. By accepting these Options, Participant agrees to the automatic exercise of these Options on the terms hereof. In its discretion, the Company may determine to cease automatically exercising options, including these Options, at any time without notice, responsibility or liability to the Participant or otherwise. Section 4. Option Period/Limitations on Exercise Except as set otherwise set forth in this Award Agreement, Participant must exercise all rights under this Award Agreement prior to the tenth anniversary of the Date of Grant (i.e., the Options will expire upon the tenth anniversary if not exercised prior to that date). Participant may sell the Shares acquired via these Options at any time, subject to Company policy on insider trading and stockholding requirements. Section 5. Termination of Employment by Death In the event the employment of Participant is terminated by reason of death, all outstanding Options not yet vested shall become immediately fully vested and, along with all previously vested Options, shall remain exercisable at any time prior to the Date of Expiration, or for one year after the date of death, whichever period is shorter, by

 
NQSO US 1/2017 4 such person or persons as shall have been named as Participant’s beneficiary(ies), or by such persons that have acquired Participant’s rights under the Options by will or by the laws of descent and distribution. Section 6. Termination of Employment by Disability In the event the employment of Participant is terminated by reason of Disability, all outstanding Options not yet vested shall become immediately fully vested and, along with all previously vested Options, shall remain exercisable at any time prior to the Date of Expiration, or for one year after the date that the Committee determines the definition of Disability to have been satisfied, whichever period is shorter. Section 7. Termination of Employment by Retirement In the event the employment of Participant is terminated by reason of Participant’s retirement on terms and conditions authorized in writing by the Committee, the Committee may exercise its discretion at or near Participant’s retirement date to provide that some or all outstanding Options not yet vested shall become immediately fully vested and, along with all previously vested Options, shall remain exercisable at any time prior to the Date of Expiration, or for five years after the date of retirement, whichever period is shorter. In exercising its discretion under this Section 7, the Committee shall consider whether Participant: (A) remained employed in good standing with the Company through Participant’s retirement date; (B) provided reasonable written notice to the Company of Participant’s intention to retire of no less than 12 weeks; (C) materially breached any statutory, contractual, or common law duties owed to Company or any material Company policy, including but not limited to post-employment non-competition, non-solicitation and confidentiality obligations; and (D) failed in good faith to provide to and perform for Company all reasonably requested duties and responsibilities in connection with the transition of Participant’s duties and responsibilities. In exercising its discretion, the Committee shall also consider: (1) the financial status of the Company; (2) Company performance; (3) Company stock performance; and (4) where appropriate, input from Company management. In the event the Committee does not so exercise its discretion, Participant’s termination of employment by reason of retirement shall be considered a termination of employment for other reasons and Section 8 of this Award Agreement shall govern. Section 8. Termination of Employment for Other Reasons If the employment of Participant shall terminate for any reason other than the reasons set forth in Sections 5, 6 or 7 herein, all previously vested Options shall remain exercisable for a period of three months from the effective date of termination. For the avoidance of doubt, termination of employment on account of a Divestiture of a Business Segment shall result in any vested Options remaining exercisable for a period of three months from the Divestiture Date. Any Options not yet vested as of the date of termination (after first taking into account the accelerated vesting provisions of Sections 5, 6, 7, and 10) shall be forfeited. The transfer of employment of Participant between the Company and any Affiliate (or between Affiliates) shall not be deemed a termination of employment for purposes of this Award Agreement. For the avoidance of doubt, in instances involving the termination of Participant’s employment, the reason for the termination of Participant’s employment (i.e., death, Disability, retirement, for other reasons, or Divestiture of Business Segment) shall control the vesting and exercising implications. For example, Participant’s death or Disability following Participant’s termination of employment by reason of retirement shall not impact the vesting or exercising of Options which shall continue to be governed by Section 7. Section 9. Change-in-Control In the event Participant is employed by the Company or its Affiliates on a date when a Change-in-Control occurs, Participant’s right to exercise these Options shall become immediately fully vested as of the date of the Change-In-Control, and shall remain exercisable until the Date of Expiration; unless such right of exercisability is terminated early pursuant to Sections 5 through 8 of this Award Agreement. Section 10. Acceleration of Vesting of Options in the Event of Divestiture of Business Segment If the “Business Segment” (as that term is defined in this Section) in which Participant is primarily employed as of the “Divestiture Date” (as that term is defined in this Section) is the subject of a “Divestiture of a Business Segment” (as that term is defined in this Section), and such divestiture results in the termination of Participant’s employment with the Company and its Affiliates for any reason, Participant shall immediately vest in any Options subject to this Award Agreement that have not previously vested and any such Options shall become immediately exercisable as of the Divestiture Date. In accordance with Section 8 above, any Options for which

 
NQSO US 1/2017 5 vesting is accelerated under this Section 10, and any Options that have vested prior to the Divestiture Date, shall remain exercisable for a period of three months from the Divestiture Date. For purposes of this Award Agreement, the term “Business Segment” shall mean a business line which the Company treats as a separate operating segment under the segment reporting rules under U.S. generally accepted accounting principles, which currently includes the following: Safety and Security Systems Group and Environmental Solutions Group. Likewise, the term “Divestiture Date” shall mean the date that a transaction constituting a Divestiture of a Business Segment is finally consummated. For purposes of this Award Agreement, the term “Divestiture of a Business Segment” means the following: A. When used with a reference to the sale of stock or other securities of a Business Segment that is or becomes a separate corporation, limited liability company, partnership or other separate business entity, the sale, exchange, transfer, distribution or other disposition of the ownership, either beneficially or of record or both, by the Company or one of its Affiliates to “Nonaffiliated Persons” (as that term is defined in this Section) of one hundred percent (100%) of either (i) the then-outstanding common stock (or the equivalent equity interests) of the Business Segment or (ii) the combined voting power of the then-outstanding voting securities of the Business Segment entitled to vote generally in the election of the board of directors or the equivalent governing body of the Business Segment; B. When used with reference to the merger or consolidation of a Business Segment that is or becomes a separate corporation, limited liability company, partnership or other separate business entity, any such transaction that results in Nonaffiliated Persons owning, either beneficially or of record or both, one hundred percent (100%) of either (i) the then-outstanding common stock (or the equivalent equity interests) of the Business Segment or (ii) the combined voting power of the then-outstanding voting securities of the Business Segment entitled to vote generally in the election of the board of directors or the equivalent governing body of the Business Segment; or C. When used with reference to the sale of the assets of the Business Segment, the sale, exchange, transfer, liquidation, distribution or other disposition of all or substantially all of the assets of the Business Segment necessary or required to operate the Business Segment in the manner that the Business Segment had been operated prior to the Divestiture Date. For purposes of this Award Agreement, the term “Nonaffiliated Persons” shall mean any persons or business entities which do not control, or which are not controlled by or under common control with, the Company. Section 11. Restrictions on Transfer Unless determined otherwise by the Committee pursuant to the terms of the Plan, these Options may not be sold, transferred, alienated, assigned, pledged, encumbered or otherwise hypothecated, other than by will or by the laws of descent and distribution. Further, these Options shall be exercisable during Participant’s lifetime only by Participant or Participant’s legal representative. Section 12. Adjustment in Certain Events If there is any change in the Stock by reason of stock dividends or other distribution (whether in the form of securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, combination, repurchase or exchange of Shares or other securities of the Company, or other similar corporate transaction or event, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, the Committee may, in its sole discretion, make such adjustments to these Options that it deems necessary or appropriate and as it may deem equitable in Participant’s rights. Section 13. Method of Exercise and Form of Payment Options that have become exercisable may be exercised by delivery of timely written notice to the Company at its executive offices, addressed to the attention of the Company’s Corporate Secretary. Such notice: (A) shall be signed by Participant or his or her legal representative; (B) shall specify the number of Options being exercised and thus the number of full Shares then elected to be purchased with respect to the Options; and (C) shall be accompanied by payment (or promise to pay, as applicable) in full of the Exercise Price of the Shares to be purchased (along with an amount equal to any federal, state, local, and non-U.S. income and employment taxes required to be withheld).

 
NQSO US 1/2017 6 The Exercise Price shall be payable: (a) in cash, check, cash equivalent and/or shares of Stock valued at the Fair Market Value at the time the Option is exercised (including, pursuant to procedures approved by the Committee, by means of attestation of ownership of a sufficient number of shares of Stock in lieu of actual delivery of such shares to the Company); or (b) by such other method as the Committee may permit in its sole discretion, including without limitation: (i) in other property having a fair market value on the date of exercise equal to the Exercise Price, (ii) if there is a public market for the shares of Stock at such time, by means of a broker-assisted “cashless exercise” pursuant to which the Company is delivered a copy of irrevocable instructions to a stockbroker to sell the Shares otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the Exercise Price, or (iii) by a “net exercise” method whereby the Company withholds from the delivery of the Shares for which the Option was exercised that number of Shares having a Fair Market Value equal to the aggregate Exercise Price for the Shares for which the Option was exercised. Any fractional Shares shall be settled in cash. The Company shall deliver to Participant evidence of book entry Shares, or upon Participant’s request, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option. The Company shall maintain a record of all information pertaining to Participant’s rights under this Award Agreement, including the number of Shares for which the Options are exercisable. If all of the Options granted pursuant to this Award Agreement have been exercised, this Award Agreement shall be null and void. Section 14. Beneficiary Designation Participant may designate a beneficiary or beneficiaries (contingently or successively) to receive any benefits that may be payable under this Award Agreement in the event of Participant’s death and, from time to time, may change his or her designated beneficiary (a “Beneficiary”). A Beneficiary may be a trust. A Beneficiary designation shall be made in writing in a form prescribed by the Company and delivered to the Company while Participant is alive. Section 15. Stockholder Rights Participant shall have no rights as a stockholder of the Company with respect to the Shares subject to this Award Agreement until such time as the Exercise Price has been paid, and the Shares have been issued and delivered to Participant. Section 16. Tax Withholding The Company shall have the power and the right to deduct or withhold, or require Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes (including Participant’s FICA obligation), domestic or foreign, required by law to be withheld with respect to any exercise of Participant’s rights under this Award Agreement. Further, the Company can withhold amounts for federal, state, local or foreign income or employment taxes in accordance with any tax withholding policy that may be adopted by the Company and is in effect from time to time with respect to equity awards under the Plan irrespective of whether the amounts to be withheld exceed the lowest tax withholding amount that could be determined for the grantee under another tax withholding method. Participant may elect, subject to any procedural rules adopted by the Committee, to satisfy the applicable withholding tax requirement, in whole or in part, by having the Company withhold Shares having an aggregate Fair Market Value on the date the tax is to be determined, equal to such applicable withholding tax requirement. Section 17. Section 409A This Award Agreement shall be construed consistent with the intention that it be exempt from Section 409A of the Code (together with any Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date hereof, “Section 409A”) as a stock right. However, notwithstanding any other provision of the Plan or this Award Agreement, if at any time the Committee determines that this Award (or any portion thereof) may be subject to Section 409A, the Committee shall have the right in its sole discretion (without any obligation to do so or to indemnify Participant or any other person for failure to do so) to adopt such amendments to the Plan or this Award Agreement, or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Committee determines are necessary or appropriate either for this Award to be exempt from the application of Section 409A or to comply with the requirements of Section 409A.

 
NQSO US 1/2017 7 Section 18. Continuation of Employment This Award Agreement shall not confer upon Participant any right to continuation of employment by the Company or its Affiliates, nor shall this Award Agreement interfere in any way with the Company’s or its Affiliates’ right to terminate Participant’s employment at any time. Section 19. Entire Award; Amendment This Award Agreement and the Plan constitute the entire agreement between the parties with respect to the terms and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto. The terms and conditions set forth in this Award Agreement may only be modified or amended in writing, signed by both parties. Section 20. Severability In the event any one or more of the provisions of this Award Agreement shall be held invalid, illegal or unenforceable in any respect in any jurisdiction, such provision or provisions shall be automatically deemed amended, but only to the extent necessary to render such provision or provisions valid, legal and enforceable in such jurisdiction, and the validity, legality and enforceability of the remaining provisions of this Award Agreement shall not in any way be affected or impaired thereby. Section 21. Miscellaneous A. This Award Agreement and the rights of Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. The Committee shall have the right to impose such restrictions on any Shares acquired pursuant to these Options, as it may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under applicable federal and state tax law, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, all of which shall be binding upon Participant. B. The Committee may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification of the Plan may materially and adversely affect Participant’s rights under this Award Agreement, without the written consent of Participant. C. Participant agrees to take all steps necessary to comply with all applicable provisions of federal and state securities and tax laws in exercising his or her rights under this Award Agreement. D. This Award Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. E. This Award (including any proceeds, gains or other economic benefit actually or constructively received by Participant upon any receipt or exercise of any Award or upon the receipt or resale of any Shares underlying the Award) shall be subject to the provisions of any clawback policy currently or subsequently implemented by the Company to the extent set forth in such policy. F. All obligations of the Company under the Plan and this Award Agreement, with respect to these Options, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. G. To the extent not preempted by federal law, this Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to principles of conflict of law.

 
NQSO US 1/2017 8 FEDERAL SIGNAL CORPORATION NONQUALIFIED STOCK OPTION AWARD BENEFICIARY DESIGNATION Participant: Social Security No.: Address: Date of Birth: Participant hereby designates the following individual(s) or entity(ies) as his or her beneficiary(ies) pursuant to the Federal Signal Corporation 2015 Executive Incentive Compensation Plan (Insert Name, Social Security Number, Relationship, Date of Birth and Address of Individuals and/or fully identify any trust beneficiary by the Name of the Trust, Date of Execution of the Trust, the Trustee’s Name, the address of the trust, and the employer identification number of the trust): Primary Beneficiary(ies) Contingent Beneficiary(ies) Participant hereby reserves the right to change this Beneficiary Designation, and any such change shall be effective when the Participant has executed a new or amended Beneficiary Designation form, and the receipt of such form has been acknowledged by the Company, all in such manner as specified by the Company from time to time, or on a future date specified by any such new or amended Beneficiary Designation form. IN WITNESS WHEREAS, the parties have executed this Beneficiary Designation on the date designated below. Date: , Signature of Participant Received: FEDERAL SIGNAL CORPORATION Date: , By:

 
EXHIBIT 10.5 _____ ___, 201_ Federal Signal Corporation 2015 Executive Incentive Compensation Plan Performance Share Unit Award Agreement You have been selected to receive this Performance Share Units (“PSUs”) award (“Award”) pursuant to the Federal Signal Corporation 2015 Executive Incentive Compensation Plan (the “Plan”), as specified below: Participant: Date of Grant: Number of PSUs Subject to this Award Agreement: Performance and Vesting Periods: January 1, 201_ through December 31, 20__ [3-year period] This Award is subject to the terms and conditions prescribed in the Plan and in the Federal Signal Corporation Performance Share Unit Award Agreement No. 2017 attached hereto and incorporated herein. Together, this Award and the attached award agreement shall be referred to throughout each as the “Award Agreement.” Calculations of performance versus target, threshold and maximum values set forth in Appendix A are made by the Committee in accordance with the terms of the Plan and are final and binding. IN WITNESS WHEREOF, the parties have caused this Award Agreement to be executed as of the Date of Grant. PARTICIPANT FEDERAL SIGNAL CORPORATION By: Print Name Chief Executive Officer Signature Address Participant agrees to execute this Award Agreement and return one copy to Mike Basili at Federal Signal Corporation, 1415 W. 22nd Street, Suite 1100, Oak Brook, IL 60523 within 45 days of the above date or forfeit the performance share unit award. Note: If there are any discrepancies in the name or address shown above, please make the appropriate corrections on this form.

 
Page 1 of 6 This document constitutes part of the prospectus covering securities that have been registered under the Securities Act of 1933, as amended. FEDERAL SIGNAL CORPORATION PERFORMANCE SHARE UNIT AWARD AGREEMENT NO. 2017 This Award Agreement, which includes the attached cover page and Appendix A, effective as of the Date of Grant, represents the grant of PSUs by the Company to Participant, pursuant to the provisions of the Plan. The Company established the Plan pursuant to which, among other things, options, stock appreciation rights, restricted stock and stock units, stock bonus awards, dividend equivalents and/or performance compensation awards may be granted to eligible persons. The Plan and this Award Agreement provide a complete description of the terms and conditions governing the PSUs. If there is any inconsistency between the terms of this Award Agreement and the terms of the Plan, the Plan’s terms shall completely supersede and replace the conflicting terms of this Award Agreement. All capitalized terms shall have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein. The Board of Directors and the Committee have determined that the interests of the Company will be advanced by encouraging and enabling certain of its employees to own shares of Stock, and that Participant is one of those employees. NOW, THEREFORE, in consideration of services rendered and the mutual covenants herein contained, the parties agree as follows: Section 1. Certain Definitions As used in this Award Agreement, the following terms shall have the following meanings: A. “Affiliate” means with respect to any Person, any other Person (other than an individual) that controls, is controlled by, or is under common control with such Person. The term “control,” as used in this Award Agreement, means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. “Controlled” and “controlling” have meanings correlative to the foregoing. B. “Award” means the award provided for in Section 2. C. “Board of Directors” means the board of directors of the Company. D. “Code” means the Internal Revenue Code of 1986, as amended. E. “Committee” means the Compensation and Benefits Committee of the Board of Directors or a subcommittee or other committee appointed to administer the Plan in accordance with the Plan. F. “Company” means Federal Signal Corporation, a Delaware corporation. G. “Date of Grant” means the date set forth on this Award Agreement. H. “Disability” shall have the meaning ascribed to that term in the Company’s long-term disability plan applicable to Participant, or if no such plan exists, at the discretion of the Committee and as determined by the Committee. I. “Participant” means the individual shown as the recipient of an award of PSUs, as set forth on this Award Agreement. J. “Performance Period” means the three consecutive calendar year period set forth in this Award Agreement. K. “Performance Share Units” or “PSUs” means the obligation of the Company to transfer the number of shares of Stock to Participant determined under Section 2, Section 4A (in the case of death or termination of employment by Disability), Section 4B (in the case of Change-in-Control),

 
PSU non-US 1/2017 Page 2 of 6 or Section 5 (in the case of Divestiture of a Business Segment) of this Award Agreement, as applicable, at the time provided in Section 6 of this Award Agreement, to the extent that the rights to such shares are vested at such time. L. “Person” means a “person” as such term is used for purposes of 13(d) or 14(d), or any successor section thereto, of the Securities Exchange Act of 1934, as amended, and any successor thereto. M. “Stock” means the common stock of the Company. N. “Vesting Period” means the three consecutive calendar year period set forth in this Award Agreement. Section 2. Award Subject to the terms of this Award Agreement, the Company awarded to Participant the number of PSUs set forth on this Award Agreement, effective as of the Date of Grant set forth on such instrument. This Award entitles Participant to receive a whole number of shares of Stock as set forth on this Award Agreement equal to a percentage, from zero percent (0%) to two hundred percent (200%), based on the Company’s performance against the performance goals set forth, and as calculated in, Appendix A. The number of shares of Stock determined based on the Company’s performance against the performance goals set forth in Appendix A (or, if applicable, the formula set forth in Section 4A (in the case of death or termination of employment by Disability), the formula set forth in Section 4B (in the case of a Change-in-Control), or Section 5 (in the case of Divestiture of a Business Segment)), shall be distributable as provided in Section 6 of this Award Agreement, but only to the extent the rights to such shares are vested under either Section 4 or Section 5 of this Award Agreement. This grant of PSUs shall not confer any right to Participant (or any other participant) to be granted PSUs or other awards in the future under the Plan. It is intended that this Award qualify as “performance-based compensation” under Section 162(m) of the Code. Notwithstanding anything to the contrary in this Award Agreement, the number of shares of Stock that may be earned under this Award Agreement cannot exceed the maximum number of shares of Stock provided for under the Plan. Section 3. Bookkeeping Account The Company shall record the number of PSUs subject to this Award Agreement to a bookkeeping account for Participant (the “Performance Share Unit Account”), subject to adjustment based on performance as set forth in Section 2 above. Participant’s Performance Share Unit Account shall be reduced by the number of PSUs, if any, forfeited in accordance with Section 4 and by the number of PSUs with respect to which shares of Stock were transferred to Participant in accordance with Section 6. Section 4. Vesting Subject to the accelerated vesting provisions provided below, the number of PSUs determined under Section 2 above shall vest on the last day of the Vesting Period, if Participant remains employed by the Company or its Affiliate through such date. For the avoidance of doubt, if the Company fails to achieve a performance goal at the threshold level, Participant shall be entitled to receive no shares of Stock subject to such performance goal, unless the deemed performance provisions in this Section specifically modify such result. If, during the Performance and Vesting Periods, while employed by the Company or its Affiliates: A. Participant dies or his or her employment terminates by reason of Disability, the number of vested PSUs subject to the Award shall be equal to the product of: (1) the number of full and partial months of Participant’s employment during the Performance Period divided by thirty-six (36) and (2) the greater of (a) one hundred percent (100%) of the PSUs subject to this Award Agreement, regardless of actual performance or (b) the number of PSUs that Participant would have been payable to Participant at the end of Performance Period based on actual Company performance during the entire Performance Period.

