Discontinued Operations

3 Months Ended

Mar. 31, 2013

Discontinued Operations

NOTE 11 – DISCONTINUED OPERATIONS

Federal Signal Technologies

On June 21, 2012, the Company announced that it had signed a definitive agreement to sell the FSTech Group and completed the disposition of the assets of the FSTech Group September 4, 2012. At closing, certain amounts were placed into escrow as security for indemnification obligations provided by the Company pursuant to the sale agreement, including defense and other costs associated with the Neology lawsuits discussed in Note 6 – Commitments and Contingencies. A significant portion of the escrow identified for general indemnification obligations will be held for a period of 18 months with the remaining general escrow funds to be held for 36 months. The portion of escrow associated with the Neology lawsuits and certain other indemnifications are to be held for a period of up to 48 months, but may be released earlier under certain conditions. If and when the relevant conditions associated with the Neology lawsuits and certain other contingencies are resolved and any remaining escrowed proceeds are released, the Company may recognize an adjustment to the loss from discontinued operations in its financial statements. The net carrying amount of the escrow receivable was classified in other current assets at March 31, 2013 and deferred charges and other assets at December 31, 2012, and was $8.0 million at both periods.

The following table represents the operating results of discontinued operations, principally the FSTech Group, as of March 31, 2012:

(in millions)	Three Months Ended March  31, 2012
Net sales	$	28.5
Interest allocated to discontinued operations		0.9
Other costs and expenses		31.4
Loss before income taxes		(3.8	)
Income tax expense		(0.1	)
Loss from discontinued operations	$	(3.9	)

For the three months ended March 31, 2013, the Company recorded $0.5 million in gains from the disposal of the FSTech Group, primarily from an adjustment in reserves associated with the original sale.

Other

In May 2012, the Company sold its Pearland Texas facility, which was previously used by the Company’s discontinued Pauluhn business, for proceeds of $0.9 million and recorded a pre-tax gain of $0.4 million. The Company retains certain liabilities for discontinued operations prior to January 1, 2010, primarily for environmental remediation and product liability.

Included in liabilities at March 31, 2013 and December 31, 2012 was $1.8 million at both periods related to environmental remediation at the Pearland, Texas facility, and $4.0 million and $4.6 million, respectively, relating to estimated product liability obligations of the discontinued North American refuse truck body business.

The following table represents the assets and liabilities of discontinued operations as of March 31, 2013 and December 31, 2012:

(in millions)	March 31, 2013		December 31, 2012
Current assets	$	0.9	$	0.8
Long-term assets		0.6		0.7
Financial service assets, net		0.5		0.5
Total assets of discontinued operations	$	2.0	$	2.0
Current liabilities	$	4.8	$	6.4
Long-term liabilities		8.2		8.6
Total liabilities of discontinued operations	$	13.0	$	15.0