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<SEC-DOCUMENT>0000277509-01-000006.txt : 20010402
<SEC-HEADER>0000277509-01-000006.hdr.sgml : 20010402
ACCESSION NUMBER:		0000277509-01-000006
CONFORMED SUBMISSION TYPE:	10-K405
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20001231
FILED AS OF DATE:		20010330

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			FEDERAL SIGNAL CORP /DE/
		CENTRAL INDEX KEY:			0000277509
		STANDARD INDUSTRIAL CLASSIFICATION:	MOTOR VEHICLES & PASSENGER CAR BODIES [3711]
		IRS NUMBER:				361063330
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K405
		SEC ACT:		
		SEC FILE NUMBER:	001-06003
		FILM NUMBER:		1586616

	BUSINESS ADDRESS:	
		STREET 1:		1415 W 22ND ST STE 1100
		CITY:			OAK BROOK
		STATE:			IL
		ZIP:			60523
		BUSINESS PHONE:		7089542000

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FEDERAL SIGN & SIGNAL CORP /DE/
		DATE OF NAME CHANGE:	19600201
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K405
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>FORM 10-K405
<TEXT>




                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    Form 10-K

  [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2000
                                       OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

        For the transition period from __________ to __________

                          Commission File Number 1-6003

                           FEDERAL SIGNAL CORPORATION
           (Exact name of the Registrant as specified in its charter)

             DELAWARE                                  36-1063330
  (State or other jurisdiction of                   (I.R.S. Employer
  incorporation or organization)                   Identification No.)

      1415 West 22nd Street,
        Oak Brook, Illinois                             60523
(Address of principal executive offices)              (Zip Code)

The Registrant's telephone number, including area code (630) 954-2000

Securities registered pursuant to Section 12(b) of the Act:

                                                   Name of Each Exchange
        Title of Each  Class                        on Which Registered

Common  Stock,  par value $1.00 per share,         New York Stock Exchange
with preferred share purchase rights

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
Yes  X  No ___

Indicate by check mark if disclosure of  delinquent  filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of the Registrant's knowledge, in definitive proxy
or  information  statements  incorporated  by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]

State the aggregate  market value of voting stock held by  nonaffiliates  of the
Registrant as of March 1, 2001.
             Common stock, $1.00 par value -- $858,672,540

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of March 1, 2001.
           Common stock, $1.00 par value - 45,422,797 shares

                  Documents  Incorporated  by  Reference

Portions of the  Annual Report to Shareholders  for the year ended December 31,
2000 are  incorporated  by  reference  into Parts I & II.  Portions of the proxy
statement for the Annual  Meeting of  Shareholders  to be held on April 19, 2001
are incorporated by reference in Part III.

<PAGE>




PART I

Item 1.    Business.

    Federal  Signal  Corporation,  founded  in  1901,  was  reincorporated  as a
Delaware  Corporation  in 1969.  The  company is a  manufacturer  and  worldwide
supplier of safety,  signaling  and  communications  equipment,  hazardous  area
lighting, fire rescue vehicles,  vehicle-mounted aerial access platforms, street
sweeping and vacuum loader  vehicles,  high  pressure  water  blasting  systems,
parking  revenue and access  control  equipment,  carbide and  superhard  tipped
cutting  tools,  precision  metal stamping  punches and related die  components,
plastic injection mold components and custom on-premise signage.

    Products   produced  and  services   rendered  by  the  Registrant  and  its
subsidiaries  (referred  to  collectively  as the  "Registrant"  herein,  unless
context  otherwise  indicates)  are divided  into four major  operating  groups:
Safety Products,  Tool, Environmental Products and Fire Rescue. A smaller group,
Sign,  reported  as  discontinued   operations  in  the  Registrant's  financial
statements,  is currently  being offered for sale.  Business units are organized
under  each  segment  because  they  share  certain  characteristics,   such  as
technology,  marketing, and product application that create long-term synergies.
The Financial Review and Note M - Segment  Information  included in the Notes to
Consolidated Financial Statements contained in the Annual Report to Shareholders
for the year ended December 31, 2000 are incorporated herein by reference.

    Developments,   including   acquisitions  and  divestitures  of  businesses,
considered significant to the company or individual segments are described under
the following discussions of the applicable groups.

Environmental Products Group

    The Environmental Products Group  manufactures street sweeping,  industrial
vacuuming and municipal catch  basin/sewer  cleaning  vehicles,  hydroexcavation
equipment,  glycol recovery vehicles and high-pressure water blasting equipment.
The group competes under the following major brand names: Elgin Sweeper, Vactor,
Guzzler, Ravo, Broom Bear, Air Bear and Jetstream.

    Environmental  Products  manufactures  a variety  of  self-propelled  street
cleaning  vehicles,  vacuum  loader  vehicles and  municipal  catch  basin/sewer
cleaning vacuum trucks as well as high-pressure water blasting  equipment.  Most
sales  are made to  municipal  customers,  private  contractors  and  government
customers.