 
PSU non-US 1/2017 Page 3 of 6 B. A Change-in-Control occurs, the number of vested PSUs subject to this Award shall be the greater of (1) one hundred percent (100%) of the PSUs subject to this Award Agreement, regardless of actual performance or (2) the number of PSUs that would have been payable to Participant for the Performance Period based on the Company’s best estimate of projected Company performance through the end of the Performance Period, determined at the date of the Change-in-Control. In the event of a Change-in-Control following an event that would otherwise enable vesting at the end of the Performance and Vesting Periods under Section 4A, the provisions of this Section 4B shall control. For the avoidance of doubt, vesting under this Section 4B is not calculated on a pro-rata basis. C. Except as provided in Section 5 below, and in certain limited instances where the Committee may exercise its discretion in determining the vesting implications of PSUs, if Participant’s employment with the Company and its Affiliates terminates for any other reason before the end of the Performance and Vesting Periods, all PSUs that are not vested at the time of such termination of employment (after first taking into account the accelerated vesting provisions of this Section 4) shall be forfeited. In the event of termination of employment (whether or not in breach of local labor laws), the Company shall have the exclusive discretion to determine the date of termination of employment for purposes of this Award. Such termination date shall be the date that Participant is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law). Section 5. Acceleration of Vesting of Shares in the Event of Divestiture of Business Segment If the “Business Segment” (as that term is defined in this Section) in which Participant is primarily employed as of the “Divestiture Date” (as that term is defined in this Section) is the subject of a “Divestiture of a Business Segment” (as that term is defined in this Section) during the Performance and Vesting Periods, and such divestiture results in the termination of Participant’s employment with the Company and its Affiliates for any reason during the Performance Period, the number of vested PSUs subject to the Award shall be equal to the product of: (1) the number of full and partial months of Participant’s employment during the Performance Period before the Divestiture Date, divided by thirty-six (36) and (2) one hundred percent (100%) of the PSUs subject to this Award Agreement, regardless of actual performance. For purposes of this Award Agreement, the term “Business Segment” shall mean a business line which the Company treats as a separate operating segment under the segment reporting rules under U.S. generally accepted accounting principles, which currently includes the following: Safety and Security Systems Group and Environmental Solutions Group. Likewise, the term “Divestiture Date” shall mean the date that a transaction constituting a Divestiture of a Business Segment is finally consummated. For purposes of this Award Agreement, the term “Divestiture of a Business Segment” means the following: A. When used with a reference to the sale of stock or other securities of a Business Segment that is or becomes a separate corporation, limited liability company, partnership or other separate business entity, the sale, exchange, transfer, distribution or other disposition of the ownership, either beneficially or of record or both, by the Company or one of its Affiliates to “Nonaffiliated Persons” (as that term is defined in this Section) of one hundred percent (100%) of either (i) the then-outstanding common stock (or the equivalent equity interests) of the Business Segment or (ii) the combined voting power of the then-outstanding voting securities of the Business Segment entitled to vote generally in the election of the board of directors or the equivalent governing body of the Business Segment; B. When used with reference to the merger or consolidation of a Business Segment that is or becomes a separate corporation, limited liability company, partnership or other separate business entity, any such transaction that results in Nonaffiliated Persons owning, either beneficially or of record or both, one hundred percent (100%) of either (i) the then-outstanding common stock (or the equivalent equity interests) of the Business Segment or (ii) the combined voting power of the then-outstanding voting securities of the Business Segment entitled to vote generally in the election of the board of directors or the equivalent governing body of the Business Segment; or C. When used with reference to the sale of the assets of the Business Segment, the sale, exchange, transfer, liquidation, distribution or other disposition of all or substantially all of the assets of the Business Segment necessary or required to operate the Business Segment in the manner that the Business Segment had been operated prior to the Divestiture Date.

 
PSU non-US 1/2017 Page 4 of 6 For purposes of this Award Agreement, the term “Nonaffiliated Persons” shall mean any persons or business entities which do not control, or which are not controlled by or under common control with, the Company. Section 6. Distribution of Shares A. Except as specifically provided to the contrary in Section 6B, the number of shares of Stock payable with respect to PSUs, as determined under Section 2 above, that become vested under this Award shall become distributable as of the end of the Vesting Period and shall be paid not later than March 15, 2020; provided however, that if it is impracticable to pay such shares of Stock by such date (e.g., due to the unavailability of audited financial statements or a Form S-8 registration statement for the shares), then the Committee may delay payment until it becomes administratively practicable to do so later that same year. B. The number of shares of Stock payable with respect to PSUs, as determined under Section 2 above, that vest prior to the end of the Vesting Period under either Section 4B or Section 5 of this Award Agreement shall become distributable on an accelerated basis as follows: (1) If a Change-in-Control occurs at any time before the end of the Vesting Period, then the number of earned shares of Stock with respect to PSUs that become vested under Section 4B of this Award Agreement shall become distributable on the date of the Change-in-Control. (2) If a Divestiture of a Business Segment occurs at any time before the end of the Vesting Period, and such divestiture results in the termination of Participant’s employment with the Company and its Affiliates for any reason, then the number of earned shares of Stock with respect to PSUs that become vested under this Award Agreement shall become distributable on the Divestiture Date, but only if that payment on that date is permissible under Section 409A of the Code. Section 7. Stockholder Rights Participant shall not have any of the rights of a stockholder of the Company with respect to PSUs until shares of Stock are issued to Participant. No dividend equivalent rights are provided under this Award Agreement. Section 8. Beneficiary Designation Participant may designate a beneficiary or beneficiaries (contingently or successively) to receive any benefits that may be payable under this Award Agreement in the event of Participant’s death and, from time to time, may change his or her designated beneficiary (a “Beneficiary”). A Beneficiary may be a trust. A Beneficiary designation shall be made in writing in a form prescribed by the Company and delivered to the Company while Participant is alive. In lieu of payment to Participant, a Beneficiary shall be paid shares of Stock under Section 6 at the same time and in the same form as Participant would have been paid but for Participant’s death. Section 9. Restrictions on Transfer PSUs awarded hereunder shall not be transferable by Participant. Except as may be required by the federal income tax withholding provisions of the Code or by the tax laws of any state or foreign sovereign, the interests of Participant and his or her Beneficiary(ies) under this Award Agreement are not subject to the claims of their respective creditors and may not be voluntarily or involuntarily sold, assigned, transferred, alienated, pledged, attached, encumbered or charged. Any attempt by Participant or a Beneficiary to sell, assign, transfer, alienate, pledge, attach, encumber, charge or otherwise dispose of any right to benefits payable hereunder shall be void. Section 10. Adjustment in Certain Events If there is any change in the Stock by reason of stock dividends or other distribution (whether in the form of securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, combination, repurchase or exchange of Stock or other securities of the Company, or other similar corporate transaction or event, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, the Committee may, in its sole discretion, make such adjustments to the number of PSUs credited to Participant’s Performance Share Unit Account that it deems necessary or appropriate and as it may deem equitable in Participant’s rights. Section 11. Tax Withholding Regardless of any action the Company, any of its Affiliates and/or Participant's employer takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to

 
PSU non-US 1/2017 Page 5 of 6 Participant’s participation in the Plan and legally applicable to Participant (“Tax-Related Items”), Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains Participant’s responsibility and may exceed the amount actually withheld by the Company or any of its affiliates. Participant further acknowledges that the Company and/or its Affiliates: (i) make no representations or undertakings regarding the treatment of any Tax- Related Items in connection with any aspect of the Performance Share Units, including, but not limited to, the grant, vesting or exercise of the Performance Share Units, the delivery of shares of Stock, the subsequent sale of shares acquired pursuant to such delivery and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of any award to reduce or eliminate Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if Participant becomes subject to tax in more than one jurisdiction between the Date of Grant and the date of any relevant taxable event, Participant acknowledges that the Company and/or its Affiliates may be required to withhold or account for Tax-Related Items in more than one jurisdiction. Prior to any relevant taxable or tax withholding event, as applicable, Participant will pay or make adequate arrangements satisfactory to the Company and/or its Affiliates to satisfy all Tax-Related Items. In this regard, Participant authorizes the Company and/or its Affiliates, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following: A. withholding from Participant’s wages or other cash compensation paid to Participant by the Company and/or its Affiliates; or B. withholding in shares of Stock to be delivered upon distribution of the Performance Share Units. The Company and/or its Affiliates may withhold or account for Tax-Related Items by considering applicable statutory withholding amounts or other applicable withholding rates. If the obligation for Tax-Related Items is satisfied by withholding in shares of Stock, for tax purposes, Participant is deemed to have been issued the full number of shares attributable to the Performance Share Units, notwithstanding that a number of shares of Stock are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of Participant’s participation in the Plan. Finally, Participant shall pay to the Company and/or its Affiliates any amount of Tax-Related Items that the Company and/or its Affiliates may be required to withhold or account for as a result of Participant’s participation in the Plan that are not satisfied by the means previously described. The Company may refuse to issue or deliver the Shares if Participant fails to comply with Participant’s obligations in connection with the Tax-Related Items. Section 12. Section 409A This Award Agreement shall be construed consistent with the intention that it be exempt from Section 409A of the Code (together with any Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date hereof, “Section 409A”). However, notwithstanding any other provision of the Plan or this Award Agreement, if at any time the Committee determines that this Award (or any portion thereof) may be subject to Section 409A, the Committee shall have the right in its sole discretion (without any obligation to do so or to indemnify Participant or any other person for failure to do so) to adopt such amendments to the Plan or this Award Agreement, or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Committee determines are necessary or appropriate either for this Award to be exempt from the application of Section 409A or to comply with the requirements of Section 409A. Section 13. Source of Payment Shares of Stock transferable to Participant, or Participant’s Beneficiary, under this Award Agreement may be either Treasury shares, authorized but unissued shares, or any combination of such stock. The Company shall have no duties to segregate or set aside any assets to secure Participant’s right to receive shares of Stock under this Award Agreement. Participant shall not have any rights with respect to transfer of shares of Stock under this Award Agreement other than the unsecured right to receive shares of Stock from the Company. Section 14. Continuation of Employment This Award Agreement shall not confer upon Participant any right to continuation of employment by the Company or its Affiliates, nor shall this Award Agreement interfere in any way with the Company’s or its Affiliates’ right to terminate t Participant’s employment at any time.

 
PSU non-US 1/2017 Page 6 of 6 Section 15. English Language Participant acknowledges and agrees that it is Participant’s express intent that this Award Agreement, the Plan and all other documents, rules, procedures, forms, notices and legal proceedings entered into, given or instituted pursuant to the Award, be drawn up in English. If Participant has received this Award Agreement, the Plan or any other rules, procedures, forms or documents related to the Award translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version will control. Section 16. Entire Award; Amendment This Award Agreement and the Plan constitute the entire agreement between the parties with respect to the terms and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto. The terms and conditions set forth in this Award Agreement may only be modified or amended in writing, signed by both parties. Section 17. Severability In the event any one or more of the provisions of this Award Agreement shall be held invalid, illegal or unenforceable in any respect in any jurisdiction, such provision or provisions shall be automatically deemed amended, but only to the extent necessary to render such provision or provisions valid, legal and enforceable in such jurisdiction, and the validity, legality and enforceability of the remaining provisions of this Award Agreement shall not in any way be affected or impaired thereby. Section 18. Miscellaneous A. This Award Agreement and the rights of Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. The Committee shall have the right to impose such restrictions on any Stock acquired pursuant to this Award Agreement, as it may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under applicable federal and state tax law, under the requirements of any stock exchange or market upon which such Stock is then listed and/or traded, and under any blue sky or state securities laws applicable to such Stock. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, all of which shall be binding upon Participant. B. The Committee may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification of the Plan may materially and adversely affect Participant’s vested rights under this Award Agreement, without the written consent of Participant. C. Participant agrees to take all steps necessary to comply with all applicable provisions of federal and state securities and tax laws in exercising his or her rights under this Award Agreement. D. This Award Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. E. This Award (including any proceeds, gains or other economic benefit actually or constructively received by Participant upon any receipt or exercise of any Award or upon the receipt or resale of any Stock underlying the Award) shall be subject to the provisions of any clawback policy currently or subsequently implemented by the Company to the extent set forth in such policy. F. All obligations of the Company under the Plan and this Award Agreement, with respect to these PSUs, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. G. To the extent not preempted by federal law, this Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to principles of conflict of law.

 
FEDERAL SIGNAL CORPORATION PERFORMANCE SHARE UNIT BENEFICIARY DESIGNATION Participant: Social Security No.: Address: Date of Birth: Participant hereby designates the following individual(s) or entity(ies) as his or her beneficiary(ies) pursuant to the Federal Signal Corporation 2015 Executive Incentive Compensation Plan (Insert Name, Social Security Number, Relationship, Date of Birth and Address of Individuals and/or fully identify any trust beneficiary by the Name of the Trust, Date of Execution of the Trust, the Trustee’s Name, the address of the trust, and the employer identification number of the trust): Primary Beneficiary(ies) Contingent Beneficiary(ies) Participant hereby reserves the right to change this Beneficiary Designation, and any such change shall be effective when the Participant has executed a new or amended Beneficiary Designation form, and the receipt of such form has been acknowledged by the Company, all in such manner as specified by the Company from time to time, or on a future date specified by any such new or amended Beneficiary Designation form. IN WITNESS WHEREOF, the parties have executed this Beneficiary Designation on the date designated below. Date: _________________, ____ Signature of Participant Received: FEDERAL SIGNAL CORPORATION Date: _________________, ____ By:

 
PSU US 1/2017 EXHIBIT 10.6 _____ ___, 20__ Federal Signal Corporation 2015 Executive Incentive Compensation Plan Performance Share Unit Award Agreement You have been selected to receive this Performance Share Units (“PSUs”) award (“Award”) pursuant to the Federal Signal Corporation 2015 Executive Incentive Compensation Plan (the “Plan”), as specified below: Participant: Date of Grant: Number of PSUs Subject to this Award Agreement: Performance and Vesting Periods: January 1, 201_ through December 31, 20__ [3-year period] This Award is subject to the terms and conditions prescribed in the Plan and in the Federal Signal Corporation Performance Share Unit Award Agreement No. 2017 attached hereto and incorporated herein. Together, this Award and the attached award agreement shall be referred to throughout each as the “Award Agreement.” Calculations of performance versus target, threshold and maximum values set forth in Appendix A are made by the Committee in accordance with the terms of the Plan and are final and binding. IN WITNESS WHEREOF, the parties have caused this Award Agreement to be executed as of the Date of Grant. PARTICIPANT FEDERAL SIGNAL CORPORATION By: Print Name Chief Executive Officer Signature Address Participant agrees to execute this Award Agreement and return one copy to Mike Basili at Federal Signal Corporation, 1415 W. 22nd Street, Suite 1100, Oak Brook, IL 60523 within 45 days of the above date or forfeit the performance share unit award. Note: If there are any discrepancies in the name or address shown above, please make the appropriate corrections on this form.

