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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________ 
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
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
  _____________________________________________
 fss-20220930_g1.jpg
FEDERAL SIGNAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware36-1063330
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1415 West 22nd Street, Oak Brook, Illinois
(Address of principal executive offices)
60523
(Zip code)
(630954-2000
(Registrant’s telephone number, including area code)
  _____________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $1.00 per shareFSSNew York Stock Exchange
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      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes      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 filerAccelerated filer
Non-accelerated filerSmaller 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  
As of October 31, 2022, the number of shares outstanding of the registrant’s common stock was 60,636,559.


FEDERAL SIGNAL CORPORATION
TABLE OF CONTENTS
Page
PART I.
Item 1.
            Note 13 - Subsequent Events
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


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, 2021, which was filed with the SEC on March 1, 2022. 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, including, for example, the ongoing coronavirus pandemic and the government response to the pandemic. 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.
1

PART I. FINANCIAL INFORMATION
Item 1.     Financial Statements (Unaudited).
FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions, except per share data)2022202120222021
Net sales$346.4 $298.3 $1,043.3 $911.8 
Cost of sales263.6 227.4 795.0 690.5 
Gross profit82.8 70.9 248.3 221.3 
Selling, engineering, general and administrative expenses39.8 33.4 125.5 111.6 
Amortization expense3.1 2.8 9.6 8.2 
Acquisition and integration-related expenses (benefits)0.4 0.4 (1.0)0.9 
Operating income39.5 34.3 114.2 100.6 
Interest expense2.7 1.1 5.9 3.3 
Other expense (income), net0.1 (0.3)(0.6)(1.1)
Income before income taxes36.7 33.5 108.9 98.4 
Income tax expense4.9 4.3 23.1 17.3 
Net income$31.8 $29.2 $85.8 $81.1 
Earnings per share:
Basic$0.53 $0.48 $1.42 $1.33 
Diluted0.52 0.47 1.40 1.31 
Weighted average common shares outstanding:
Basic60.4 60.9 60.5 60.8 
Diluted61.0 61.7 61.1 61.8 
See notes to condensed consolidated financial statements.
2

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
 Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions)2022202120222021
Net income $31.8 $29.2 $85.8 $81.1 
Other comprehensive income (loss):
Change in foreign currency translation adjustment(11.9)(4.2)(22.1)(3.4)
Change in unrecognized net actuarial loss and prior service cost related to pension benefit plans, net of income tax expense of $0.3, $0.2, $0.8 and $0.7, respectively
1.8 1.4 4.9 3.1 
Change in unrealized gain or loss on interest rate swaps, net of income tax expense of $0.4, $0.0, $1.2 and $0.3, respectively
1.1 0.1 3.4 0.9 
Total other comprehensive (loss) income(9.0)(2.7)(13.8)0.6 
Comprehensive income$22.8 $26.5 $72.0 $81.7 
See notes to condensed consolidated financial statements.
3

