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 (Zip Code) | |
(Address of principal executive offices) |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, par value $1.00 per share, with preferred share purchase rights | New York Stock Exchange |
Item 1 | Business. |
Safety and Security Systems Group |
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• | Closure of Preble, New York plant — By the end of 2004, the Company had closed its 120,000 square | |
• | Sale of interest in Plastisol B.V. Holdings — In 2004, the Company sold its 54% majority ownership interest in Plastisol B.V. Holdings to its minority partner. The Company acquired its ownership interest in Plastisol in 2001. Plastisol manufactures glassfiber reinforced polyester fire truck cabs and bodies mainly for the European and Asian markets. | |
• | Safety Storage Inc. joint venture — In June 2004, the Company concluded the sale of its 30% minority ownership interest in Safety Storage, Inc. to the majority owner. Safety Storage makes mobile buildings for the off-site storage of hazardous waste. | |
• | Industrial leasing portfolio — In 2001, the Company made the strategic decision to exit the leasing business for industrial customers. During 2004, the Company sold a $10 million portion of its industrial leases to a financial institution and continued the runoff of the rest of the portfolio; proceeds were used to pay down debt. | |
• | Dayton France manufacturing consolidation — The Company has completed reduction of certain manufacturing activities at Dayton France. |
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Item 1A. | Risk Factors. |
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Item 1B. | Unresolved Staff Comments. |
Item 2. | Properties. |
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Item 3. | Legal Proceedings. |
Item 4. | Submission of Matters to a Vote of Security Holders. |
Item | Executive Officers. |
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Item 5. | Market for Company’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
(a) | Market Information |
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12/01 | 12/02 | 12/03 | 12/04 | 12/05 | 12/06 | |||||||||||||||||||||||||
Federal Signal Corporation _ _ | 100.00 | 90.43 | 85.00 | 87.60 | 75.56 | 81.97 | ||||||||||||||||||||||||
Russell 2000 . . . . . . | 100.00 | 79.52 | 117.09 | 138.55 | 144.86 | 171.47 | ||||||||||||||||||||||||
S & P Midcap 400 — — – | 100.00 | 85.49 | 115.94 | 135.05 | 152.00 | 167.69 | ||||||||||||||||||||||||
S & P Industrials _ _ | 100.00 | 73.66 | 97.37 | 114.93 | 117.60 | 133.23 | ||||||||||||||||||||||||
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(b) | Not applicable |
(c) |
Total Number of Shares | ||||||||||||||||
Purchased as Part of | Maximum Number of | |||||||||||||||
Total Number of | Average Price | Publicly Announced | Shares That May Yet | |||||||||||||
Period | Shares Purchased(a) | Paid per Share | Plans | Be Purchased | ||||||||||||
Mar. 2006 | 175,000 | $ | 18.05 | 175,000 | ||||||||||||
May 2006 | 175,000 | 17.50 | 175,000 | |||||||||||||
July 2006 | 179,700 | 15.22 | 179,700 | |||||||||||||
Aug. 2006 | 220,500 | 14.65 | 220,500 | |||||||||||||
Total | 750,200 | $ | 16.27 | 750,200 |
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Item 6. | Selected Financial Data. |
2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||
Operating Results (dollars in millions): | ||||||||||||||||||||||
Net sales(a) | $ | 1,156.9 | $ | 1,063.9 | $ | 1,058.2 | $ | 980.9 | $ | 1,030.9 | ||||||||||||
Income before income taxes(a) | $ | 46.3 | $ | 4.9 | $ | 44.2 | $ | 56.6 | $ | 59.9 | ||||||||||||
Income from continuing operations(a) | $ | 47.3 | $ | 9.5 | $ | 36.5 | $ | 43.7 | $ | 44.1 | ||||||||||||
Operating margin(a) | 6.0 | % | 2.7 | % | 6.0 | % | 7.9 | % | 8.5 | % | ||||||||||||
Return on average common shareholders’ equity(b) | (1.2 | )% | (0.6 | )% | 9.1 | % | 12.1 | % | 13.2 | % | ||||||||||||
Common Stock Data (per share): | ||||||||||||||||||||||
Income (loss) from continuing operations — diluted | $ | .98 | $ | .20 | $ | .76 | $ | .95 | $ | .97 | ||||||||||||
Cash dividends | $ | .24 | $ | .40 | $ | .80 | $ | .80 | $ | .78 | ||||||||||||
Market price range: | ||||||||||||||||||||||
High | $ | 17.95 | $ | 20.56 | $ | 20.79 | $ | 27.07 | $ | 24.63 | ||||||||||||
Low | $ | 13.80 | $ | 15.75 | $ | 13.60 | $ | 16.00 | $ | 17.00 | ||||||||||||
Average common shares outstanding (in millions) | 48.2 | 48.1 | 48.0 | 45.9 | 45.4 | |||||||||||||||||
Financial Position at Year-End (dollars in millions): | ||||||||||||||||||||||
Working capital(a)(c) | $ | 164.9 | $ | 162.1 | $ | 104.7 | $ | 158.5 | $ | 162.0 | ||||||||||||
Current ratio(a)(c) | 1.6 | 1.7 | 1.4 | 1.8 | 1.9 | |||||||||||||||||
Total assets | $ | 1,119.5 | $ | 1,132.4 | $ | 1,177.5 | $ | 1,155.9 | $ | 1,012.7 | ||||||||||||
Long-term debt, net of current portion | $ | 203.7 | $ | 215.7 | $ | 194.1 | $ | 344.5 | $ | 232.7 | ||||||||||||
Shareholders’ equity | $ | 376.3 | $ | 412.7 | $ | 422.5 | $ | 398.0 | $ | 359.4 | ||||||||||||
Debt-to-capitalization ratio(d) | 43.0 | % | 37.0 | % | 40.0 | % | 44.0 | % | 44.0 | % | ||||||||||||
Other (dollars in millions): | ||||||||||||||||||||||
Orders(a) | $ | 1,138.7 | $ | 1,123.5 | $ | 1,007.6 | $ | 1,046.6 | $ | 1,039.1 | ||||||||||||
Backlog(a) | $ | 390.0 | $ | 415.0 | $ | 333.1 | $ | 415.3 | $ | 341.3 | ||||||||||||
Net cash provided by operating activities | $ | 72.9 | $ | 52.5 | $ | 70.3 | $ | 102.1 | $ | 69.0 | ||||||||||||
Net cash provided by (used for) investing activities | $ | (3.0 | ) | $ | 34.1 | $ | (10.1 | ) | $ | (71.0 | ) | $ | (33.1 | ) | ||||||||
Net cash provided by (used for) financing activities | $ | 7.1 | $ | (81.7 | ) | $ | (59.9 | ) | $ | (38.2 | ) | $ | (32.6 | ) | ||||||||
Capital expenditures(a) | $ | 19.5 | $ | 20.1 | $ | 16.8 | $ | 18.8 | $ | 17.8 | ||||||||||||
Depreciation and amortization(a) | $ | 21.5 | $ | 19.6 | $ | 18.4 | $ | 20.2 | $ | 18.9 | ||||||||||||
Employees(a) | 5,500 | 5,600 | 5,881 | 6,244 | 6,297 |
2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
Operating Results (dollars in millions): | ||||||||||||||||||||
Net sales(a) | $ | 1,211.6 | $ | 1,119.0 | $ | 1,024.5 | $ | 1,023.1 | $ | 939.2 | ||||||||||
Income (loss) before income taxes(a) | $ | 42.7 | $ | 40.8 | $ | (0.5 | ) | $ | 41.4 | $ | 51.7 | |||||||||
Income from continuing operations(a) | $ | 34.4 | $ | 43.9 | $ | 6.1 | $ | 34.7 | $ | 40.6 | ||||||||||
Operating margin(a) | 5.8 | % | 5.7 | % | 2.2 | % | 5.9 | % | 7.8 | % | ||||||||||
Return on average common shareholders’ equity(b) | 6.0 | % | (1.2 | )% | (0.6 | )% | 9.1 | % | 11.3 | % | ||||||||||
Common Stock Data (per share): | ||||||||||||||||||||
Income from continuing operations — diluted | $ | 0.72 | $ | 0.91 | $ | 0.13 | $ | 0.72 | $ | 0.88 | ||||||||||
Cash dividends | $ | 0.24 | $ | 0.24 | $ | 0.40 | $ | 0.80 | $ | 0.80 | ||||||||||
Market price range: | ||||||||||||||||||||
High | $ | 19.75 | $ | 17.95 | $ | 20.56 | $ | 20.79 | $ | 27.07 | ||||||||||
Low | $ | 12.69 | $ | 13.80 | $ | 15.75 | $ | 13.60 | $ | 16.00 | ||||||||||
Average common shares outstanding (in millions) | 48.0 | 48.2 | 48.1 | 48.0 | 45.9 | |||||||||||||||
Financial Position at Year-End (dollars in millions): | ||||||||||||||||||||
Working capital(a)(c) | $ | 144.9 | $ | 160.6 | $ | 157.1 | $ | 99.2 | $ | 152.2 | ||||||||||
Current ratio(a)(c) | 1.5 | 1.6 | 1.7 | 1.4 | 1.8 | |||||||||||||||
Total assets | $ | 1,049.4 | $ | 1,119.5 | $ | 1,132.4 | $ | 1,177.5 | $ | 1,155.9 | ||||||||||
Long-term debt, net of current portion | $ | 160.3 | $ | 203.7 | $ | 215.7 | $ | 194.1 | $ | 344.5 | ||||||||||
Shareholders’ equity | $ | 386.4 | $ | 376.3 | $ | 412.7 | $ | 422.5 | $ | 398.0 | ||||||||||
Debt-to-capitalization ratio(d) | 37.4 | % | 43.0 | % | 37.3 | % | 40.0 | % | 44.0 | % | ||||||||||
Netdebt-to-capitalization ratio(f) | 35.3 | % | 33.5 | % | 35.8 | % | 39.1 | % | 37.1 | % | ||||||||||
Other (dollars in millions): | ||||||||||||||||||||
Orders(a) | $ | 1,230.1 | $ | 1,100.5 | $ | 1,083.7 | $ | 972.7 | $ | 1,005.1 | ||||||||||
Backlog(a) | $ | 403.3 | $ | 386.2 | $ | 411.9 | $ | 330.3 | $ | 412.2 | ||||||||||
Net cash provided by operating activities | $ | 29.7 | $ | 70.6 | $ | 52.5 | $ | 70.3 | $ | 102.1 | ||||||||||
Net cash provided by (used for) investing activities | $ | (19.3 | ) | $ | (0.7 | ) | $ | 34.1 | $ | (10.1 | ) | $ | (71.0 | ) | ||||||
Net cash provided by (used for) financing activities | $ | (83.0 | ) | $ | 7.1 | $ | (81.7 | ) | $ | (59.9 | ) | $ | (38.2 | ) | ||||||
Capital expenditures(a) | $ | 18.2 | $ | 16.6 | $ | 19.4 | $ | 16.8 | $ | 15.1 | ||||||||||
Depreciation and amortization(a) | $ | 17.9 | $ | 18.2 | $ | 16.2 | $ | 15.1 | $ | 16.9 | ||||||||||
Employees(a) | 5,469 | 5,367 | 5,382 | 5,666 | 5,987 |
(a) | continuing operations only, prior year amounts have been reclassified for discontinued operations as discussed in Note | |
(b) | excludes cumulative effects of changes in accounting | |
(c) | working capital: current manufacturing assets less current manufacturing liabilities; current ratio: current manufacturing assets divided by current manufacturing liabilities | |
(d) | manufacturing operations: total manufacturing debt divided by the sum of total manufacturing debt plus manufacturing equity(e) |
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(e) | manufacturing equity: total equity less financial services assets plus financial services borrowings | |
(f) | net debt to capitalization ratio: manufacturing debt less cash and cash equivalents divided by manufacturing equity less cash and cash equivalents |
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Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of |
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2006 | 2005 | 2004 | ||||||||||
Analysis of orders: | ||||||||||||
Total orders | $ | 1,230.1 | $ | 1,100.5 | $ | 1,083.7 | ||||||
Change in orders year over year | 12.0 | % | 2.0 | % | ||||||||
Change in US municipal and government orders year over year | 3.0 | % | 10.0 | % | ||||||||
Change in US industrial and commercial orders year over year | 14.0 | % | (6.0 | )% | ||||||||
Change in non-US orders year over year | 23.0 | % | (2.0 | )% |
2005 | 2004 | 2003 | |||||||||||
Net sales | $ | 1,156.9 | $ | 1,063.9 | $ | 1,058.2 | |||||||
Cost of sales | (865.4 | ) | (814.9 | ) | (769.2 | ) | |||||||
Operating expenses | (221.6 | ) | (213.6 | ) | (220.7 | ) | |||||||
Restructuring charges | (0.7 | ) | (7.0 | ) | (4.8 | ) | |||||||
Operating income | 69.2 | 28.4 | 63.5 | ||||||||||
Interest expense | (23.1 | ) | (20.6 | ) | (18.8 | ) | |||||||
Other income (expense) | .2 | (2.9 | ) | (.5 | ) | ||||||||
Income tax benefit (charge) | 1.0 | 4.6 | (7.7 | ) | |||||||||
Income from continuing operations | 47.3 | 9.5 | 36.5 | ||||||||||
Discontinued operations | (51.9 | ) | (11.8 | ) | .8 | ||||||||
Net (loss) income | $ | (4.6 | ) | $ | (2.3 | ) | $ | 37.3 | |||||
Other data: | |||||||||||||
Operating margin | 6.0 | % | 2.7 | % | 6.0 | % | |||||||
Income per share — continuing operations | $ | .98 | $ | 0.20 | $ | 0.76 |
2005 | 2004 | 2003 | ||||||||||
Analysis of orders: | ||||||||||||
Total orders | $ | 1,138.7 | $ | 1,123.5 | $ | 1,007.6 | ||||||
Change in orders year on year | 1.0 | % | 12.0 | % | ||||||||
Change in US municipal and government orders year over year | 10.0 | % | (6.0 | )% | ||||||||
Change in US industrial and commercial orders year over year | (6.0 | )% | 4.0 | % | ||||||||
Change in non-US orders year over year | (2.0 | )% | 16.0 | % |
2006 | 2005 | 2004 | ||||||||||
Net sales | $ | 1,211.6 | $ | 1,119.0 | $ | 1,024.5 | ||||||
Cost of sales | (927.2 | ) | (867.5 | ) | (814.3 | ) | ||||||
Gross profit | 284.4 | 251.5 | 210.2 | |||||||||
Operating expenses | (214.5 | ) | (187.1 | ) | (180.2 | ) | ||||||
Restructuring charges | — | (0.7 | ) | (7.0 | ) | |||||||
Operating income | 69.9 | 63.7 | 23.0 | |||||||||
Interest expense | (25.0 | ) | (23.1 | ) | (20.6 | ) | ||||||
Other income (expense) | (2.2 | ) | 0.2 | (2.9 | ) | |||||||
Income tax benefit (charge) | (8.3 | ) | 3.1 | 6.6 | ||||||||
Income from continuing operations | 34.4 | 43.9 | 6.1 | |||||||||
Discontinued operations | (11.7 | ) | (48.5 | ) | (8.4 | ) | ||||||
Net income (loss) | $ | 22.7 | $ | (4.6 | ) | $ | (2.3 | ) | ||||
Other data: | ||||||||||||
Operating margin | 5.8 | % | 5.7 | % | 2.2 | % | ||||||
Earnings per share — continuing operations | $ | 0.72 | $ | 0.91 | $ | 0.13 |
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January 1, 2006 | January 1, 2005 | January 1, 2004 | ||||||||||
Discount rate | 5.75 | 6.00 | 6.25 | |||||||||
Expected long-term rate of return | 8.50 | 9.00 | 9.00 | |||||||||
Rate of increase in compensation levels | 3.50 | 3.50 | 3.50 | |||||||||
Mortality tables used | RP2000 | GAM83 | GAM83 | |||||||||
Approximate impact of change in assumptions, after tax | $1.3 million loss | $.5 million loss | ||||||||||