 
PSU US 1/2017 Page 1 of 6 This document constitutes part of the prospectus covering securities that have been registered under the Securities Act of 1933, as amended. FEDERAL SIGNAL CORPORATION PERFORMANCE SHARE UNIT AWARD AGREEMENT NO. 2017 This Award Agreement, which includes the attached cover page and Appendix A, effective as of the Date of Grant, represents the grant of PSUs by the Company to Participant, pursuant to the provisions of the Plan. The Company established the Plan pursuant to which, among other things, options, stock appreciation rights, restricted stock and stock units, stock bonus awards, dividend equivalents and/or performance compensation awards may be granted to eligible persons. The Plan and this Award Agreement provide a complete description of the terms and conditions governing the PSUs. If there is any inconsistency between the terms of this Award Agreement and the terms of the Plan, the Plan’s terms shall completely supersede and replace the conflicting terms of this Award Agreement. All capitalized terms shall have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein. The Board of Directors and the Committee have determined that the interests of the Company will be advanced by encouraging and enabling certain of its employees to own shares of Stock, and that Participant is one of those employees. NOW, THEREFORE, in consideration of services rendered and the mutual covenants herein contained, the parties agree as follows: Section 1. Certain Definitions As used in this Award Agreement, the following terms shall have the following meanings: A. “Affiliate” means with respect to any Person, any other Person (other than an individual) that controls, is controlled by, or is under common control with such Person. The term “control,” as used in this Award Agreement, means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. “Controlled” and “controlling” have meanings correlative to the foregoing. B. “Award” means the award provided for in Section 2. C. “Board of Directors” means the board of directors of the Company. D. “Code” means the Internal Revenue Code of 1986, as amended. E. “Committee” means the Compensation and Benefits Committee of the Board of Directors or a subcommittee or other committee appointed to administer the Plan in accordance with the Plan. F. “Company” means Federal Signal Corporation, a Delaware corporation. G. “Date of Grant” means the date set forth on this Award Agreement. H. “Disability” shall have the meaning ascribed to that term in the Company’s long-term disability plan applicable to Participant, or if no such plan exists, at the discretion of the Committee and as determined by the Committee. I. “Participant” means the individual shown as the recipient of an award of PSUs, as set forth on this Award Agreement. J. “Performance Period” means the three consecutive calendar year period set forth in this Award Agreement. K. “Performance Share Units” or “PSUs” means the obligation of the Company to transfer the number of shares of Stock to Participant determined under Section 2, Section 4A (in the case of death or termination of employment by Disability), Section 4B (in the case of Change-in-Control), or Section 5 (in the case of Divestiture of a Business Segment) of this Award Agreement, as

 
PSU US 1/2017 Page 2 of 6 applicable, at the time provided in Section 6 of this Award Agreement, to the extent that the rights to such shares are vested at such time. L. “Person” means a “person” as such term is used for purposes of 13(d) or 14(d), or any successor section thereto, of the Securities Exchange Act of 1934, as amended, and any successor thereto. M. “Stock” means the common stock of the Company. N. “Vesting Period” means the three consecutive calendar year period set forth in this Award Agreement. O. “Fair Market Value” shall have the meaning set forth in the Plan Section 2. Award Subject to the terms of this Award Agreement, the Company awarded to Participant the number of PSUs set forth on this Award Agreement, effective as of the Date of Grant set forth on such instrument. This Award entitles Participant to receive a whole number of shares of Stock as set forth on this Award Agreement equal to a percentage, from zero percent (0%) to two hundred percent (200%), based on the Company’s performance against the performance goals set forth, and as calculated in, Appendix A. The number of shares of Stock determined based on the Company’s performance against the performance goals set forth in Appendix A (or, if applicable, the formula set forth in Section 4A (in the case of death or termination of employment by Disability), the formula set forth in Section 4B (in the case of a Change-in-Control), or Section 5 (in the case of Divestiture of a Business Segment)), shall be distributable as provided in Section 6 of this Award Agreement, but only to the extent the rights to such shares are vested under either Section 4 or Section 5 of this Award Agreement. This grant of PSUs shall not confer any right to Participant (or any other participant) to be granted PSUs or other awards in the future under the Plan. It is intended that this Award qualify as “performance-based compensation” under Section 162(m) of the Code. Notwithstanding anything to the contrary in this Award Agreement, the number of shares of Stock that may be earned under this Award Agreement cannot exceed the maximum number of shares of Stock provided for under the Plan. Section 3. Bookkeeping Account The Company shall record the number of PSUs subject to this Award Agreement to a bookkeeping account for Participant (the “Performance Share Unit Account”), subject to adjustment based on performance as set forth in Section 2 above. Participant’s Performance Share Unit Account shall be reduced by the number of PSUs, if any, forfeited in accordance with Section 4 and by the number of PSUs with respect to which shares of Stock were transferred to Participant in accordance with Section 6. Section 4. Vesting Subject to the accelerated vesting provisions provided below, the number of PSUs determined under Section 2 above shall vest on the last day of the Vesting Period, if Participant remains employed by the Company or its Affiliate through such date. For the avoidance of doubt, if the Company fails to achieve a performance goal at the threshold level, Participant shall be entitled to receive no shares of Stock subject to such performance goal, unless the deemed performance provisions in this Section specifically modify such result. If, during the Performance and Vesting Periods, while employed by the Company or its Affiliates: A. Participant dies or his or her employment terminates by reason of Disability, the number of vested PSUs subject to the Award shall be equal to the product of: (1) the number of full and partial months of Participant’s employment during the Performance Period divided by thirty-six (36) and (2) the greater of (a) one hundred percent (100%) of the PSUs subject to this Award Agreement, regardless of actual performance or (b) the number of PSUs that Participant would have been payable to Participant at the end of Performance Period based on actual Company performance during the entire Performance Period.

 
PSU US 1/2017 Page 3 of 6 B. A Change-in-Control occurs, the number of vested PSUs subject to this Award shall be the greater of (1) one hundred percent (100%) of the PSUs subject to this Award Agreement, regardless of actual performance or (2) the number of PSUs that would have been payable to Participant for the Performance Period based on the Company’s best estimate of projected Company performance through the end of the Performance Period, determined at the date of the Change-in-Control. In the event of a Change-in-Control following an event that would otherwise enable vesting at the end of the Performance and Vesting Periods under Section 4A, the provisions of this Section 4B shall control. For the avoidance of doubt, vesting under this Section 4B is not calculated on a pro-rata basis. C. Except as provided in Section 5 below, and in certain limited instances where the Committee may exercise its discretion in determining the vesting implications of PSUs, if Participant’s employment with the Company and its Affiliates terminates for any other reason before the end of the Performance and Vesting Periods, all PSUs that are not vested at the time of such termination of employment (after first taking into account the accelerated vesting provisions of this Section 4) shall be forfeited. Section 5. Acceleration of Vesting of Shares in the Event of Divestiture of Business Segment If the “Business Segment” (as that term is defined in this Section) in which Participant is primarily employed as of the “Divestiture Date” (as that term is defined in this Section) is the subject of a “Divestiture of a Business Segment” (as that term is defined in this Section) during the Performance and Vesting Periods, and such divestiture results in the termination of Participant’s employment with the Company and its Affiliates for any reason during the Performance Period, the number of vested PSUs subject to the Award shall be equal to the product of: (1) the number of full and partial months of Participant’s employment during the Performance Period before the Divestiture Date, divided by thirty-six (36) and (2) one hundred percent (100%) of the PSUs subject to this Award Agreement, regardless of actual performance. For purposes of this Award Agreement, the term “Business Segment” shall mean a business line which the Company treats as a separate operating segment under the segment reporting rules under U.S. generally accepted accounting principles, which currently includes the following: Safety and Security Systems Group and Environmental Solutions Group. Likewise, the term “Divestiture Date” shall mean the date that a transaction constituting a Divestiture of a Business Segment is finally consummated. For purposes of this Award Agreement, the term “Divestiture of a Business Segment” means the following: A. When used with a reference to the sale of stock or other securities of a Business Segment that is or becomes a separate corporation, limited liability company, partnership or other separate business entity, the sale, exchange, transfer, distribution or other disposition of the ownership, either beneficially or of record or both, by the Company or one of its Affiliates to “Nonaffiliated Persons” (as that term is defined in this Section) of one hundred percent (100%) of either (i) the then-outstanding common stock (or the equivalent equity interests) of the Business Segment or (ii) the combined voting power of the then-outstanding voting securities of the Business Segment entitled to vote generally in the election of the board of directors or the equivalent governing body of the Business Segment; B. When used with reference to the merger or consolidation of a Business Segment that is or becomes a separate corporation, limited liability company, partnership or other separate business entity, any such transaction that results in Nonaffiliated Persons owning, either beneficially or of record or both, one hundred percent (100%) of either (i) the then-outstanding common stock (or the equivalent equity interests) of the Business Segment or (ii) the combined voting power of the then-outstanding voting securities of the Business Segment entitled to vote generally in the election of the board of directors or the equivalent governing body of the Business Segment; or C. When used with reference to the sale of the assets of the Business Segment, the sale, exchange, transfer, liquidation, distribution or other disposition of all or substantially all of the assets of the Business Segment necessary or required to operate the Business Segment in the manner that the Business Segment had been operated prior to the Divestiture Date. For purposes of this Award Agreement, the term “Nonaffiliated Persons” shall mean any persons or business entities which do not control, or which are not controlled by or under common control with, the Company.

 
PSU US 1/2017 Page 4 of 6 Section 6. Distribution of Shares A. Except as specifically provided to the contrary in Section 6B, the number of shares of Stock payable with respect to PSUs, as determined under Section 2 above, that become vested under this Award shall become distributable as of the end of the Vesting Period and shall be paid not later than March 15, 2020 provided however, that if it is impracticable to pay such shares of Stock by such date (e.g., due to the unavailability of audited financial statements or a Form S-8 registration statement for the shares), then the Committee may delay payment until it becomes administratively practicable to do so later that same year. B. The number of shares of Stock payable with respect to PSUs, as determined under Section 2 above, that vest prior to the end of the Vesting Period under either Section 4B or Section 5 of this Award Agreement shall become distributable on an accelerated basis as follows: (1) If a Change-in-Control occurs at any time before the end of the Vesting Period, then the number of earned shares of Stock with respect to PSUs that become vested under Section 4B of this Award Agreement shall become distributable on the date of the Change-in-Control. (2) If a Divestiture of a Business Segment occurs at any time before the end of the Vesting Period, and such divestiture results in the termination of Participant’s employment with the Company and its Affiliates for any reason, then the number of earned shares of Stock with respect to PSUs that become vested under this Award Agreement shall become distributable on the Divestiture Date, but only if that payment on that date is permissible under Section 409A of the Code. Section 7. Stockholder Rights Participant shall not have any of the rights of a stockholder of the Company with respect to PSUs until shares of Stock are issued to Participant. No dividend equivalent rights are provided under this Award Agreement. Section 8. Beneficiary Designation Participant may designate a beneficiary or beneficiaries (contingently or successively) to receive any benefits that may be payable under this Award Agreement in the event of Participant’s death and, from time to time, may change his or her designated beneficiary (a “Beneficiary”). A Beneficiary may be a trust. A Beneficiary designation shall be made in writing in a form prescribed by the Company and delivered to the Company while Participant is alive. In lieu of payment to Participant, a Beneficiary shall be paid shares of Stock under Section 6 at the same time and in the same form as Participant would have been paid but for Participant’s death. Section 9. Restrictions on Transfer PSUs awarded hereunder shall not be transferable by Participant. Except as may be required by the federal income tax withholding provisions of the Code or by the tax laws of any State, the interests of Participant and his or her Beneficiary(ies) under this Award Agreement are not subject to the claims of their respective creditors and may not be voluntarily or involuntarily sold, assigned, transferred, alienated, pledged, attached, encumbered or charged. Any attempt by Participant or a Beneficiary to sell, assign, transfer, alienate, pledge, attach, encumber, charge or otherwise dispose of any right to benefits payable hereunder shall be void. Section 10. Adjustment in Certain Events If there is any change in the Stock by reason of stock dividends or other distribution (whether in the form of securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, combination, repurchase or exchange of Stock or other securities of the Company, or other similar corporate transaction or event, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, the Committee may, in its sole discretion, make such adjustments to the number of PSUs credited to Participant’s Performance Share Unit Account that it deems necessary or appropriate and as it may deem equitable in Participant’s rights. Section 11. Tax Withholding The Company shall not be obligated to transfer any shares of Stock until Participant pays to the Company or any of its Affiliates in cash, or any other form of property, including Stock, acceptable to the Company, the amount required to be withheld from the wages or other amounts owing to Participant with respect to such shares. Further, the Company can withhold amounts for federal, state, local or foreign income or employment taxes in accordance with any tax withholding policy that may be adopted by the Company and is in effect from time to time

 
PSU US 1/2017 Page 5 of 6 with respect to equity awards under the Plan irrespective of whether the amounts to be withheld exceed the lowest tax withholding amount that could be determined for the grantee under another tax withholding method. Participant may elect, subject to procedural rules adopted by the Committee, to satisfy the applicable withholding tax requirement, in whole or in part, by having the Company reduce the number of shares of Stock otherwise transferable under this Award Agreement having an aggregate Fair Market Value on the date the tax is to be determined, equal to such applicable withholding tax requirement. Section 12. Section 409A This Award Agreement shall be construed consistent with the intention that it be exempt from Section 409A of the Code (together with any Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date hereof, “Section 409A”). However, notwithstanding any other provision of the Plan or this Award Agreement, if at any time the Committee determines that this Award (or any portion thereof) may be subject to Section 409A, the Committee shall have the right in its sole discretion (without any obligation to do so or to indemnify Participant or any other person for failure to do so) to adopt such amendments to the Plan or this Award Agreement, or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Committee determines are necessary or appropriate either for this Award to be exempt from the application of Section 409A or to comply with the requirements of Section 409A. Section 13. Source of Payment Shares of Stock transferable to Participant, or Participant’s Beneficiary, under this Award Agreement may be either Treasury shares, authorized but unissued shares, or any combination of such stock. The Company shall have no duties to segregate or set aside any assets to secure Participant’s right to receive shares of Stock under this Award Agreement. Participant shall not have any rights with respect to transfer of shares of Stock under this Award Agreement other than the unsecured right to receive shares of Stock from the Company. Section 14. Continuation of Employment This Award Agreement shall not confer upon Participant any right to continuation of employment by the Company or its Affiliates, nor shall this Award Agreement interfere in any way with the Company’s or its Affiliates’ right to terminate Participant’s employment at any time. Section 16. Entire Award; Amendment This Award Agreement and the Plan constitute the entire agreement between the parties with respect to the terms and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto. The terms and conditions set forth in this Award Agreement may only be modified or amended in writing, signed by both parties. Section 17. Severability In the event any one or more of the provisions of this Award Agreement shall be held invalid, illegal or unenforceable in any respect in any jurisdiction, such provision or provisions shall be automatically deemed amended, but only to the extent necessary to render such provision or provisions valid, legal and enforceable in such jurisdiction, and the validity, legality and enforceability of the remaining provisions of this Award Agreement shall not in any way be affected or impaired thereby. Section 18. Miscellaneous A. This Award Agreement and the rights of Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. The Committee shall have the right to impose such restrictions on any Stock acquired pursuant to this Award Agreement, as it may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under applicable federal and state tax law, under the requirements of any stock exchange or market upon which such Stock is then listed and/or traded, and under any blue sky or state securities laws applicable to such Stock. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, all of which shall be binding upon Participant.

 
PSU US 1/2017 Page 6 of 6 B. The Committee may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification of the Plan may materially and adversely affect Participant’s rights under this Award Agreement, without the written consent of Participant. C. Participant agrees to take all steps necessary to comply with all applicable provisions of federal and state securities and tax laws in exercising his or her rights under this Award Agreement. D. This Award Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. E. This Award (including any proceeds, gains or other economic benefit actually or constructively received by Participant upon any receipt or exercise of any Award or upon the receipt or resale of any Stock underlying the Award) shall be subject to the provisions of any clawback policy currently or subsequently implemented by the Company to the extent set forth in such policy. F. All obligations of the Company under the Plan and this Award Agreement, with respect to these PSUs, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. G. To the extent not preempted by federal law, this Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to principles of conflict of law.

 
PSU US 1/2017 FEDERAL SIGNAL CORPORATION PERFORMANCE SHARE UNIT BENEFICIARY DESIGNATION Participant: Social Security No.: Address: Date of Birth: Participant hereby designates the following individual(s) or entity(ies) as his or her beneficiary(ies) pursuant to the Federal Signal Corporation 2015 Executive Incentive Compensation Plan (Insert Name, Social Security Number, Relationship, Date of Birth and Address of Individuals and/or fully identify any trust beneficiary by the Name of the Trust, Date of Execution of the Trust, the Trustee’s Name, the address of the trust, and the employer identification number of the trust): Primary Beneficiary(ies) Contingent Beneficiary(ies) Participant hereby reserves the right to change this Beneficiary Designation, and any such change shall be effective when Participant has executed a new or amended Beneficiary Designation form, and the receipt of such form has been acknowledged by the Company, all in such manner as specified by the Company from time to time, or on a future date specified by any such new or amended Beneficiary Designation form. IN WITNESS WHEREOF, the parties have executed this Beneficiary Designation on the date designated below. Date: _________________, ____ Signature of Participant Received: FEDERAL SIGNAL CORPORATION Date: _________________, ____ By:

 
RSA US 1/2017 EXHIBIT 10.7 ______ ___, 201__ Federal Signal Corporation 2015 Executive Incentive Compensation Plan Restricted Stock Award Agreement You have been selected to receive this grant of Restricted Stock (“Award”) pursuant to the Federal Signal Corporation 2015 Executive Incentive Compensation Plan (the “Plan”), as specified below: Participant: Date of Grant: Number of Shares of Restricted Stock Granted: Lapse of Restriction Date: Restrictions placed on the shares of Restricted Stock shall lapse on the date and in the amount listed below: ___ on _____ ___, 20__ [3-year cliff vesting] This Award is subject to the terms and conditions prescribed in the Plan and in the Federal Signal Corporation Restricted Stock Unit Award Agreement No. 2017 attached hereto and incorporated herein. Together, this Award and the attached award agreement shall be referred to throughout each as the “Award Agreement.” IN WITNESS WHEREOF, the parties have caused this Award Agreement to be executed as of the Date of Grant. PARTICIPANT FEDERAL SIGNAL CORPORATION By: Print Name Chief Executive Officer Signature Address Participant agrees to execute this Award Agreement and return one copy to Mike Basili at Federal Signal Corporation, 1415 W. 22nd Street, Suite 1100, Oak Brook, IL 60523 within 45 days of the above date or forfeit the restricted stock award. Note: If there are any discrepancies in the name or address shown above, please make the appropriate corrections on this form.