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30,
2022
December 31,
2021
(in millions, except per share data)(Unaudited) 
ASSETS
Current assets:
Cash and cash equivalents$35.5 $40.5 
Accounts receivable, net of allowances for doubtful accounts of $2.1 and $2.1, respectively
170.0 136.0 
Inventories287.5 229.1 
Prepaid expenses and other current assets17.8 25.4 
Total current assets510.8 431.0 
Properties and equipment, net of accumulated depreciation of $159.6 and $151.6, respectively
170.8 141.9 
Rental equipment, net of accumulated depreciation of $44.1 and $43.8, respectively
108.5 108.4 
Operating lease right-of-use assets25.3 29.8 
Goodwill430.8 432.2 
Intangible assets, net of accumulated amortization of $52.0 and $42.7, respectively
197.6 205.7 
Deferred tax assets8.0 8.4 
Other long-term assets13.3 8.7 
Total assets$1,465.1 $1,366.1 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term borrowings and finance lease obligations$0.7 $0.6 
Accounts payable80.9 64.8 
Customer deposits23.1 21.9 
Accrued liabilities:
Compensation and withholding taxes28.5 29.9 
Current operating lease liabilities6.8 8.8 
Other current liabilities41.4 44.4 
Total current liabilities181.4 170.4 
Long-term borrowings and finance lease obligations330.8 282.2 
Long-term operating lease liabilities19.1 22.1 
Long-term pension and other postretirement benefit liabilities35.5 40.4 
Deferred tax liabilities56.7 53.2 
Other long-term liabilities13.6 13.8 
Total liabilities637.1 582.1 
Stockholders’ equity:
Common stock, $1 par value per share, 90.0 shares authorized, 69.2 and 68.9 shares issued, respectively
69.2 68.9 
Capital in excess of par value265.1 256.7 
Retained earnings753.0 683.6 
Treasury stock, at cost, 8.6 and 8.0 shares, respectively
(171.3)(151.0)
Accumulated other comprehensive loss(88.0)(74.2)
Total stockholders’ equity828.0 784.0 
Total liabilities and stockholders’ equity$1,465.1 $1,366.1 
See notes to condensed consolidated financial statements.
4

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 Nine Months Ended
September 30,
(in millions)20222021
Operating activities:
Net income$85.8 $81.1 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization40.7 37.5 
Stock-based compensation expense7.5 5.5 
Deferred income taxes0.3 (8.0)
Changes in operating assets and liabilities(101.9)(61.0)
Net cash provided by operating activities32.4 55.1 
Investing activities:
Purchases of properties and equipment(45.6)(12.5)
Payments for acquisition-related activity, net of cash acquired(6.6)(52.2)
Other, net2.1 0.2 
Net cash used for investing activities(50.1)(64.5)
Financing activities:
Increase in revolving lines of credit, net49.9 40.1 
Purchases of treasury stock(16.1)(3.4)
Redemptions of common stock to satisfy withholding taxes related to stock-based compensation(3.0)(7.8)
Cash dividends paid to stockholders(16.4)(16.5)
Proceeds from stock-based compensation activity0.1 4.1 
Other, net(0.1)(0.1)
Net cash provided by financing activities14.4 16.4 
Effects of foreign exchange rate changes on cash and cash equivalents(1.7)(0.7)
(Decrease) increase in cash and cash equivalents(5.0)6.3 
Cash and cash equivalents at beginning of year40.5 81.7 
Cash and cash equivalents at end of period$35.5 $88.0 
See notes to condensed consolidated financial statements.
5

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
Three Months Ended September 30, 2022
(in millions)Common
Stock
Capital in
Excess of
Par
Value
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Loss
Total
Balance at July 1, 2022$69.2 $262.4 $726.7 $(170.2)$(79.0)$809.1 
Net income31.8 31.8 
Total other comprehensive loss(9.0)(9.0)
Cash dividends declared ($0.09 per share)
(5.5)(5.5)
Stock-based payments:
Stock-based compensation2.1 2.1 
Stock option exercises and other 0.6 (1.1)(0.5)
Balance at September 30, 2022$69.2 $265.1 $753.0 $(171.3)$(88.0)$828.0 
Three Months Ended September 30, 2021
(in millions)Common
Stock
Capital in
Excess of
Par
Value
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Loss
Total
Balance at July 1, 2021$68.7 $249.6 $645.9 $(129.8)$(88.4)$746.0 
Net income29.2 29.2 
Total other comprehensive loss(2.7)(2.7)
Cash dividends declared ($0.09 per share)
(5.5)(5.5)
Stock-based payments:
Stock-based compensation1.7 1.7 
Stock option exercises and other 0.6 (0.4)0.2 
Stock repurchase program(3.2)(3.2)
Balance at September 30, 2021$68.7 $251.9 $669.6 $(133.4)$(91.1)$765.7 