    Elgin is the leading U.S. brand of self-propelled  street cleaning vehicles.
Utilizing  three basic  cleaning  methods  (mechanical  sweeping,  vacuuming and
recirculating  air), Elgin brand products are primarily designed for large-scale
cleaning of curbed  streets and other paved  surfaces.  The group  acquired Five
Star  Manufacturing in January 1998, a manufacturer of a unique design of street
sweepers: the Broom Bear four-wheeled mechanical street sweeper and the Air Bear
four-wheeled  recirculating  air street  sweeper.  The  acquisition of Five Star
accelerated the group's entry in industrial and contract sweeping market niches.
Elgin and Five Star  brand  products  are  manufactured  in the  group's  Elgin,
Illinois and Youngsville, North Carolina facilities.

    Ravo is a leading European-brand of self-propelled street and sewer cleaning
vehicles.  Utilizing  the vacuuming  cleaning  method,  Ravo brand  products are
primarily  designed for cleaning of curbed  streets and other paved surfaces and
are manufactured in the group's Alkmaar, Netherlands facilities.

    Guzzler  is  the  leading  U.S.  brand  of  waste  removal   vehicles  using
vacuum-based  technology  for worldwide  industrial and  environmental  markets.
Vactor is the leading U.S.  brand of  municipal  combination  catch  basin/sewer
cleaning  vacuum  trucks.  The  acquisition  of Vactor  provided  a  significant
expansion of  municipal  equipment  and enhanced the domestic and  international
dealer   networks  of  both  Elgin  Sweeper  and  Vactor.   In  late  2000,  the
Environmental  Products Group consolidated  production of its Guzzler industrial
vacuum   products  from   Birmingham,   Alabama  into  its  Streator,   Illinois
manufacturing facilities.

    Jetstream of Houston,  Inc.  ("Jetstream"),  acquired in August  1998,  is a
Houston-based  manufacturer  of water blasting  equipment.  Jetstream  sells its
products  predominately  to the industrial  vacuum loader  customer  base.  This
provides  product and service  cross-selling  opportunities  for the  previously
existing  industrial  customer  base as well as the customer  set already  being
served by Jetstream.

    A  new  product  line  acquired  in  March  2000  was  the  Vaxjet  patented
closed-loop  surface  cleaner.  This product utilizes  waterblast  technology to
remove oil, dirt and other  accumulations from various surfaces while vacuuming,
filtering and recycling  the wash water.  This patented  system is an innovative
combination  of  the  group's  sewer-cleaning  vacuum  truck  and  high-pressure
waterblasting  technologies,  and has the ability to serve a  potentially  large
emerging  market.  VaxJet  products are  manufactured  in the group's  Streator,
Illinois facilities.

    All of the Environmental  Products Group companies also sell accessories and
replacement parts for their products.

    Some products and components  thereof are not  manufactured by the group but
are purchased for incorporation with products of the group's manufacture.

    A majority of the group's  sales are made  primarily to municipal  customers
and government customers both domestic and overseas.

    The group competes with several U.S. and non-U.S.  manufacturers and due to
the diversity of products offered,  no meaningful  estimate of either the number
of competitors or the group's relative  position within the global market can be
made,  although  the group does  believe  it is a major  supplier  within  these
product  lines.  The  group  competes  with  numerous  non-U.S.   manufacturers,
principally in non-U.S. markets.

    At December 31, 2000, Environmental Products Group backlog was $72.3 million
compared to $57.2  million at December 31, 1999. A  substantial  majority of the
orders in the backlog at December 31, 2000 are reasonably  expected to be filled
within current fiscal year.

Fire Rescue Group

    The Fire Rescue Group manufactures fire/emergency apparatus, rescue vehicles
and aerial  access  platforms  under the  following  brand names:  Emergency One
(E-One), Bronto Skylift, Saulsbury and Superior.  Together, E-One, Saulsbury and
Superior,  are  referred to as Fire Rescue  Group - North  America.  The group's
products are manufactured in its facilities located in Ocala,  Florida;  Preble,
New York; Red Deer, Alberta and Tampere and Pori, Finland.

    Emergency One is a leading brand of fire rescue vehicles including pumpers,
tankers,  aerial ladder  trucks,  custom  chassis,  and airport  rescue and fire
fighting  vehicles (each of aluminum  construction  for rust-free  operation and
energy efficiency). E-One products are marketed and sold throughout the U.S. and
the world.  A full range of Superior  brand truck  bodies are  manufactured  and
distributed  primarily  for the  Canadian  market and  U.S.  wildlands  markets.
Superior is the leading brand of fire/emergency apparatus in Canada.

    Headquartered  in  Tampere,  Finland,  Bronto  manufactures  vehicle-mounted
aerial access  platforms.  Bronto is the leading  manufacturer of such platforms
for fire rescue  markets in the world and a leading  manufacturer  of heavy-duty
industrial platforms.

    In January 1998, the Registrant acquired Saulsbury Fire Equipment Corp., the
leading  manufacturer of stainless  steel-bodied fire trucks and rescue vehicles
in the United States.  The Saulsbury brand of steel-bodied  products  complement
the E-One brand of aluminum-bodied  fire apparatus and custom fire chassis.  The
acquisition of Saulsbury Fire provides the group with additional distribution, a
service  center in the  northeast  United  States and  additional  manufacturing
capacity for aluminum-bodied trucks in the U.S.