 
This document constitutes part of the prospectus covering securities that have been registered under the Securities Act of 1933, as amended. FEDERAL SIGNAL CORPORATION RESTRICTED STOCK AWARD AGREEMENT NO. 2017 This Award Agreement, which includes the attached cover page, effective as of the Date of Grant, represents the grant of shares of restricted stock (the “Restricted Stock”) by the Company to the Participant named in this Award Agreement, pursuant to the provisions of the Plan. The Company established the Plan pursuant to which, among other things, options, stock appreciation rights, restricted stock and stock units, stock bonus awards, dividend equivalents and/or performance compensation awards may be granted to eligible persons. The Plan and this Award Agreement provide a complete description of the terms and conditions governing the Restricted Stock. If there is any inconsistency between the terms of this Award Agreement and the terms of the Plan, the Plan’s terms shall completely supersede and replace the conflicting terms of this Award Agreement. All capitalized terms shall have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein. The Board of Directors and the Committee have determined that the interests of the Company will be advanced by encouraging and enabling certain of its employees to own shares of the Stock, and that Participant is one of those employees. NOW, THEREFORE, in consideration of services rendered and the mutual covenants herein contained, the parties agree as follows: Section 1. Certain Definitions As used in this Award Agreement, the following terms shall have the following meanings: A. “Affiliate” means with respect to any Person, any other Person (other than an individual) that controls, is controlled by, or is under common control with such Person. The term “control,” as used in this Award Agreement, means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. “Controlled” and “controlling” have meanings correlative to the foregoing. B. “Board of Directors” means the board of directors of the Company. C. “Code” means the Internal Revenue Code of 1986, as amended. D. “Committee” means the Compensation and Benefits Committee of the Board of Directors or a subcommittee or other committee appointed to administer the Plan in accordance with the Plan. E. “Company” means Federal Signal Corporation, a Delaware corporation. F. “Date of Grant” means the date set forth on this Award Agreement. G. “Disability” shall have the meaning ascribed to that term in the Company’s long-term disability plan applicable to Participant, or if no such plan exists, at the discretion of the Committee and as determined by the Committee. H. “Lapse of Restriction Date” means the date set forth on this Award Agreement. I. “Participant” means the individual shown as the recipient of an award of Restricted Stock, as set forth on this Award Agreement. J. “Person” means a “person” as such term is used for purposes of 13(d) or 14(d), or any successor section thereto, of the Securities Exchange Act of 1934, as amended, and any successor thereto. K. “Stock” means the common stock of the Company. L. “Fair Market Value” shall have the meaning set forth in the Plan.

 
Section 2. Employment with the Company Except as may otherwise be provided in Sections 6A, 6B, 7 or 8, the Restricted Stock granted hereunder is granted on the condition that Participant remains an Employee of the Company from the Date of Grant through (and including) the Lapse of Restriction Date set forth in this Award Agreement (the “Period of Restriction”). This grant of Restricted Stock shall not confer any right to Participant (or any other participant) to be granted Restricted Stock or other awards in the future under the Plan. Section 3. Issuance of Restricted Stock; Certificate Legend Evidence of the issuance of the Restricted Stock pursuant to this Award Agreement may be accomplished in such manner as the Company or its authorized representatives shall deem appropriate, including, without limitation, electronic registration, book entry registration or issuance of a stock certificate or stock certificates in the name of Participant. In the event the Restricted Stock is issued in book-entry form, the depository and the Company's transfer agent shall be provided with appropriate notice referring to the terms, conditions and restrictions applicable to the Restricted Stock, together with such stop-transfer instructions as the Company deems appropriate. The Company may retain, at its option, the physical custody of any stock certificate representing any Restricted Stock, or require that such certificates be placed in escrow or trust, until all restrictions applicable thereto are removed or lapse. Participant shall promptly surrender to the Company for cancellation any stock certificate representing Restricted Stock that has been forfeited. Any stock certificates representing the Restricted Stock, when issued, shall bear appropriate legends with respect to the restrictions on transferability contained in the Plan and this Award Agreement and shall also bear appropriate legends required under the Securities Act of 1933, as amended. Section 4. Removal of Restrictions Except as may otherwise be provided herein and in the Plan, the shares of Restricted Stock granted pursuant to this Award Agreement shall become freely transferable by Participant on the date and in the amount set forth under the Lapse of Restriction Date set forth in this Award Agreement, subject to applicable federal and state securities laws. Once shares of Restricted Stock are no longer subject to any restrictions, Participant shall be entitled to have the legend or book entry registration required by Section 3 of this Award Agreement removed from the applicable stock certificates. Section 5. Voting Rights and Dividends During the Period of Restriction, Participant may exercise full voting rights and shall accrue all dividends and other distributions paid with respect to the shares of Restricted Stock while they are held. If any such dividends or distributions are paid in shares, such shares shall be subject to the same restrictions on transferability as are the shares of Restricted Stock with respect to which they were paid. Section 6. Termination of Employment A. If Participant dies or his or her employment is terminated by reason of Disability during the Period of Restriction, the Period of Restriction and the restrictions imposed on the shares of Restricted Stock held by Participant at the time of Participant’s death or Disability shall immediately lapse with all such Restricted Stock vesting and becoming freely transferable by Participant or his or her estate, subject to applicable federal and state securities laws. B. If Participant’s employment is terminated by reason of Participant’s retirement during the Period of Restriction on terms and conditions authorized in writing by the Committee, the Committee may exercise its discretion at or near Participant’s retirement date to provide that the Period of Restriction and restrictions imposed on some or all of the shares of Restricted Stock shall lapse on a dated determined by Committee, with such shares of Restricted Stock vesting and becoming freely transferable by Participant, subject to applicable federal and state securities laws. In exercising its discretion under this Section 6B, the Committee shall consider whether Participant: (1) remained employed in good standing with the Company through Participant’s retirement date; (2) provided reasonable written notice to the Company of Participant’s intention to retire of no less than 12 weeks; (3) materially breached any statutory, contractual, or common law duties owed to Company or any material Company policy, including but not limited to post-employment non-competition, non-solicitation and confidentiality obligations; and (4) failed in good faith to provide to and perform for Company all reasonably requested duties and responsibilities in connection with the transition of Participant’s duties and responsibilities. In exercising its discretion, the Committee

 
shall also consider: (a) the financial status of the Company; (b) Company performance: (c) Company stock performance; and (d) where appropriate, input from Company management. In the event the Committee does not so exercise its discretion, Participant’s termination of employment by reason of retirement shall be considered a termination of employment for other reasons and Section 6C shall govern. C. If Participant’s employment terminates for any reason other than the reasons set forth in Sections 6A, 6B, 7 or 8, during the Period of Restriction, all shares of Restricted Stock held by Participant at the time of employment termination and still subject to a Period of Restriction or other restrictions shall be forfeited by Participant to the Company. The transfer of employment of Participant between the Company and any Affiliate (or between Affiliates) shall not be deemed a termination of employment for the purposes of this Award Agreement. Section 7. Change-in-Control In the event of a Change-in-Control of the Company during the Period of Restriction and prior to the Participant’s termination of employment with the Company and its Affiliates, the Period of Restriction and restrictions imposed on the shares of Restricted Stock shall immediately lapse, with all such shares of Restricted Stock vesting and becoming freely transferable by Participant, subject to applicable federal and state securities laws. Section 8. Acceleration of Vesting of Shares in the Event of Divestiture of Business Segment If the “Business Segment” (as that term is defined in this Section) in which Participant is primarily employed as of the “Divestiture Date” (as that term is defined in this Section) is the subject of a “Divestiture of a Business Segment” (as that term is defined in this Section), and such divestiture results in the termination of Participant’s employment with the Company and its Affiliates for any reason, the Period of Restriction and restrictions imposed on the shares of Restricted Stock subject to this Award Agreement shall immediately lapse, with all such shares of Restricted Stock vesting and becoming freely transferable by Participant, subject to applicable federal and state securities laws. For purposes of this Award Agreement, the term “Business Segment” shall mean a business line which the Company treats as a separate operating segment under the segment reporting rules under U.S. generally accepted accounting principles, which currently includes the following: Safety and Security Systems Group and Environmental Solutions Group. Likewise, the term “Divestiture Date” shall mean the date that a transaction constituting a Divestiture of a Business Segment is finally consummated. For purposes of this Award Agreement, the term “Divestiture of a Business Segment” means the following: A. When used with reference to the sale of stock or other securities of a Business Segment that is or becomes a separate corporation, limited liability company, partnership or other separate business entity, the sale, exchange, transfer, distribution or other disposition of the ownership, either beneficially or of record or both, by the Company or one of its Affiliates to “Nonaffiliated Persons” (as that term is defined in this Section) of 100% of either (a) the then-outstanding common stock (or the equivalent equity interests) of the Business Segment or (b) the combined voting power of the then-outstanding voting securities of the Business Segment entitled to vote generally in the election of the board of directors or the equivalent governing body of the Business Segment; B. When used with reference to the merger or consolidation of a Business Segment that is or becomes a separate corporation, limited liability company, partnership or other separate business entity, any such transaction that results in Nonaffiliated Persons owning, either beneficially or of record or both, one hundred percent (100%) of either (a) the then-outstanding common stock (or the equivalent equity interests) of the Business Segment or (b) the combined voting power of the then-outstanding voting securities of the Business Segment entitled to vote generally in the election of the board of directors or the equivalent governing body of the Business Segment; or C. When used with reference to the sale of the assets of the Business Segment, the sale, exchange, transfer, liquidation, distribution or other disposition of all or substantially all of the assets of the Business Segment necessary or required to operate the Business Segment in the manner that the Business Segment had been operated prior to the Divestiture Date. For purposes of this Award Agreement, the term “Nonaffiliated Persons” shall mean any persons or business entities which do not control, or which are not controlled by or under common control with, the Company.

 
Section 9. Restrictions on Transfer Unless determined otherwise by the Committee pursuant to the terms of the Plan, during the Period of Restriction, shares of Restricted Stock granted pursuant to this Award Agreement may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated (a “Transfer”), other than by will or by the laws of descent and distribution, except as provided in the Plan. If any Transfer, whether voluntary or involuntary, of shares of Restricted Stock is made, or if any attachment, execution, garnishment, or lien shall be issued against or placed upon the shares of Restricted Stock, Participant’s right to such shares of Restricted Stock shall be immediately forfeited by Participant to the Company, and this Award Agreement shall terminate. Section 10. Adjustment in Certain Events If there is any change in the Stock by reason of stock dividends or other distribution (whether in the form of securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, combination, repurchase or exchange of Stock or other securities of the Company, or other similar corporate transaction or event, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, the Committee may, in its sole discretion, make such adjustments to the Restricted Stock that it deems necessary or appropriate and as it may deem equitable in Participant’s rights. Section 11. Tax Withholding The Company shall have the power and the right to deduct or withhold, or require Participant or beneficiary to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes (including Participant’s FICA obligation), domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Award Agreement. Further, the Company can withhold amounts for federal, state, local or foreign income or employment taxes in accordance with any tax withholding policy that may be adopted by the Company and is in effect from time to time with respect to equity awards under the Plan irrespective of whether the amounts to be withheld exceed the lowest tax withholding amount that could be determined for the grantee under another tax withholding method. Participant may elect, subject to procedural rules adopted by the Committee, to satisfy the applicable withholding tax requirement, in whole or in part, by having the Company withhold shares having an aggregate Fair Market Value on the date the tax is to be determined, equal to such applicable withholding tax requirement. Section 12. Other Tax Matters Participant shall review with his or her own tax advisors the federal, state, local and other tax consequences, including those in addition to any tax withholding obligations, of the investment in the Restricted Shares and the transactions contemplated by this Award Agreement. Participant has the right to file an election under Section 83 of the Code. The filing of the 83(b) election is the responsibility of Participant. Participant must notify the Company of the filing on or prior to the day of making the filing. Section 13. Section 409A This Award Agreement shall be construed consistent with the intention that it be exempt from Section 409A of the Code (together with any Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date hereof, “Section 409A”). However, notwithstanding any other provision of the Plan or this Award Agreement, if at any time the Committee determines that this Award (or any portion thereof) may be subject to Section 409A, the Committee shall have the right in its sole discretion (without any obligation to do so or to indemnify Participant or any other person for failure to do so) to adopt such amendments to the Plan or this Award Agreement, or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Committee determines are necessary or appropriate either for this Award to be exempt from the application of Section 409A or to comply with the requirements of Section 409A. Section 14. Source of Payment Shares of Stock transferable to Participant, or Participant’s Beneficiary, under this Award Agreement may be either Treasury shares, authorized but unissued shares, or any combination of such stock. The Company shall have no duties to segregate or set aside any assets to secure Participant’s right to receive shares of Stock under this Award Agreement. Participant shall not have any rights with respect to transfer of shares of Stock under this Award Agreement other than the unsecured right to receive shares of Stock from the Company.

 
Section 15. Continuation of Employment This Award Agreement shall not confer upon Participant any right to continuation of employment by the Company or its Affiliates, nor shall this Award Agreement interfere in any way with the Company’s or its Affiliates’ right to terminate Participant’s employment at any time. Section 16. Beneficiary Designation Participant may designate a beneficiary or beneficiaries (contingently or successively) to receive any benefits that may be payable under this Award Agreement in the event of Participant’s death and, from time to time, may change his or her designated beneficiary (“Beneficiary”). A Beneficiary may be a trust. A Beneficiary designation shall be made in writing in a form prescribed by the Company and delivered to the Company while Participant is alive. Section 17. Entire Award; Amendment This Award Agreement and the Plan constitute the entire agreement between the parties with respect to the terms and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto. The terms and conditions set forth in this Award Agreement may only be modified or amended in writing, signed by both parties. Section 18. Severability In the event any one or more of the provisions of this Award Agreement shall be held invalid, illegal or unenforceable in any respect in any jurisdiction, such provision or provisions shall be automatically deemed amended, but only to the extent necessary to render such provision or provisions valid, legal and enforceable in such jurisdiction, and the validity, legality and enforceability of the remaining provisions of this Award Agreement shall not in any way be affected or impaired thereby. Section 19. Miscellaneous A. This Award Agreement and the rights of Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. The Committee shall have the right to impose such restrictions on any Stock acquired pursuant to this Award Agreement, as it may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under applicable federal and state tax law, under the requirements of any stock exchange or market upon which such Stock is then listed and/or traded, and under any blue sky or state securities laws applicable to such Stock. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, all of which shall be binding upon Participant. B. The Committee may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification of the Plan may materially and adversely affect Participant’s rights under this Award Agreement, without the written consent of Participant. C. Participant agrees to take all steps necessary to comply with all applicable provisions of federal and state securities and tax laws in exercising his or her rights under this Award Agreement. D. This Award Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. E. This Award (including any proceeds, gains or other economic benefit actually or constructively received by Participant upon any receipt or exercise of any award or upon the receipt or resale of any Stock underlying the Award) shall be subject to the provisions of any clawback policy currently or subsequently implemented by the Company to the extent set forth in such policy. F. All obligations of the Company under the Plan and this Award Agreement, with respect to the Restricted Stock, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

 
G. To the extent not preempted by federal law, this Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to principles of conflict of law.

 
FEDERAL SIGNAL CORPORATION RESTRICTED STOCK AWARD BENEFICIARY DESIGNATION Participant: Social Security No.: Address: Date of Birth: Participant hereby designates the following individual(s) or entity(ies) as his or her beneficiary(ies) pursuant to the Federal Signal Corporation 2015 Executive Incentive Compensation Plan (Insert Name, Social Security Number, Relationship, Date of Birth and Address of Individuals and/or fully identify any trust beneficiary by the Name of the Trust, Date of Execution of the Trust, the Trustee’s Name, the address of the trust, and the employer identification number of the trust): Primary Beneficiary(ies) Contingent Beneficiary(ies) Participant hereby reserves the right to change this Beneficiary Designation, and any such change shall be effective when Participant has executed a new or amended Beneficiary Designation form, and the receipt of such form has been acknowledged by the Company, all in such manner as specified by the Company from time to time, or on a future date specified by any such new or amended Beneficiary Designation form. IN WITNESS WHEREOF, the parties have caused this Beneficiary Designation to be executed on the date designated below. Date: Signature of Participant Received: FEDERAL SIGNAL CORPORATION Date: By: Participant

 
RSU NON-US –1/2017 6302311.4 EXHIBIT 10.8 _____ ___, 20__ Federal Signal Corporation 2015 Executive Incentive Compensation Plan Restricted Stock Unit Award Agreement You have been selected to receive this grant of Restricted Stock Units (“Award”) pursuant to the Federal Signal Corporation 2015 Executive Incentive Compensation Plan (the “Plan”), as specified below: Participant: Date of Grant: Number of Shares of Restricted Stock Units Granted: Vesting Date: Restricted stock units shall vest at the time and in the amount set forth below: ____ on _____ ___, 20__ [3-year cliff vesting] This Award is subject to the terms and conditions prescribed in the Plan and in the Federal Signal Corporation Restricted Stock Unit Award Agreement No. 2017 attached hereto and incorporated herein. Together, this Award and the attached award agreement shall be referred to throughout each as the “Award Agreement.” IN WITNESS WHEREOF, the parties have caused this Award Agreement to be executed as of the Date of Grant. PARTICIPANT FEDERAL SIGNAL CORPORATION By: Print Name Chief Executive Officer Signature Address: Participant agrees to execute this Award Agreement and return one copy to Mike Basili at Federal Signal Corporation, 1415 W. 22nd Street, Suite 1100, Oak Brook, IL 60523 within 45 days of the above date or forfeit the restricted stock units award. Note: If there are any discrepancies in the name or address shown above, please make the appropriate corrections on this form.

 
This document constitutes part of the prospectus covering securities that have been registered under the Securities Act of 1933, as amended. FEDERAL SIGNAL CORPORATION RESTRICTED STOCK UNIT AWARD AGREEMENT NO. 2017 This Award Agreement, which includes the attached cover page, effective as of the Date of Grant, represents the grant of Restricted Stock Units by the Company, to the Participant named in this Award Agreement, pursuant to the provisions of the Plan. The Company established the Plan pursuant to which, among other things, options, stock appreciation rights, restricted stock and stock units, stock bonus awards, dividend equivalents and/or performance compensation awards may be granted to eligible persons. The Plan and this Award Agreement provide a complete description of the terms and conditions governing the Restricted Stock Units. If there is any inconsistency between the terms of this Award Agreement and the terms of the Plan, the Plan’s terms shall completely supersede and replace the conflicting terms of this Award Agreement. All capitalized terms shall have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein. The Board of Directors and the Committee have determined that the interests of the Company will be advanced by encouraging and enabling certain of its employees to own shares of the Stock, and that Participant is one of those employees. NOW, THEREFORE, in consideration of services rendered and the mutual covenants herein contained, the parties agree as follows: Section 1. Certain Definitions As used in this Award Agreement, the following terms shall have the following meanings: A. “Affiliate” means with respect to any Person, any other Person (other than an individual) that controls, is controlled by, or is under common control with such Person. The term “control,” as used in this Award Agreement, means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. “Controlled” and “controlling” have meanings correlative to the foregoing. B. “Award” means the award provided for in Section 2. C. “Board of Directors” means the board of directors of the Company. D. “Code” means the Internal Revenue Code of 1986, as amended. E. “Committee” means the Compensation and Benefits Committee of the Board of Directors or a subcommittee or other committee appointed to administer the Plan in accordance with the Plan. F. “Company” means Federal Signal Corporation, a Delaware corporation. G. “Date of Grant” means the date set forth on this Award Agreement. H. “Disability” shall have the meaning ascribed to that term in the Company’s long-term disability plan applicable to Participant, or if no such plan exists, at the discretion of the Committee and as determined by the Committee. I. “Participant” means the individual shown as the recipient of the Restricted Stock Units, as set forth on this Award Agreement. J. “Person” means a “person” as such term is used for purposes of 13(d) or 14(d), or any successor section thereto, of the Securities Exchange Act of 1934, as amended, and any successor thereto.