Nine Months Ended September 30, 2022
(in millions)Common
Stock
Capital in
Excess of
Par
Value
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Loss
Total
Balance at January 1, 2022$68.9 $256.7 $683.6 $(151.0)$(74.2)$784.0 
Net income85.8 85.8 
Total other comprehensive loss(13.8)(13.8)
Cash dividends declared ($0.27 per share)
(16.4)(16.4)
Stock-based payments:
Stock-based compensation6.8 6.8 
Stock option exercises and other0.2 1.7 (2.9)(1.0)
Performance share unit transactions0.1 (0.1)(1.3)(1.3)
Stock repurchase program(16.1)(16.1)
Balance at September 30, 2022$69.2 $265.1 $753.0 $(171.3)$(88.0)$828.0 
See notes to condensed consolidated financial statements.


6

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited)
Nine Months Ended September 30, 2021
(in millions)Common
Stock
Capital in
Excess of
Par
Value
Retained
Earnings
Treasury
Stock
Accumulated
Other
Comprehensive
Loss
Total
Balance at January 1, 2021$67.8 $240.8 $605.0 $(119.8)$(91.7)$702.1 
Net income81.1 81.1 
Total other comprehensive income0.6 0.6 
Cash dividends declared ($0.27 per share)
(16.5)(16.5)
Stock-based payments:
Stock-based compensation4.9 4.9 
Stock option exercises and other0.7 6.4 (6.4)0.7 
Performance share unit transactions0.2 (0.2)(3.8)(3.8)
Stock repurchase program(3.4)(3.4)
Balance at September 30, 2021$68.7 $251.9 $669.6 $(133.4)$(91.1)$765.7 
See notes to condensed consolidated financial statements.
7

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 services rendered by the Company are divided into two reportable segments: Environmental Solutions Group and 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. 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 presented herein are adequate to ensure the information presented is not misleading. Except as otherwise noted, 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, 2021, and should be read in conjunction with those consolidated financial statements and the notes thereto.
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. During the current year, the Company is separately presenting Amortization expense on the Condensed Consolidated Statements of Operations. Accordingly, prior-year amounts have been reclassified from Selling, engineering, general and administrative (“SEG&A”) expenses to conform to current-year presentation.
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, which may differ materially due to, among other things, 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, 2021, which was filed with the SEC on March 1, 2022. 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 October 2021, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Liabilities from Contracts with Customers, which requires an acquirer to recognize and measure contract assets and liabilities acquired in a business combination in accordance with Revenue from Contracts with Customers (Topic 606) rather than adjust them to fair value at the acquisition date. This ASU, which is applied on a prospective basis, is effective for fiscal years beginning after December 15, 2022, and early adoption is permitted. The Company early adopted this ASU effective January 1, 2022, and the guidance will be applied on a prospective basis to future business combinations, as applicable.
There are no new accounting pronouncements issued, but not yet adopted, that are expected to have a material impact on the Company’s results of operations, financial position or cash flow.
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. Actual results could differ from those estimates.
8