    All  of  the  Fire  Rescue  Group   businesses  also  sell  accessories  and
replacement parts for their products.

    Some products and components  thereof are not  manufactured by the group but
are purchased for incorporation with products of the group's manufacture.

    The  majority of Fire Rescue  Group sales are made  primarily  to municipal
customers,  volunteer fire departments and government customers both in U.S. and
non-U.S. markets.

    The group competes with several U.S. and non-U.S.  manufacturers and due to
the diversity of products offered,  no meaningful  estimate of either the number
of competitors or the group's relative  position within the global market can be
made,  although  the group does  believe  it is a major  supplier  within  these
product  lines.  The  group  competes  with  numerous  non-U.S.   manufacturers,
principally in non-U.S. markets.

    At December 31, 2000, Fire Rescue Group backlog was $255.6 million  compared
to $246.5 million at December 31, 1999. A substantial  majority of the orders in
the backlog at December 31, 2000 are reasonably expected to be filled within the
current fiscal year.

Safety Products Group

    Significant  subsidiaries or operations of the Safety Products Group include
the Signal Products Division, Aplicaciones Tecnologicas VAMA S.A. (VAMA), Victor
Industries Ltd.  (Victor),  Pauluhn  Electric Mfg. Co.,  Justrite  Manufacturing
Company (Justrite),  and Federal APD. Virtually all of these businesses have the
leading position in their respective domestic markets. The group also includes a
number of other business units most of which have been acquired  within the past
five years and which are described later below.

    The  group's  products  principally  consist of: (1) a variety of visual and
audible warning, signaling, and communications devices used by private industry,
federal,  state and local governments,  building  contractors,  police, fire and
medical  fleets,  utilities and civil  defense;  (2) hazardous area lighting and
communications  products  used by  mines,  petrochemical  plants,  offshore  oil
platforms and other hazardous  industrial sites; (3) safety containment products
for  handling  and  storing  hazardous  materials  used  by a  wide  variety  of
industrial and laboratory  customers as well as military agencies and municipal,
state and federal  governments;  and (4) parking,  revenue  control,  and access
control  equipment and systems for parking  facilities,  commercial  businesses,
bridge and pier installation and residential developments.

    Visual and audible warning and signaling  devices include  emergency vehicle
warning lights,  electromechanical  and electronic vehicle sirens and industrial
signal  lights,   sirens,   horns,   bells  and  solid  state  audible  signals,
audio/visual  emergency  warning and evacuation  systems,  including weather and
nuclear power plant warning  notification  systems and industrial  intercoms and
communications systems.

    Hazardous  area lighting and  communications  products  include  specialized
lights, control ballasts,  connectors,  and microprocessor-based  public address
and multi-party paging systems.

    Safety  containment  products  include  safety  cabinets for  flammables and
corrosives;  safety and dispenser  cans;  waste  receptacles  and disposal cans;
spill control pallets and overpacks;  and hazardous  material storage buildings,
lockers, pallets and platforms.

    Parking,  revenue control,  and access control equipment and systems include
parking and security gates,  card access readers,  ticket issuing devices,  coin
and  token  units,  fee  computers,  automatic  paystations,  various  forms  of
electronic control units and personal  computer-based revenue and access control
systems.

During the five-year  period ending December 31, 2000, the following  businesses
were acquired and became part of the Safety Products Group:

                   Principal
Entity             Headquarters  Acquired         Principal
                                                  Products/Services

Millbank           England       January 1999     Commercial and
                                                  industrial
                                                  communications systems

Atkinson Dynamics  Illinois      August 1998      Industrial intercoms,
                                                  communications systems

Stinger Spike      California    September 1998   Tire deflation products
                                                  for the law enforcement
                                                  industry

Citicomp           Brazil        October 1998     Parking equipment -
                                                  Brazil

NRL Corp.          Canada        November 1998    Explosion-proof
                                                  lighting for land based
                                                  oil and gas rigs

Extec Ltd.         England       December 1998    Explosion-proof
                                                  telephone housing

Akusta IFE         England       October 1997     Heavy duty and
                                                  explosion-proof
                                                  communications equipment

Pauluhn Electric   Texas         July 1997        Hazardous area and
                                                  explosion-proof
                                                  electrical products

Victor             England       June 1996        Hazardous area
                                                  industrial lighting
                                                  products

    Warning and signaling  products,  which account for the principal portion of
the group's  business,  are marketed to both industrial and governmental  users.
Many of the group's products are designed in accordance with various  regulatory
codes and standards,  and meet agency  approvals such as Factory Mutual (FM) and
Underwriters  Laboratory (UL). Products are sold to industrial customers through
manufacturers'  representatives  who sell to  approximately  1,500  wholesalers.
Products are also sold to  governmental  customers  through more than 900 active
independent distributors as well as through original equipment manufacturers and
direct  sales.  International  sales are made  through the  group's  independent
foreign distributors or on a direct basis.