 
K. “Restricted Stock Unit” means the obligation of the Company to transfer one share of Stock to Participant at the time provided in Section 6 of this Award Agreement, provided such Restricted Stock Unit is vested at such time. L. “Stock” means the common stock of the Company. M. “Vesting Date” means the date upon which the Restricted Stock Unit becomes vested as set forth in either Section 4 or 5 of this Award Agreement. N. “Fair Market Value” shall have the meaning set forth in the Plan. Section 2. Award Subject to the terms of this Award Agreement, the Company hereby grants to Participant the number of Restricted Stock Units set forth on this Award Agreement, effective as of the Date of Grant set forth on such instrument. This grant of Restricted Stock Units shall not confer any right to Participant (or any other participant) to be granted Restricted Stock Units or other awards in the future under the Plan. Section 3. Bookkeeping Account The Company shall record the number of Restricted Stock Units granted hereunder to a bookkeeping account for Participant (the “Restricted Stock Unit Account”). Participant’s Restricted Stock Unit Account shall be reduced by the number of Restricted Stock Units, if any, forfeited in accordance with Section 4 and by the number of shares of Stock transferred to Participant in accordance with Section 6 with respect to such Restricted Stock Units. Section 4. Vesting Subject to the accelerated vesting provisions provided below, the Restricted Stock Units shall vest on the third anniversary of the Date of Grant, if Participant remains employed by the Company or its Affiliates through such date. If, while employed by the Company or its Affiliates, Participant dies or his or her employment terminates by reason of Disability before the third anniversary of the Date of Grant, all of the Restricted Stock Units granted pursuant to Section 2 shall become fully vested on the date of such death or Disability, as applicable. If, while Participant is employed by the Company or its Affiliate, a Change-in-Control occurs, all of the Restricted Stock Units granted pursuant to Section 2 shall become fully vested on the date of such Change-in- Control. Except as provided in Section 5 below, if Participant’s employment with the Company and its Affiliates is terminated for any other reason before the third anniversary of the Date of Grant, all Restricted Stock Units that are not vested at the time of such termination of employment (after first taking into account the accelerated vesting provisions of this Section 4 and Section 5 below) shall be forfeited. Section 5. Acceleration of Vesting of Shares in the Event of Divestiture of Business Segment If the “Business Segment” (as that term is defined in this Section) in which Participant is primarily employed as of the “Divestiture Date” (as that term is defined in this Section) is the subject of a “Divestiture of a Business Segment” (as that term is defined in this Section), and such divestiture results in the termination of Participant’s employment with the Company and its Affiliates for any reason, the Restricted Stock Units shall become fully vested on the Divestiture Date. For purposes of this Award Agreement, the term “Business Segment” shall mean a business line which the Company treats as a separate operating segment under the segment reporting rules under U.S. generally accepted accounting principles, which currently includes the following: Safety and Security Systems Group and Environmental Solutions Group. Likewise, the term “Divestiture Date” shall mean the date that a transaction constituting a Divestiture of a Business Segment is finally consummated. For purposes of this Award Agreement, the term “Divestiture of a Business Segment” means the following:

 
A. When used with a reference to the sale of stock or other securities of a Business Segment that is or becomes a separate corporation, limited liability company, partnership or other separate business entity, the sale, exchange, transfer, distribution or other disposition of the ownership, either beneficially or of record or both, by the Company or one of its Affiliates to “Nonaffiliated Persons” (as that term is defined in this Section) of 100% of either (i) the then-outstanding common stock (or the equivalent equity interests) of the Business Segment or (ii) the combined voting power of the then-outstanding voting securities of the Business Segment entitled to vote generally in the election of the board of directors or the equivalent governing body of the Business Segment; B. When used with reference to the merger or consolidation of a Business Segment that is or becomes a separate corporation, limited liability company, partnership or other separate business entity, any such transaction that results in Nonaffiliated Persons owning, either beneficially or of record or both, 100% of either (i) the then- outstanding common stock (or the equivalent equity interests) of the Business Segment or (ii) the combined voting power of the then-outstanding voting securities of the Business Segment entitled to vote generally in the election of the board of directors or the equivalent governing body of the Business Segment; or C. When used with reference to the sale of the assets of the Business Segment, the sale, exchange, transfer, liquidation, distribution or other disposition of all or substantially all of the assets of the Business Segment necessary or required to operate the Business Segment in the manner that the Business Segment had been operated prior to the Divestiture Date. For purposes of this Award Agreement, the term “Nonaffiliated Persons” shall mean any persons or business entities which do not control, or which are not controlled by or under common control with, the Company. Section 6. Distribution of Shares Subject to the provisions below, shares of Stock equal to the number of Restricted Stock Units credited to the Restricted Stock Unit Account of Participant shall become distributable on the Vesting Date. Actual distribution of shares of Stock with respect to vested Restricted Stock Units will occur as soon as administratively feasible, but in no event more than 60 days after such shares become distributable as described in this Section 6. Section 7. Stockholder Rights Participant shall not have any of the rights of a stockholder of the Company with respect to Restricted Stock Units. No dividend equivalent rights are provided under this Award Agreement. Section 8. Beneficiary Designation Participant may designate a beneficiary or beneficiaries (contingently, consecutively, or successively) to receive any benefits that may be payable under this Award Agreement in the event of Participant’s death and, from time to time, may change his or her designated beneficiary (a “Beneficiary”). A Beneficiary may be a trust. A Beneficiary designation shall be made in writing in a form prescribed by the Company and delivered to the Company while Participant is alive. In lieu of payment to Participant, a Beneficiary shall be paid shares of Stock under Section 6. Section 9. Restrictions on Transfer Restricted Stock Units awarded hereunder shall not be transferable by Participant. Except as may be required by the federal income tax withholding provisions of the Code or by the tax laws of any state or foreign sovereign, the interests of Participant and his or her Beneficiary(ies) under this Award Agreement are not subject to the claims of their respective creditors and may not be voluntarily or involuntarily sold, assigned, transferred, alienated, pledged, attached, encumbered or charged. Any attempt by Participant or a Beneficiary to sell, assign, transfer, alienate, pledge, attach, encumber, charge or otherwise dispose of any right to benefits payable hereunder shall be void. Section 10. Adjustment in Certain Events If there is any change in the Stock by reason of stock dividends or other distribution (whether in the form of securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, combination, repurchase or exchange of Stock or other securities of the Company, or other similar corporate transaction or event, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, the Committee may, in its sole discretion, make such adjustments to the

 
number of Restricted Stock Units credited to Participant’s Restricted Stock Unit Account that it deems necessary or appropriate and as it may deem equitable in Participant’s rights. Section 11. Tax Withholding The Company shall not be obligated to transfer any shares of Stock until Participant pays to the Company or any of its Affiliates in cash, or any other form of property, including Stock, acceptable to the Company, the amount required to be withheld from the wages or other amounts owing to Participant with respect to such shares. Participant may elect, subject to procedural rules adopted by the Committee, to satisfy the applicable withholding requirement, in whole or in part, by having the Company reduce the number of shares of Stock otherwise transferable under this Award Agreement having an aggregate Fair Market Value on the date the tax is to be determined, equal to such applicable withholding requirement. Section 12. Section 409A This Award Agreement shall be construed consistent with the intention that it be exempt from Section 409A of the Code (together with any Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date hereof, “Section 409A”). However, notwithstanding any other provision of the Plan or this Award Agreement, if at any time the Committee determines that this Award (or any portion thereof) may be subject to Section 409A, the Committee shall have the right in its sole discretion (without any obligation to do so or to indemnify Participant or any other person for failure to do so) to adopt such amendments to the Plan or this Award Agreement, or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Committee determines are necessary or appropriate either for this Award to be exempt from the application of Section 409A or to comply with the requirements of Section 409A. Section 13. Source of Payment Shares of Stock transferable to Participant, or Participant’s Beneficiary, under this Award Agreement may be either Treasury shares, authorized but unissued shares, or any combination of such stock. The Company shall have no duties to segregate or set aside any assets to secure Participant’s right to receive shares of Stock under this Award Agreement. Participant shall not have any rights with respect to transfer of shares of Stock under this Award Agreement other than the unsecured right to receive shares of Stock from the Company. Section 14. Continuation of Employment This Award Agreement shall not confer upon Participant any right to continuation of employment by the Company or its Affiliates, nor shall this Award Agreement interfere in any way with the Company’s or its Affiliates’ right to terminate Participant’s employment at any time. Section 15. English Language Participant acknowledges and agrees that it is Participant’s express intent that this Award Agreement, the Plan and all other documents, rules, procedures, forms, notices and legal proceedings entered into, given or instituted pursuant to the Award, be drawn up in English. If Participant has received this Award Agreement, the Plan or any other rules, procedures, forms or documents related to the Award translated into a language other than English, and if the meaning of the translated version is different than the English version, the English version will control. Section 15. Entire Award; Amendment This Award Agreement and the Plan constitute the entire agreement between the parties with respect to the terms and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto. The terms and conditions set forth in this Award Agreement may only be modified or amended in writing, signed by both parties. Section 16. Severability In the event any one or more of the provisions of this Award Agreement shall be held invalid, illegal or unenforceable in any respect in any jurisdiction, such provision or provisions shall be automatically deemed amended, but only to the extent necessary to render such provision or provisions valid, legal and enforceable in such jurisdiction, and the validity, legality and enforceability of the remaining provisions of this Award Agreement shall not in any way be affected or impaired thereby.

 
Section 17. Miscellaneous A. This Award Agreement and the rights of Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. The Committee shall have the right to impose such restrictions on any Stock acquired pursuant to this Award Agreement, as it may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under applicable federal and state tax law, under the requirements of any stock exchange or market upon which such Stock is then listed and/or traded, and under any blue sky or state securities laws applicable to such Stock. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, all of which shall be binding upon Participant. B. The Committee may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification of the Plan may materially and adversely affect Participant’s rights under this Award Agreement, without the written consent of Participant. C. Participant agrees to take all steps necessary to comply with all applicable provisions of federal and state securities and tax laws in exercising his or her rights under this Award Agreement. D. This Award Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. E. This Award (including any proceeds, gains or other economic benefit actually or constructively received by Participant upon any receipt or exercise of any Award or upon the receipt or resale of any Stock underlying the Award) shall be subject to the provisions of any clawback policy currently or subsequently implemented by the Company to the extent set forth in such policy. F. All obligations of the Company under the Plan and this Award Agreement, with respect to these Restricted Stock Units, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. G. To the extent not preempted by federal law, this Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to principles of conflict of law.

 
FEDERAL SIGNAL CORPORATION RESTRICTED STOCK UNIT BENEFICIARY DESIGNATION Participant: Social Security No.: Address: Date of Birth: Participant hereby designates the following individual(s) or entity(ies) as his or her beneficiary(ies) pursuant to the Federal Signal Corporation 2015 Executive Incentive Compensation Plan (Insert Name, Social Security Number, Relationship, Date of Birth and Address of Individuals and/or fully identify any trust beneficiary by the Name of the Trust, Date of Execution of the Trust, the Trustee’s Name, the address of the trust, and the employer identification number of the trust): Primary Beneficiary(ies) Contingent Beneficiary(ies) Participant hereby reserves the right to change this Beneficiary Designation, and any such change shall be effective when the Participant has executed a new or amended Beneficiary Designation form, and the receipt of such form has been acknowledged by the Company, all in such manner as specified by the Company from time to time, or on a future date specified by any such new or amended Beneficiary Designation form. IN WITNESS WHEREAS, the parties have executed this Beneficiary Designation on the date designated below. Date: _________________, ____ Signature of Participant Received: FEDERAL SIGNAL CORPORATION Date: _________________, ____ By:

 
PSU US 7/2017 EXHIBIT 10.9 July 25, 2017 Federal Signal Corporation 2015 Executive Incentive Compensation Plan Performance Share Unit Award Agreement You have been selected to receive this Performance Share Units (“PSUs”) award (“Award”) pursuant to the Federal Signal Corporation 2015 Executive Incentive Compensation Plan (the “Plan”), as specified below: Participant: Robert Fines Date of Grant: July 25, 2017 Number of PSUs Subject to this Award Agreement: 40,961 Performance and Vesting Periods: June 2, 2017 through the date that the Company’s Period 5 ends in 2020. This Award is subject to the terms and conditions prescribed in the Plan and in the Federal Signal Corporation Performance Share Unit Award Agreement No. 2017 attached hereto and incorporated herein. Together, this Award and the attached award agreement shall be referred to throughout each as the “Award Agreement.” Calculations of performance versus target, threshold and maximum values set forth in Appendix A are made by the Committee in accordance with the terms of the Plan and are final and binding. IN WITNESS WHEREOF, the parties have caused this Award Agreement to be executed as of the Date of Grant. PARTICIPANT FEDERAL SIGNAL CORPORATION By: Print Name Chief Executive Officer Signature Address Participant agrees to execute this Award Agreement and return one copy to Mike Basili at Federal Signal Corporation, 1415 W. 22nd Street, Suite 1100, Oak Brook, IL 60523 within 45 days of the above date or forfeit the performance share unit award. Note: If there are any discrepancies in the name or address shown above, please make the appropriate corrections on this form.

 
PSU US 7/2017 Page 1 of 6 This document constitutes part of the prospectus covering securities that have been registered under the Securities Act of 1933, as amended. FEDERAL SIGNAL CORPORATION PERFORMANCE SHARE UNIT AWARD AGREEMENT NO. 2017 This Award Agreement, which includes the attached cover page and Appendix A, effective as of the Date of Grant, represents the grant of PSUs by the Company to Participant, pursuant to the provisions of the Plan. The Company established the Plan pursuant to which, among other things, options, stock appreciation rights, restricted stock and stock units, stock bonus awards, dividend equivalents and/or performance compensation awards may be granted to eligible persons. The Plan and this Award Agreement provide a complete description of the terms and conditions governing the PSUs. If there is any inconsistency between the terms of this Award Agreement and the terms of the Plan, the Plan’s terms shall completely supersede and replace the conflicting terms of this Award Agreement. All capitalized terms shall have the meanings ascribed to them in the Plan, unless specifically set forth otherwise herein. The Board of Directors and the Committee have determined that the interests of the Company will be advanced by encouraging and enabling certain of its employees to own shares of Stock, and that Participant is one of those employees. NOW, THEREFORE, in consideration of services rendered and the mutual covenants herein contained, the parties agree as follows: Section 1. Certain Definitions As used in this Award Agreement, the following terms shall have the following meanings: A. “Affiliate” means with respect to any Person, any other Person (other than an individual) that controls, is controlled by, or is under common control with such Person. The term “control,” as used in this Award Agreement, means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. “Controlled” and “controlling” have meanings correlative to the foregoing. B. “Award” means the award provided for in Section 2. C. “Board of Directors” means the board of directors of the Company. D. “Code” means the Internal Revenue Code of 1986, as amended. E. “Committee” means the Compensation and Benefits Committee of the Board of Directors or a subcommittee or other committee appointed to administer the Plan in accordance with the Plan. F. “Company” means Federal Signal Corporation, a Delaware corporation. G. “Date of Grant” means the date set forth on this Award Agreement. H. “Disability” shall have the meaning ascribed to that term in the Company’s long-term disability plan applicable to Participant, or if no such plan exists, at the discretion of the Committee and as determined by the Committee. I. “Participant” means the individual shown as the recipient of an award of PSUs, as set forth on this Award Agreement. J. “Performance Period” means the three-year period beginning on June 2, 2017 and ending on the date that the Company’s period 5 ends in 2020. K. “Performance Share Units” or “PSUs” means the obligation of the Company to transfer the number of shares of Stock to Participant determined under Section 2, Section 4A (in the case of death or termination of employment by Disability), Section 4B (in the case of Change-in-Control), or Section 5 (in the case of Divestiture of a Business Segment) of this Award Agreement, as

 
PSU US 7/2017 Page 2 of 6 applicable, at the time provided in Section 6 of this Award Agreement, to the extent that the rights to such shares are vested at such time. L. “Person” means a “person” as such term is used for purposes of 13(d) or 14(d), or any successor section thereto, of the Securities Exchange Act of 1934, as amended, and any successor thereto. M. “Stock” means the common stock of the Company. N. “TBEI” means Truck Bodies & Equipment International, Inc. and each subsidiary thereof. O. “Vesting Period” means the three-year period beginning on June 2, 2017 and ending on the date that the Company’s period 5 ends in 2020. P. “Fair Market Value” shall have the meaning set forth in the Plan. Section 2. Award Subject to the terms of this Award Agreement, the Company awarded to Participant the number of PSUs set forth on this Award Agreement, effective as of the Date of Grant set forth on such instrument. This Award entitles Participant to receive a whole number of shares of Stock as set forth on this Award Agreement equal to a percentage, from zero percent (0%) to two hundred percent (200%), based on TBEI’s performance against the performance goals set forth, and as calculated in, Appendix A. The number of shares of Stock determined based on TBEI’s performance against the performance goals set forth in Appendix A (or, if applicable, the formula set forth in Section 4A (in the case of death or termination of employment by Disability), the formula set forth in Section 4B (in the case of a Change-in-Control), or the formula set forth in Section 4C (in the case of Participant’s employment termination for reasons other than for Cause), or Section 5 (in the case of Divestiture of a Business Segment)), shall be distributable as provided in Section 6 of this Award Agreement, but only to the extent the rights to such shares are vested under either Section 4 or Section 5 of this Award Agreement. This grant of PSUs shall not confer any right to Participant (or any other participant) to be granted PSUs or other awards in the future under the Plan. It is intended that this Award qualify as “performance-based compensation” under Section 162(m) of the Code. Notwithstanding anything to the contrary in this Award Agreement, the number of shares of Stock that may be earned under this Award Agreement cannot exceed the maximum number of shares of Stock provided for under the Plan. Section 3. Bookkeeping Account The Company shall record the number of PSUs subject to this Award Agreement to a bookkeeping account for Participant (the “Performance Share Unit Account”), subject to adjustment based on performance as set forth in Section 2 above. Participant’s Performance Share Unit Account shall be reduced by the number of PSUs, if any, forfeited in accordance with Section 4 and by the number of PSUs with respect to which shares of Stock were transferred to Participant in accordance with Section 6. Section 4. Vesting Subject to the accelerated vesting provisions provided below, the number of PSUs determined under Section 2 above shall vest on the last day of the Vesting Period, if Participant remains employed by the Company or its Affiliate through such date. For the avoidance of doubt, if the Company fails to achieve a performance goal at the threshold level, Participant shall be entitled to receive no shares of Stock subject to such performance goal, unless the deemed performance provisions in this Section specifically modify such result. If, during the Performance and Vesting Periods, while employed by the Company or its Affiliates: A. Participant dies or his or her employment terminates by reason of Disability, the number of vested PSUs subject to the Award shall be equal to the product of: (1) the number of full and partial months of Participant’s employment during the Performance Period divided by thirty-six (36) and (2) the greater of (a) one hundred percent (100%) of the PSUs subject to this Award Agreement, regardless of actual performance or (b) the number of PSUs