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)
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, 2021.
NOTE 2 – ACQUISITIONS
On October 4, 2021, the Company completed the acquisition of substantially all of the assets and operations of Ground Force Manufacturing LLC (“Ground Force”). Ground Force is a leading manufacturer of specialty material handling vehicles that support the extraction of metals. The Company expects that the Ground Force acquisition will further bolster its position as an industry leading diversified industrial manufacturer of specialized vehicles for maintenance and infrastructure markets with leading brands of premium, value-adding products, and a strong supporting aftermarket platform.
The cash consideration paid by the Company to acquire Ground Force was approximately $43.1 million and was funded through existing cash and borrowings on the Company’s credit facility.
During the three months ended September 30, 2022, the Company finalized its purchase price allocation for the Ground Force acquisition. The measurement period adjustments, which primarily resulted from the completion of the third-party valuation of acquired intangible assets, did not have a material impact on the financial statements as of, and for the three and nine months ended, September 30, 2022. The following table summarizes the fair value of assets acquired and liabilities assumed as of the acquisition date:
(in millions)
Purchase price, inclusive of closing adjustments$43.1 
Total consideration43.1 
Accounts receivable3.0 
Inventories4.0 
Prepaid expenses and other current assets0.2 
Properties and equipment1.3 
Operating lease right-of-use assets3.0 
Customer relationships (a)
16.8 
Trade names (b)
7.8 
Operating lease liabilities(3.0)
Accounts payable(1.8)
Accrued liabilities(0.7)
Customer deposits(2.9)
Net assets acquired27.7
Goodwill (c)
$15.4 
(a)    Represents the fair value assigned to customer relationships, which are considered to be definite-lived intangible assets, with an estimated useful life of 12 years.
(b)    Represents the fair value assigned to trade names, which are considered to be indefinite-lived intangible assets.
(c)    Goodwill, which is tax-deductible, has been allocated to the Environmental Solutions Group on the basis that the synergies identified will primarily benefit this segment.
9

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)
NOTE 3 – REVENUE RECOGNITION
The following table presents the Company’s Net sales disaggregated by geographic region, based on the location of the end customer, and by major product line:
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions)2022202120222021
Geographic Region:
U.S.$275.9 $233.3 $840.1 $692.5 
Canada44.9 44.9 131.2 151.6 
Europe/Other25.6 20.1 72.0 67.7 
Total net sales$346.4 $298.3 $1,043.3 $911.8 
Major Product Line:
Environmental Solutions
Vehicles and equipment (a)
$214.8 $185.5 $668.0 $578.2 
Parts44.1 37.5 130.0 112.7 
Rental income (b)
14.4 11.9 40.2 32.6 
Other (c)
11.5 14.2 27.1 35.0 
Total284.8 249.1 865.3 758.5 
Safety and Security Systems
Public safety and security equipment36.3 30.2 109.9 93.6 
Industrial signaling equipment16.7 12.2 46.0 39.9 
Warning systems8.6 6.8 22.1 19.8 
Total61.6 49.2 178.0 153.3 
Total net sales$346.4 $298.3 $1,043.3 $911.8 
(a)    Includes net sales from the sale of new and used vehicles and equipment, including sales of rental equipment.
(b)    Represents income from vehicle and equipment lease arrangements with customers.
(c)    Primarily includes revenues from services, such as maintenance and repair work, and the sale of extended warranty contracts.
Contract Balances
The Company recognizes contract liabilities when cash payments, such as customer deposits, are received in advance of the Company’s satisfaction of the related performance obligations. Contract liabilities are recognized as Net sales when the related performance obligations are satisfied, which generally occurs within three to six months of the cash receipt. Contract liability balances are not materially impacted by any other factors. The Company’s contract liabilities were $26.6 million and $25.3 million as of September 30, 2022 and December 31, 2021, respectively. Contract assets, such as unbilled receivables, were not material as of any of the periods presented herein.
NOTE 4 – INVENTORIES
The following table summarizes the components of Inventories:
(in millions)September 30,
2022
December 31,
2021
Finished goods$97.3 $87.9 
Raw materials152.8 116.4 
Work in process37.4 24.8 
Total inventories$287.5 $229.1 
10