    Because of the large number of the group's products, the group competes with
a variety of  manufacturers  and suppliers and  encounters  varying  competitive
conditions  among its  different  products and  different  classes of customers.
Because of the variety of such products and customers, no meaningful estimate of
either  the total  number of  competitors  or the  group's  overall  competitive
position within the global market can be made. Generally, competition is intense
as to all of the group's  products  and, as to most such  products,  is based on
price,  including competitive bidding,  product reputation and performance,  and
product servicing.

    The backlog of orders of the Safety  Products Group products  believed to be
firm at  December  31,  2000 and 1999  was  $18.5  million  and  $27.3  million,
respectively.  Almost all of the backlog of orders at  December  31,  2000,  are
reasonably expected to be filled within the current fiscal year.

Tool Group

    The Tool Group  manufactures a broad range of carbide and superhard  cutting
tools,  mold-tooling products and punches and other die components used in metal
stamping operations.

    The carbide  cutting  tool  operations  manufacture  consumable  carbide and
superhard   insert   tooling  for  cutoff  and  deep   grooving   metal  cutting
applications.  These operations  include  Manchester Tool Company and Clapp Dico
Corporation.  In July 1999, the company acquired Clapp & Haney Tool Company, the
leading  U.S.  manufacturer  and marketer of  polycrystalline  diamond and cubic
boron nitride  consumable  tooling.  The group's  smaller  Dico-brand  superhard
cutting-tool  operations  were  consolidated  into the  larger,  more  efficient
Whitehouse,  Ohio  facilities  in  October  2000.  Together  these two  combined
operations are now referred to as Clapp Dico.

    In March 2000, the Tool Group acquired P.C.S.  Company  (P.C.S.) located in
Fraser,  Michigan.  P.C.S. provides precision tooling,  ejector pins, core pins,
sleeves and  accessories to the growing  plastic  injection  mold  industry.  By
combining  selective  marketing  and  sales  functions  with the die  components
business,  the P.C.S.  acquisition  enhances  future  growth  prospects for both
product segments.

    The die components and precision tooling operations manufacture and purchase
for  resale  an  extensive  variety  of  consumable  standard  and  special  die
components for the metal stamping industry. These components consist of piercing
punches, matched die matrixes, punch holders or retainers, can and body punches,
precision  ground  high alloy parts and many other  products  related to a metal
stamper's  needs.  The die  components  and precision  tooling  operations  also
produce a large variety of consumable  precision  metal  products for customers'
nonstamping  needs,  including special heat exchanger tools,  beverage container
tools, powder compacting tools and molding  components.  Subsidiaries of the die
components  and  precision   tooling   operations   include:   Dayton   Progress
Corporation,  Schneider  Stanznormalien  GmbH (Schneider),  Jamestown  Precision
Tooling, Inc., Technical Tooling, Inc.
(TTI), and M.J. Industries (MJI).

    During the five-year period ending December 31, 2000, the die components and
precision tooling operations continued to broaden the markets they serve through
the following acquisitions:


                Principal
Entity          Headquarters    Acquired        Principal Products/Services

MJI             France          August 1996     Precision punch and die
                                                components

TTI             Minnesota       July 1996       Body punch tooling

    The acquisition of MJI provided  manufacturing  capabilities on the European
continent  and greater  access to European  markets while TTI  complemented  and
broadened the operations' can and body punch product lines.

    During 1996,  sales and revenue were also  generated by Bassett  Rotary Tool
Company,  a manufacturer of rotary carbide cutting tools,  which was sold at the
end of 1996.

    Because of the nature of and market for the group's products, competition is
keen at both domestic and international levels. Many customers have some ability
to produce certain products themselves, but at a cost disadvantage. Major market
emphasis is placed on quality of product, delivery and level of service.

    Tool Group products are capital intensive with the only significant  outside
cost being the  purchase of the tool  steel,  carbide,  cubic boron  nitride and
polycrystalline  diamond material, as well as items necessary for manufacturing.
Inventories  are  maintained to assure  prompt  service to the customer with the
average  order for  standard  tools  filled  in less than one week for  domestic
shipments and within two weeks for international shipments.

    Tool Group customers include metal and plastic  fabricators and tool and die
shops  throughout  the  world.  Because of the  nature of the  products,  volume
depends mainly on repeat orders from customers numbering in the thousands. These
products are used in the manufacturing process of a broad range of items such as
automobiles,  appliances, construction products, electrical motors, switches and
components and a wide variety of other household and industrial goods.
Almost all business is done with private industry.

    The  group's   products  are  marketed  in  the  United  States,   and  many
international    markets,    principally   through   industrial    distributors.
Foreign-owned  manufacturing,  sales and distribution  facilities are located in
Weston, Ontario; Tokyo, Japan; Warwickshire,  England;  Frankfurt,  Germany; and
Meaux, France.

    The group competes with several U.S. and non-U.S.  manufacturers and due to
the diversity of products offered,  no meaningful  estimate of either the number
of competitors or the group's relative  position within the global market can be
made,  although  the group does  believe  it is a major  supplier  within  these
product  lines.  The  group  competes  with  numerous  non-U.S.   manufacturers,
principally in non-U.S. markets.