 
PSU US 7/2017 Page 3 of 6 that Participant would have been payable to Participant at the end of Performance Period based on actual TBEI performance during the entire Performance Period. B. A Change-in-Control occurs, the number of vested PSUs subject to this Award shall be the greater of (1) one hundred percent (100%) of the PSUs subject to this Award Agreement, regardless of actual performance or (2) the number of PSUs that would have been payable to Participant for the Performance Period based on the Company’s best estimate of projected TBEI performance through the end of the Performance Period, determined at the date of the Change-in-Control. In the event of a Change-in-Control following an event that would otherwise enable vesting at the end of the Performance and Vesting Periods under Section 4A, the provisions of this Section 4B shall control. For the avoidance of doubt, vesting under this Section 4B is not calculated on a pro-rata basis. C. Participant is terminated without Cause, the number of vested PSUs subject to the Award shall be equal to the product of: (1) the number of full and partial months of Participant’s employment during the Performance Period divided by thirty-six (36) and (2) the number of PSUs that would have been payable to Participant at the end of Performance Period based on actual TBEI performance during the entire Performance Period. In the event of Participant’s death or a Change-in-Control following an event that would otherwise enable vesting at the end of the Performance and Vesting Periods under this Section 4C, the provisions of this Section 4C shall control. For purposes of this Section 4(C), the term “Cause” means the termination of Participant’s employment with the Company and its Affiliates as a result of: (1) the commission by Participant of a felony or a fraud; (2) conduct by Participant that brings the Company and/or any of its Affiliates into substantial public disgrace or disrepute; (3) gross negligence or gross misconduct by Participant with respect to the Company and/or any of its Affiliates; (4) repudiation by Participant of this Award Agreement or Participant’s abandonment of employment with the Company and/or its Affiliates; (5) Participant’s insubordination or failure to follow the directions of the Board of Directors of the Company or the individual to whom Participant reports, which is not cured within three business days after written notice thereof to Participant; (6) Participant’s violation of any non-competition, non- solicitation, or confidentiality agreement or obligation with respect to the Company and/or any of its Affiliates; (7) Participant’s breach of a material employment policy of the Company and/or any of its Affiliates, which is not cured within three business days after written notice thereof to Participant; or (8) any other material breach by Participant of any agreement with the Company and/or any of its Affiliates which is not cured within thirty days after written notice thereof to Participant. D. Except as provided in Section 5 below, and in certain limited instances where the Committee may exercise its discretion in determining the vesting implications of PSUs, if Participant’s employment with the Company and its Affiliates terminates for any other reason before the end of the Performance and Vesting Periods, all PSUs that are not vested at the time of such termination of employment (after first taking into account the accelerated vesting provisions of this Section 4) shall be forfeited. Section 5. Acceleration of Vesting of Shares in the Event of Divestiture of Business Segment If the “Business Segment” (as that term is defined in this Section) in which Participant is primarily employed as of the “Divestiture Date” (as that term is defined in this Section) is the subject of a “Divestiture of a Business Segment” (as that term is defined in this Section) during the Performance and Vesting Periods, and such divestiture results in the termination of Participant’s employment with the Company and its Affiliates for any reason during the Performance Period, the number of vested PSUs subject to the Award shall be equal to the product of: (1) the number of full and partial months of Participant’s employment during the Performance Period before the Divestiture Date, divided by thirty-six (36) and (2) one hundred percent (100%) of the PSUs subject to this Award Agreement, regardless of actual performance. For purposes of this Award Agreement, the term “Business Segment” shall mean a business line which the Company treats as a separate operating segment under the segment reporting rules under U.S. generally accepted accounting principles, which currently includes the following: Safety and Security Systems Group and Environmental Solutions Group. Likewise, the term “Divestiture Date” shall mean the date that a transaction constituting a Divestiture of a Business Segment is finally consummated. For purposes of this Award Agreement, the term “Divestiture of a Business Segment” means the following: A. When used with a reference to the sale of stock or other securities of a Business Segment that is or becomes a separate corporation, limited liability company, partnership or other separate business entity, the sale, exchange, transfer, distribution or other disposition of the ownership, either beneficially or of record or both, by the Company or one of its Affiliates to “Nonaffiliated Persons” (as that term is defined in this Section) of one hundred

 
PSU US 7/2017 Page 4 of 6 percent (100%) of either (i) the then-outstanding common stock (or the equivalent equity interests) of the Business Segment or (ii) the combined voting power of the then-outstanding voting securities of the Business Segment entitled to vote generally in the election of the board of directors or the equivalent governing body of the Business Segment; B. When used with reference to the merger or consolidation of a Business Segment that is or becomes a separate corporation, limited liability company, partnership or other separate business entity, any such transaction that results in Nonaffiliated Persons owning, either beneficially or of record or both, one hundred percent (100%) of either (i) the then-outstanding common stock (or the equivalent equity interests) of the Business Segment or (ii) the combined voting power of the then-outstanding voting securities of the Business Segment entitled to vote generally in the election of the board of directors or the equivalent governing body of the Business Segment; or C. When used with reference to the sale of the assets of the Business Segment, the sale, exchange, transfer, liquidation, distribution or other disposition of all or substantially all of the assets of the Business Segment necessary or required to operate the Business Segment in the manner that the Business Segment had been operated prior to the Divestiture Date. For purposes of this Award Agreement, the term “Nonaffiliated Persons” shall mean any persons or business entities which do not control, or which are not controlled by or under common control with, the Company. Section 6. Distribution of Shares A. Except as specifically provided to the contrary in Section 6B, the number of shares of Stock payable with respect to PSUs, as determined under Section 2 above, that become vested under this Award shall become distributable as of the end of the Vesting Period and shall be paid not later than September 15, 2020 provided however, that if it is impracticable to pay such shares of Stock by such date (e.g., due to the unavailability of audited financial statements or a Form S-8 registration statement for the shares), then the Committee may delay payment until it becomes administratively practicable to do so later that same year. B. The number of shares of Stock payable with respect to PSUs, as determined under Section 2 above, that vest prior to the end of the Vesting Period under either Section 4B or Section 5 of this Award Agreement shall become distributable on an accelerated basis as follows: (1) If a Change-in-Control occurs at any time before the end of the Vesting Period, then the number of earned shares of Stock with respect to PSUs that become vested under Section 4B of this Award Agreement shall become distributable on the date of the Change-in-Control. (2) If a Divestiture of a Business Segment occurs at any time before the end of the Vesting Period, and such divestiture results in the termination of Participant’s employment with the Company and its Affiliates for any reason, then the number of earned shares of Stock with respect to PSUs that become vested under this Award Agreement shall become distributable on the Divestiture Date, but only if that payment on that date is permissible under Section 409A of the Code. Section 7. Stockholder Rights Participant shall not have any of the rights of a stockholder of the Company with respect to PSUs until shares of Stock are issued to Participant. No dividend equivalent rights are provided under this Award Agreement. Section 8. Beneficiary Designation Participant may designate a beneficiary or beneficiaries (contingently or successively) to receive any benefits that may be payable under this Award Agreement in the event of Participant’s death and, from time to time, may change his or her designated beneficiary (a “Beneficiary”). A Beneficiary may be a trust. A Beneficiary designation shall be made in writing in a form prescribed by the Company and delivered to the Company while Participant is alive. In lieu of payment to Participant, a Beneficiary shall be paid shares of Stock under Section 6 at the same time and in the same form as Participant would have been paid but for Participant’s death. Section 9. Restrictions on Transfer PSUs awarded hereunder shall not be transferable by Participant. Except as may be required by the federal income tax withholding provisions of the Code or by the tax laws of any State, the interests of Participant and his or her Beneficiary(ies) under this Award Agreement are not subject to the claims of their respective creditors and may not be voluntarily or involuntarily sold, assigned, transferred, alienated, pledged, attached, encumbered or charged.

 
PSU US 7/2017 Page 5 of 6 Any attempt by Participant or a Beneficiary to sell, assign, transfer, alienate, pledge, attach, encumber, charge or otherwise dispose of any right to benefits payable hereunder shall be void. Section 10. Adjustment in Certain Events If there is any change in the Stock by reason of stock dividends or other distribution (whether in the form of securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, combination, repurchase or exchange of Stock or other securities of the Company, or other similar corporate transaction or event, or changes in applicable rules, rulings, regulations or other requirements of any governmental body or securities exchange, the Committee may, in its sole discretion, make such adjustments to the number of PSUs credited to Participant’s Performance Share Unit Account that it deems necessary or appropriate and as it may deem equitable in Participant’s rights. Section 11. Tax Withholding The Company shall not be obligated to transfer any shares of Stock until Participant pays to the Company or any of its Affiliates in cash, or any other form of property, including Stock, acceptable to the Company, the amount required to be withheld from the wages or other amounts owing to Participant with respect to such shares. Further, the Company can withhold amounts for federal, state, local or foreign income or employment taxes in accordance with any tax withholding policy that may be adopted by the Company and is in effect from time to time with respect to equity awards under the Plan irrespective of whether the amounts to be withheld exceed the lowest tax withholding amount that could be determined for the grantee under another tax withholding method. Participant may elect, subject to procedural rules adopted by the Committee, to satisfy the applicable withholding tax requirement, in whole or in part, by having the Company reduce the number of shares of Stock otherwise transferable under this Award Agreement having an aggregate Fair Market Value on the date the tax is to be determined, equal to such applicable withholding tax requirement. Section 12. Section 409A This Award Agreement shall be construed consistent with the intention that it be exempt from Section 409A of the Code (together with any Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date hereof, “Section 409A”). However, notwithstanding any other provision of the Plan or this Award Agreement, if at any time the Committee determines that this Award (or any portion thereof) may be subject to Section 409A, the Committee shall have the right in its sole discretion (without any obligation to do so or to indemnify Participant or any other person for failure to do so) to adopt such amendments to the Plan or this Award Agreement, or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, as the Committee determines are necessary or appropriate either for this Award to be exempt from the application of Section 409A or to comply with the requirements of Section 409A. Section 13. Source of Payment Shares of Stock transferable to Participant, or Participant’s Beneficiary, under this Award Agreement may be either Treasury shares, authorized but unissued shares, or any combination of such stock. The Company shall have no duties to segregate or set aside any assets to secure Participant’s right to receive shares of Stock under this Award Agreement. Participant shall not have any rights with respect to transfer of shares of Stock under this Award Agreement other than the unsecured right to receive shares of Stock from the Company. Section 14. Continuation of Employment This Award Agreement shall not confer upon Participant any right to continuation of employment by the Company or its Affiliates, nor shall this Award Agreement interfere in any way with the Company’s or its Affiliates’ right to terminate Participant’s employment at any time. Section 16. Entire Award; Amendment This Award Agreement and the Plan constitute the entire agreement between the parties with respect to the terms and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto. The terms and conditions set forth in this Award Agreement may only be modified or amended in writing, signed by both parties.

 
PSU US 7/2017 Page 6 of 6 Section 17. Severability In the event any one or more of the provisions of this Award Agreement shall be held invalid, illegal or unenforceable in any respect in any jurisdiction, such provision or provisions shall be automatically deemed amended, but only to the extent necessary to render such provision or provisions valid, legal and enforceable in such jurisdiction, and the validity, legality and enforceability of the remaining provisions of this Award Agreement shall not in any way be affected or impaired thereby. Section 18. Miscellaneous A. This Award Agreement and the rights of Participant hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. The Committee shall have the right to impose such restrictions on any Stock acquired pursuant to this Award Agreement, as it may deem advisable, including, without limitation, restrictions under applicable federal securities laws, under applicable federal and state tax law, under the requirements of any stock exchange or market upon which such Stock is then listed and/or traded, and under any blue sky or state securities laws applicable to such Stock. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Award Agreement, all of which shall be binding upon Participant. B. The Committee may terminate, amend, or modify the Plan; provided, however, that no such termination, amendment, or modification of the Plan may materially and adversely affect Participant’s rights under this Award Agreement, without the written consent of Participant. C. Participant agrees to take all steps necessary to comply with all applicable provisions of federal and state securities and tax laws in exercising his or her rights under this Award Agreement. D. This Award Agreement shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. E. This Award (including any proceeds, gains or other economic benefit actually or constructively received by Participant upon any receipt or exercise of any Award or upon the receipt or resale of any Stock underlying the Award) shall be subject to the provisions of any clawback policy currently or subsequently implemented by the Company to the extent set forth in such policy. F. All obligations of the Company under the Plan and this Award Agreement, with respect to these PSUs, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company. G. To the extent not preempted by federal law, this Award Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to principles of conflict of law.

 
FEDERAL SIGNAL CORPORATION PERFORMANCE SHARE UNIT BENEFICIARY DESIGNATION Participant: Social Security No.: Address: Date of Birth: Participant hereby designates the following individual(s) or entity(ies) as his or her beneficiary(ies) pursuant to the Federal Signal Corporation 2015 Executive Incentive Compensation Plan (Insert Name, Social Security Number, Relationship, Date of Birth and Address of Individuals and/or fully identify any trust beneficiary by the Name of the Trust, Date of Execution of the Trust, the Trustee’s Name, the address of the trust, and the employer identification number of the trust): Primary Beneficiary(ies) Contingent Beneficiary(ies) Participant hereby reserves the right to change this Beneficiary Designation, and any such change shall be effective when Participant has executed a new or amended Beneficiary Designation form, and the receipt of such form has been acknowledged by the Company, all in such manner as specified by the Company from time to time, or on a future date specified by any such new or amended Beneficiary Designation form. IN WITNESS WHEREOF, the parties have executed this Beneficiary Designation on the date designated below. Date: _________________, ____ Signature of Participant Received: FEDERAL SIGNAL CORPORATION Date: _________________, ____ By:

 
EXHIBIT 10.10 FIRST AMENDMENT TO THE 2005 EXECUTIVE INCENTIVE COMPENSATION PLAN (2010 RESTATEMENT) WHEREAS, Federal Signal Corporation (the “Company”) maintains the 2005 Executive Incentive Compensation Plan (2010 Restatement) (the “2010 Plan”); and WHEREAS, amendment of the 2010 Plan now is considered desirable to make the administrative procedures under the 2010 Plan consistent with the administrative procedures contained in the proposed Federal Signal Corporation 2015 Executive Incentive Compensation Plan. NOW, THEREFORE, by virtue of the power granted to the Compensation and Benefits Committee by Section 2 of the 2010 Plan, the 2010 Plan is hereby amended in the following particular, effective as of April 6, 2015: By substituting the following Section for Section 2 of the 2010 Plan: 2. Administration. (a) The Compensation and Benefits Committee of the Board of Directors shall administer the 2010 Plan. To the extent required to comply with the provisions of Rule 16b-3 promulgated under the Exchange Act (if the Board is not acting as the Committee under the 2010 Plan) or necessary to obtain the exception for performance-based compensation under Section 162(m) of the Code with respect to a performance award, as applicable, it is intended that each member of the Committee shall, at the time he takes any action with respect to an award under the 2010 Plan, be an eligible director as defined by applicable law. However, the fact that a Committee member shall fail to qualify as an eligible director shall not invalidate any award granted by the Committee that is otherwise validly granted under the 2010 Plan. The majority of the members of the Committee shall constitute a quorum. The acts of a majority of the members present at any meeting at which a quorum is present or acts approved in writing by a majority of the Committee shall be deemed the acts of the Committee. (b) Subject to the provisions of the 2010 Plan and applicable law, the Committee shall have the sole and plenary authority, in addition to other express powers and authorizations conferred on the Committee by the 2010 Plan, to: (i) designate participants; (ii) determine the type or types of awards to be granted to a participant; (iii) determine the number of shares of common stock to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, awards; (iv) determine the timing, pricing, amount and other terms and conditions of any award and any amendments thereto; (v) determine whether, to what extent, and under what circumstances awards may be settled or

 
-2- exercised in cash, shares of common stock, other securities, other awards or other property, or canceled, forfeited, or suspended and the method or methods by which awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances the delivery of cash, common stock, other securities, other awards or other property and other amounts payable with respect to an award shall be deferred either automatically or at the election of the participant or of the Committee; (vii) interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the 2010 Plan and any instrument or agreement relating to, or award granted under, the 2010 Plan; (viii) establish, amend, suspend, or waive any rules and regulations and appoint such agents as the Committee shall deem appropriate for the proper administration of the 2010 Plan; (ix) accelerate the vesting or exercisability of, payment for or lapse of restrictions on, awards; and (x) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the 2010 Plan. (c) Except to the extent prohibited by applicable law or the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or traded, the Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or delegation may be revoked by the Committee at any time. Without limiting the generality of the foregoing, the Committee may delegate to one or more officers of the Company or any of its Affiliates the authority to act on behalf of the Committee with respect to any matter, right, obligation, or election that is the responsibility of or that is allocated to the Committee herein, and that may be so delegated as a matter of law, except for grants of awards to persons (i) who are non-employee members of the Board or otherwise are subject to Section 16 of the Exchange Act or (ii) who are, or who are reasonably expected to be, “covered employees” for purposes of Section 162(m) of the Code. (d) Unless otherwise expressly provided in the 2010 Plan, all designations, determinations, interpretations, and other decisions under or with respect to the 2010 Plan or any award or any documents evidencing awards granted pursuant to the 2010 Plan shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon all persons or entities, including, without limitation, the Company, any of its affiliates, any participant, any holder or beneficiary of any award, and any stockholder of the Company. (e) No member of the Board, the Committee, delegate of the Committee or any officer, employee or agent of the Company (each such person, an “Indemnifiable Person”) shall be liable for any action taken or omitted to be taken or any determination made in good faith with respect to the 2010 Plan or any award hereunder. Each Indemnifiable Person shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense (including attorneys’ fees) that may be imposed upon or incurred by such Indemnifiable Person in connection with or resulting from any action, suit or proceeding to which such Indemnifiable Person may be a party or in which such Indemnifiable Person may be involved by reason of any action taken or omitted to be taken under the 2010 Plan or any award agreement and against and from any and all amounts paid by such Indemnifiable Person with the Company’s approval, in settlement thereof, or paid by such Indemnifiable Person in satisfaction of any judgment in any such action, suit or proceeding against such Indemnifiable Person,

 
-3- provided, that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification shall not be available to an Indemnifiable Person to the extent that a final judgment or other final adjudication (in either case not subject to further appeal) binding upon such Indemnifiable Person determines that the acts or omissions of such Indemnifiable Person giving rise to the indemnification claim resulted from such Indemnifiable Person’s fraud, gross negligence or willful criminal act or omission or that such right of indemnification is otherwise prohibited by law or by the Company’s Certificate of Incorporation or By-Laws. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such Indemnifiable Persons may be entitled under the Company’s Certificate of Incorporation or By-Laws or as a matter of law or otherwise, or any other power that the Company may have to indemnify such Indemnifiable Persons or hold them harmless. (f) Notwithstanding anything to the contrary contained in the 2010 Plan, the Board may, in its sole discretion, at any time and from time to time, grant awards and administer the 2010 Plan with respect to such awards. In any such case, the Board shall have all the authority granted to the Committee under the 2010 Plan. IN WITNESS WHEREOF, this Amendment has been executed by the Compensation and Benefits Committee of the Board of Directors of Federal Signal Corporation, this 26th day of March, 2015.