Approximate impact of change in assumptions, EPS | $(.03) | $(.01) |
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2005 | 2004 | 2003 | ||||||||||
Environmental Products | $ | $ | $ | .6 | ||||||||
Fire Rescue | .9 | 5.4 | ||||||||||
Safety Products | 3.3 | |||||||||||
Tool | (.2 | ) | 1.2 | .9 | ||||||||
Corporate | .4 | |||||||||||
Total | $ | .7 | $ | 7.0 | $ | 4.8 | ||||||
2006 | 2005 | 2004 | ||||||||||
Safety and Security Systems | $ | — | $ | — | $ | — | ||||||
Fire Rescue | — | 0.9 | 5.4 | |||||||||
Environmental Solutions | — | — | — | |||||||||
Tool | — | (0.2 | ) | 1.2 | ||||||||
Corporate | — | — | 0.4 | |||||||||
Total | $ | — | $ | 0.7 | $ | 7.0 | ||||||
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2005 | 2004 | 2003 | ||||||||||
Total orders | $ | 361.9 | $ | 311.2 | $ | 258.0 | ||||||
US orders | 268.1 | 233.5 | 195.1 | |||||||||
Non-US orders | 93.8 | 77.7 | 62.9 | |||||||||
Net sales | 347.7 | 294.6 | 261.8 | |||||||||
Operating income | 28.9 | 25.2 | 19.8 | |||||||||
Operating margin | 8.3 | % | 8.6 | % | 7.6 | % |
2006 | 2005 | 2004 | ||||||||||
Total orders | $ | 305.5 | $ | 259.5 | $ | 294.7 | ||||||
US orders | 184.9 | 164.8 | 199.4 | |||||||||
Non-US orders | 120.6 | 94.7 | 95.3 | |||||||||
Net sales | 304.5 | 276.5 | 247.4 | |||||||||
Operating income | 41.2 | 45.0 | 33.5 | |||||||||
Operating margin | 13.5 | % | 16.3 | % | 13.5 | % |
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2006 | 2005 | 2004 | ||||||||||
Total orders | $ | 365.0 | $ | 354.7 | $ | 355.8 | ||||||
US orders | 199.3 | 234.7 | 211.9 | |||||||||
Non-US orders | 165.7 | 120.0 | 143.9 | |||||||||
Net sales | 384.8 | 371.2 | 360.9 | |||||||||
Operating income (loss) | 6.8 | 2.3 | (23.9 | ) | ||||||||
Operating margin | 1.8 | % | 0.6 | % | (6.6 | )% |
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2006 | 2005 | 2004 | ||||||||||
Total orders | $ | 437.2 | $ | 361.9 | $ | 311.2 | ||||||
US orders | 333.6 | 268.1 | 233.5 | |||||||||
Non-US orders | 103.6 | 93.8 | 77.7 | |||||||||
Net sales | 399.4 | 347.7 | 294.6 | |||||||||
Operating income | 37.1 | 28.9 | 25.2 | |||||||||
Operating margin | 9.3 | % | 8.3 | % | 8.6 | % |
2005 | 2004 | 2003 | ||||||||||
Total orders | $ | 354.7 | $ | 355.8 | $ | 369.0 | ||||||
US orders | 234.7 | 211.9 | 249.5 | |||||||||
Non-US orders | 120.0 | 143.9 | 119.5 | |||||||||
Net sales | 371.2 | 360.9 | 402.1 | |||||||||
Operating income (loss) | 2.3 | (23.9 | ) | 14.7 | ||||||||
Operating margin | .6 | % | (6.6 | )% | 3.7 | % |
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2005 | 2004 | 2003 | ||||||||||
Total orders | $ | 259.5 | $ | 294.7 | $ | 228.7 | ||||||
US orders | 164.8 | 199.4 | 143.2 | |||||||||
Non-US orders | 94.7 | 95.3 | 85.5 | |||||||||
Net sales | 276.5 | 247.4 | 241.1 | |||||||||
Operating income | 45.0 | 33.5 | 28.1 | |||||||||
Operating margin | 16.3 | % | 13.5 | % | 11.7 | % |
2005 | 2004 | 2003 | ||||||||||
Total orders | $ | 162.6 | $ | 161.8 | $ | 151.9 | ||||||
US orders | 117.6 | 116.8 | 107.6 | |||||||||
Non-US orders | 45.0 | 45.0 | 44.3 | |||||||||
Net sales | 161.5 | 161.0 | 153.2 | |||||||||
Operating income | 16.8 | 15.3 | 14.9 | |||||||||
Operating margin | 10.4 | % | 9.5 | % | 9.8 | % |
2006 | 2005 | 2004 | ||||||||||
Total orders | $ | 122.4 | $ | 124.4 | $ | 122.0 | ||||||
US orders | 82.6 | 82.5 | 80.4 | |||||||||
Non-US orders | 39.8 | 41.9 | 41.6 | |||||||||
Net sales | 122.9 | 123.6 | 121.6 | |||||||||
Operating income | 8.2 | 11.3 | 9.9 | |||||||||
Operating margin | 6.7 | % | 9.1 | % | 8.1 | % |
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2005 | 2004 | 2003 | ||||||||||
Operating cash flow | $ | 72.9 | $ | 52.5 | $ | 70.3 | ||||||
Dividends | (13.5 | ) | (19.3 | ) | (38.3 | ) | ||||||
Capital expenditures | (19.5 | ) | (20.1 | ) | (16.8 | ) | ||||||
Dispositions of businesses | 49.1 | 7.5 | ||||||||||
Purchases of treasury stock | (5.0 | ) | (.1 | ) | ||||||||
Borrowing activity, net | 24.9 | (62.4 | ) | (24.0 | ) | |||||||
All other, net | 17.2 | 5.1 | 1.7 | |||||||||
Increase in cash | $ | 77.0 | $ | 4.9 | $ | .3 | ||||||
2006 | 2005 | 2004 | ||||||||||
Operating cash flow | $ | 29.7 | $ | 70.6 | $ | 52.5 | ||||||
Dividends | (11.5 | ) | (13.5 | ) | (19.3 | ) | ||||||
Capital expenditures | (18.2 | ) | (16.6 | ) | (19.4 | ) | ||||||
Purchases of treasury stock | (12.1 | ) | (5.0 | ) | — | |||||||
Borrowing activity, net | (60.5 | ) | 24.9 | (62.4 | ) | |||||||
All other, net | — | 16.6 | 53.5 | |||||||||
Increase (decrease) in cash | $ | (72.6 | ) | $ | 77.0 | $ | 4.9 | |||||
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Payments Due by Period | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
Total | 1 Year | 2-3 Years | 4-5 Years | 5 Years | ||||||||||||||||
Short-term obligations | $ | 6.6 | $ | 6.6 | $ | $ | $ | |||||||||||||
Long-term debt | 431.3 | 104.5 | 117.8 | 95.6 | 113.4 | |||||||||||||||
Operating lease obligations | 31.1 | 7.1 | 10.1 | 6.9 | 7.0 | |||||||||||||||
Fair value of interest rate swaps | 6.7 | .1 | .5 | 1.6 | 4.5 | |||||||||||||||
Fair value of foreign exchange contracts | (1.4 | ) | (1.4 | ) | ||||||||||||||||
Total contractual obligations | $ | 474.3 | $ | 116.9 | $ | 128.4 | $ | 104.1 | $ | 124.9 | ||||||||||
Payments Due by Period | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
Total | 1 Year | 2-3 Years | 4-5 Years | 5 Years | ||||||||||||||||
Short-term obligations | $ | 30.3 | $ | 30.3 | $ | — | $ | — | $ | — | ||||||||||
Long-term debt | 347.1 | 41.6 | 107.2 | 87.2 | 111.1 | |||||||||||||||
Operating lease obligations | 28.3 | 6.8 | 9.5 | 6.6 | 5.4 | |||||||||||||||
Fair value of interest rate swaps | 5.6 | 0.3 | — | 2.1 | 3.2 | |||||||||||||||
Total contractual obligations | $ | 411.3 | $ | 79.0 | $ | 116.7 | $ | 95.9 | $ | 119.7 | ||||||||||
Notional Amount Expiration by Period | ||||||||||||||||
Less than | 2-3 | 4-5 | ||||||||||||||
Total | 1 Year | Years | Years | |||||||||||||
Financial standby letters of credit for casualty insurance policies | $ | 34.4 | $ | 34.4 | $ | $ | ||||||||||
Guaranteed residual value obligations | 2.6 | 2.3 | .2 | .1 | ||||||||||||
Total commercial commitments | $ | 37.0 | $ | 36.7 | $ | .2 | $ | .1 | ||||||||
Notional Amount Expiration by Period | ||||||||||||||||
Less than | 2-3 | 4-5 | ||||||||||||||
Total | 1 Year | Years | Years | |||||||||||||
Financial standby letters of credit | $ | 36.4 | $ | 35.9 | $ | 0.1 | $ | 0.4 | ||||||||
Performance standby letters of credit | 1.0 | 1.0 | — | — | ||||||||||||
Guaranteed residual value obligations | 2.5 | 0.1 | 2.4 | — | ||||||||||||
Total commercial commitments | $ | 39.9 | $ | 37.0 | $ | 2.5 | $ | 0.4 | ||||||||
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Expected Maturity Date | ||||||||||||||||||||||||||||||||
Fair | ||||||||||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | Thereafter | Total | Value | |||||||||||||||||||||||||
Fixed rate | $ | 83.5 | $ | 27.8 | $ | 35.2 | $ | 25.1 | $ | 25.2 | $ | 93.1 | $ | 289.9 | $ | 302.0 | ||||||||||||||||
Average interest rate | 5.8 | % | 5.9 | % | 5.8 | % | 5.7 | % | 5.6 | % | 5.5 | % | ||||||||||||||||||||
Variable rate | $ | 27.6 | $ | 18.8 | $ | 36.0 | $ | 14.0 | $ | 31.3 | $ | 20.3 | $ | 148.0 | $ | 148.0 | ||||||||||||||||
Average interest rate | 5.5 | % | 5.4 | % | 5.4 | % | 5.4 | % | 5.4 | % | 5.3 | % | 5.2 | % |
20
Expected Maturity Date | Fair | |||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | Thereafter | Total | Value | |||||||||||||||||||||||||
Fixed rate | $ | 27.8 | $ | 35.1 | $ | 25.1 | $ | 25.2 | $ | 25.2 | $ | 68.0 | $ | 206.4 | $ | 210.8 | ||||||||||||||||
Average interest rate | 5.9 | % | 5.8 | % | 5.7 | % | 5.6 | % | 5.5 | % | 5.2 | % | 5.7 | % | — | |||||||||||||||||
Variable rate | $ | 44.1 | $ | 34.5 | $ | 12.4 | $ | 29.7 | $ | 7.2 | $ | 43.1 | $ | 171.0 | $ | 171.0 | ||||||||||||||||
Average interest rate | 6.6 | % | 6.6 | % | 6.6 | % | 6.6 | % | 6.6 | % | 6.6 | % | 6.6 | % | — |
Expected Maturity Date | ||||||||||||||||||||||||||||||||
Fair | ||||||||||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | Thereafter | Total | Value | |||||||||||||||||||||||||
Pay fixed, receive variable | $ | 10.0 | $ | $ | 25.0 | $ | 10.0 | $ | 10.0 | $ | $ | 55.0 | $ | .7 | ||||||||||||||||||
Average pay rate | 3.8 | % | 5.1 | % | 3.8 | % | 3.8 | % | ||||||||||||||||||||||||
Average receive rate | 4.8 | % | 4.7 | % | 4.8 | % | 4.9 | % | ||||||||||||||||||||||||
Receive fixed, pay variable | $ | 17.1 | $ | 17.1 | $ | 25.1 | $ | 15.1 | $ | 15.1 | $ | 63.4 | $ | 152.9 | $ | (7.4 | ) | |||||||||||||||
Average pay rate | 7.9 | % | 7.8 | % | 7.2 | % | 6.8 | % | 6.9 | % | 6.9 | % | ||||||||||||||||||||
Average receive rate | 6.5 | % | 6.5 | % | 6.0 | % | 5.7 | % | 5.7 | % | 5.7 | % |
Expected Maturity Date | Fair | |||||||||||||||||||||||||||||||
2007 | 2008 | 2009 | 2010 | 2011 | Thereafter | Total | Value | |||||||||||||||||||||||||
Pay fixed, receive variable | $ | — | $ | 25.0 | $ | 5.0 | $ | 5.0 | $ | — | $ | — | $ | 35.0 | $ | 0.4 | ||||||||||||||||
Average pay rate | — | 5.1 | % | 3.8 | % | 3.8 | % | — | — | — | — | |||||||||||||||||||||
Average receive rate | — | 5.4 | % | 5.5 | % | 5.5 | % | — | — | — | — | |||||||||||||||||||||
Receive fixed, pay variable | $ | 13.6 | $ | 17.6 | $ | 7.6 | $ | 7.6 | $ | 7.6 | $ | 44.0 | $ | 98.0 | $ | (4.6 | ) | |||||||||||||||
Average pay rate | 8.4 | % | 8.0 | % | 7.3 | % | 7.3 | % | 7.4 | % | 7.1 | % | — | — | ||||||||||||||||||
Average receive rate | 6.4 | % | 6.1 | % | 5.7 | % | 5.7 | % | 5.7 | % | 5.2 | % | — | — |
Expected | ||||||||||||||
Settlement Date | ||||||||||||||
2006 | ||||||||||||||
Average | ||||||||||||||
Notional | Contract | Fair | ||||||||||||
Amount | Rate | Value | ||||||||||||
Forward contracts: | ||||||||||||||
Buy Euros, sell US dollars | $ | 6.7 | 1.20 | $ | ||||||||||
Buy Canadian dollars, sell US dollars | 7.1 | 1.40 | 1.5 | |||||||||||
Other currencies | 3.4 | (.1 | ) | |||||||||||
Total forward contracts | 17.2 | 1.4 | ||||||||||||
Options: | ||||||||||||||
Buy Canadian dollars, sell US dollars | 17.9 | 1.12 | ||||||||||||
Buy US dollars, sell Euros | 16.7 | 1.17 | (.3 | ) | ||||||||||
Total options | 34.6 | (.3 | ) | |||||||||||
Total foreign currency derivatives | $ | 51.8 | $ | 1.1 | ||||||||||
Expected | ||||||||||||
Settlement Date | ||||||||||||
2007 | ||||||||||||
Average | ||||||||||||
Notional | Contract | Fair | ||||||||||
Amount | Rate | Value | ||||||||||
Forward contracts: | ||||||||||||
Buy Euros, sell US dollars | $ | 1.7 | 1.3 | $ | — | |||||||
Other currencies | 5.5 | (0.2 | ) | |||||||||
Total forward contracts | 7.2 | (0.2 | ) | |||||||||
Options: | ||||||||||||
Buy US dollars, sell Euros | 8.4 | 1.2 | — | |||||||||
Total foreign currency derivatives | $ | 15.6 | $ | (0.2 | ) | |||||||
24
21
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk. |
Item 8. | Financial Statements and Supplementary Data. |
25
22
Page | |||||
26
23
27
24
28
25
December 31, | |||||||||||
2005 | 2004 | ||||||||||
($ in millions) | |||||||||||
ASSETS | |||||||||||
Manufacturing activities: | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 91.9 | $ | 14.9 | |||||||
Accounts receivable, net of allowances for doubtful accounts of $2.7 million and $2.2 million, respectively | 170.0 | 192.1 | |||||||||
Inventories — Note B | 158.0 | 153.1 | |||||||||
Other current assets | 24.8 | 19.3 | |||||||||
Total current assets | 444.7 | 379.4 | |||||||||
Properties and equipment — Note C | 92.8 | 100.8 | |||||||||
Other assets | |||||||||||
Goodwill — Note Q | 333.4 | 337.1 | |||||||||
Other deferred charges and assets | 40.0 | 43.3 | |||||||||
Total manufacturing assets | 910.9 | 860.6 | |||||||||
Assets of discontinued operations — Note K | 39.4 | 75.3 | |||||||||
Financial services activities — Lease financing and other receivables, net of allowances for doubtful accounts of $3.9 million and $3.9 million, respectively, and net of unearned finance revenue — Note D | 169.2 | 196.5 | |||||||||
Total assets | $ | 1,119.5 | $ | 1,132.4 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
Manufacturing activities: | |||||||||||
Current liabilities | |||||||||||
Short-term borrowings — Note E | $ | 6.6 | $ | 7.6 | |||||||
Current portion of long-term borrowings — Note E | 66.0 | 11.3 | |||||||||
Accounts payable | 75.6 | 70.3 | |||||||||
Accrued liabilities | |||||||||||
Compensation and withholding taxes | 35.1 | 30.5 | |||||||||
Customer deposits | 33.0 | 24.5 | |||||||||
Other | 63.5 | 73.1 | |||||||||
Total current liabilities | 279.8 | 217.3 | |||||||||
Long-term borrowings — Note E | 203.7 | 215.7 | |||||||||
Long-term pension and other liabilities | 50.5 | 34.3 | |||||||||
Deferred income taxes — Note F | 26.0 | 56.6 | |||||||||
Total manufacturing liabilities | 560.0 | 523.9 | |||||||||
Liabilities of discontinued operations | 24.3 | 17.4 | |||||||||
Financial services activities — Borrowings — Note E | 158.9 | 178.4 | |||||||||
Total liabilities | 743.2 | 719.7 | |||||||||