    The order  backlogs of the Tool Group as of December  31, 2000 and  December
31, 1999 were $14.7 million and $13.1 million,  respectively. The entire backlog
of orders at  December  31,  2000 is  expected  to be filled  within the current
fiscal year.

Sign Group

    The Sign Group  manufactures  and markets outdoor signs,  neon and displays.
The group additionally  provides repair services and also enters into multi-year
maintenance  service contracts for signs and other electrical  equipment such as
parking lot lights and message  boards.  Its  operations  are oriented to custom
designing and engineering of commercial and industrial  signs or groups of signs
for its customers.

    The sale  and  lease of signs  and the  sale of  maintenance  contracts  are
conducted  primarily through the group's direct sales organization that operates
from  seventeen  sales  and  manufacturing   facilities  located   strategically
throughout the continental U.S. Customers for sign products and services consist
primarily of  multi-location  commercial  businesses  and large  commercial  and
institutional developments.

    Some of the group's  displays are leased to customers for terms of typically
three to five years,  with both the lease and the  maintenance  portions of many
such contracts then renewed for successive periods.

    The  group is  nationally  a  principal  producer  of  high-end  custom  and
custom-quantity signs. The group's marketing strategies focus on market segments
to which it can  provide  a unique  set of  services.  The  group  has  multiple
regional and national competitors. Competition for sign products and services is
intense and competitive factors are largely quality,  price, project and program
management    capabilities,    aesthetic   and   design   considerations,    and
lease/maintenance services.

    Total backlog at December 31, 2000, applicable to sign products and services
was  approximately  $48.6  million  compared to  approximately  $49.2 million at
December 31, 1999. A significant  part of the group's sign products and services
backlog relates to sign  maintenance  contracts that are usually  performed over
three to five  years.  At  December  31,  2000,  the Sign Group had a backlog of
in-service sign maintenance contracts of approximately $31.3 million compared to
approximately $28.2 million at December 31, 1999. With the exception of the sign
maintenance  contracts,  most of the backlog  orders at December 31,  2000,  are
reasonably expected to be filled within the current fiscal year.

    In January 2000, the Registrant  announced it is seeking buyers for the Sign
Group due to the Registrant  focusing on growth strategies for its other groups.
The results of the Sign Group are  reported as  discontinued  operations  in the
Registrant's consolidated financial statements.

Additional Information

    The  Registrant's  sources and  availability of materials and components are
not materially dependent upon either a single vendor or very few vendors.

    The Registrant owns a number of patents and possesses rights under others to
which it attaches importance,  but does not believe that its business as a whole
is materially  dependent upon any such patents or rights.  The  Registrant  also
owns a number of trademarks  which it believes are important in connection  with
the identification of its products and associated  goodwill with customers,  but
no material part of the Registrant's business is dependent on such trademarks.

    The  Registrant's   business  is  not  materially  dependent  upon  research
activities  relating  to the  development  of new  products  or  services or the
improvement  of existing  products  and  services,  but such  activities  are of
importance as to some of the  Registrant's  products.  Expenditures for research
and  development by the  Registrant  were  approximately  $18.8 million in 2000,
$15.8 million in 1999 and $11.9 million in 1998.  Fire Rescue and  Environmental
Products each had sizeable increases in both 2000 and 1999.

    Note M - Segment  and Related  Information,  presented  in the  Registrant's
Annual Report to  Shareholders  for the year ended  December 31, 2000,  contains
information   concerning  the  Registrant's  foreign  sales,  export  sales  and
operations by geographic area, and is incorporated herein by reference.

    Certain of the Registrant's  businesses are susceptible to the influences of
seasonal buying or delivery patterns. The Registrant's  businesses which tend to
have lower sales in the first calendar  quarter  compared to other quarters as a
result of these influences are street sweeping, outdoor warning, other municipal
emergency signal products, parking systems, aerial access platform manufacturing
operations and signage.

    No material part of the business of the Registrant is dependent  either upon
a single  customer  or very few  customers.  The  Registrant  is in  substantial
compliance with federal,  state and local  provisions which have been enacted or
adopted regulating the discharge of materials into the environment, or otherwise
relating to the  protection of the  environment.  These  provisions  have had no
material  adverse  impact upon  capital  expenditures,  earnings or  competitive
position of the Registrant and its  subsidiaries.  The Registrant  employed over
7,000 people in ongoing businesses at the close of 2000. The Registrant believes
relations with its employees have been good.

Item 2.    Properties.

    As of December 31,  2000,  the  Registrant  utilized  thirty-four  principal
manufacturing  plants located  throughout North America,  as well as thirteen in
Europe, one in South Africa,  one in South America,  and one in the Far East. In
addition,  there  were 50  sales  and  service/warehouse  sites of which 39 were
U.S.-based.

    In total,  the Registrant  devoted  approximately  1,929,000  square feet to
manufacturing and 1,112,000 square feet to service, warehousing and office space
as of December  31,  2000.  Of the total square  footage,  approximately  37% is
devoted to the Safety  Products  Group,  14% to the Tool Group,  24% to the Fire
Rescue Group, 17% to the Environmental  Products Group and 8% to the Sign Group.
Approximately  65% of the total square footage is owned by the Registrant,  with
the remaining 35% being leased.