 
1 EXHIBIT 10.11 SECOND AMENDMENT TO THE 2005 EXECUTIVE INCENTIVE COMPENSATION PLAN (2010 RESTATEMENT) This Second Amendment to the 2005 Executive Incentive Compensation Plan, as amended (2010 Restatement) (the “2010 EICP”) was approved by the Board of Directors of Federal Signal Corporation on July 24, 2017. WHEREAS, Federal Signal Corporation (the “Company”) maintains the 2010 EICP; WHEREAS, the Board of Directors of the Company (the “Board”) now deems it desirable to amend the 2010 EICP in certain respects; and WHEREAS, this Second Amendment of the 2010 EICP shall supersede and amend the provision of the 2010 EICP set forth below in its entirety. NOW THEREFORE, by virtue and in the exercise of the powers reserved to the Board, under Section 16 of the 2010 EICP, the 2010 EICP is hereby amended in the following respects: 1. Section 14 of the Plan is amended in its entirety to read as follows: 14. Taxes The Company shall be entitled to withhold taxes in compliance with applicable tax withholding requirements, if any, with respect to any amounts payable or shares deliverable under this 2010 Plan after giving the person entitled to receive such payment or delivery notice as far in advance as practicable, and the Company may defer making payment or delivery as to any benefit if any such tax is payable until indemnified to its satisfaction. In the sole discretion of the Administrator, the person entitled to any such delivery may, by notice to the Company at the time the requirement for such delivery is first established, elect to have such withholding satisfied by a reduction of the number of shares otherwise so deliverable, such reduction to be calculated based on a closing market price on the date of such notice. In no event shall the amount of such tax withholding exceed the maximum statutory tax rates (or such other rate as would not trigger a negative accounting impact), as determined by the Company in its sole discretion * * * Except as modified by this First Amendment, all terms and provisions of the 2010 EICP shall remain in full force and effect.

 
1 EXHIBIT 10.12 FIRST AMENDMENT TO THE FEDERAL SIGNAL CORPORATION EXECUTIVE INCENTIVE PERFORMANCE PLAN AS AMENDED AND RESTATED This First Amendment to the Federal Signal Executive Incentive Performance Plan, As Amended and Restated (the “EIPP”) was approved by the Compensation and Benefits Committee of the Board of Directors of Federal Signal Corporation (the “Committee”) on July 24, 2017. WHEREAS, Federal Signal Corporation (the “Company”) maintains the EIPP; WHEREAS, the Committee (the “Board”) now deems it desirable to amend the EIPP in certain respects; and WHEREAS, this First Amendment of the EIPP shall supersede and amend the provision of the EIPP set forth below in its entirety. NOW THEREFORE, by virtue and in the exercise of the powers reserved to the Committee, under Section 8.1 of the EIPP, the EIPP is hereby amended in the following respects: 1. Section 7.2 of the Plan is amended in its entirety to read as follows: 7.2. Withholding Taxes. The Company has the right to deduct from all payments or awards under this Plan any taxes in compliance with applicable tax withholding requirements, if any. In no event shall the amount of such tax withholding exceed the maximum statutory tax rates (or such other rate as would not trigger a negative accounting impact), as determined by the Company in its sole discretion. * * * Except as modified by this First Amendment, all terms and provisions of the EIPP shall remain in full force and effect.

 
1 EXHIBIT 10.13 FIRST AMENDMENT TO THE FEDERAL SIGNAL CORPORATION 2015 EXECUTIVE INCENTIVE COMPENSATION PLAN This First Amendment to the Federal Signal Corporation 2015 Executive Incentive Compensation Plan (the “Plan”) was approved by the Board of Directors of Federal Signal Corporation on July 24, 2017. WHEREAS, Federal Signal Corporation (the “Company”) maintains the Plan; WHEREAS, the Board of Directors of the Company (the “Board”) now deems it desirable to amend the Plan in certain respects; and WHEREAS, this First Amendment of the Plan shall supersede and amend the provisions of the Plan set forth below in their entirety. NOW THEREFORE, by virtue and in the exercise of the powers reserved to the Board, under Section 15 of the Plan, the Plan is hereby amended in the following respects: 1. Section 7(d) of the Plan is amended in its entirety to read as follows: 7. Options. (d) Method of Exercise and Form of Payment. Method of Exercise and Form of Payment. No shares of Common Stock shall be delivered pursuant to any exercise of an Option until payment in full of the Exercise Price therefor is received by the Company and the Participant has paid to the Company an amount equal to any federal, state, local and non-U.S. income and employment taxes required to be withheld. Options that have become exercisable may be exercised by delivery of written or electronic notice of exercise to the Company in accordance with the terms of the Option accompanied by payment of the Exercise Price. The Exercise Price shall be payable (i) in cash, check, cash equivalent and/or shares of Common Stock valued at the Fair Market Value at the time the Option is exercised (including, pursuant to procedures approved by the Committee, by means of attestation of ownership of a sufficient number of shares of Common Stock in lieu of actual delivery of such shares to the Company); or (ii) by such other method as the Committee may permit in its sole discretion, including without limitation: (A) in other property having a fair market value on the date of exercise equal to the Exercise Price, (B) if there is a public market for the shares of Common Stock at such time, by means of a broker-assisted “cashless exercise” pursuant to which the Company is delivered a copy of irrevocable instructions to a stockbroker to sell the shares of Common Stock otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company an amount equal to the Exercise Price, or (C) by a “net exercise” method whereby the Company withholds from the delivery of the shares of Common Stock for which the Option was exercised that number of shares of Common Stock having a Fair Market Value equal to the aggregate Exercise Price for the shares of Common Stock for which the Option was exercised. Any fractional shares of Common Stock shall be settled in cash. Notwithstanding the foregoing, the Committee may, in its sole discretion, implement a provision with respect to Options providing that if, on the last day of an Option Period, the Participant has not then exercised such Option and such Option meets certain criteria as may be established by the Committee, such Option shall be deemed to have been exercised by the Participant on the last day of the Option Period by virtue of a net exercise and the Company shall make the appropriate payment to such Participant after complying with applicable withholding tax requirements, if any, attributable to such exercise, but in no event exceeding the maximum statutory tax rates (or such other rate as would not trigger a negative accounting impact), as determined by the Company in its sole discretion. .

 
2 2. Section 8(c) of the Plan is amended in its entirety to read as follows: 8. Stock Appreciation Rights. (c) Method of Exercise. SARs that have become exercisable may be exercised by delivery of written or electronic notice of exercise to the Company in accordance with the terms of the Award, specifying the number of SARs to be exercised and the date on which such SARs were awarded. Notwithstanding the foregoing, the Committee may, in its sole discretion, implement a provision with respect to SARs providing that if, on the last day of the Option Period (or in the case of a SAR independent of an option, the SAR Period), the Fair Market Value exceeds the Strike Price, the Participant has not exercised the SAR or the corresponding Option (if applicable), and neither the SAR nor the corresponding Option (if applicable) has expired, such SAR shall be deemed to have been exercised by the Participant on such last day and the Company shall make the appropriate payment to such Participant after complying with applicable withholding tax requirements, if any, attributable to such exercise, but in no event exceeding the maximum statutory tax rates (or such other rate as would not trigger a negative accounting impact), as determined by the Company in its sole discretion. 3. Section 16(c)(i) and (ii) of the Plan are amended in its entirety to read as follows: 16. General. (c) Tax Withholding. (i) A Participant shall be required to pay to the Company or any of its Affiliates, and the Company or any of its Affiliates shall have the right and is hereby authorized to withhold, from any cash, shares of Common Stock, other securities or other property deliverable under any Award or from any compensation or other amounts owing to a Participant, the amount (in cash, Common Stock, other securities or other property) of any withholding taxes in respect of an Award, its exercise, or any payment or transfer under an Award or under the Plan and to take such other action as may be necessary in the opinion of the Committee or the Company to comply with applicable withholding tax requirements for the payment of such withholding and taxes. In no event shall the amount of such tax withholding exceed the maximum statutory tax rates (or such other rate as would not trigger a negative accounting impact), as determined by the Company in its sole discretion. (ii) Without limiting the generality of clause (i) above, the Committee may, in its sole discretion, permit a Participant to satisfy, in whole or in part, the foregoing withholding liability by: (A) the delivery of shares of Common Stock owned by the Participant having a Fair Market Value at the tender date determined by the Committee to be sufficient to comply with applicable withholding tax requirements, if any, attributable to such taxable event, but in no event exceeding the maximum statutory tax rates (or such other rate as would not trigger a negative accounting impact), as determined by the Company in its sole discretion; or (B) having the Company withhold from the number of shares of Common Stock otherwise issuable or deliverable pursuant to the exercise or settlement of the Award having a Fair Market Value at the date of the applicable taxable event determined by the Committee to comply with applicable withholding tax requirements, if any, attributable to such taxable event, but in no event exceeding the maximum statutory tax rates (or such other rate as would not trigger a negative accounting impact), as determined by the Company in its sole discretion. * * * Except as modified by this First Amendment, all terms and provisions of the Plan shall remain in full force and effect.

 


EXHIBIT 31.1
CEO Certification under Section 302 of the Sarbanes-Oxley Act
I, Jennifer L. Sherman, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Federal Signal Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 8, 2017
 
 
/s/ Jennifer L. Sherman
 
 
Jennifer L. Sherman
 
President and Chief Executive Officer
 
(Principal Executive Officer)





EXHIBIT 31.2
CFO Certification under Section 302 of the Sarbanes-Oxley Act
I, Ian A. Hudson, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Federal Signal Corporation;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 8, 2017
 
 
/s/ Ian A. Hudson  
 
Ian A. Hudson
 
Vice President and Interim Chief Financial Officer
 
(Principal Financial Officer)





EXHIBIT 32.1
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Quarterly Report of Federal Signal Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jennifer L. Sherman, President and Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or 78o (d)); and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 8, 2017
 
 
/s/ Jennifer L. Sherman
 
 
Jennifer L. Sherman
 
President and Chief Executive Officer
 
( Principal Executive Officer)
This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. This certification shall also not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange act of 1934, as amended, except to the extent that the Company specifically incorporates it by reference.





EXHIBIT 32.2
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the Quarterly Report of Federal Signal Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ian A. Hudson, Vice President and Interim Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (15 U.S.C. 78m or 78o (d)); and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 8, 2017
 
 
/s/ Ian A. Hudson  
 
Ian A. Hudson
 
Vice President and Interim Chief Financial Officer
 
(Principal Financial Officer)
This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. This certification shall also not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange act of 1934, as amended, except to the extent that the Company specifically incorporates it by reference.



EXHIBIT 99.1
RELEASEHEADEREX991Q22015A06.JPG
 
 
 
 
 

FOR IMMEDIATE RELEASE
Federal Signal Corporation Reports Strong Second Quarter and Raises Full-Year Outlook
Oak Brook, Illinois, August 8, 2017 — Federal Signal Corporation (NYSE:FSS), a leader in environmental and safety solutions, today reported results for the second quarter ended June 30, 2017 .

•
Orders of $271 million , up $84 million , or 45% , from last year, including organic growth of $27 million , or 19%
•
Net sales of $224 million , up 30% compared to last year
•
GAAP earnings per share of $0.19 , up from $0.15 last year
•
Adjusted earnings per share of $0.23 , up from $0.17 last year
•
Operating cash flow up $22 million compared to last year
•
Raising full-year outlook to a range of $0.77 to $0.80, from a range of $0.70 to $0.78
Consolidated net sales for the second quarter were $224.4 million , up $52.1 million , or 30% versus the same quarter a year ago. Second quarter income from continuing operations was $11.5 million , equal to $0.19 per diluted share, compared to $9.4 million , equal to $0.15 per share, in the prior-year quarter.
The Company also reported adjusted net income from continuing operations for the second quarter of $13.8 million , equal to $0.23 per diluted share, compared to $10.1 million , or $0.17 per diluted share, in the same quarter a year ago. The Company is reporting adjusted results to facilitate comparisons of underlying performance on a year-over-year basis. A reconciliation of these and other non-GAAP measures is provided at the conclusion of this news release.
Q2 Earnings Exceed Expectations; Significant Increase in Orders and Backlog Driven by Organic Growth and M&A
“We are pleased to report an outstanding second quarter, with results that exceeded both revenue and earnings expectations,” commented Jennifer L. Sherman, President and Chief Executive Officer. “As in the first quarter, total reported orders were up significantly in comparison to the prior year, driven by acquisitions and robust organic order growth, where we saw benefits from customers replenishing rental fleets, momentum on the industrial side and the results of our initiative to expand into the utility market.”
Consolidated orders were $271.1 million for the quarter, up $83.8 million , or 45% , compared to the prior-year quarter. The Environmental Solutions Group reported orders of $214.7 million in the second quarter of 2017 , an increase of $79.4 million , or 59% , compared to the prior-year quarter. The improvement was largely due to the acquisition of TBEI and organic order growth of approximately $22 million , or 24% , primarily represented by improved orders for sewer cleaners and vacuum trucks. Orders within our Safety and Security Systems Group were up $4.4 million . Consolidated backlog at June 30, 2017 was $223 million , up $73 million , or 49% , compared to last year, and up $49 million , or 28% , from the end of the first quarter of 2017.
In the Environmental Solutions Group, net sales were up $54.9 million , or 46% , primarily due to $31.4 million of incremental net sales resulting from the JJE acquisition, which was completed in June 2016, an increase in shipments of sewer cleaners and vacuum trucks in the U.S., and the contribution of $18.1 million of TBEI sales for June, which has historically been a seasonally-strong month. Sales in the Safety and Security Systems Group decreased by $2.8 million , or 5% .
Consolidated second quarter operating income was $18.7 million , up $4.4 million , or 31% , compared to the prior-year quarter, primarily driven by a $6.1 million increase within the Environmental Solutions Group, partially offset by a $1.0 million reduction within the Safety and Security Systems Group and a $0.7 million increase in corporate expenses. Consolidated operating margin was 8.3% , unchanged from the prior-year quarter.
Consolidated adjusted earnings before interest, tax, depreciation and amortization (“adjusted EBITDA”) for the second quarter of 2017 was $28.9 million , up $9.5 million, or 49%, compared to the prior-year quarter, and consolidated adjusted EBITDA margin was 12.9% compared to 11.3% last year.

1


Adjusted EBITDA in the Environmental Solutions Group was up $10.8 million , or 58%, to $29.3 million , and its adjusted EBITDA margin was 16.8% , up from 15.5% last year. Within the Safety and Security Systems Group, adjusted EBITDA was $6.7 million , compared to $7.7 million last year, and its adjusted EBITDA margin was 13.4% , compared to 14.6% last year.
Completed TBEI Acquisition in June; Improved Cash Flow Facilitates Post-Acquisition Reduction in Debt Leverage
Net cash of $32.1 million was provided by continuing operating activities in the second quarter of 2017 , compared to $10.6 million in the prior-year quarter. For the first half of 2017 , net cash of $45.8 million was provided by continuing operating activities, compared to $3.9 million in the same period of 2016 .
During the second quarter, the Company completed the acquisition of TBEI, funding $243.0 million of the purchase price through borrowings under its credit facility, with the remainder being paid with existing cash on hand. At June 30, 2017 , consolidated debt was $289 million , total cash and cash equivalents were $37 million and the Company had $93 million of availability for borrowings under its credit facility.
“The improvement in our cash flow generation in the second quarter was particularly encouraging,” said Sherman. “It enabled us to pay down $20 million of borrowings, and our debt leverage at the end of the quarter was down to 2.4 times adjusted EBITDA, compared to 2.7 times at the beginning of June, when we completed the TBEI acquisition. While our short-term focus is on delevering, our long-term priorities for the use of our capital remain unchanged.”
The Company also funded dividends of $4.2 million during the second quarter, and the Board of Directors recently declared a $0.07 per share dividend that will be payable in the third quarter.
Outlook
“Our second quarter performance provides us with increased confidence in our full-year outlook,” Sherman noted. “While our municipal markets continue to be steady overall, we have seen some recent deferrals of larger orders of street sweepers and public safety products, which we believe to be temporary. With the growth in organic orders experienced in the first half of the year contributing to a strong backlog for vacuum trucks and sewer cleaners, and up to $0.03 of accretion currently expected from TBEI, we are raising our full-year 2017 adjusted EPS outlook to a new range of $0.77 to $0.80, from a range of $0.70 to $0.78.”
CONFERENCE CALL
Federal Signal will host its second quarter conference call on Tuesday, August 8, 2017 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 or by dialing phone number 1-888-806-6231 and entering the pin number 8899709. A replay will be available on Federal Signal’s website shortly after the call.
About Federal Signal
Federal Signal Corporation (NYSE: FSS) provides products and services to protect people and our planet. Founded in 1901, Federal Signal is a leading global designer, manufacturer and supplier of products and total solutions that serve municipal, governmental, industrial and commercial customers. Headquartered in Oak Brook, Ill., with manufacturing facilities worldwide, the Company operates two groups: Environmental Solutions and Safety and Security Systems. For more information on Federal Signal, visit: http://www.federalsignal.com .
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995
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; risks associated with acquisitions such as integration of operations and achieving anticipated revenue and cost benefits; foreign currency exchange rate changes; interest rate changes; increased legal expenses and litigation results; legal and regulatory developments and other risks and uncertainties described in filings with the Securities and Exchange Commission.
Contact: Ian Hudson, Interim Chief Financial Officer, +1-630-954-2000, ihudson@federalsignal.com


2



FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(in millions, except per share data)
2017
 