Shareholders’ equity — Notes I and J | |||||||||||
Common stock, $1 par value per share, 90.0 million shares authorized, 48.8 million and 48.6 million shares issued, respectively | 48.8 | 48.6 | |||||||||
Capital in excess of par value | 98.2 | 94.4 | |||||||||
Retained earnings | 278.9 | 295.8 | |||||||||
Treasury stock, .7 million and .4 million shares, respectively, at cost | (18.1 | ) | (13.6 | ) | |||||||
Deferred stock awards | (4.8 | ) | (3.1 | ) | |||||||
Accumulated other comprehensive (loss) income | |||||||||||
Foreign currency translation | (5.7 | ) | 3.2 | ||||||||
Net derivative gain, cash flow hedges | 2.1 | 1.6 | |||||||||
Minimum pension liability | (23.1 | ) | (14.2 | ) | |||||||
Total | (26.7 | ) | (9.4 | ) | |||||||
Total shareholders’ equity | 376.3 | 412.7 | |||||||||
Total liabilities and shareholders’ equity | $ | 1,119.5 | $ | 1,132.4 | |||||||
December 31, | ||||||||
2006 | 2005 | |||||||
($ in millions) | ||||||||
ASSETS | ||||||||
Manufacturing activities: | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 19.3 | $ | 91.9 | ||||
Accounts receivable, net of allowances for doubtful accounts of $3.0 million and $2.6 million, respectively | 192.1 | 165.1 | ||||||
Inventories — Note 2 | 174.2 | 153.0 | ||||||
Other current assets | 33.2 | 24.6 | ||||||
Total current assets | 418.8 | 434.6 | ||||||
Properties and equipment — Note 3 | 85.7 | 81.6 | ||||||
Other assets | ||||||||
Goodwill — Note 16 | 310.6 | 307.3 | ||||||
Other deferred charges and assets | 17.6 | 39.1 | ||||||
Total manufacturing assets | 832.7 | 862.6 | ||||||
Assets of discontinued operations — Note 11 | 57.8 | 87.7 | ||||||
Financial services activities — Lease financing and other receivables, net of allowances for doubtful accounts of $4.0 million and $3.9 million, respectively, and net of unearned finance revenue — Note 4 | 158.9 | 169.2 | ||||||
Total assets | $ | 1,049.4 | $ | 1,119.5 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Manufacturing activities: | ||||||||
Current liabilities | ||||||||
Short-term borrowings — Note 5 | $ | 30.3 | $ | 6.6 | ||||
Current portion of long-term borrowings — Note 5 | 34.4 | 66.0 | ||||||
Accounts payable | 90.0 | 73.7 | ||||||
Accrued liabilities | ||||||||
Compensation and withholding taxes | 36.0 | 34.0 | ||||||
Customer deposits | 23.0 | 33.0 | ||||||
Other | 60.2 | 60.7 | ||||||
Total current liabilities | 273.9 | 274.0 | ||||||
Long-term borrowings — Note 5 | 160.3 | 203.7 | ||||||
Long-term pension and other liabilities | 27.9 | 50.5 | ||||||
Deferred income taxes — Note 6 | 20.7 | 16.3 | ||||||
Total manufacturing liabilities | 482.8 | 544.5 | ||||||
Liabilities of discontinued operations | 31.2 | 39.8 | ||||||
Financial services activities — Borrowings — Note 5 | 149.0 | 158.9 | ||||||
Total liabilities | 663.0 | 743.2 | ||||||
Shareholders’ equity — Notes 9 and 10 | ||||||||
Common stock, $1 par value per share, 90.0 million shares authorized, 49.1 million and 48.8 million shares issued, respectively | 49.1 | 48.8 | ||||||
Capital in excess of par value | 99.8 | 98.2 | ||||||
Retained earnings | 290.7 | 278.9 | ||||||
Treasury stock, 1.5 million and .7 million shares, respectively, at cost | (30.1 | ) | (18.1 | ) | ||||
Deferred stock awards | — | (4.8 | ) | |||||
Accumulated other comprehensive (loss) | (23.1 | ) | (26.7 | ) | ||||
Total shareholders’ equity | 386.4 | 376.3 | ||||||
Total liabilities and shareholders’ equity | $ | 1,049.4 | $ | 1,119.5 | ||||
29
26
For the Years Ended December 31, | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
($ in millions, except per share data) | ||||||||||||||
Net sales | $ | 1,156.9 | $ | 1,063.9 | $ | 1,058.2 | ||||||||
Costs and expenses | ||||||||||||||
Cost of sales | 865.4 | 814.9 | 769.2 | |||||||||||
Selling, general and administrative | 228.3 | 213.6 | 220.7 | |||||||||||
Gain on sale of product line | (6.7 | ) | ||||||||||||
Restructuring charges | .7 | 7.0 | 4.8 | |||||||||||
Operating income | 69.2 | 28.4 | 63.5 | |||||||||||
Interest expense | 23.1 | 20.6 | 18.8 | |||||||||||
Other income (expense) | .2 | (2.9 | ) | (.5 | ) | |||||||||
Income (expense) before income taxes | 46.3 | 4.9 | 44.2 | |||||||||||
Income tax benefit (charge) — Note F | 1.0 | 4.6 | (7.7 | ) | ||||||||||
Income from continuing operations | 47.3 | 9.5 | 36.5 | |||||||||||
Discontinued operations — Note K: | ||||||||||||||
(Loss) income from operations, net of tax (benefit) charge of $(12.4) million, $(6.2) million and $0.4 million, respectively | (50.3 | ) | (18.5 | ) | 1.2 | |||||||||
(Loss) gain on dispositions, net of tax (benefit) charge of $(1.2) million, $7.9 million, and $.0 million, respectively | (1.6 | ) | 6.7 | (.4 | ) | |||||||||
Net (loss) income* | $ | (4.6 | ) | $ | (2.3 | ) | $ | 37.3 | ||||||
Basic and diluted income (loss) per share | ||||||||||||||
Income from continuing operations | $ | .98 | $ | .20 | $ | .76 | ||||||||
Discontinued operations: | ||||||||||||||
(Loss) income from operations, net of taxes | (1.05 | ) | (.39 | ) | .03 | |||||||||
(Loss) gain on dispositions, net of taxes | (.03 | ) | .14 | (.01 | ) | |||||||||
Net (loss) income* | $ | (.10 | ) | $ | (.05 | ) | $ | .78 | ||||||
For the Years Ended December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
($ in millions, except per share data) | ||||||||||||
Net sales | $ | 1,211.6 | $ | 1,119.0 | $ | 1,024.5 | ||||||
Costs and expenses | ||||||||||||
Cost of sales | 927.2 | 867.5 | 814.3 | |||||||||
Selling, engineering, general and administrative | 214.5 | 193.8 | 180.2 | |||||||||
Gain on sale of product line | — | (6.7 | ) | — | ||||||||
Restructuring charges | — | 0.7 | 7.0 | |||||||||
Operating income | 69.9 | 63.7 | 23.0 | |||||||||
Interest expense | 25.0 | 23.1 | 20.6 | |||||||||
Other income (expense) | (2.2 | ) | 0.2 | (2.9 | ) | |||||||
Income (loss) before income taxes | 42.7 | 40.8 | (0.5 | ) | ||||||||
Income tax benefit (charge) — Note 6 | (8.3 | ) | 3.1 | 6.6 | ||||||||
Income from continuing operations | 34.4 | 43.9 | 6.1 | |||||||||
Discontinued operations — Note 11: | ||||||||||||
Loss from discontinued operations and disposal, net of tax (benefit) charge of $(2.0) million, $(11.5) million and $3.7 million, respectively | (11.7 | ) | (48.5 | ) | (8.4 | ) | ||||||
Net income (loss) | $ | 22.7 | $ | (4.6 | ) | $ | (2.3 | ) | ||||
Basic and diluted earnings (loss) per share | ||||||||||||
Earnings from continuing operations | $ | 0.72 | $ | 0.91 | $ | 0.13 | ||||||
Loss from discontinued operations and disposal, net of taxes | (0.25 | ) | (1.01 | ) | (0.18 | ) | ||||||
Net earnings (loss) per share | $ | 0.47 | $ | (0.10 | ) | $ | (0.05 | ) | ||||
30
27
Accumulated | ||||||||||||||||||||||||||||||
Common | Capital in | Other | ||||||||||||||||||||||||||||
Stock | Excess of | Deferred | Comprehensive | |||||||||||||||||||||||||||
Par | Par | Retained | Treasury | Stock | Income | |||||||||||||||||||||||||
Value | Value | Earnings | Stock | Awards | (Loss) | Total | ||||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||||
Balance at December 31, 2002, | $ | 48.4 | $ | 91.1 | $ | 313.7 | $ | (18.0 | ) | $ | (3.2 | ) | $ | (34.0 | ) | $ | 398.0 | |||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||
Net income | 37.3 | 37.3 | ||||||||||||||||||||||||||||
Foreign currency translation | 14.4 | 14.4 | ||||||||||||||||||||||||||||
Unrealized gains on derivatives, net of $1.1 million tax expense | 1.9 | 1.9 | ||||||||||||||||||||||||||||
Minimum pension liability, net of $.2 million tax benefit | (.4 | ) | (.4 | ) | ||||||||||||||||||||||||||
Comprehensive income | 53.2 | |||||||||||||||||||||||||||||
Cash dividends declared | (33.6 | ) | (33.6 | ) | ||||||||||||||||||||||||||
Compensation plans: | ||||||||||||||||||||||||||||||
Exercise of stock options | .1 | .1 | ||||||||||||||||||||||||||||
Stock awards granted | .8 | (.8 | ) | |||||||||||||||||||||||||||
Related tax benefits | .2 | .2 | ||||||||||||||||||||||||||||
Amortization of deferred stock awards | 1.2 | 1.2 | ||||||||||||||||||||||||||||
Treasury stock: | ||||||||||||||||||||||||||||||
Issuance | 3.3 | 3.3 | ||||||||||||||||||||||||||||
Purchases | (.1 | ) | (.1 | ) | ||||||||||||||||||||||||||
Retirement | (.2 | ) | .2 | |||||||||||||||||||||||||||
Other | (.1 | ) | (.2 | ) | .5 | .2 | ||||||||||||||||||||||||
Balance at December 31, 2003 | 48.4 | 91.9 | 317.4 | (14.8 | ) | (2.3 | ) | (18.1 | ) | 422.5 | ||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||||
Net loss | (2.3 | ) | (2.3 | ) | ||||||||||||||||||||||||||
Foreign currency translation | 6.8 | 6.8 | ||||||||||||||||||||||||||||
Unrealized gains on derivatives, net of $1.2 million tax expense | 1.9 | 1.9 | ||||||||||||||||||||||||||||
Comprehensive income | 6.4 | |||||||||||||||||||||||||||||
Cash dividends declared | (19.3 | ) | (19.3 | ) | ||||||||||||||||||||||||||
Compensation plans: | ||||||||||||||||||||||||||||||
Exercise of stock options | .1 | .4 | .5 | |||||||||||||||||||||||||||
Stock awards granted | .2 | 2.9 | .1 | (3.2 | ) | |||||||||||||||||||||||||
Related tax benefits | .5 | .5 | ||||||||||||||||||||||||||||
Amortization of deferred stock awards | 1.0 | 1.0 | ||||||||||||||||||||||||||||
Other | (.1 | ) | (1.3 | ) | 1.1 | 1.4 | 1.1 | |||||||||||||||||||||||
Balance at December 31, 2004 | 48.6 | 94.4 | 295.8 | (13.6 | ) | (3.1 | ) | (9.4 | ) | 412.7 | ||||||||||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||||||||
Net loss | (4.6 | ) | (4.6 | ) | ||||||||||||||||||||||||||
Foreign currency translation | (8.9 | ) | (8.9 | ) | ||||||||||||||||||||||||||
Unrealized gains on derivatives, net of $.3 million tax expense | .5 | .5 | ||||||||||||||||||||||||||||
Minimum pension liability, net of $5.3 million tax expense | (8.9 | ) | (8.9 | ) | ||||||||||||||||||||||||||
Comprehensive loss: | (21.9 | ) | ||||||||||||||||||||||||||||
Cash dividends declared | (11.6 | ) | (11.6 | ) | ||||||||||||||||||||||||||
Compensation plans: | ||||||||||||||||||||||||||||||
Exercise of stock options | .3 | .3 | ||||||||||||||||||||||||||||
Stock awards granted | .2 | 4.7 | (.1 | ) | (4.8 | ) | ||||||||||||||||||||||||
Related tax benefits | ||||||||||||||||||||||||||||||
Amortization of deferred stock awards | 2.1 | 2.1 | ||||||||||||||||||||||||||||
Treasury stock: | ||||||||||||||||||||||||||||||
Purchases | (5.0 | ) | (5.0 | ) | ||||||||||||||||||||||||||
Other | (1.2 | ) | (.7 | ) | .6 | 1.0 | (.3 | ) | ||||||||||||||||||||||
Balance at December 31, 2005 | $ | 48.8 | $ | 98.2 | $ | 278.9 | $ | (18.1 | ) | $ | (4.8 | ) | $ | (26.7 | ) | $ | 376.3 | |||||||||||||
Common | Capital in | Accumulated | ||||||||||||||||||||||||||
Stock | Excess of | Deferred | Other | |||||||||||||||||||||||||
Par | Par | Retained | Treasury | Stock | Comprehensive | |||||||||||||||||||||||
Value | Value | Earnings | Stock | Awards | Loss | Total | ||||||||||||||||||||||
($ in millions) | ||||||||||||||||||||||||||||
Balance at December 31, 2003, | $ | 48.4 | $ | 91.9 | $ | 317.4 | $ | (14.8 | ) | $ | (2.3 | ) | $ | (18.1 | ) | $ | 422.5 | |||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net loss | (2.3 | ) | (2.3 | ) | ||||||||||||||||||||||||
Foreign currency translation | 6.8 | 6.8 | ||||||||||||||||||||||||||
Unrealized gains on derivatives, net of $1.2 million tax expense | 1.9 | 1.9 | ||||||||||||||||||||||||||
Comprehensive income | 6.4 | |||||||||||||||||||||||||||
Cash dividends declared | (19.3 | ) | (19.3 | ) | ||||||||||||||||||||||||
Compensation plans: | ||||||||||||||||||||||||||||
Exercise of stock options | 0.1 | 0.4 | 0.5 | |||||||||||||||||||||||||
Stock awards granted | 0.2 | 2.9 | 0.1 | (3.2 | ) | — | ||||||||||||||||||||||
Related tax benefits | 0.5 | 0.5 | ||||||||||||||||||||||||||
Amortization of deferred stock awards | 1.0 | 1.0 | ||||||||||||||||||||||||||
Other | (0.1 | ) | (1.3 | ) | 1.1 | 1.4 | 1.1 | |||||||||||||||||||||
Balance at December 31, 2004 | 48.6 | 94.4 | 295.8 | (13.6 | ) | (3.1 | ) | (9.4 | ) | 412.7 | ||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net loss | (4.6 | ) | (4.6 | ) | ||||||||||||||||||||||||
Foreign currency translation | (8.9 | ) | (8.9 | ) | ||||||||||||||||||||||||
Unrealized gains on derivatives, net of $0.3 million tax expense | 0.5 | 0.5 | ||||||||||||||||||||||||||
Minimum pension liability, net of $5.3 million tax benefit | (8.9 | ) | (8.9 | ) | ||||||||||||||||||||||||
Comprehensive loss | (21.9 | ) | ||||||||||||||||||||||||||
Cash dividends declared | (11.6 | ) | (11.6 | ) | ||||||||||||||||||||||||
Compensation plans: | ||||||||||||||||||||||||||||
Exercise of stock options | 0.3 | 0.3 | ||||||||||||||||||||||||||
Stock awards granted | 0.2 | 4.7 | (0.1 | ) | (4.8 | ) | — | |||||||||||||||||||||
Amortization of deferred stock awards | 2.1 | 2.1 | ||||||||||||||||||||||||||
Treasury stock: | ||||||||||||||||||||||||||||
Purchases | (5.0 | ) | (5.0 | ) | ||||||||||||||||||||||||
Other | (1.2 | ) | (0.7 | ) | 0.6 | 1.0 | (0.3 | ) | ||||||||||||||||||||