    All of the  Registrant's  properties,  as well as the related  machinery and
equipment, are considered to be well-maintained, suitable and adequate for their
intended purposes. In the aggregate, these facilities are of sufficient capacity
for the Registrant's current business needs.

Item 3.    Legal Proceedings.

    The  Registrant  is subject to various  claims,  other  pending and possible
legal actions for product  liability and other damages and other matters arising
out of the conduct of the Registrant's business. The Registrant believes,  based
on current knowledge and after  consultation  with counsel,  that the outcome of
such  claims  and  actions  will  not  have a  material  adverse  effect  on the
Registrant's consolidated financial position or the results of operations.


Item 4.    Submission of Matters to a Vote of Security Holders.

    No  matters  were  submitted  to a vote  of  security  holders  through  the
solicitation of proxies or otherwise  during the three months ended December 31,
2000.


                                     PART II

Item 5.    Market  for  the  Registrant's  Common  Stock  and  Related
           Security Holder Matters.

    Federal  Signal  Corporation's  Common Stock is listed and traded on the New
York Stock  Exchange  under the symbol FSS.  Market price range and dividend per
share data listed in Note Q - Selected  Quarterly Data (Unaudited)  contained in
the Annual  Report to  Shareholders  for the year  ended  December  31,  2000 is
incorporated herein by reference.  As of March 1, 2001, there were 4,102 holders
of record of the Registrant's common stock.

    Certain  long-term debt agreements  impose  restrictions on the Registrant's
ability to pay cash dividends on its common stock. All of the retained  earnings
at December 31, 2000 were free of any restrictions.

Item 6.    Selected Financial Data.

    Selected  Financial  Data  contained in the  Registrant's  Annual  Report to
Shareholders  for the year ended  December  31, 2000 is  incorporated  herein by
reference.

Item 7.    Management's  Discussion and Analysis of Financial Condition
           and Results of Operations.

    The  Financial  Review  contained  in  the  Registrant's  Annual  Report  to
Shareholders  for the year ended  December  31, 2000 is  incorporated  herein by
reference.

Item 7a.   Qualitative and Quantitative Disclosures About Market Risk.

    The  Financial  Review  caption  "Market Risk  Management"  contained in the
Registrant's  Annual Report to Shareholders for the year ended December 31, 2000
is incorporated herein by reference.

Item 8.    Financial Statements and Supplementary Data.

    The  consolidated  financial  statements and  accompanying  footnotes of the
Registrant  and  the  report  of  the  independent  auditors  set  forth  in the
Registrant's  Annual Report to Shareholders for the year ended December 31, 2000
are incorporated herein by reference.

Item 9.    Changes in and Disagreements  with Accountants on Accounting
           and Financial Disclosure.

    None.


                                    PART III

Item 10.   Directors and Executive Officers of the Registrant.

    The information under the caption  "Election of Directors"  contained in the
Registrant's  Proxy  Statement for the Annual Meeting of Shareholders to be held
on April 19, 2001 is incorporated herein by reference.

    The following is a list of the Registrant's executive officers,  their ages,
business experience and positions and offices as of March 1, 2001:

    Joseph J. Ross, age 55, was elected Chairman,  President and Chief Executive
Officer in February 1990.  Mr. Ross continues to serve in  the  capacities  of
Chairman and Chief Executive officer.

    John A.  DeLeonardis,  age 53, was elected Vice  President-Taxes  in January
1992.

    Duane A. Doerle, age 45, was elected Vice President-Corporate Development in
July 1996. Previously,  he served as Director-Corporate  Development since April
1992.

    Henry L. Dykema,  age 61, was elected as Vice President and Chief  Financial
Officer in January 1995.

    Richard G. Gibb,  age 57, was elected  Executive  Vice  President in January
1998.  Previously,  Mr. Gibb was President of the Safety  Products Group and the
Signal Products Division, having served in those capacities since April 1995 and
February 1985, respectively.

    Andrew E. Graves,  age 42, was elected President and Chief Operating Officer
in February 2001. From 1994 to 1998, Mr. Graves was Vice President-Latin America
for Case Corporation and from 1998 to 1999 was President of Case Capital.  From
1999 to 2000, he was President  of CNH Capital,  a subsidiary  of CNH Global,
Inc., the successor company to Case Corporation and New Holland Corporation.

    Robert W. Racic,  age 52, was elected Vice  President and Treasurer in April
1984.

    Richard L. Ritz,  age 47, was  elected  Vice  President  and  Controller  in
January 1991.

    Kim A. Wehrenberg,  age 49, was elected Vice President,  General Counsel and
Secretary effective October 1986.

    These  officers  hold office  until the next annual  meeting of the Board of
Directors  following their election and until their  successors  shall have been
elected and qualified.

    There  are no family  relationships  among  any of the  foregoing  executive
officers.

Item 11.   Executive Compensation.

    The information contained under the caption "Executive  Compensation" of the
Registrant's  Proxy  Statement for the Annual Meeting of Shareholders to be held
April 19, 2001 is incorporated herein by reference.