2016
 
2017
 
2016
Net sales
$
224.4

 
$
172.3

 
$
402.2

 
$
345.1

Cost of sales
169.7

 
127.3

 
303.9

 
252.7

Gross profit
54.7

 
45.0

 
98.3

 
92.4

Selling, engineering, general and administrative expenses
34.9

 
30.3

 
66.4

 
59.9

Acquisition and integration-related expenses
1.0

 
0.4

 
1.5

 
0.9

Restructuring
0.1

 
—

 
0.4

 
1.2

Operating income
18.7

 
14.3

 
30.0

 
30.4

Interest expense
1.3

 
0.4

 
1.9

 
0.8

Debt settlement charges
—

 
—

 
—

 
0.3

Other income, net
(0.2
)
 
(0.3
)
 
(0.5
)
 
(1.0
)
Income before income taxes
17.6

 
14.2

 
28.6

 
30.3

Income tax expense
6.1

 
4.8

 
9.9

 
10.5

Income from continuing operations
11.5

 
9.4

 
18.7

 
19.8

(Loss) gain from discontinued operations and disposal, net of income tax (benefit) expense of $(0.1), $(0.3), $0.0 and $4.1, respectively
(0.1
)
 
(0.3
)
 
—

 
2.9

Net income
$
11.4

 
$
9.1

 
$
18.7

 
$
22.7

Basic earnings per share:
 
 
 
 
 
 
 
Earnings from continuing operations
$
0.19

 
$
0.16

 
$
0.31

 
$
0.32

(Loss) earnings from discontinued operations and disposal, net of tax
—

 
(0.01
)
 
—

 
0.05

Net earnings per share
$
0.19

 
$
0.15

 
$
0.31

 
$
0.37

Diluted earnings per share:

 

 

 

Earnings from continuing operations
$
0.19

 
$
0.15

 
$
0.31

 
$
0.32

(Loss) earnings from discontinued operations and disposal, net of tax
—

 
—

 
—

 
0.05

Net earnings per share
$
0.19

 
$
0.15

 
$
0.31

 
$
0.37

Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
59.7

 
60.1

 
59.7

 
61.1

Diluted
60.3

 
60.9

 
60.3

 
61.9

Cash dividends declared per common share
$
0.07

 
$
0.07

 
$
0.14

 
$
0.14

 
 
 
 
 
 
 
 
Operating data:
 
 
 
 
 
 
 
Operating margin
8.3
%
 
8.3
%
 
7.5
%
 
8.8
%
Adjusted EBITDA
$
28.9

 
$
19.4

 
$
47.8

 
$
40.2

Adjusted EBITDA margin
12.9
%
 
11.3
%
 
11.9
%
 
11.6
%
Total orders
$
271.1

 
$
187.3

 
$
485.7

 
$
323.0

Backlog
222.7

 
149.8

 
222.7

 
149.8

Depreciation and amortization
6.6

 
4.2

 
12.3

 
7.2



3



FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
June 30,
2017
 
December 31,
2016
(in millions, except per share data)
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
37.0

 
$
50.7

Accounts receivable, net of allowances for doubtful accounts of $1.0 and $0.8, respectively
117.5

 
81.3

Inventories
139.7

 
120.1

Prepaid expenses and other current assets
8.7

 
7.5

Total current assets
302.9

 
259.6

Properties and equipment, net of accumulated depreciation of $106.7 and $101.3, respectively
63.9

 
42.9

Rental equipment, net of accumulated depreciation of $15.2 and $9.7, respectively
83.8

 
80.8

Goodwill
372.2

 
236.5

Intangible assets, net of accumulated amortization of $1.3 and $0.5, respectively
162.8

 
10.2

Deferred tax assets
6.7

 
8.2

Deferred charges and other assets
4.2

 
3.9

Long-term assets of discontinued operations
1.1

 
1.1

Total assets
$
997.6

 
$
643.2

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Current portion of long-term borrowings and capital lease obligations
$
0.3

 
$
0.5

Accounts payable
66.7

 
35.3

Customer deposits
6.5

 
4.5

Accrued liabilities:
 
 
 
Compensation and withholding taxes
17.6

 
13.8

Other current liabilities
40.8

 
28.7

Current liabilities of discontinued operations
0.8

 
2.1

Total current liabilities
132.7

 
84.9

Long-term borrowings and capital lease obligations
288.9

 
63.5

Long-term pension and other postretirement benefit liabilities
57.5

 
61.1

Deferred gain
9.7

 
10.7

Deferred tax liabilities
67.4

 
—

Other long-term liabilities
27.0

 
26.9

Long-term liabilities of discontinued operations
2.0

 
2.0

Total liabilities
585.2

 
249.1

Stockholders’ equity:
 
 
 
Common stock, $1 par value per share, 90.0 shares authorized, 65.9 and 65.4 shares issued, respectively
65.9

 
65.4

Capital in excess of par value
204.4

 
200.3

Retained earnings
312.1

 
301.8

Treasury stock, at cost, 6.0 and 5.8 shares, respectively
(84.5
)
 
(81.4
)
Accumulated other comprehensive loss
(85.5
)
 
(92.0
)
Total stockholders’ equity
412.4

 
394.1

Total liabilities and stockholders’ equity
$
997.6

 
$
643.2



4



FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 
Six Months Ended 
 June 30,
(in millions)
2017
 
2016
Operating activities:
 
 
 
Net income
$
18.7

 
$
22.7

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Loss (gain) from discontinued operations and disposal
—

 
(2.9
)
Depreciation and amortization
12.3

 
7.2

Deferred financing costs
0.2

 
0.5

Deferred gain
(1.0
)
 
(0.9
)
Stock-based compensation expense
2.7

 
2.2

Pension expense, net of funding
(2.8
)
 
(2.2
)
Deferred income taxes
2.8

 
7.0

Changes in operating assets and liabilities, net of effects of acquisitions and discontinued operations
12.9

 
(29.7
)
Net cash provided by continuing operating activities
45.8

 
3.9

Net cash (used for) provided by discontinued operating activities
(0.3
)
 
1.3

Net cash provided by operating activities
45.5

 
5.2

Investing activities:
 
 
 
Purchases of properties and equipment
(2.7
)
 
(3.6
)
Payments for acquisitions, net of cash acquired
(269.2
)
 
(102.6
)
Other, net
0.1

 
(0.5
)
Net cash used for continuing investing activities
(271.8
)
 
(106.7
)
Net cash (used for) provided by discontinued investing activities
(1.1
)
 
88.0

Net cash used for investing activities
(272.9
)
 
(18.7
)
Financing activities:
 
 
 
Increase in revolving lines of credit, net
223.0

 
64.8

Payments on long-term borrowings
—

 
(43.4
)
Payments of debt financing fees
(0.2
)
 
(1.1
)
Purchases of treasury stock
—

 
(33.1
)
Redemptions of common stock to satisfy withholding taxes related to stock-based compensation
(2.4
)
 
(2.6
)
Cash dividends paid to stockholders
(8.4
)
 
(8.6
)
Proceeds from stock-based compensation activity
1.2

 
0.2

Other, net
(0.2
)
 
(0.4
)
Net cash provided by (used for) continuing financing activities
213.0

 
(24.2
)
Net cash provided by discontinued financing activities
—

 
0.7

Net cash provided by (used for) financing activities
213.0

 
(23.5
)
Effects of foreign exchange rate changes on cash and cash equivalents
0.7

 
(0.3
)
Decrease in cash and cash equivalents
(13.7
)
 
(37.3
)
Cash and cash equivalents at beginning of year
50.7

 
76.0

Cash and cash equivalents at end of period
$
37.0

 
$
38.7


5



FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
GROUP RESULTS (Unaudited)
The following tables summarize group operating results as of and for the three and six months ended June 30, 2017 and 2016 :  
Environmental Solutions Group
 
Three Months Ended June 30,
 
Six Months Ended June 30,
($ in millions)
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Net sales
$
174.3


$
119.4

 
$
54.9

 
$
302.1

 
$
234.8

 
$
67.3

Operating income
21.0


14.9

 
6.1

 
31.3

 
31.4

 
(0.1
)
Adjusted EBITDA
29.3

 
18.5

 
10.8

 
44.8

 
36.8

 
8.0

Operating data:
 
 
 
 
 
 
 
 
 
 
 
Operating margin
12.0
%
 
12.5
%
 
(0.5
)%
 
10.4
%
 
13.4
%
 
(3.0
)%
Adjusted EBITDA margin
16.8
%
 
15.5
%
 
1.3
 %
 
14.8
%
 
15.7
%
 
(0.9
)%
Total orders
214.7

 
135.3

 
79.4

 
381.3

 
218.5

 
162.8

Backlog
197.8

 
117.0

 
80.8

 
197.8

 
117.0

 
80.8

Depreciation and amortization
5.6


3.1

 
2.5

 
10.2

 
4.9

 
5.3

Safety and Security Systems Group
 
Three Months Ended June 30,
 
Six Months Ended June 30,
($ in millions)
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Net sales
$
50.1


$
52.9

 
$
(2.8
)
 
$
100.1

 
$
110.3

 
$
(10.2
)
Operating income
5.6


6.6

 
(1.0
)
 
12.0

 
11.5

 
0.5

Adjusted EBITDA
6.7

 
7.7

 
(1.0
)
 
14.4

 
14.9

 
(0.5
)
Operating data:
 
 
 
 
 
 
 
 
 
 
 
Operating margin
11.2
%
 
12.5
%
 
(1.3
)%
 
12.0
%
 
10.4
%
 
1.6
%
Adjusted EBITDA margin
13.4
%
 
14.6
%
 
(1.2
)%
 
14.4
%
 
13.5
%
 
0.9
%
Total orders
56.4

 
52.0

 
4.4

 
104.4

 
104.5

 
(0.1
)
Backlog
24.9

 
32.8

 
(7.9
)
 
24.9

 
32.8

 
(7.9
)
Depreciation and amortization
1.0


1.1

 
(0.1
)
 
2.0

 
2.2

 
(0.2
)
Corporate Expenses
Corporate operating expenses were $7.9 million and $7.2 million for the three months ended June 30, 2017 and 2016 , respectively. For the six months ended June 30, 2017 and 2016 , corporate operating expenses were $13.3 million and $12.5 million , respectively.

6



SEC REGULATION G NON-GAAP RECONCILIATION
The financial measures presented below are unaudited and are not in accordance with U.S. generally accepted accounting principles (“GAAP”). The non-GAAP financial information presented herein should be considered supplemental to, and not a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company has provided this supplemental information to investors, analysts, and other interested parties to enable them to perform additional analyses of operating results, to illustrate the results of operations giving effect to the non-GAAP adjustments shown in the reconciliations below, and to provide an additional measure of performance which management considers in operating the business.
Adjusted net income and earnings per share from continuing operations (“EPS”):
The Company believes that modifying its 2017 and 2016 net income and diluted EPS provides additional measures which are representative of the Company’s underlying performance and improves the comparability of results across reporting periods. During the three and six months ended June 30, 2017 and 2016 adjustments were made to reported GAAP net income and diluted EPS to exclude the impact of restructuring activity, executive severance costs, acquisition and integration-related expenses, purchase accounting effects and debt settlement charges, where applicable.
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(in millions)
2017
 
2016
 
2017
 
2016
Income from continuing operations
$
11.5

 
$
9.4

 
$
18.7

 
$
19.8

Add:
 
 
 
 
 
 
 
Income tax expense
6.1

 
4.8

 
9.9

 
10.5

Income before income taxes
17.6

 
14.2

 
28.6

 
30.3

Add:
 
 
 
 
 
 
 
Restructuring
0.1


—

 
0.4

 
1.2

Executive severance costs
—


—

 
0.7


—

Acquisition and integration-related expenses
1.0


0.4

 
1.5

 
0.9

Purchase accounting effects (a)
2.5


0.5

 
3.0


0.5

Debt settlement charges
—

 
—

 
—

 
0.3

Adjusted income before income taxes
21.2

 
15.1

 
34.2

 
33.2

Adjusted income tax expense (b)
(7.4
)
 
(5.0
)
 
(11.9
)
 
(11.5
)
Adjusted net income from continuing operations
$
13.8

 
$
10.1

 
$
22.3

 
$
21.7

 
 
 
 
 
 
 
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(dollars per diluted share)
2017
 
2016
 
2017
 
2016
EPS, as reported
$
0.19

 
$
0.15

 
$
0.31

 
$
0.32

Add:
 
 
 
 
 
 
 
Income tax expense
0.10

 
0.08

 
0.16

 
0.17

Income before income taxes
0.29

 
0.23

 
0.47

 
0.49

Add:
 
 
 
 
 
 
 
Restructuring
—

 
—

 
0.01

 
0.02

Executive severance costs
—

 
—

 
0.01

 
—

Acquisition and integration-related expenses
0.02

 
0.01

 
0.03

 
0.01

Purchase accounting effects (a)
0.04

 
0.01

 
0.05

 
0.01

Debt settlement charges
—

 
—

 
—

 
0.01

Adjusted income before income taxes
0.35

 
0.25

 
0.57

 
0.54

Adjusted income tax expense (b)
(0.12
)
 
(0.08
)
 
(0.20
)
 
(0.19
)
Adjusted EPS
$
0.23

 
$
0.17

 
$
0.37

 
$
0.35

(a)
Purchase accounting effects relate to adjustments to exclude the step-up in the valuation of equipment acquired in connection with current and prior-year acquisitions that was sold subsequent to the acquisition dates in the three and six months ended June 30, 2017 and 2016 , as well as to exclude the depreciation of the step-up in the valuation of the rental fleet acquired in the JJE transaction.
(b)
Adjusted income tax expense for the three and six months ended June 30, 2017 and 2016 was recomputed after excluding the impact of restructuring activity, executive severance costs, acquisition and integration-related expenses, purchase accounting effects and debt settlement charges, where applicable.

7



Adjusted EBITDA:
The Company uses adjusted EBITDA and the ratio of adjusted EBITDA to net sales (“adjusted EBITDA margin”), at both the consolidated and segment level, as additional measures which are representative of its underlying performance and to improve the comparability of results across reporting periods. We believe that investors use versions of these metrics in a similar manner. For these reasons, the Company believes that adjusted EBITDA and adjusted EBITDA margin, at both the consolidated and segment level, are meaningful metrics to investors in evaluating the Company’s underlying financial performance.
Consolidated adjusted EBITDA is a non-GAAP measure that represents the total of income from continuing operations, interest expense, debt settlement charges, acquisition and integration-related expenses, restructuring activity, executive severance costs, purchase accounting effects, other income/expense, income tax expense, and depreciation and amortization expense. Consolidated adjusted EBITDA margin is a non-GAAP measure that represents the total of income from continuing operations, interest expense, debt settlement charges, acquisition and integration-related expenses, restructuring activity, executive severance costs, purchase accounting effects, other income/expense, income tax expense, and depreciation and amortization expense divided by net sales for the applicable period(s).
Segment adjusted EBITDA is a non-GAAP measure that represents the total of segment operating income, acquisition and integration-related expenses, restructuring activity, purchase accounting effects and depreciation and amortization expense, as applicable. Segment adjusted EBITDA margin is a non-GAAP measure that represents the total of segment operating income, acquisition and integration-related expenses, restructuring activity, purchase accounting effects and depreciation and amortization expense, as applicable, divided by net sales for the applicable period(s). Segment operating income includes all revenues, costs and expenses directly related to the segment involved. In determining segment income, neither corporate nor interest expenses are included. Segment depreciation and amortization expense relates to those assets, both tangible and intangible, that are utilized by the respective segment.
Other companies may use different methods to calculate adjusted EBITDA and adjusted EBITDA margin.
Consolidated
The following table summarizes the Company’s consolidated adjusted EBITDA and adjusted EBITDA margin and reconciles income from continuing operations to consolidated adjusted EBITDA for the three and six months ended June 30, 2017 and 2016 :
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
($ in millions)
2017
 
2016
 
2017
 
2016
Income from continuing operations
$
11.5

 
$
9.4

 
$
18.7

 
$
19.8

Add:
 
 
 
 
 
 
 
Interest expense
1.3

 
0.4

 
1.9

 
0.8

Debt settlement charges
—

 
—

 
—

 
0.3

Acquisition and integration-related expenses
1.0

 
0.4

 
1.5

 
0.9

Restructuring
0.1


—

 
0.4

 
1.2

Executive severance costs
—

 
—

 
0.7

 
—

Purchase accounting effects
2.5

 
0.5

 
3.0

 
0.5

Other income, net
(0.2
)
 
(0.3
)
 
(0.5
)
 
(1.0
)
Income tax expense
6.1

 
4.8

 
9.9

 
10.5

Depreciation and amortization
6.6

 
4.2

 
12.2

 
7.2

Consolidated adjusted EBITDA
$
28.9


$
19.4


$
47.8


$
40.2

 
 
 
 
 
 
 
 
Net sales
$
224.4

 
$
172.3

 
$
402.2

 
$
345.1

 
 
 
 
 
 
 
 
Consolidated adjusted EBITDA margin
12.9
%

11.3
%

11.9
%

11.6
%

Environmental Solutions Group
The following table summarizes the Environmental Solutions Group’s adjusted EBITDA and adjusted EBITDA margin and reconciles operating income to adjusted EBITDA for the three and six months ended June 30, 2017 and 2016 :

8



 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
($ in millions)
2017
 
2016
 
2017
 
2016
Operating income
$
21.0

 
$
14.9

 
$
31.3

 
$
31.4

Add:
 
 
 
 
 
 
 
Acquisition and integration-related expenses
0.2

 
—

 
0.4

 
—

Purchase accounting effects
2.5

 
0.5

 
3.0

 
0.5

Depreciation and amortization
5.6

 
3.1

 
10.1

 
4.9

Adjusted EBITDA
$
29.3


$
18.5

 
$
44.8


$
36.8

 
 
 
 
 
 
 
 
Net sales
$
174.3

 
$
119.4

 
$
302.1

 
$
234.8

 
 
 
 
 
 
 
 
Adjusted EBITDA margin
16.8
%
 
15.5
%
 
14.8
%
 
15.7
%

Safety and Security Systems Group
The following table summarizes the Safety and Security Systems Group’s adjusted EBITDA and adjusted EBITDA margin and reconciles operating income to adjusted EBITDA for the three and six months ended June 30, 2017 and 2016 :
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
($ in millions)
2017
 
2016
 
2017
 
2016
Operating income
$
5.6

 
$
6.6

 
$
12.0

 
$
11.5

Add:
 
 
 
 
 
 
 
Restructuring
0.1

 
—

 
0.4

 
1.2

Depreciation and amortization
1.0

 
1.1

 
2.0

 
2.2

Adjusted EBITDA
$
6.7


$
7.7

 
$
14.4


$
14.9

 
 
 
 
 
 
 
 
Net sales
$
50.1

 
$
52.9

 
$
100.1

 
$
110.3

 
 
 
 
 
 
 
 
Adjusted EBITDA margin
13.4
%
 
14.6
%
 
14.4
%
 
13.5
%


9