Balance at December 31, 2005 | 48.8 | 98.2 | 278.9 | (18.1 | ) | (4.8 | ) | (26.7 | ) | 376.3 | ||||||||||||||||||
Comprehensive loss: | ||||||||||||||||||||||||||||
Net income | 22.7 | 22.7 | ||||||||||||||||||||||||||
Foreign currency translation | 10.0 | 10.0 | ||||||||||||||||||||||||||
Unrealized losses on derivatives, net of $1.3 million tax benefit | (2.2 | ) | (2.2 | ) | ||||||||||||||||||||||||
Minimum pension liability, net of $2.3 million tax expense | 4.0 | 4.0 | ||||||||||||||||||||||||||
Comprehensive income: | 34.5 | |||||||||||||||||||||||||||
Adjustments to adopt SFAS 158, net of $4.8 million tax benefit | (8.2 | ) | (8.2 | ) | ||||||||||||||||||||||||
Cash dividends declared | (11.5 | ) | (11.5 | ) | ||||||||||||||||||||||||
Reclassification of deferred stock awards | (4.8 | ) | 4.8 | — | ||||||||||||||||||||||||
Compensation plans: | ||||||||||||||||||||||||||||
Exercise of stock options | 0.5 | 0.5 | ||||||||||||||||||||||||||
Related excess tax benefits | 0.3 | 0.3 | ||||||||||||||||||||||||||
Stock-based compensation: | ||||||||||||||||||||||||||||
Awards and options | 0.3 | 5.5 | 5.8 | |||||||||||||||||||||||||
Treasury stock: | ||||||||||||||||||||||||||||
Purchases | (12.1 | ) | (12.1 | ) | ||||||||||||||||||||||||
Other | 0.1 | 0.6 | 0.1 | 0.8 | ||||||||||||||||||||||||
Balance at December 31, 2006 | $ | 49.1 | $ | 99.8 | $ | 290.7 | $ | (30.1 | ) | $ | — | $ | (23.1 | ) | $ | 386.4 | ||||||||||||
31
28
For the Years Ended | ||||||||||||||
December 31, | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
($ in millions) | ||||||||||||||
Operating activities | ||||||||||||||
Net (loss) income | $ | (4.6 | ) | $ | (2.3 | ) | $ | 37.3 | ||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||
Loss (income) on discontinued operations | 50.3 | 18.5 | (1.2 | ) | ||||||||||
(Gain) loss on disposition of discontinued operations | 1.6 | (6.7 | ) | 0.4 | ||||||||||
Non-cash restructuring charges | 0.3 | 7.1 | 1.9 | |||||||||||
Gain on sale of product line | (6.7 | ) | ||||||||||||
Loss on minority interest divestiture | 2.9 | (0.5 | ) | |||||||||||
Depreciation and amortization | 21.5 | 19.6 | 18.4 | |||||||||||
Provision for doubtful accounts | (2.3 | ) | 3.3 | 3.2 | ||||||||||
Deferred income taxes | (4.4 | ) | 13.0 | 4.5 | ||||||||||
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions of companies | ||||||||||||||
Accounts receivable | 10.2 | (12.2 | ) | (14.1 | ) | |||||||||
Inventories | (.7 | ) | (10.5 | ) | 7.4 | |||||||||
Other current assets | (3.6 | ) | 7.4 | 1.7 | ||||||||||
Lease financing and other receivables | 27.2 | 31.0 | (5.1 | ) | ||||||||||
Accounts payable | 6.5 | 5.0 | 5.3 | |||||||||||
Customer deposits | 9.2 | 2.8 | (9.6 | ) | ||||||||||
Accrued liabilities | 1.6 | 8.0 | (4.5 | ) | ||||||||||
Income taxes | (22.9 | ) | (28.0 | ) | 2.5 | |||||||||
Pension contributions | (7.7 | ) | (5.2 | ) | (6.0 | ) | ||||||||
Other | 8.7 | 4.8 | 11.6 | |||||||||||
Net cash provided by continuing operating activities | 84.2 | 58.5 | 53.2 | |||||||||||
Net cash used for discontinued operating activities | (11.3 | ) | (6.0 | ) | 17.1 | |||||||||
Net cash provided by operating activities | 72.9 | 52.5 | 70.3 | |||||||||||
Investing activities | ||||||||||||||
Purchases of properties and equipment | (19.5 | ) | (20.1 | ) | (16.8 | ) | ||||||||
Proceeds from sales of properties and equipment | 10.1 | |||||||||||||
Proceeds from sale of product line | 11.9 | |||||||||||||
Investment in joint venture | (0.7 | ) | ||||||||||||
Other, net | (1.2 | ) | 5.5 | (0.8 | ) | |||||||||
Net cash provided (used for) continuing investing activities | 0.6 | (14.6 | ) | (17.6 | ) | |||||||||
Net cash provided by (used for) discontinued investing activities | (3.6 | ) | 48.7 | 7.5 | ||||||||||
Net cash provided by (used for) investing activities | (3.0 | ) | 34.1 | (10.1 | ) | |||||||||
Financing activities | ||||||||||||||
Proceeds (reduction) in short-term borrowings, net | 53.8 | (36.3 | ) | (66.0 | ) | |||||||||
Proceeds from issuance of long-term borrowings | 104.2 | 42.0 | ||||||||||||
Repayment of long-term borrowings | (133.1 | ) | (26.1 | ) | ||||||||||
Purchases of treasury stock | (5.0 | ) | (0.1 | ) | ||||||||||
Cash dividends paid to shareholders | (13.5 | ) | (19.3 | ) | (38.3 | ) | ||||||||
Other, net | 0.7 | 0.7 | ||||||||||||
Net cash provided by (used for) continuing financing activities | 7.1 | (81.7 | ) | (61.7 | ) | |||||||||
Net cash used for discontinued financing activities | 1.8 | |||||||||||||
Net cash provided by (used for) financing activities | 7.1 | (81.7 | ) | (59.9 | ) | |||||||||
Increase in cash and cash equivalents | 77.0 | 4.9 | 0.3 | |||||||||||
Cash and cash equivalents at beginning of year | 14.9 | 10.0 | 9.7 | |||||||||||
Cash and cash equivalents at end of year | $ | 91.9 | $ | 14.9 | $ | 10.0 | ||||||||
For the Years Ended | ||||||||||||
December 31, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
($ in millions) | ||||||||||||
Operating activities | ||||||||||||
Net income (loss) | $ | 22.7 | $ | (4.6 | ) | $ | (2.3 | ) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Loss on discontinued operations and disposal | 11.7 | 48.5 | 8.4 | |||||||||
Non-cash restructuring charges | — | 0.3 | 7.1 | |||||||||
Gain on sale of product line | — | (6.7 | ) | — | ||||||||
Loss on joint venture | 2.2 | — | — | |||||||||
Gain on sale of properties and equipment | (1.4 | ) | (2.3 | ) | — | |||||||
Loss on minority interest divestiture | — | 2.9 | ||||||||||
Depreciation and amortization | 17.9 | 18.2 | 16.2 | |||||||||
Stock option and award compensation expense | 5.8 | 2.1 | 1.0 | |||||||||
Provision for doubtful accounts | (1.4 | ) | (2.3 | ) | 3.3 | |||||||
Deferred income taxes | (2.7 | ) | (39.7 | ) | 9.9 | |||||||
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions of companies | ||||||||||||
Accounts receivable | (21.2 | ) | 15.1 | (6.9 | ) | |||||||
Inventories | (15.8 | ) | 4.3 | (5.0 | ) | |||||||
Other current assets | (1.3 | ) | (3.4 | ) | 7.6 | |||||||
Lease financing and other receivables | 10.4 | 27.2 | 31.0 | |||||||||
Accounts payable | 14.3 | 4.6 | 3.5 | |||||||||
Customer deposits | (10.8 | ) | 9.2 | 2.8 | ||||||||
Accrued liabilities | (2.1 | ) | (0.1 | ) | 5.6 | |||||||
Income taxes | 2.3 | 0.5 | (34.6 | ) | ||||||||
Pension contributions | (11.3 | ) | (7.7 | ) | (5.2 | ) | ||||||
Other | 5.7 | 6.7 | 3.7 | |||||||||
Net cash provided by continuing operating activities | 25.0 | 69.9 | 49.0 | |||||||||
Net cash provided by discontinued operating activities | 4.7 | 0.7 | 3.5 | |||||||||
Net cash provided by operating activities | 29.7 | 70.6 | 52.5 | |||||||||
Investing activities | ||||||||||||
Purchases of properties and equipment | (18.2 | ) | (16.6 | ) | (19.4 | ) | ||||||
Proceeds from sales of properties and equipment | 2.5 | 10.1 | — | |||||||||
Proceeds from sale of product line | — | 11.9 | — | |||||||||
Investment in joint venture | (1.5 | ) | (0.7 | ) | — | |||||||
Other, net | (1.4 | ) | (1.2 | ) | 5.5 | |||||||
Net cash provided by (used for) continuing investing activities | (18.6 | ) | 3.5 | (13.9 | ) | |||||||
Net cash provided by (used for) discontinued investing activities | (0.7 | ) | (4.2 | ) | 48.0 | |||||||
Net cash provided by (used for) investing activities | (19.3 | ) | (0.7 | ) | 34.1 | |||||||
Financing activities | ||||||||||||
Increase (reduction) in short-term borrowings, net | 23.7 | 53.8 | (36.3 | ) | ||||||||
Proceeds from issuance of long-term borrowings | 23.6 | 104.2 | — | |||||||||
Repayment of long-term borrowings | (107.8 | ) | (133.1 | ) | (26.1 | ) | ||||||
Purchases of treasury stock | (12.1 | ) | (5.0 | ) | — | |||||||
Cash dividends paid to shareholders | (11.5 | ) | (13.5 | ) | (19.3 | ) | ||||||
Other, net | 1.1 | 0.7 | — | |||||||||
Net cash provided by (used for) continuing financing activities | (83.0 | ) | 7.1 | (81.7 | ) | |||||||
Net cash used for discontinued financing activities | — | — | — | |||||||||
�� | ||||||||||||
Net cash provided by (used for) financing activities | (83.0 | ) | 7.1 | (81.7 | ) | |||||||
Increase (decrease) in cash and cash equivalents | (72.6 | ) | 77.0 | 4.9 | ||||||||
Cash and cash equivalents at beginning of year | 91.9 | 14.9 | 10.0 | |||||||||
Cash and cash equivalents at end of year | $ | 19.3 | $ | 91.9 | $ | 14.9 | ||||||
32
29
33
30
31
34
32
35
Before Adoption of | Adjustments to | After Adoption of | ||||||||||
SFAS 158* | Adopt SFAS 158 | SFAS 158 | ||||||||||
Increase/(decrease) | ||||||||||||
Assets: | ||||||||||||
Noncurrent benefit asset | $ | 12.3 | $ | (12.3 | ) | $ | — | |||||
Intangible asset | 0.4 | (0.4 | ) | — | ||||||||
Deferred tax asset** | 11.5 | 4.8 | 16.3 | |||||||||
Liabilities: | ||||||||||||
Noncurrent benefit liability | $ | 21.7 | $ | (0.7 | ) | $ | 21.0 | |||||
Shareholders’ Equity: | ||||||||||||
Accumulated Other Comprehensive Income | $ | (19.1 | ) | $ | (8.2 | ) | $ | (27.3 | ) |
* | Includes effects of additional minimum liability, if any, that would have been recognized at December 31, 2006. | |
** | Assumes a 37% tax rate. |
36
Accumulated Other | ||||||||||||
Comprehensive | Comprehensive | |||||||||||
Total | Income | Income | ||||||||||
Balance at December 31, 2005 | $ | (23.1 | ) | |||||||||
Decrease in Additional Minimum Liability included in Other Comprehensive Income, net of tax | 4.0 | 4.0 | 4.0 | |||||||||
Adjustments to adopt SFAS 158, net of tax | (8.2 | ) | (8.2 | ) | ||||||||
Balance at December 31, 2006 | $ | (27.3 | ) | |||||||||
2005 | 2004 | |||||||
Finished goods | $ | 40.2 | $ | 43.5 | ||||
Work in process | 59.3 | 49.8 | ||||||
Raw materials | 58.5 | 59.8 | ||||||
Total inventories | $ | 158.0 | $ | 153.1 | ||||
2006 | 2005 | |||||||
Raw materials | $ | 73.9 | $ | 56.9 | ||||
Work in process | 40.8 | 58.4 | ||||||
Finished goods | 59.5 | 37.7 | ||||||
Total inventories | $ | 174.2 | $ | 153.0 | ||||
2005 | 2004 | |||||||
Land | $ | 8.0 | $ | 9.2 | ||||
Buildings and improvements | 54.2 | 55.0 | ||||||
Machinery and equipment | 224.8 | 225.4 | ||||||
Accumulated depreciation | (194.2 | ) | (188.8 | ) | ||||
Total properties and equipment | $ | 92.8 | $ | 100.8 | ||||
2006 | 2005 | |||||||
Land | $ | 7.6 | $ | 7.7 | ||||
Buildings and improvements | 49.3 | 49.4 | ||||||
Machinery and equipment | 205.7 | 195.0 | ||||||
Accumulated depreciation | (176.9 | ) | (170.5 | ) | ||||
Total properties and equipment | $ | 85.7 | $ | 81.6 | ||||
33
37
2005 | 2004 | |||||||
Revolving Credit Facility | $ | $ | 45.0 | |||||
Other foreign lines of credit | 6.6 | 7.6 | ||||||
Total short-term borrowings | 6.6 | 52.6 | ||||||
Less short-term financial services activities — borrowings | (45.0 | ) | ||||||
Net short-term borrowings | $ | 6.6 | $ | 7.6 | ||||
2006 | 2005 | |||||||
Amended Credit Agreement | $ | 21.8 | $ | — | ||||
Other foreign lines of credit | 8.5 | 6.6 | ||||||
Total short-term borrowings | $ | 30.3 | $ | 6.6 | ||||
34
38
2005 | 2004 | ||||||||
6.79% Unsecured Private Placement note due in annual installments of $10.0 million due 2007-2011 | $ | 50.0 | $ | 50.0 | |||||
6.37% Unsecured Private Placement note due in annual installments of $10.0 million due 2005-2008 | 30.0 | 40.0 | |||||||
6.60% Unsecured Private Placement note due in annual installments of $7.1 million due 2005-2011 | 42.9 | 50.0 | |||||||
4.93% Unsecured Private Placement note due in annual installments of $8.0 million due 2008-2012 | 40.0 | 40.0 | |||||||
5.24% Unsecured Private Placement note due 2012 | 60.0 | 60.0 | |||||||
5.49% Unsecured Private Placement note due 2006 | 65.0 | 65.0 | |||||||
Unsecured Private Placement note, floating rate (5.57% and 3.59% at December 31, 2005 and 2004, respectively) due 2008-2013 | 50.0 | 50.0 | |||||||
Loan Agreement (described below), due 2006-2017 | 91.4 | ||||||||
Other | 2.0 | 3.4 | |||||||
431.3 | 358.4 | ||||||||
Fair value of interest rate swaps | (6.9 | ) | (6.7 | ) | |||||
Unamortized balance of terminated fair value interest rate swaps | 4.2 | 8.7 | |||||||
428.6 | 360.4 | ||||||||
Less current maturities, excluding financial services activities | (66.0 | ) | (11.3 | ) | |||||
Less financial services activities — borrowings | (158.9 | ) | (133.4 | ) | |||||
Total long-term borrowings, net | $ | 203.7 | $ | 215.7 | |||||
2006 | 2005 | |||||||
6.79% Unsecured Private Placement note with annual installments of $10.0 million due2007-2011 | $ | 50.0 | $ | 50.0 | ||||
6.37% Unsecured Private Placement note with annual installments of $10.0 million due2005-2008 | 20.0 | 30.0 | ||||||
6.60% Unsecured Private Placement note with annual installments of $7.1 million due2005-2011 | 35.7 | 42.9 | ||||||
4.93% Unsecured Private Placement note with annual installments of $8.0 million due2008-2012 | 40.0 | 40.0 | ||||||
5.24% Unsecured Private Placement note due 2012 | 60.0 | 60.0 | ||||||
5.49% Unsecured Private Placement note due 2006 | — | 65.0 | ||||||
Unsecured Private Placement note, floating rate (6.41% and 5.57% at December 31, 2006 and 2005, respectively) due2008-2013 | 50.0 | 50.0 | ||||||