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)
NOTE 5 – DEBT
The following table summarizes the components of Long-term borrowings and finance lease obligations:
(in millions)September 30,
2022
December 31, 2021
2019 Credit Agreement (a)
$329.5 $280.7 
Finance lease obligations2.0 2.1 
Total long-term borrowings and finance lease obligations, including current portion331.5 282.8 
Less: Current finance lease obligations0.7 0.6 
Total long-term borrowings and finance lease obligations$330.8 $282.2 
(a)     Defined as the Second Amended and Restated Credit Agreement, dated July 30, 2019, as amended.
As more fully described within Note 12 – 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:
 September 30, 2022December 31, 2021
 (in millions)
Notional
Amount
Fair
Value
Notional
Amount
Fair
Value
Long-term borrowings (a)
$331.5 $331.5 $282.8 $282.8 
(a)     Long-term borrowings includes current finance lease obligations of $0.7 million and $0.6 million as of September 30, 2022 and December 31, 2021, respectively.
Borrowings under the 2019 Credit Agreement bore interest, at the Company’s option, at a base rate or a Eurocurrency or Sterling Overnight Index Average (“SONIA”) daily rate (as each is defined in the 2019 Credit Agreement), plus, in each case, an applicable margin. The applicable margin ranged from zero to 0.75% for base rate borrowings and 1.00% to 1.75% for Eurocurrency or SONIA daily rate borrowings. The Company also paid a commitment fee to the lenders ranging between 0.10% to 0.25% per annum on the unused portion of the $500 million revolving credit facility along with other standard fees. Letter of credit fees were payable on outstanding letters of credit in an amount equal to the applicable Eurocurrency or SONIA daily rate margin plus other customary fees.
The Company was subject to certain net leverage ratio and interest coverage ratio financial covenants under the 2019 Credit Agreement that were measured at each fiscal quarter-end. The Company was in compliance with all such covenants as of September 30, 2022.
As of September 30, 2022, there was $329.5 million of cash drawn and $10.3 million of undrawn letters of credit under the 2019 Credit Agreement, with $160.2 million of net availability for borrowings. As of December 31, 2021, there was $280.7 million cash drawn and $10.1 million of undrawn letters of credit under the 2019 Credit Agreement, with $209.2 million of net availability for borrowings.
The following table summarizes the gross borrowings and gross payments under the Company’s revolving credit facilities:
Nine Months Ended
September 30,
(in millions)20222021
Gross borrowings$85.7 $161.0 
Gross payments 35.8 120.9 
On October 21, 2022, the Company entered into the Third Amended and Restated Credit Agreement (the “2022 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, PNC Bank, National Association and Truist Bank as syndication agents, and the other lenders and parties signatory thereto. The 2022 Credit Agreement amends and restates the 2019 Credit Agreement. See Note 13 – Subsequent Events for additional information.