Item 12.   Security   Ownership  of  Certain   Beneficial  Owners  and
           Management.

    The information  contained under the caption "Security  Ownership of Certain
Beneficial Owners" of the Registrant's Proxy Statement for the Annual Meeting of
Shareholders to be held April 19, 2001 is incorporated herein by reference.

Item 13.   Certain Relationships and Related Transactions.

    The information contained under the caption "Executive  Compensation" of the
Registrant's  Proxy  Statement for the Annual Meeting of Shareholders to be held
April 19, 2001 is incorporated herein by reference.

                                     PART IV

Item 14.   Exhibits,  Financial Statement Schedules and Reports on Form
8-K.

(a)1. Financial Statements

      The  following   consolidated   financial  statements  of  Federal  Signal
      Corporation and Subsidiaries included in the Registrant's Annual Report to
      Shareholders  for the year ended  December 31, 2000 are filed as a part of
      this report and are incorporated by reference in Item 8:

           Consolidated Balance Sheets -- December 31, 2000 and 1999

           Consolidated  Statements  of Income -- Years  ended  December
           31, 2000, 1999 and 1998

           Consolidated  Statements  of  Comprehensive  Income  -- Years ended
           December 31, 2000, 1999 and 1998

           Consolidated  Statements  of Cash Flows -- Years ended  December 31,
           2000, 1999 and 1998

           Notes to Consolidated Financial Statements

  2.  Financial Statement Schedules

      The following  consolidated financial statement schedule of Federal Signal
      Corporation and Subsidiaries,  for the three years ended December 31, 2000
      is filed as a part of this report in response to Item 14(d):

           Schedule II -- Valuation and qualifying accounts

      All  other  schedules  for  which  provision  is  made  in the  applicable
      accounting  regulations of the Securities and Exchange  Commission are not
      required  under  the  related   instructions  or  are  inapplicable,   and
      therefore, have been omitted.

  3.  Exhibits

      3. a. Restated Certificate of Incorporation of the Registrant, filed as
            Exhibit  (3)(a) to the  Registrant's  Form  10-K for the year  ended
            December 31, 1996 is incorporated herein by reference.

         b. By-laws of the Registrant, incorporated herein.

      4. a. Rights  Agreement  dated  7/9/98,  filed as  Exhibit  (4) to the
            Registrant's Form 8-A dated July 28, 1998 is incorporated  herein by
            reference.

         b. The  Registrant  has no  long-term  debt  agreements  for  which the
            related outstanding debt exceeds 10% of consolidated total assets as
            of  December  31,  2000.  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.

     10. a. The amended 1996 Stock Benefit Plan, filed as Exhibit (10)(a) to the
            Registrant's  Form  10-K for the year  ended  December  31,  1998 is
            incorporated herein by reference.

         b. Corporate  Management Incentive Bonus Plan, filed as Exhibit (10)(b)
            to the  Registrant's  Form 10-K for the year ended December 31, 1998
            is incorporated herein by reference.

         c. Supplemental   Pension  Plan,   filed  as  Exhibit  (10)(c)  to  the
            Registrant's  Form  10-K for the year  ended  December  31,  1995 is
            incorporated herein by reference.

         d. Executive Disability, Survivor and Retirement Plan, filed as Exhibit
            (10)(d) to the  Registrant's  Form 10-K for the year ended  December
            31, 1995 is incorporated herein by reference.

         e. Supplemental  Savings and Investment  Plan, filed as Exhibit (10)(f)
            to the  Registrant's  Form 10-K for the year ended December 31, 1993
            is incorporated herein by reference.

         f. Employment  Agreement with Joseph J. Ross,  filed as Exhibit (10)(g)
            to the  Registrant's  Form 10-K for the year ended December 31, 1994
            is incorporated herein by reference.

         g. Employment  agreement with Andrew E. Graves dated  February 1, 2001
            incorporated herein.

         h. Change of Control Agreement with Kim A. Wehrenberg, filed as Exhibit
            (10)(h) to the  Registrant's  Form 10-K for the year ended  December
            31, 1994 is incorporated herein by reference.

         i. Director Deferred Compensation Plan, filed as Exhibit (10)(h) to the
            Registrant's  Form  10-K for the year  ended  December  31,  1997 is
            incorporated herein by reference.

         j. Retirement Plan for Outside  Directors  (applies only to individuals
            who became a director  prior to October 9,  1997),  filed as Exhibit
            (10)(I) to the  Registrant's  Form 10-K for the year ended  December
            31, 1997 is incorporated herein by reference.

     13. Annual  Report to  Shareholders  for the year ended  December 31, 2000.
         Such report,  except for those  portions  thereof  which are  expressly
         incorporated  by  reference  in this Form 10-K,  is  furnished  for the
         information of the  Commission  only and is not to be deemed "filed" as
         part of this filing.

     21. Subsidiaries of the Registrant

     23. Consent of Independent Auditors


(b) Reports on Form 8-K for the three months ended December 31, 2000

    A current  report on Form 8-K dated  December  15, 2000  pursuant to Item 9-
    "Regulation  FD" announced  guidance for the fourth  quarter of 2000 and the
    year 2001.