Loan Agreement (described below), due2006-2017 | 90.7 | 91.4 | ||||||
Other | 0.7 | 2.0 | ||||||
347.1 | 431.3 | |||||||
Fair value of interest rate swaps | (4.6 | ) | (6.9 | ) | ||||
Unamortized balance of terminated fair value interest rate swaps | 1.2 | 4.2 | ||||||
343.7 | 428.6 | |||||||
Less current maturities, excluding financial services activities | (34.4 | ) | (66.0 | ) | ||||
Less financial services activities — borrowings | (149.0 | ) | (158.9 | ) | ||||
Total long-term borrowings, net | $ | 160.3 | $ | 203.7 | ||||
35
39
2005 | 2004 | 2003 | |||||||||||
Current: | |||||||||||||
Federal | $ | 29.5 | $ | (30.0 | ) | $ | (6.4 | ) | |||||
Foreign | 7.1 | 6.4 | 6.9 | ||||||||||
State and local | 1.1 | .4 | .3 | ||||||||||
37.7 | (23.2 | ) | .8 | ||||||||||
Deferred: | |||||||||||||
Federal | (38.0 | ) | 19.3 | 7.4 | |||||||||
Foreign | (.4 | ) | (.2 | ) | (.7 | ) | |||||||
State and local | (.3 | ) | (.5 | ) | .2 | ||||||||
(38.7 | ) | 18.6 | 6.9 | ||||||||||
Total income taxes | $ | (1.0 | ) | $ | (4.6 | ) | $ | 7.7 | |||||
2006 | 2005 | 2004 | ||||||||||
Current: | ||||||||||||
Federal | $ | 5.9 | $ | 28.4 | $ | (23.6 | ) | |||||
Foreign | 4.9 | 7.1 | 6.4 | |||||||||
State and local | 0.2 | 1.1 | 0.7 | |||||||||
11.0 | 36.6 | (16.5 | ) | |||||||||
Deferred: | ||||||||||||
Federal | (3.4 | ) | (38.9 | ) | 11.0 | |||||||
Foreign | 0.2 | (0.4 | ) | (0.2 | ) | |||||||
State and local | 0.5 | (0.4 | ) | (0.9 | ) | |||||||
(2.7 | ) | (39.7 | ) | 9.9 | ||||||||
Total income taxes | $ | 8.3 | $ | (3.1 | ) | $ | (6.6 | ) | ||||
36
40
2005 | 2004 | 2003 | ||||||||||
Statutory federal income tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
State income taxes, net of federal tax benefit | 1.7 | (.1 | ) | 1.5 | ||||||||
Tax-exempt interest | (5.4 | ) | (56.8 | ) | (6.7 | ) | ||||||
Benefits from shutdown of U.K. facility | 0.0 | 0.0 | (6.4 | ) | ||||||||
Dividend repatriation | (5.5 | ) | 0.0 | 0.0 | ||||||||
Strategy relating to sale of U.K. lighting business | (4.0 | ) | 0.0 | 0.0 | ||||||||
Exports benefit | (1.7 | ) | (22.2 | ) | (2.3 | ) | ||||||
Tax reserves | (17.2 | ) | (3.1 | ) | 0.0 | |||||||
R&D tax credits | (1.3 | ) | (23.7 | ) | (2.0 | ) | ||||||
Foreign tax effects | (2.9 | ) | (23.3 | ) | (1.7 | ) | ||||||
Valuation allowances | 1.1 | 4.7 | 1.5 | |||||||||
Other, net | (1.9 | ) | (2.9 | ) | (1.4 | ) | ||||||
Effective income tax rate | (2.1 | )% | (92.4 | )% | 17.5 | % | ||||||
2006 | 2005 | 2004 | ||||||||||||||
Statutory federal income tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||||||
State income taxes, net of federal tax benefit | 1.5 | 1.6 | 1.6 | |||||||||||||
Tax-exempt interest | (5.1 | ) | (6.1 | ) | (529.4 | ) | ||||||||||
Dividend repatriation | — | (6.2 | ) | — | ||||||||||||
Strategy relating to sale of U.K. lighting business | — | (4.6 | ) | — | ||||||||||||
Exports benefit | (2.3 | ) | (1.9 | ) | (207.0 | ) | ||||||||||
Tax reserves | (4.4 | ) | (19.5 | ) | (28.4 | ) | ||||||||||
R&D tax credits | (1.9 | ) | (1.5 | ) | (221.3 | ) | ||||||||||
Foreign tax effects | (1.5 | ) | (4.5 | ) | (151.0 | ) | ||||||||||
Valuation allowances | (0.7 | ) | 1.2 | 43.7 | ||||||||||||
Other, net | (1.2 | ) | (1.1 | ) | (187.8 | ) | ||||||||||
Effective income tax rate | 19.4 | % | (7.6 | )% | (1244.6 | )% | ||||||||||
2006 | 2005 | |||||||
Deferred tax assets: | ||||||||
Accrued expenses | $ | 14.6 | $ | 11.8 | ||||
Net operating loss, alternative minimum tax, research and development, and foreign tax credit carry forwards | 33.9 | 20.8 | ||||||
Other | 9.3 | 9.1 | ||||||
Gross deferred tax assets | 57.8 | 41.7 | ||||||
Valuation allowance | (5.4 | ) | (3.4 | ) | ||||
Total deferred tax assets | 52.4 | 38.3 | ||||||
Deferred tax liabilities: | ||||||||
Depreciation and amortization | (48.6 | ) | (36.3 | ) | ||||
Revenue recognition | (0.3 | ) | (2.7 | ) | ||||
Pension liabilities | (4.9 | ) | (3.5 | ) | ||||
Undistributed earnings of non-US subsidiary | (0.4 | ) | (0.2 | ) | ||||
Gross deferred tax liabilities | (54.2 | ) | (42.7 | ) | ||||
Net deferred tax liability | $ | (1.8 | ) | $ | (4.4 | ) | ||
37
41
2005 | 2004 | |||||||||
Deferred tax assets: | ||||||||||
Accrued expenses | $ | 12.4 | $ | 11.6 | ||||||
Net operating loss, alternative minimum tax, research and development, and foreign tax credit carry forwards | 20.8 | 11.1 | ||||||||
Other — primarily minimum pension liability | 8.9 | |||||||||
Gross deferred tax assets | 42.1 | 22.7 | ||||||||
Valuation allowance | (3.4 | ) | (5.0 | ) | ||||||
Total deferred tax assets | 38.7 | 17.7 | ||||||||
Deferred tax liabilities: | ||||||||||
Depreciation and amortization | (45.8 | ) | (47.6 | ) | ||||||
Revenue recognition | (2.7 | ) | (2.9 | ) | ||||||
Pension liabilities | (3.5 | ) | (6.6 | ) | ||||||
Other | 0.0 | (7.2 | ) | |||||||
Undistributed earnings of non-US subsidiary | (.2 | ) | (5.6 | ) | ||||||
Gross deferred tax liabilities | (52.2 | ) | (69.9 | ) | ||||||
Net deferred tax liability | $ | (13.5 | ) | $ | (52.2 | ) | ||||
2005 | 2004 | |||||||
Current net deferred tax assets | $ | 12.5 | $ | 4.4 | ||||
Long-term net deferred tax liability | (26.0 | ) | (56.6 | ) | ||||
$ | (13.5 | ) | $ | (52.2 | ) | |||
2006 | 2005 | |||||||
Current net deferred tax assets, included in Other Current Assets in the accompanying balance sheets | $ | 18.9 | $ | 11.9 | ||||
Long-term net deferred tax liability | (20.7 | ) | (16.3 | ) | ||||
$ | (1.8 | ) | $ | (4.4 | ) | |||
38
2005 | 2004 | 2003 | ||||||||||
United States | $ | 20.4 | $ | (14.0 | ) | $ | 26.1 | |||||
Non-US | 25.9 | 18.9 | 18.1 | |||||||||
$ | 46.3 | $ | 4.9 | $ | 44.2 | |||||||
2006 | 2005 | 2004 | ||||||||||
United States | $ | 27.3 | $ | 14.9 | $ | (19.4 | ) | |||||
Non-US | 15.4 | 25.9 | 18.9 | |||||||||
$ | 42.7 | $ | 40.8 | $ | (0.5 | ) | ||||||
US Benefit Plans | Non-US Benefit Plan | ||||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | ||||||||||||||||||||
Company-sponsored plans | |||||||||||||||||||||||||
Service cost | $ | 4.8 | $ | 4.6 | $ | 4.1 | $ | .2 | $ | .2 | $ | .2 | |||||||||||||
Interest cost | 8.1 | 7.7 | 7.1 | 2.8 | 2.6 | 2.2 | |||||||||||||||||||
Expected return on plan assets | (8.8 | ) | (8.2 | ) | (7.8 | ) | (3.6 | ) | (3.2 | ) | (2.7 | ) | |||||||||||||
Amortization of transition amount | (.2 | ) | (.2 | ) | (.2 | ) | |||||||||||||||||||
Other | 1.9 | 1.6 | .9 | .7 | .9 | .8 | |||||||||||||||||||
5.8 | 5.5 | 4.1 | .1 | .5 | .5 | ||||||||||||||||||||
Multiemployer plans | .3 | .2 | .2 | ||||||||||||||||||||||
Net periodic pension expense | $ | 6.1 | $ | 5.7 | $ | 4.3 | $ | .1 | $ | .5 | $ | .5 | |||||||||||||
US Benefit Plans | Non-US Benefit Plan | |||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | |||||||||||||||||||
Discount rate | 6.00 | % | 6.25 | % | 6.75 | % | 5.75 | % | 5.50 | % | 5.50 | % | ||||||||||||
Rate of increase in compensation levels | 3.50 | % | 3.50 | % | 3.50 | % | NA* | NA* | 2.50 | % | ||||||||||||||
Expected long term rate of return on plan assets | 9.00 | % | 9.00 | % | 9.00 | % | 8.30 | % | 8.30 | % | 8.00 | % |
39
42
US Benefit Plans | Non-US Benefit Plan | |||||||||||||||||||||||
2006 | 2005 | 2004 | 2006 | 2005 | 2004 | |||||||||||||||||||
Company-sponsored plans | ||||||||||||||||||||||||
Service cost | $ | 4.3 | $ | 4.8 | $ | 4.6 | $ | 0.2 | $ | 0.2 | $ | 0.2 | ||||||||||||
Interest cost | 8.6 | 8.2 | 7.7 | 2.7 | 2.8 | 2.6 | ||||||||||||||||||
Expected return on plan assets | (9.9 | ) | (8.8 | ) | (8.2 | ) | (3.8 | ) | (3.6 | ) | (3.2 | ) | ||||||||||||
Amortization of actuarial loss | 1.4 | 1.8 | 1.5 | 0.6 | 0.7 | 0.9 | ||||||||||||||||||
Amortization of prior service cost | 0.1 | 0.1 | 0.1 | — | — | — | ||||||||||||||||||
Curtailment charge | 1.3 | — | — | — | — | — | ||||||||||||||||||
Other | — | (0.3 | ) | (0.2 | ) | — | — | — | ||||||||||||||||
5.8 | 5.8 | 5.5 | (0.3 | ) | 0.1 | 0.5 | ||||||||||||||||||
Multiemployer plans | 0.3 | 0.3 | 0.2 | — | — | — | ||||||||||||||||||
Net periodic pension expense (income) | $ | 6.1 | $ | 6.1 | $ | 5.7 | $ | (0.3 | ) | $ | 0.1 | $ | 0.5 | |||||||||||
US Benefit Plans | Non-US Benefit Plan | |||||||||||||||||||||||
2006 | 2005 | 2004 | 2006 | 2005 | 2004 | |||||||||||||||||||
Discount rate | 6.13 | % | 6.0 | % | 6.25 | % | 5.2 | % | 5.75 | % | 5.5 | % | ||||||||||||
Rate of increase in compensation levels | 3.5 | % | 3.5 | % | 3.5 | % | NA | * | NA | * | NA | * | ||||||||||||
Expected long term rate of return on plan assets | 8.5 | % | 9.0 | % | 9.0 | % | 7.0 | % | 8.3 | % | 8.3 | % |
* | Non-US plan benefits are not adjusted for compensation level changes |
43
Non-US Benefit | |||||||||||||||||
US Benefit Plans | Plan | ||||||||||||||||
2005 | 2004 | 2005 | 2004 | ||||||||||||||
Projected benefit obligation at beginning of year | $ | 134.2 | $ | 120.9 | $ | 49.3 | $ | 46.3 | |||||||||
Service cost | 4.8 | 4.6 | .2 | .2 | |||||||||||||
Interest cost | 8.2 | 7.7 | 2.8 | 2.6 | |||||||||||||
Actuarial loss (gain) | 10.6 | 4.4 | 4.4 | (1.5 | ) | ||||||||||||
Benefits paid | (4.6 | ) | (3.4 | ) | (3.3 | ) | (2.1 | ) | |||||||||
Increase due to translation | (1.2 | ) | 3.8 | ||||||||||||||
Projected benefit obligation at end of year | $ | 153.2 | $ | 134.2 | $ | 52.2 | $ | 49.3 | |||||||||
Accumulated benefit obligation at end of year | $ | 134.2 | $ | 117.6 | $ | 52.2 | $ | 49.3 | |||||||||
Fair value of plan assets at beginning of year | $ | 102.6 | $ | 88.6 | $ | 43.5 | $ | 38.2 | |||||||||
Actual return on plan assets | 4.5 | 8.6 | 7.5 | 3.6 | |||||||||||||
Company contribution | 5.3 | 8.8 | 2.2 | .8 | |||||||||||||
Benefits and expenses paid | (4.6 | ) | (3.4 | ) | (3.3 | ) | (2.3 | ) | |||||||||
Increase due to translation | (1.1 | ) | 3.2 | ||||||||||||||
Fair value of plan assets at end of year | $ | 107.8 | $ | 102.6 | $ | 48.8 | $ | 43.5 | |||||||||
Funded status of plan at end of year | $ | (45.4 | ) | $ | (31.6 | ) | $ | (3.4 | ) | $ | (5.8 | ) | |||||
Unrecognized actuarial loss | 52.4 | 39.2 | 13.3 | 13.5 | |||||||||||||
Unrecognized prior service cost | 1.7 | 1.7 | |||||||||||||||
Unrecognized net transition obligation | (.1 | ) | |||||||||||||||
Net amount recognized as prepaid benefit cost in the balance sheet | $ | 8.7 | $ | 9.2 | $ | 9.9 | $ | 7.7 | |||||||||
Amounts recognized in the balance sheet consist of: | |||||||||||||||||
Prepaid benefit cost | $ | 8.7 | $ | 9.2 | $ | 9.9 | $ | 7.7 | |||||||||
Accrued benefit liability | (35.1 | ) | (24.2 | ) | (3.3 | ) | |||||||||||
Intangible asset | 1.7 | 1.7 | |||||||||||||||
Accumulated other comprehensive income, pre-tax | 33.4 | 22.5 | 3.3 | ||||||||||||||
Net amount recognized | $ | 8.7 | $ | 9.2 | $ | 9.9 | $ | 7.7 | |||||||||
US Benefit Plans | Non-US Benefit Plan | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Change in Benefit Obligation | ||||||||||||||||
Benefit obligation, beginning of year | $ | 153.2 | $ | 134.2 | $ | 52.2 | $ | 49.3 | ||||||||
Service cost | 4.3 | 4.8 | 0.2 | 0.2 | ||||||||||||
Interest cost | 8.6 | 8.2 | 2.7 | 2.8 | ||||||||||||
Plan amendments | (4.4 | ) | — | — | — | |||||||||||
Actuarial loss/(gain) | (9.3 | ) | 10.6 | 0.6 | 4.4 | |||||||||||
Benefits paid | (9.2 | ) | (4.6 | ) | (2.5 | ) | (3.3 | ) | ||||||||
Increase (decrease) due to translation | — | — | 3.8 | (1.2 | ) | |||||||||||
Benefit obligation, end of year | $ | 143.2 | $ | 153.2 | $ | 57.0 | $ | 52.2 | ||||||||
Accumulated benefit obligation, end of year | $ | 131.2 | $ | 134.2 | $ | 57.0 | $ | 52.2 | ||||||||
US Benefit | Non-US | |||||||||||||||
Plans | Benefit Plan | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Discount rate | 5.75 | % | 6.00 | % | 5.10 | % | 5.75 | % | ||||||||
Rate of increase in compensation levels | 3.50 | % | 3.50 | % | NA* | NA* | ||||||||||
Expected long-term rate of return on plan assets | 8.50 | % | 9.00 | % | 7.80 | % | 8.30 | % |
US Benefit Plans | Non-US Benefit Plan | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Discount rate | 6.00 | % | 5.75 | % | 5.20 | % | 5.10 | % | ||||||||
Rate of increase in compensation levels | 3.50 | % | 3.50 | % | N/A | N/A |
US Benefit Plans | Non-US Benefit Plan | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Change in Plan Assets | ||||||||||||||||
Fair value of plan assets, beginning of year | $ | 107.8 | $ | 102.6 | $ | 48.8 | $ | 43.5 | ||||||||
Actual return on plan assets | 16.4 | 4.5 | 5.4 | 7.5 | ||||||||||||
Company contribution | 10.0 | 5.3 | 1.3 | 2.2 | ||||||||||||
Benefits and expenses paid | (9.2 | ) | (4.6 | ) | (2.5 | ) | (3.3 | ) | ||||||||
Increase (decrease) due to translation | — | — | 3.7 | (1.1 | ) | |||||||||||
Fair value of plan assets, end of year | $ | 125.0 | $ | 107.8 | $ | 56.7 | $ | 48.8 | ||||||||
40
44
US Benefit Plans | Non-US Benefit Plan | |||||||||||||||||||||||
Percentage of | Percentage of | |||||||||||||||||||||||
Plan Assets | Plan Assets | |||||||||||||||||||||||
as of | Target | as of | Target | |||||||||||||||||||||
December 31, | Allocation | September 30, | Allocation | |||||||||||||||||||||