11

FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)
Interest Rate Swap
On October 2, 2019, the Company entered into an interest rate swap (the “2019 Swap”) with a notional amount of $75.0 million, as a means of fixing the floating interest rate component on $75.0 million of its variable-rate debt. The 2019 Swap was previously designated as a cash flow hedge, with an original maturity date of July 30, 2024.
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 assessed quarterly. The Company does not use derivative instruments for trading or speculative purposes.
The fair value of the Company’s interest rate swaps 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 Condensed Consolidated Balance Sheets.
At September 30, 2022, the fair value of the 2019 Swap was an asset of $4.0 million, which was included in Other long-term assets on the Condensed Consolidated Balance Sheet. At December 31, 2021, the fair value of the Swap was a liability of $0.7 million, which was included in Other long-term liabilities on the Condensed Consolidated Balance Sheet. During the three and nine months ended September 30, 2022, unrealized pre-tax gains of $1.6 million and $4.7 million, respectively, were recorded in Accumulated other comprehensive loss. During the three and nine months ended September 30, 2021, unrealized pre-tax gains of $0.1 million and $1.2 million, respectively, were recorded in Accumulated other comprehensive loss. No ineffectiveness was recorded in either period.
In connection with entering into the 2022 Credit Agreement in October 2022, the Company terminated the 2019 Swap and entered into a new interest rate swap. See Note 13 – Subsequent Events for additional information.
NOTE 6 – INCOME TAXES
The Company recognized income tax expense of $4.9 million and $4.3 million for the three months ended September 30, 2022 and 2021, respectively. During the three months ended September 30, 2022, the Company recognized a $2.7 million tax benefit from the release of a valuation allowance that had previously been recorded against deferred tax assets associated with foreign tax credits in the U.S., which are now considered more-likely-than-not to be realized, primarily due to tax planning strategies. The Company also recognized a $1.1 million tax benefit during the three months ended September 30, 2022 associated with the release of a valuation allowance in the U.K., as the associated deferred tax assets are now considered more-likely-than-not to be realized primarily due to increased projections of future taxable income. During the three months ended September 30, 2021, the Company recognized a $3.4 million tax benefit associated with the release of state valuation allowances and a $1.1 million tax benefit associated with the remeasurement of deferred taxes for changes in state tax apportionment, both of which resulted from a change in tax status during the quarter. Including these items, the Company’s effective tax rate for the three months ended September 30, 2022 was 13.4%, compared to 12.8% in the prior-year quarter.
For the nine months ended September 30, 2022 and 2021, the Company recognized income tax expense of $23.1 million and $17.3 million, respectively. The increase in tax expense in the current-year period was largely due to higher pre-tax income levels and a $3.2 million reduction in the amount of excess tax benefits from stock compensation activity compared to the prior-year period. Including these items, the Company’s effective tax rate for the nine months ended September 30, 2022 was 21.2%, compared to 17.6% in the prior-year period.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)
NOTE 7 – PENSIONS
The following table summarizes the components of Net periodic pension expense (benefit): 
 U.S. Benefit PlanNon-U.S. Benefit Plan
 Three Months Ended
September 30,
Nine Months Ended
September 30,
Three Months Ended
September 30,
Nine Months Ended
September 30,
(in millions)20222021202220212022202120222021
Service cost$ $ $ $ $0.1 $ $0.1 $0.1 
Interest cost1.2 1.2 3.3 3.6 0.2 0.2 0.6 0.5 
Amortization of actuarial loss0.6 1.0 1.7 2.9 0.2 0.2 0.5 0.6 
Amortization of prior service cost     0.1 0.1 0.2 
Expected return on plan assets(1.7)(2.4)(5.2)(7.2)(0.5)(0.5)(1.5)(1.5)
Net periodic pension expense (benefit)$0.1 $(0.2)$(0.2)$(0.7)$ $ $(0.2)$(0.1)
The items that comprise Net periodic pension expense (benefit), other than service cost, are included as a component of Other expense (income), net on the Condensed Consolidated Statements of Operations.
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 September 30, 2022, the Company had outstanding performance and financial standby letters of credit, as well as outstanding bid and performance bonds, aggregating to $36.5 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 credit or bond being called is remote.
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 September 30, 2022, both the single year and maximum potential cash payments the Company could be required to make to repurchase equipment under these agreements amounted to $2.3 million. The Company’s risk under these repurchase arrangements would be partially mitigated by the value of the products repurchased as part of the transaction. Historical cash requirements and losses associated with these obligations have not been significant but could increase if customer defaults exceed current expectations.
The Company has certain lease agreements for facilities owned by affiliates which include provisions requiring the Company to guarantee any remaining lease payments in the event of default. As of September 30, 2022, the total amount of future payments guaranteed under these agreements was approximately $1.3 million. The Company believes the likelihood of defaulting on these leases is remote.
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.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)
The following table summarizes the changes in the Company’s warranty liabilities during the nine months ended September 30, 2022 and 2021:
(in millions)20222021
Balance at January 1$9.7 $10.2 
Provisions to expense5.3 5.2 
Acquisitions 0.2 
Payments(5.9)(6.3)
Balance at September 30$9.1 $9.3 
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 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 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
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)
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.
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 plaintiffs’ motions to amend their complaints. On April 24, 2015, the cases were transferred to Cook County chancery court to decide the class certification issues. On March 23, 2018, plaintiffs filed a motion to certify as a class all firefighters from the Chicago Fire Department who have filed lawsuits in this matter. The Company objected to certification and the parties engaged in discovery and other matters related to this motion.