2005 | 2004 | 2006 | 2005 | 2004 | 2006 | |||||||||||||||||||
Equity securities | 77 | % | 77 | % | 75 | % | 61 | % | 57 | % | 60 | % | ||||||||||||
Fixed income securities | 23 | % | 23 | % | 25 | % | 36 | % | 42 | % | 40 | % | ||||||||||||
Cash | 3 | % | 1 | % | ||||||||||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||
US Benefit Plans | Non-US Benefit Plan | |||||||||||||||||||||||
Percentage of | ||||||||||||||||||||||||
Target | Plan Assets as of | Target | Percentage of | |||||||||||||||||||||
Allocation | December 31 | Allocation | Plan Assets as of September 30, | |||||||||||||||||||||
2007 | 2006 | 2005 | 2007 | 2006 | 2005 | |||||||||||||||||||
Equity securities | 75 | % | 81 | % | 77 | % | 60 | % | 67 | % | 61 | % | ||||||||||||
Fixed income securities | 25 | % | 19 | % | 23 | % | 40 | % | 31 | % | 36 | % | ||||||||||||
Cash | — | — | — | — | 2 | % | 3 | % | ||||||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||
US Benefit Plans | Non-US Benefit Plans | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Funded status, end of year | ||||||||||||||||
Fair value of plan assets | $ | 125.0 | $ | 107.8 | $ | 56.7 | $ | 48.8 | ||||||||
Benefit obligations | 143.2 | 153.2 | 57.0 | 52.2 | ||||||||||||
Funded status | (18.2 | ) | (45.4 | ) | (0.3 | ) | (3.4 | ) | ||||||||
Unrecognized net actuarial loss | N/A | 52.4 | N/A | 13.3 | ||||||||||||
Unrecognized prior service cost | N/A | 1.7 | N/A | — | ||||||||||||
Amount recognized, end of year | $ | (18.2 | ) | $ | 8.7 | $ | (0.3 | ) | $ | 9.9 | ||||||
45
US Benefit Plans | Non-US Benefit Plan | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Noncurrent liability | $ | (18.2 | ) | $ | N/A | $ | (0.3 | ) | $ | N/A | ||||||
Prepaid benefit cost | N/A | 8.7 | N/A | 9.9 | ||||||||||||
Accrued benefit liability | N/A | (35.1 | ) | N/A | (3.3 | ) | ||||||||||
Intangible asset | N/A | 1.7 | N/A | — | ||||||||||||
Accumulated other comprehensive income (loss), pre-tax | 31.0 | 33.4 | 12.6 | 3.3 | ||||||||||||
Net amount recognized | $ | 12.8 | $ | 8.7 | $ | 12.3 | $ | 9.9 | ||||||||
US Benefit Plans | Non-US Benefit Plan | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Net actuarial loss | $ | 30.6 | N/A | $ | 12.6 | N/A | ||||||||||
Prior service cost | 0.4 | N/A | — | N/A | ||||||||||||
Net amount recognized, pre-tax | $ | 31.0 | N/A | $ | 12.6 | N/A | ||||||||||
US Benefit | Non-US | |||||||
Plans | Benefit Plan | |||||||
2006 | $ | 4.1 | $ | 2.4 | ||||
2007 | 4.3 | 2.5 | ||||||
2008 | 4.8 | 2.6 | ||||||
2009 | 5.2 | 2.8 | ||||||
2010 | 5.8 | 3.0 | ||||||
2011-2015 | 41.3 | 17.5 | ||||||
$ | 65.5 | $ | 30.8 | |||||
US Benefit | Non-US | |||||||
Plans | Benefit Plan | |||||||
2007 | $ | 4.5 | $ | 2.6 | ||||
2008 | 4.7 | 2.8 | ||||||
2009 | 5.0 | 3.0 | ||||||
2010 | 5.4 | 3.3 | ||||||
2011 | 5.9 | 3.4 | ||||||
2012-2016 | 39.9 | 19.5 |
41
46
42
Fair Value Swaps | Cash Flow Swaps | |||||||||||||||
2005 | 2004 | 2005 | 2004 | |||||||||||||
Notional amount | $ | 202.9 | $ | 220.0 | $ | 105.0 | $ | 85.0 | ||||||||
Fair value | (10.0 | ) | (6.7 | ) | 3.3 | .8 | ||||||||||
Average pay rate | 7.2 | % | 5.5 | % | 6.3 | % | 4.4 | % | ||||||||
Average receive rate | 6.0 | % | 6.0 | % | 6.2 | % | 2.5 | % |
Fair Value Swaps | Cash Flow Swaps | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Notional amount | $ | 147.9 | $ | 202.9 | $ | 85.0 | $ | 105.0 | ||||||||
Fair value | (7.2 | ) | (10.0 | ) | 1.6 | 3.3 | ||||||||||
Average pay rate | 8.0 | % | 7.2 | % | 6.9 | % | 6.3 | % | ||||||||
Average receive rate | 6.0 | % | 6.0 | % | 7.6 | % | 6.2 | % |
2005 | 2004 | |||||||||||||||
Notional | Fair | Notional | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
Fair value forwards | $ | $ | $ | 9.9 | $ | (.1 | ) | |||||||||
Cash flow forwards | 17.2 | 1.4 | 24.9 | 2.6 | ||||||||||||
Options | 34.6 | (.3 | ) | 25.1 | .4 | |||||||||||
Total | $ | 51.8 | $ | 1.1 | $ | 59.9 | $ | 2.9 | ||||||||
43
47
2006 | 2005 | |||||||||||||||
Notional | Fair | Notional | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
Cash flow forwards | $ | 7.2 | $ | (0.2 | ) | $ | 17.2 | $ | 1.4 | |||||||
Options | 8.4 | — | 34.6 | (.3 | ) | |||||||||||
Total | $ | 15.6 | $ | (0.2 | ) | $ | 51.8 | $ | 1.1 | |||||||
2006 | 2005 | 2004 | ||||||||||
Dividend yield | 1.3 | % | 1.7 | % | 2.1 | % | ||||||
Expected volatility | 30 | % | 27 | % | 32 | % | ||||||
Risk free interest rate | 4.6 | % | 4.2 | % | 3.5 | % | ||||||
Weighted average expected option life in years | 7 | 8 | 8 |
48
Weighted Average Price per | ||||||||||||||||||||||||
Option Shares | Share | |||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Outstanding at beginning of year | 2.6 | 2.4 | 2.2 | $ | 19.84 | $ | 20.06 | $ | 21.33 | |||||||||||||||
Granted | .6 | .5 | .5 | 15.69 | 18.74 | 15.37 | ||||||||||||||||||
Cancelled or expired | (.5 | ) | (.2 | ) | (.3 | ) | 19.09 | 20.14 | 20.92 | |||||||||||||||
Exercised | (.1 | ) | 15.26 | 15.65 | 18.84 | |||||||||||||||||||
Outstanding at end of year | 2.7 | 2.6 | 2.4 | 19.15 | 19.84 | 20.06 | ||||||||||||||||||
Exercisable at end of year | 1.8 | 1.8 | 1.5 | $ | 20.19 | $ | 20.70 | $ | 21.25 | |||||||||||||||
Option Shares | Weighted Average Exercise Price | |||||||||||||||||||||||
2006 | 2005 | 2004 | 2006 | 2005 | 2004 | |||||||||||||||||||
(In millions) | ||||||||||||||||||||||||
Outstanding at beginning of year | 2.7 | 2.6 | 2.4 | $ | 19.15 | $ | 19.84 | $ | 20.06 | |||||||||||||||
Granted | 0.6 | 0.6 | 0.5 | 16.93 | 15.69 | 18.74 | ||||||||||||||||||
Cancelled or expired | (0.7 | ) | (0.5 | ) | (0.2 | ) | 21.26 | 19.09 | 20.14 | |||||||||||||||
Exercised | (0.0 | ) | (0.0 | ) | (0.1 | ) | 16.23 | 15.26 | 15.65 | |||||||||||||||
Outstanding at end of year | 2.6 | 2.7 | 2.6 | $ | 18.15 | $ | 19.15 | $ | 19.84 | |||||||||||||||
Exercisable at end of year | 1.7 | 1.8 | 1.8 | $ | 18.84 | $ | 20.19 | $ | 20.70 | |||||||||||||||
Options Remaining | Options Exercisable | |||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||
Weighted | Average | Average | ||||||||||||||||||
Average | Exercise | Exercise | ||||||||||||||||||
Range of Exercise Prices | Shares | Remaining Life | Price | Shares | Price | |||||||||||||||
(in millions) | (in years) | (in millions) | ||||||||||||||||||
$14.01 - $16.00 | .3 | 7.6 | $ | 14.87 | .2 | $ | 14.83 | |||||||||||||
16.01 - 18.00 | .8 | 7.6 | 16.17 | .3 | 16.15 | |||||||||||||||
18.01 - 20.00 | .4 | 8.0 | 18.84 | .2 | 18.92 | |||||||||||||||
20.01 - 22.00 | .7 | 3.8 | 21.10 | .6 | 21.10 | |||||||||||||||
22.01 - 24.00 | .4 | 3.5 | 23.47 | .4 | 23.48 | |||||||||||||||
24.01 - 26.00 | .1 | 1.3 | 24.96 | .1 | 24.81 | |||||||||||||||
2.7 | 5.8 | $ | 19.15 | 1.8 | $ | 20.19 | ||||||||||||||
Options Outstanding | Options Exercisable | |||||||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||||||
Weighted | Average | Average | ||||||||||||||||||||||
Average | Exercise | Exercise | ||||||||||||||||||||||
Range of Exercise Prices | Shares | Remaining Life | Price | Shares | Price | |||||||||||||||||||
(In millions) | (In years) | (In millions) | ||||||||||||||||||||||
$12.00 - $16.00 | 0.3 | 4.8 | $ | 14.79 | 0.3 | $ | 14.88 | |||||||||||||||||
16.01 - 18.00 | 1.1 | 7.3 | 16.50 | 0.4 | 16.19 | |||||||||||||||||||
18.01 - 20.00 | 0.4 | 5.4 | 18.84 | 0.2 | 18.89 | |||||||||||||||||||
20.01 - 22.00 | 0.5 | 2.0 | 21.03 | 0.5 | 21.03 | |||||||||||||||||||
22.01 - 26.40 | 0.3 | 2.4 | 23.62 | 0.3 | 23.62 | |||||||||||||||||||
2.6 | 5.2 | $ | 18.15 | 1.7 | $ | 18.84 | ||||||||||||||||||
2005 | 2004 | |||||||
Reported net loss | $ | (4.6 | ) | $ | (2.3 | ) | ||
Add: Stock-based employee compensation expense included in reported net loss, net of related tax effects | 1.3 | 0.6 | ||||||
Deduct: Total stock-based employee compensation expense determined under the fair-value method for all awards, net of related tax effects | (2.6 | ) | (2.3 | ) | ||||
Pro forma net loss | $ | (5.9 | ) | $ | (4.0 | ) | ||
Basic and diluted loss per common share: | ||||||||
Reported loss per share | $ | (0.10 | ) | $ | (0.05 | ) | ||
Pro forma loss per share | $ | (0.12 | ) | $ | (0.08 | ) |
49
44
2005 | 2004 | 2003 | ||||||||||
Number of shares granted (in millions) | .3 | .2 | .0 | |||||||||
Fair value of shares granted | $ | 4.9 | $ | 3.2 | $ | .8 | ||||||
Weighted average fair value per share | $ | 15.26 | $ | 19.19 | $ | 15.81 | ||||||
Compensation expense recorded | $ | 2.1 | $ | 1.0 | $ | 1.2 |
Number of | Weighted Average | |||||||
Restricted Shares | Price per Share | |||||||
(Shares in millions) | ||||||||
Outstanding and non-vested at December 31, 2005 | 0.4 | $ | 16.48 | |||||
Granted | 0.4 | 17.02 | ||||||
Vested | (0.1 | ) | 17.46 | |||||
Cancelled | (0.1 | ) | 16.12 | |||||
Outstanding and non-vested at December 31, 2006 | 0.6 | $ | 16.70 | |||||
2005 | 2004 | 2003 | ||||||||||
Dividend yield | 1.7 | % | 2.1 | % | 4.5 | % | ||||||
Expected volatility | 27 | % | 32 | % | 28 | % | ||||||
Risk free interest rate | 4.2 | % | 3.5 | % | 3.6 | % | ||||||
Weighted average expected option life in years | 8 | 8 | 8 | |||||||||
Weighted average per share value of options granted during the year | $ | 4.93 | $ | 5.96 | $ | 2.97 | ||||||
2005 | 2004 | 2003 | |||||||||||
Reported net (loss) income | $ | (4.6 | ) | $ | (2.3 | ) | $ | 37.3 | |||||
Add: Stock-based employee compensation expense included in reported net (loss) income net of related tax effects | 1.3 | .6 | .7 | ||||||||||
Deduct: Total stock-based employee compensation expense determined under the fair-value method for all awards, net of related tax effects | (2.6 | ) | (2.3 | ) | (1.5 | ) | |||||||
Pro forma net (loss) income | $ | (5.9 | ) | $ | (4.0 | ) | $ | 36.5 | |||||
Basic and diluted net (loss) income per common share: | |||||||||||||
Reported net (loss) income | $ | (.10 | ) | $ | (.05 | ) | $ | .78 | |||||
Pro forma net (loss) income | $ | (.12 | ) | $ | (.08 | ) | $ | .76 |
45
50
2006 | 2005 | |||||||
($ in millions) | ||||||||
Current assets | $ | 18.2 | $ | 36.9 | ||||
Properties and equipment | 12.9 | 18.0 | ||||||
Long-term assets | 26.7 | 32.8 | ||||||
Total assets | $ | 57.8 | $ | 87.7 | ||||
Current liabilities | 7.2 | 18.3 | ||||||
Long-term liabilities | 24.0 | 21.5 | ||||||
Total liabilities | $ | 31.2 | $ | 39.8 | ||||
2005 | 2004 | 2003 | ||||||||||
Net sales | $ | 63.8 | $ | 128.9 | $ | 161.3 | ||||||
Costs and expenses | (126.5 | ) | (153.6 | ) | (159.7 | ) | ||||||
(Loss) income before income taxes | (62.7 | ) | (24.7 | ) | 1.6 | |||||||
Income tax charge (benefit) | (12.4 | ) | (6.2 | ) | .4 | |||||||
(Loss) income from discontinued operations | $ | (50.3 | ) | $ | (18.5 | ) | $ | 1.2 | ||||
2006 | 2005 | 2004 | ||||||||||
Net sales | $ | 83.8 | $ | 101.7 | $ | 168.4 | ||||||
Costs and expenses | (97.5 | ) | (161.7 | ) | (173.1 | ) | ||||||
Loss before income taxes | (13.7 | ) | (60.0 | ) | (4.7 | ) | ||||||
Income tax charge (benefit) | (2.0 | ) | (11.5 | ) | 3.7 | |||||||
Loss from discontinued operations and disposal | $ | (11.7 | ) | $ | (48.5 | ) | $ | (8.4 | ) | |||
46
51
Pre-tax | Pre-tax | Total pre-tax | ||||||||||
restructuring | restructuring | restructuring | ||||||||||
Initiative | charges in 2004 | charges in 2005 | charges | |||||||||
Closure of refuse truck production facility in Oshkosh, Wisconsin and consolidation into its facility in Medicine Hat, Alberta | $ | 8.4 | $ | 2.0 | $ | 10.4 |
Pre-tax | Pre-tax | Total pre-tax | ||||||||||
Restructuring | Restructuring | Restructuring | ||||||||||
Initiative | Charges in 2004 | Charges in 2005 | Charges | |||||||||
Closure of refuse truck production facility in Oshkosh, Wisconsin and consolidation into its facility in Medicine Hat, Alberta | $ | 8.4 | $ | 2.0 | $ | 10.4 |
($ in millions) | 2005 | 2004 | ||||||
Current assets | $ | 32.6 | $ | 45.5 | ||||
Properties and equipment | 6.8 | 10.1 | ||||||
Goodwill | 15.4 | |||||||
Intangibles | 4.3 | |||||||
Total assets | $ | 39.4 | $ | 75.3 | ||||
Current liabilities | 22.3 | 17.4 | ||||||
Long-term liabilities | 2.0 | |||||||
Total liabilities | $ | 24.3 | $ | 17.4 | ||||
47
52
48
Pre-Tax | Pre-Tax | |||||||||||||
Restructuring | Restructuring | |||||||||||||
Group | Initiative | Charges in 2004 | Charges in 2005 | Total Charges | ||||||||||
Fire Rescue | Closure of the production facilities located in Preble, New York and consolidation of US production of fire rescue vehicles into the Ocala, Florida operations; completed in the first quarter of 2005 | $ | 5.4 | $ | .9 | $ | 6.3 | |||||||
Tool | Reducing manufacturing activities relating to tooling products in France and outsourcing production to its Portugal facility; completed in the fourth quarter of 2005 | 1.2 | (.2 | ) | 1.0 | |||||||||
Corporate | Planning and organizing restructuring activities | .4 | .4 | |||||||||||
$ | 7.0 | $ | .7 | $ | 7.7 | |||||||||
Pre-Tax | Pre-Tax | |||||||||||||
Restructuring | Restructuring | |||||||||||||
Group | Initiative | Charges in 2004 | Charges in 2005 | Total Charges | ||||||||||
Fire Rescue | Closure of the production facilities located in Preble, New York and consolidation of US production of fire rescue vehicles into the Ocala, Florida operations; completed in the first quarter of 2005 | $ | 5.4 | $ | 0.9 | $ | 6.3 | |||||||
Tool | Reducing manufacturing activities relating to tooling products in France and outsourcing production to its Portugal facility; completed in the fourth quarter of 2005 | 1.2 | (0.2 | ) | 1.0 | |||||||||
Corporate | Planning and organizing restructuring activities | 0.4 | 0.4 | |||||||||||
$ | 7.0 | $ | 0.7 | $ | 7.7 | |||||||||
Asset | ||||||||||||||||
Severance | Impairment | Other | Total | |||||||||||||
Balance as of January 1, 2004 | $ | — | $ | — | $ | — | $ | — | ||||||||
Charges to expense | 3.5 | 2.7 | .8 | 7.0 | ||||||||||||
Cash payments | (1.6 | ) | (.7 | ) | (2.3 | ) | ||||||||||
Non-cash activity | .1 | (2.7 | ) | (2.6 | ) | |||||||||||
Balance as of December 31, 2004 | 2.0 | — | .1 | 2.1 | ||||||||||||
Charges to expense | .5 | .2 | .7 | |||||||||||||
Cash payments | (2.6 | ) | (.5 | ) | (3.1 | ) | ||||||||||
Non-cash activity | .1 | .2 | .3 | |||||||||||||
Balance as of December 31, 2005 | $ | — | $ | — | $ | — | $ | — | ||||||||
Asset | ||||||||||||||||
Severance | Impairment | Other | Total | |||||||||||||
Balance as of December 31, 2004 | $ | 2.0 | $ | — | $ | 0.1 | $ | 2.1 | ||||||||
Charges to expense | 0.5 | — | 0.2 | 0.7 | ||||||||||||
Cash payments | (2.6 | ) | — | (0.5 | ) | (3.1 | ) | |||||||||
Non-cash activity | 0.1 | — | 0.2 | 0.3 | ||||||||||||
Balance as of December 31, 2005 and 2006 | $ | — | $ | — | $ | — | $ | — | ||||||||
53
49
54
50
51
55
2005 | 2004 | 2003 | |||||||||||
Net sales | |||||||||||||
Environmental Products | $ | 347.7 | $ | 294.6 | $ | 261.8 | |||||||
Fire Rescue | 371.2 | 360.9 | 402.1 | ||||||||||
Safety Products | 276.5 | 247.4 | 241.1 | ||||||||||
Tool | 161.5 | 161.0 | 153.2 | ||||||||||
Total net sales | $ | 1,156.9 | $ | 1,063.9 | $ | 1,058.2 | |||||||
Operating income (loss) | |||||||||||||
Environmental Products | $ | 28.9 | $ | 25.2 | $ | 19.8 | |||||||
Fire Rescue | 2.3 | (23.9 | ) | 14.7 | |||||||||
Safety Products | 45.0 | 33.5 | 28.1 | ||||||||||
Tool | 16.8 | 15.3 | 14.9 | ||||||||||
Corporate expense | (23.8 | ) | (21.7 | ) | (14.0 | ) | |||||||
Total operating income (loss) | 69.2 | 28.4 | 63.5 | ||||||||||
Interest expense | (23.1 | ) | (20.6 | ) | (18.8 | ) | |||||||
Other income (expense) | .2 | (2.9 | ) | (.5 | ) | ||||||||
Income (loss) before income taxes | $ | 46.3 | $ | 4.9 | $ | 44.2 | |||||||
Depreciation and amortization | |||||||||||||
Environmental Products | $ | 3.2 | �� | $ | 2.6 | $ | 2.8 | ||||||
Fire Rescue | 4.8 | 5.1 | 4.5 | ||||||||||
Safety Products | 4.5 | 5.0 | 5.0 | ||||||||||
Tool | 8.1 | 7.9 | 7.3 | ||||||||||
Corporate | .9 | (1.0 | ) | (1.2 | ) | ||||||||
Total depreciation and amortization | $ | 21.5 | $ | 19.6 | $ | 18.4 | |||||||
2006 | 2005 | 2004 | ||||||||||
Net sales | ||||||||||||
Safety and Security Systems | $ | 304.5 | $ | 276.5 | $ | 247.4 | ||||||
Fire Rescue | 384.8 | 371.2 | 360.9 | |||||||||
Environmental Solutions | 399.4 | 347.7 | 294.6 | |||||||||
Tool | 122.9 | 123.6 | 121.6 | |||||||||
Total net sales | $ | 1,211.6 | $ | 1,119.0 | $ | 1,024.5 | ||||||
Operating income (loss) | ||||||||||||
Safety and Security Systems | $ | 41.2 | $ | 45.0 | $ | 33.5 | ||||||
Fire Rescue | 6.8 | 2.3 | (23.9 | ) | ||||||||
Environmental Solutions | 37.1 | 28.9 | 25.2 | |||||||||
Tool | 8.2 | 11.3 | 9.9 | |||||||||
Corporate expense | (23.4 | ) | (23.8 | ) | (21.7 | ) | ||||||
Total operating income | 69.9 | 63.7 | 23.0 | |||||||||
Interest expense | (25.0 | ) | (23.1 | ) | (20.6 | ) | ||||||
Other income (expense) | (2.2 | ) | 0.2 | (2.9 | ) | |||||||
Income (loss) before income taxes | $ | 42.7 | $ | 40.8 | $ | (0.5 | ) | |||||
Depreciation and amortization | ||||||||||||
Safety and Security Systems | $ | 5.5 | $ | 4.5 | $ | 2.6 | ||||||
Fire Rescue | 3.8 | 4.8 | 5.1 | |||||||||
Environmental Solutions | 4.6 | 3.2 | 5.0 | |||||||||
Tool | 4.8 | 4.8 | 4.5 | |||||||||
Corporate | 0.6 | 0.9 | (1.0 | ) | ||||||||
Total depreciation and amortization | $ | 19.3 | $ | 18.2 | $ | 16.2 | ||||||
52
56
2005 | 2004 | 2003 | |||||||||||||
Identifiable assets | |||||||||||||||
Manufacturing activities | |||||||||||||||
Environmental Products | $ | 245.0 | $ | 214.6 | $ | 219.0 | |||||||||
Fire Rescue | 216.6 | 232.7 | 227.4 | ||||||||||||
Safety Products | 181.5 | 212.0 | 203.9 | ||||||||||||
Tool | 166.5 | 167.2 | 163.2 | ||||||||||||
Corporate | 101.3 | 34.1 | 36.8 | ||||||||||||
Total manufacturing activities | 910.9 | 860.6 | 850.3 | ||||||||||||
Assets of discontinued operations | 39.4 | 75.3 | 97.1 | ||||||||||||
Financial services activities | |||||||||||||||
Environmental Products | 30.5 | 41.4 | 55.4 | ||||||||||||
Fire Rescue | 138.7 | 155.1 | 174.7 | ||||||||||||
Total financial services activities | 169.2 | 196.5 | 230.1 | ||||||||||||
Total identifiable assets | $ | 1,119.5 | $ | 1,132.4 | $ | 1,177.5 | |||||||||
2005 | 2004 | 2003 | |||||||||||
Additions to long-lived assets | |||||||||||||
Environmental Products | $ | 4.6 | $ | 4.3 | $ | 13.2 | |||||||
Fire Rescue | 3.4 | 5.5 | 5.7 | ||||||||||
Safety Products | 2.3 | 5.1 | 7.9 | ||||||||||
Tool | 5.8 | 5.9 | 5.5 | ||||||||||
Corporate | .2 | 1.7 | 8.6 | ||||||||||
Total additions to long-lived assets | $ | 16.3 | $ | 22.5 | $ | 40.9 | |||||||
2006 2005 2004 Identifiable assets Manufacturing activities Safety and Security Systems $ 197.5 $ 181.5 $ 212.0 Fire Rescue 219.4 216.6 232.7 Environmental Solutions 229.4 245.0 214.6 Tool 116.8 120.2 117.3 Corporate 69.6 99.3 31.9 Total manufacturing activities 832.7 862.6 808.5 Assets of discontinued operations 57.8 87.7 127.4 Financial services activities Fire Rescue 116.3 138.7 155.1 Environmental Solutions 27.5 30.5 41.4 Corporate 15.1 — — Total financial services activities 158.9 169.2 196.5 �� Total identifiable assets $ 1,049.4 $ 1,119.5 $ 1,132.4 Additions to long-lived assets Safety and Security Systems $ 4.2 $ 2.3 $ 5.5 Fire Rescue 3.8 3.4 5.1 Environmental Solutions 5.4 4.6 4.3 Tool 4.2 5.8 5.3 Corporate 1.3 0.2 1.7 Total additions to long-lived assets $ 18.9 $ 16.3 $ 21.9
2005 | 2004 | 2003 | |||||||||||
Financial revenues | |||||||||||||
Environmental Products | $ | 2.2 | $ | 3.5 | $ | 4.5 | |||||||
Fire Rescue | 7.4 | 8.6 | 8.9 | ||||||||||
Total financial revenues | $ | 9.6 | $ | 12.1 | $ | 13.4 | |||||||
2006 | 2005 | 2004 | ||||||||||
Financial revenues | ||||||||||||
Fire Rescue | $ | 6.3 | $ | 7.4 | $ | 8.6 | ||||||
Environmental Solutions | 1.9 | 2.2 | 3.5 | |||||||||
Total financial revenues | $ | 8.2 | $ | 9.6 | $ | 12.1 | ||||||
5357
2005 | 2004 | 2003 | |||||||||||
Net sales | |||||||||||||
United States | $ | 814.7 | $ | 702.2 | $ | 697.5 | |||||||
Europe | 271.5 | 280.8 | 290.2 | ||||||||||
Canada | 61.1 | 68.8 | 57.1 | ||||||||||
Other | 9.6 | 12.1 | 13.4 | ||||||||||
$ | 1,156.9 | $ | 1,063.9 | $ | 1,058.2 | ||||||||
Long-lived assets | |||||||||||||
United States | $ | 345.3 | $ | 355.2 | $ | 367.2 | |||||||
Europe | 47.3 | 53.1 | 49.8 | ||||||||||
Canada | 72.5 | 72.5 | 77.2 | ||||||||||
Other | 1.1 | .4 | 1.1 | ||||||||||
$ | 466.2 | $ | 481.2 | $ | 495.3 | ||||||||
2006 | 2005 | 2004 | ||||||||||
Net sales | ||||||||||||
United States | $ | 782.5 | $ | 780.0 | $ | 666.1 | ||||||
Europe | 318.9 | 269.8 | 279.5 | |||||||||
Canada | 102.0 | 59.6 | 66.8 | |||||||||
Other | 8.2 | 9.6 | 12.1 | |||||||||
$ | 1,211.6 | $ | 1,119.0 | $ | 1,024.5 | |||||||
Long-lived assets | ||||||||||||
United States | $ | 262.5 | $ | 307.1 | $ | 313.8 | ||||||
Europe | 59.3 | 47.3 | 53.1 | |||||||||
Canada | 70.7 | 72.5 | 72.5 | |||||||||
Other | 21.4 | 1.1 | 0.6 | |||||||||
$ | 413.9 | $ | 428.0 | $ | 440.0 | |||||||
2005 | 2004 | 2003 | ||||||||||
Numerator for both basic and diluted income per share computations — net income (loss) | $ | (4.6 | ) | $ | (2.3 | ) | $ | 37.3 | ||||
Denominator for basic income per share — weighted average shares outstanding | 48.2 | 48.1 | 48.0 | |||||||||
Effect of employee stock options (potential dilutive common shares) | ||||||||||||
Denominator for diluted income per share — adjusted shares | 48.2 | 48.1 | 48.0 | |||||||||
54
58
2005 | 2004 | |||||||
Balance at January 1 | $ | 11.1 | $ | 12.7 | ||||
Provisions to expense | 12.7 | 16.4 | ||||||
Actual costs incurred | (11.7 | ) | (18.0 | ) | ||||
Balance at December 31 | $ | 12.1 | $ | 11.1 | ||||
2006 | 2005 | |||||||
Balance at January 1 | $ | 9.2 | $ | 8.0 | ||||
Provisions to expense | 11.7 | 12.7 | ||||||
Actual costs incurred | (12.7 | ) | (11.5 | ) | ||||
Balance at December 31 | $ | 8.2 | $ | 9.2 | ||||
2005 | 2004 | |||||||||||||||
Notional | Fair | Notional | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
Short-term debt (Note E) | $ | 6.6 | $ | 6.6 | $ | 52.6 | $ | 52.6 | ||||||||
Long-term debt (Note E) | 431.3 | 443.4 | 358.4 | 360.3 | ||||||||||||
Fair value swaps (Note H) | 202.9 | (10.0 | ) | 220.0 | (6.7 | ) | ||||||||||
Cash flow swaps (Note H) | 105.0 | 3.3 | 85.0 | .8 | ||||||||||||
Foreign exchange contracts (Note H) | 17.2 | 1.4 | 34.8 | 2.5 |
55
2006 | 2005 | |||||||||||||||
Notional | Fair | Notional | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
Short-term debt (Note 5) | $ | 30.3 | $ | 30.3 | $ | 6.6 | $ | 6.6 | ||||||||
Long-term debt (Note 5) | 347.1 | 351.5 | 431.3 | 443.4 | ||||||||||||
Fair value swaps (Note 8) | 147.9 | (7.2 | ) | 202.9 | (10.0 | ) | ||||||||||
Cash flow swaps (Note 8) | 85.0 | 1.6 | 105.0 | 3.3 | ||||||||||||
Foreign exchange contracts (Note 8) | 7.2 | — | 17.2 | 1.4 |
59
Environmental | Fire | Safety | ||||||||||||||||||
Products | Rescue | Products | Tool | Total | ||||||||||||||||
December 31, 2003 | $ | 127.0 | $ | 37.8 | $ | 88.5 | $ | 82.0 | $ | 335.3 | ||||||||||
Adjustments | (.9 | ) | (.9 | ) | ||||||||||||||||
Translation | .3 | 1.1 | 1.4 | (.1 | ) | 2.7 | ||||||||||||||
December 31, 2004 | 126.4 | 38.9 | 89.9 | 81.9 | 337.1 | |||||||||||||||
Translation | (.6 | ) | (1.9 | ) | (1.2 | ) | (3.7 | ) | ||||||||||||
December 31, 2005 | $ | 125.8 | $ | 37.0 | $ | 88.7 | $ | 81.9 | $ | 333.4 | ||||||||||
Environmental | Fire | Safety | ||||||||||||||||||
Solutions | Rescue | Security | Tool | Total | ||||||||||||||||
December 31, 2004 | $ | 126.4 | $ | 38.9 | $ | 89.9 | $ | 55.8 | $ | 311.0 | ||||||||||
Translation | (0.6 | ) | (1.9 | ) | (1.2 | ) | — | (3.7 | ) | |||||||||||
December 31, 2005 | 125.8 | 37.0 | 88.7 | 55.8 | 307.3 | |||||||||||||||
Translation | 0.4 | 1.6 | 1.3 | — | 3.3 | |||||||||||||||
December 31, 2006 | $ | 126.2 | $ | 38.6 | $ | 90.0 | $ | 55.8 | $ | 310.6 | ||||||||||
December 31, 2005 | December 31, 2004 | ||||||||||||||||||||||||||||
Weighted- | |||||||||||||||||||||||||||||
Average | Gross | Net | Gross | Net | |||||||||||||||||||||||||
Useful Life | Carrying | Accumulated | Carrying | Carrying | Accumulated | Carrying | |||||||||||||||||||||||
(Years) | Value | Amortization | Value | Value | Amortization | Value | |||||||||||||||||||||||
Amortizable: | |||||||||||||||||||||||||||||
Developed software | 6 | $ | 14.7 | $ | (6.4 | ) | $ | 8.3 | $ | 13.4 | $ | (4.7 | ) | $ | 8.7 | ||||||||||||||
Patents | 5-10 | 3.8 | (2.7 | ) | 1.1 | 3.9 | (2.4 | ) | 1.5 | ||||||||||||||||||||
Other | 3 | .1 | .1 | ||||||||||||||||||||||||||
Total | $ | 18.6 | $ | (9.1 | ) | $ | 9.5 | $ | 17.3 | $ | (7.1 | ) | $ | 10.2 | |||||||||||||||
Weighted- | December 31, 2006 | December 31, 2005 | ||||||||||||||||||||||||||
Average | Gross | Net | Gross | Net | ||||||||||||||||||||||||
Useful Life | Carrying | Accumulated | Carrying | Carrying | Accumulated | Carrying | ||||||||||||||||||||||
(Years) | Value | Amortization | Value | Value | Amortization | Value | ||||||||||||||||||||||
Amortizable: | ||||||||||||||||||||||||||||
Developed software | 6 | $ | 15.3 | $ | (8.3 | ) | $ | 7.0 | $ | 14.7 | $ | (6.4 | ) | $ | 8.3 | |||||||||||||
Patents | 5-10 | 0.5 | (0.4 | ) | 0.1 | 0.4 | (0.2 | ) | 0.2 | |||||||||||||||||||
Other | 3 | 1.2 | (0.1 | ) | 1.1 | 0.1 | — | 0.1 | ||||||||||||||||||||
Total | $ | 17.0 | $ | (8.8 | ) | $ | 8.2 | $ | 15.2 | $ | (6.6 | ) | $ | 8.6 | ||||||||||||||
56
60
61
For the Quarterly Period Ended | |||||||||||||||||||||||||||||||||
2005 | 2004 | ||||||||||||||||||||||||||||||||
March 31 | June 30 | September 30 | December 31 | March 31 | June 30 | September 30 | December 31 | ||||||||||||||||||||||||||
Net sales | $ | 264.0 | $ | 300.5 | $ | 285.6 | $ | 306.8 | $ | 242.7 | $ | 268.6 | $ | 252.2 | $ | 300.4 | |||||||||||||||||
Gross margin | 68.1 | 72.9 | 70.4 | 80.1 | 62.5 | 67.3 | 60.0 | 59.2 | |||||||||||||||||||||||||
Income (loss) from continuing operations | 4.3 | 15.5 | 14.0 | 13.5 | 3.8 | 3.0 | 2.8 | (.1 | ) | ||||||||||||||||||||||||
(Loss) from discontinued operations | (4.5 | ) | (4.3 | ) | (3.7 | ) | (37.8 | ) | (1.6 | ) | (5.3 | ) | (5.4 | ) | (6.2 | ) | |||||||||||||||||