Thereafter, on December 20, 2021, the parties executed a settlement agreement to resolve claims of approximately 462 firefighters still involved in the Cook County litigation, as well as the DuPage County litigation discussed below. Under the
terms of the settlement agreement, the Company agreed to pay a lump sum of $0.2 million to resolve the claims of these firefighters. The estimated settlement amount was accrued by the Company. The Company agreed to pay this lump sum amount based upon its assessment of firefighters who meet minimal bilateral hearing loss standards, which is a subset of the larger group referenced above. The settlement agreement did not require the payment of any attorney fees by the Company. The settlement agreement also provided that plaintiffs’ attorney would withdraw from representing firefighters who do not agree to the settlement. The Company had discretion to void the settlement agreement if less than 93% of these firefighters agreed to settle their claims; the settlement agreement would also be voided if less than 70% of eligible firefighters agreed to the settlement. The settlement agreement was subject to review and approval by the Court. In July 2022, the Company issued the $0.2 million settlement payment for eligible plaintiffs who submitted a release. The claims of all other eligible plaintiffs were dismissed for want of prosecution on August 5, 2022. Those plaintiffs may refile their claims by August 5, 2023.
The Company 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. Pursuant to these orders, these plaintiffs had six months thereafter to refile their cases in jurisdictions where these firefighters are located. Prior to this six-month deadline, attorneys representing some of these plaintiffs contacted the Company regarding possible settlement of their cases. During the year ended December 31, 2017, the Company entered into a global settlement agreement with two attorneys who represented approximately 1,090 of these plaintiffs. Under the terms of the settlement agreement, the Company offered $700 per plaintiff to settle these cases and 717 plaintiffs accepted this offer as a final settlement. The settlement agreement did not require the payment of any attorney fees by the Company. The attorneys representing these plaintiffs agreed to withdraw from representing plaintiffs who did not respond to the settlement offer. It is the Company’s position that the non-settling plaintiffs who failed to timely refile their cases following the February 2017 dismissal by the Circuit Court of Cook County are now barred from doing so by the statute of limitations. The Company 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 was also sued on this issue outside of the Cook County, Illinois venue. Between 2007 and 2009, a total of 71 lawsuits involving 71 plaintiffs were filed in the Court of Common Pleas, Philadelphia County, Pennsylvania. 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. 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 less
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FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)
than $0.1 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 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% 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.
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 involved 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 were located outside of Pennsylvania. One of the complaints in these cases, which involved 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 (the “Order”). After plaintiffs appealed this Order, the United States Court of Appeals for the Third Circuit affirmed the lower court decision awarding fees and costs to the Company.
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 involved a total of 193 firefighters, most of whom were 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 appealed this decision and, on September 25, 2018, the appellate court reversed this dismissal. The Company then filed a petition with the appellate court requesting that the court reconsider its ruling. On December 7, 2018, the appellate court granted the Company’s petition
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FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
(Unaudited)
and withdrew its prior decision. On June 25, 2020, the Court issued a decision affirming the trial court’s dismissal of these cases with prejudice.
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 for nominal amounts involving four Philadelphia firefighters that had been set for trial in Philadelphia state court during September 2016. During 2017, plaintiffs filed additional cases in the Court of Common Pleas, Philadelphia County, involving over 100 Philadelphia firefighter plaintiffs. 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 filed an opposition to this motion. These cases were then transferred to the mass tort program in Philadelphia for pretrial purposes. Plaintiffs’ counsel thereafter dismissed several plaintiffs. During November 2017, a trial involving one Philadelphia firefighter occurred. The jury returned a verdict in favor of the Company in this trial. Prior to a dismissal of these cases pursuant to the Tolling Agreement, discussed below, there was a total of 75 firefighters involved in cases pending in the Philadelphia mass tort program.
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,