Gain (loss) on disposition | (1.6 | ) | (4.4 | ) | (1.3 | ) | 12.4 | ||||||||||||||||||||||||||
Net income (loss) | (.2 | ) | 11.2 | 10.3 | (25.9 | ) | 2.2 | (6.7 | ) | (3.9 | ) | 6.1 | |||||||||||||||||||||
Per share data — diluted: | |||||||||||||||||||||||||||||||||
Income from continuing operations | .09 | .32 | .29 | .28 | .08 | .06 | .06 | ||||||||||||||||||||||||||
Income (loss) from discontinued operations | (.09 | ) | (.09 | ) | (.08 | ) | (.82 | ) | (.04 | ) | (.20 | ) | (.14 | ) | .13 | ||||||||||||||||||
Net income (loss)* | .23 | .21 | (.54 | ) | .04 | (.14 | ) | (.08 | ) | .13 | |||||||||||||||||||||||
Dividends paid per share | .06 | .06 | .06 | .06 | .10 | .10 | .10 | .10 | |||||||||||||||||||||||||
Market price range per share | |||||||||||||||||||||||||||||||||
High | 17.88 | 16.50 | 17.95 | 17.15 | 20.03 | 20.56 | 19.14 | 19.18 | |||||||||||||||||||||||||
Low | 14.45 | 13.80 | 15.55 | 14.80 | 17.62 | 16.88 | 15.75 | 16.01 |
For the Quarterly Period Ended | ||||||||||||||||||||||||||||||||
2006 | 2005 | |||||||||||||||||||||||||||||||
March 31 | June 30 | September 30 | December 31 | March 31 | June 30 | September 30 | December 31 | |||||||||||||||||||||||||
Net sales | $ | 273.6 | $ | 309.5 | $ | 289.4 | $ | 339.1 | $ | 253.9 | $ | 291.1 | $ | 276.4 | $ | 297.6 | ||||||||||||||||
Gross margin* | 61.4 | 72.5 | 70.7 | 79.8 | 57.9 | 62.9 | 60.5 | 70.2 | ||||||||||||||||||||||||
Gross margin pre-reclassification* | 67.8 | 79.3 | 76.7 | 86.8 | 64.6 | 69.6 | 67.2 | 76.8 | ||||||||||||||||||||||||
Income from continuing operations | 1.3 | 10.6 | 9.4 | 13.1 | 3.5 | 14.6 | 13.1 | 12.7 | ||||||||||||||||||||||||
Gain (loss) from discontinued operations | (1.2 | ) | (2.0 | ) | 0.2 | 1.0 | (3.7 | ) | (3.4 | ) | (2.8 | ) | (37.0 | ) | ||||||||||||||||||
Gain (loss) on disposition | — | (10.5 | ) | (0.4 | ) | 1.2 | — | — | — | (1.6 | ) | |||||||||||||||||||||
Net income (loss) | 0.1 | (1.9 | ) | 9.2 | 15.3 | (0.2 | ) | 11.2 | 10.3 | (25.9 | ) | |||||||||||||||||||||
Per share data — diluted: | ||||||||||||||||||||||||||||||||
Income from continuing operations | 0.03 | 0.22 | 0.20 | 0.27 | 0.08 | 0.30 | 0.27 | 0.26 | ||||||||||||||||||||||||
Income (loss) from discontinued operations | (0.03 | ) | (0.26 | ) | (0.01 | ) | 0.05 | (0.08 | ) | (0.07 | ) | (0.06 | ) | (0.80 | ) | |||||||||||||||||
Net income (loss) | — | (0.04 | ) | 0.19 | 0.32 | — | (0.23 | ) | 0.21 | (0.54 | ) | |||||||||||||||||||||
Dividends paid per share | 0.06 | 0.06 | 0.06 | 0.06 | 0.06 | 0.06 | 0.06 | 0.06 | ||||||||||||||||||||||||
Market price range per share High | 19.06 | 19.75 | 16.54 | 16.71 | 17.88 | 16.50 | 17.95 | 17.15 | ||||||||||||||||||||||||
Low | 14.75 | 14.26 | 12.69 | 14.65 | 14.45 | 13.80 | 15.55 | 14.80 |
* | In 2006, the Company began classifying certain selling, engineering, general and administrative expenses in cost of sales. This reclassification is reflected in all periods presented. |
57
Period Ending: | 2005 | 2004 | ||||||
March 31 | $ | .3 | $ | |||||
June 30 | .4 | 3.8 | ||||||
September 30 | .7 | |||||||
December 31 | 2.5 |
58
62
Item | Changes in and Disagreements with Accountants on Accounting and Financial |
Item | Controls and |
(a) | Evaluation of Disclosure Controls and Procedures |
(b) | Management’s Annual Report on Internal Control over Financial Reporting and Attestation Report of the Registered Public Accounting Firm |
(c) | Changes in Internal Control over Financial Reporting |
59
Item |
Item 10. | Directors and Corporate Governance. |
60
63
Item | Executive |
Item | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder |
Item | Certain Relationships and Related Transactions, Director Independence. |
Item | Principal Accountant Fees and |
Item | Exhibits and Financial Statement |
64
61
By: | /s/ Robert D. Welding |
/s/ Robert D. Welding Robert D. Welding | President, Chief Executive Officer and Director (Principal Executive Officer) | |||
/s/ Stephanie K. Kushner Stephanie K. Kushner | Vice President and Chief Financial Officer (Principal Financial Officer) | |||
/s/ Paul Brown Paul Brown | Vice President and Controller (Principal Accounting Officer) | |||
/s/ James C. Janning James C. Janning | Chairman and Director | |||
/s/ Charles R. Campbell Charles R. Campbell | Director | |||
/s/ Robert M. Gerrity Robert M. Gerrity | Director | |||
/s/ James E. Goodwin James E. Goodwin | Director | |||
/s/ Robert S. Hamada Robert S. Hamada | Director | |||
/s/ Paul W. Jones Paul W. Jones | Director | |||
/s/ John F. McCartney John F. McCartney | Director | |||
/s/ Brenda L. Reichelderfer Brenda L. Reichelderfer | Director |
65
62
Deductions | ||||||||||||||||||
Additions | Accounts | |||||||||||||||||
Balance at | Charged to | Written off | Balance | |||||||||||||||
Beginning | Costs and | Net of | at End | |||||||||||||||
Description | of Year | Expenses | Recoveries | of Year | ||||||||||||||
($ in millions) | ||||||||||||||||||
Allowance for doubtful accounts | ||||||||||||||||||
Year ended December 31, 2005: | ||||||||||||||||||
Manufacturing activities | $ | 2.2 | $ | 2.7 | ||||||||||||||
Financial service activities | 3.9 | 3.9 | ||||||||||||||||
Total | $ | 6.1 | $ | 2.8 | $ | (2.3 | ) | $ | 6.6 | |||||||||
Year ended December 31, 2004: | ||||||||||||||||||
Manufacturing activities | $ | 2.4 | $ | 2.2 | ||||||||||||||
Financial service activities | 2.9 | 3.9 | ||||||||||||||||
Total | $ | 5.3 | $ | 3.0 | $ | (2.2 | ) | $ | 6.1 | |||||||||
Year ended December 31, 2003: | ||||||||||||||||||
Manufacturing activities | $ | 2.5 | $ | 2.4 | ||||||||||||||
Financial service activities | 1.0 | 2.9 | ||||||||||||||||
Total | $ | 3.5 | $ | 3.5 | $ | (1.7 | ) | $ | 5.3 | |||||||||
Inventory obsolescence | ||||||||||||||||||
Year ended December 31, 2005: | ||||||||||||||||||
Manufacturing activities | $ | 6.2 | $ | 2.6 | $ | (3.0 | ) | $ | 5.8 | |||||||||
Year ended December 31, 2004: | ||||||||||||||||||
Manufacturing activities | $ | 5.2 | $ | 4.1 | $ | (3.1 | ) | $ | 6.2 | |||||||||
Year ended December 31, 2003: | ||||||||||||||||||
Manufacturing activities | $ | 4.6 | $ | 4.4 | $ | (3.8 | ) | $ | 5.2 | |||||||||
Product liability and workers’ compensation | ||||||||||||||||||
Year ended December 31, 2005: | ||||||||||||||||||
Manufacturing activities | $ | 7.9 | $ | 7.4 | $ | (6.2 | ) | $ | 9.1 | |||||||||
Year ended December 31, 2004: | ||||||||||||||||||
Manufacturing activities | $ | 6.2 | $ | 8.6 | $ | (6.9 | ) | $ | 7.9 | |||||||||
Year ended December 31, 2003: | ||||||||||||||||||
Manufacturing activities | $ | 6.1 | $ | 6.7 | $ | (6.6 | ) | $ | 6.2 | |||||||||
Deductions | ||||||||||||||||
Additions | Accounts | |||||||||||||||
Balance at | Charged to | Written off | Balance | |||||||||||||
Beginning | Costs and | Net of | at End | |||||||||||||
Description | of Year | Expenses | Recoveries | of Year | ||||||||||||
($ in millions) | ||||||||||||||||
Allowance for doubtful accounts | ||||||||||||||||
Year ended December 31, 2006: | ||||||||||||||||
Manufacturing activities | $ | 2.6 | $ | 3.0 | ||||||||||||
Financial service activities | 3.9 | 4.0 | ||||||||||||||
Total | $ | 6.5 | $ | 2.1 | $ | (1.6 | ) | $ | 7.0 | |||||||
Year ended December 31, 2005: | ||||||||||||||||
Manufacturing activities | $ | 2.1 | $ | 2.6 | ||||||||||||
Financial service activities | 3.9 | 3.9 | ||||||||||||||
Total | $ | 6.0 | $ | 2.9 | $ | (2.4 | ) | $ | 6.5 | |||||||
Year ended December 31, 2004: | ||||||||||||||||
Manufacturing activities | $ | 2.3 | $ | 2.1 | ||||||||||||
Financial service activities | 2.9 | 3.9 | ||||||||||||||
Total | $ | 5.2 | $ | 2.8 | $ | (2.0 | ) | $ | 6.0 | |||||||
Inventory obsolescence | ||||||||||||||||
Year ended December 31, 2006: | ||||||||||||||||
Manufacturing activities | $ | 5.6 | $ | 3.6 | $ | (3.5 | ) | $ | 5.7 | |||||||
Year ended December 31, 2005: | ||||||||||||||||
Manufacturing activities | $ | 6.0 | $ | 2.2 | $ | (2.6 | ) | $ | 5.6 | |||||||
Year ended December 31, 2004: | ||||||||||||||||
Manufacturing activities | $ | 5.0 | $ | 3.7 | $ | (2.7 | ) | $ | 6.0 | |||||||
Product liability and workers’ compensation | ||||||||||||||||
Year ended December 31, 2006: | ||||||||||||||||
Manufacturing activities | $ | 9.1 | $ | 6.1 | $ | (6.8 | ) | $ | 8.4 | |||||||
Year ended December 31, 2005: | ||||||||||||||||
Manufacturing activities | $ | 7.9 | $ | 7.4 | $ | (6.2 | ) | $ | 9.1 | |||||||
Year ended December 31, 2004: | ||||||||||||||||
Manufacturing activities | $ | 6.2 | $ | 8.6 | $ | (6.9 | ) | $ | 7.9 | |||||||
Warranty liability: |
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3 | . | a. | Restated Certificate of Incorporation of the Company, filed as Exhibit (3)(a) to the Company’s Form 10-K for the year ended December 31, 1996 is incorporated herein by reference. | |||
b. | By-laws of the Company, as amended February 13, 2004, filed as Exhibit 3.b to the Company’s Form 10-K for the year ended December 31, 2003 is incorporated herein by reference. | |||||
. | a. | Rights Agreement dated 7/9/98, filed as Exhibit (4) to the Company’s Form 8-A dated July 28, 1998 is incorporated herein by reference. | ||||
b. | Amended and Restated Credit Agreement dated February 3, 2006 by and among the Company, Harris N.A. and other third party lenders named | |||||
c. | The Company has no other long-term debt agreements for which the related outstanding debt exceeds 10% of consolidated total assets as of December 31, 2004. Copies of debt instruments for which the related debt is less than 10% of consolidated total assets will be furnished to the Commission upon request. | |||||
. | a. | The 1996 Stock Benefit Plan, as amended April 17, 2003, filed as Exhibit 10(a) to the Company’s Form 10-K for the year ended December 31, 2003 is incorporated herein by reference. (1) | ||||
b. | ||||||
c. | Supplemental Pension Plan, filed as Exhibit (10)(c) to the Company’s Form 10-K for the year ended December 31, 1995 is incorporated herein by reference. (1) | |||||
d. | Executive Disability, Survivor and Retirement Plan, filed as Exhibit (10)(d) to the Company’s Form 10-K for the year ended December 31, 1995 is incorporated herein by reference. (1) | |||||
e. | Savings Restoration Plan, amended and restated effective January 1, 2007 from Supplemental Savings and Investment | |||||
f. | Employment Agreement with Robert D. Welding filed as Exhibit 10.f to the Company’sForm 10-K for the year ended December 31, 2003 is incorporated herein by reference. (1) | |||||
g. | ||||||
Pension Agreement with Stephanie K. Kushner, filed as Exhibit (10)(g) to the Company’sForm 10-K for the year ended December 31, 2002 is incorporated herein by reference. (1) | ||||||
Severance Policy for Executive Employees, | ||||||
* | ||||||
i. | Change of Control Agreement with Stephanie K. Kushner, filed as Exhibit (10) (i) to the Company’sForm 10-K for the year ended December 31, 2001 is incorporated herein by reference. (1) | |||||
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j | Form of ExecutiveChange-In-Control Severance Agreement | |||||
k. | Form of ExecutiveChange-In-Control Severance Agreement | |||||
l. | Director Deferred Compensation Plan, filed as Exhibit (10)(h) to the Company’s Form 10-K for the year ended December 31, 1997 is incorporated herein by | |||||
2005 Executive Incentive Compensation Plan, filed as Appendix B to the Company’s Proxy Statement for the Annual Meeting of | ||||||
Executive Incentive Performance Plan, filed as | ||||||
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p. | General Release and Separation Agreement between Federal Signal Corporation and Karen N. Latham, dated August 31, 2006. (1)* | |||||
q. | Stock Purchase Agreement between Federal Signal Corporation and Kennametal Inc., dated December 29, 2006 with respect to the sale by Federal Signal Corporation of the capital stock of Manchester Tool Company, a wholly owned subsidiary of Federal Signal Corporation, to Kennametal Inc.* | |||||
11 | . | Computation of per share earnings is furnished in Note 1 of the financial statements contained under Item 8 of this 10-K and thereby incorporated herein by reference. | ||||
14 | . | Code of Ethics for CEO and Senior Financial Officers, as amended February 13, 2004, filed as Exhibit 14 to the Company’s Form 10-K for the year ended December 31, 2003 is incorporated herein by reference. | ||||
21 | . | Subsidiaries of the Company.* | ||||
23 | . | Consent of Independent Registered Public Accounting Firm, as filed herein.* | ||||
31 | .1 | CEO Certification under Section 302 of the Sarbanes-Oxley Act, as filed herein.* | ||||
31 | .2 | CFO Certification under Section 302 of the Sarbanes-Oxley Act, as filed herein.* | ||||
32 | .1 | CEO Certification of Periodic Report under Section 906 of the Sarbanes-Oxley Act, as filed herein.* | ||||
32 | .2 | CFO Certification of Periodic Report under Section 906 of the Sarbanes-Oxley Act, as filed herein.* | ||||
99 | .1 | Press Release, as filed herein.* |
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