(c) and (d)

    The  response to this  portion of Item 14 is being  submitted  as a separate
    section of this report.

Other Matters

    For the purposes of complying  with the  amendments to the rules  governing
Form S-8  (effective  July 13,  1990)  under  the  Securities  Act of 1933,  the
undersigned,  the Registrant,  hereby  undertakes as follows,  which undertaking
shall be incorporated by reference into the Registrant's Registration Statements
on Form S-8 Nos. 33-12876,  33-22311, 33-38494, 33-41721, 33-49476, 33-14251 and
33-89509 dated April 14, 1987, June 26, 1988,  December 28, 1990, July 15, 1991,
June 9, 1992, October 16, 1996 and October 22, 1999, respectively:

    Insofar as  indemnification  for liabilities  arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
the  Registrant  pursuant  to  the  foregoing  provisions,   or  otherwise,  the
Registrant  has been advised that in the opinion of the  Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore,  unenforceable. In the event that a claim for indemnification
against such  liabilities  (other than the payment by the Registrant of expenses
incurred or paid by a director,  officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director,  officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.


<PAGE>





                                   Signatures


Pursuant to the requirements of Section 13 or 15 (d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                      FEDERAL SIGNAL CORPORATION



                                       By:  /s/ Joseph J. Ross
                                          Chairman, Chief Executive
                                            Officer and Director




Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below, as of March 30, 2001, by the following  persons on behalf
of the Registrant and in the capacities indicated.




     /s/ Henry L. Dykema                      /s/ Charles R. Campbell
    Vice President and Chief                         Director
        Financial Officer



     /s/ Richard L. Ritz                      /s/ James C. Janning
  Vice President and Controller                     Director



                                              /s/ Paul W. Jones
                                                     Director



                                              /s/ James A. Lovell, Jr.
                                                     Director



                                              /s/ Richard R. Thomas
                                                     Director

<PAGE>

<TABLE>
<CAPTION>

                                                                     SCHEDULE II



              FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
                    Valuation and Qualifying Accounts

          For the Years Ended December 31, 2000, 1999 and 1998

<S>                                 <C>          <C>          <C>             <C>

                                                                Deductions
                                                   Additions     Accounts
                                     Balance at    Charged to    written off    Balance
                                     beginning     costs and      net of        at end
        Description                   of year      expenses     recoveries      of year
                                    ----------     ---------    -----------    --------
Deducted from asset accounts -
 Allowance for doubtful accounts

  Year ended December 31, 2000:
    Manufacturing activities        $2,901,000                                $2,629,000
    Financial service activities       976,000                                   683,000
                                     ---------                                 ---------
    Total                           $3,877,000     $881,000     $1,446,000    $3,312,000


  Year ended December 31, 1999:
    Manufacturing activities        $2,174,000                                $2,901,000
    Financial service activities       675,000                                   976,000
                                     ---------                                 ---------
    Total                           $2,849,000   $2,098,000     $1,070,000    $3,877,000


  Year ended December 31, 1998:
    Manufacturing activities        $2,219,000                                $2,174,000
    Financial service activities       520,000                                   675,000
                                     ---------                                 ---------
    Total                           $2,739,000   $1,358,000     $1,248,000    $2,849,000

</TABLE>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.B
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>BY-LAWS OF THE REGISTRANT
<TEXT>



                                     BY-LAWS

                                       OF

                           FEDERAL SIGNAL CORPORATION
                            (a Delaware Corporation)



                                    ARTICLE I

                           Offices. Books and Records.

        Section 1.1 Offices. The registered office of FEDERAL SIGNAL CORPORATION
(herein called the  "Corporation")  within the State of Delaware shall be in the
City of Wilmington,  County of New Castle.  The  Corporation  may also have such
other  offices at such other places both within or without the State of Delaware
as the Board of Directors of the Corporation (herein called the "Board) may from
time to time determine or the business of the Corporation may require.

        Section 1.2. Books and records. The books and records of the Corporation
shall be kept at the principal  business office of the  Corporation,  or at such
other place or places as the Board shall from time to time determine.


                                   ARTICLE II

                            Meetings of Stockholders.

        Section 2.1. Place of meetings.  Meetings of stockholders  shall be held
at such  place,  within or without the State of  Delaware,  as may be fixed from
time to time by the Board and specified in the respective  notices or waivers of
notice  thereof,  provided  that if the Board  shall not so fix the place of any
meeting of stockholders or if any special meeting of stockholders is called by a
person or  persons  other  than the  Board,  such  meeting  shall be held at the
principal business office of the Corporation.

        Section 2.2. Annual Meetings. An annual meeting of stock-holders for the
purpose of electing  directors and the transaction of such other business as may
properly be brought  before the meeting  shall be held each year at such time as
may from time to time be  determined  by the  Board.  In the  absence  of such a
determination by the Board prior to twenty (20) days before the fourth Friday in
April of each year,  such annual  meeting  shall be held on the fourth Friday in
April at the hour of 11:00 A.M., unless a legal holiday, and if a legal holiday,
then on the next succeeding  business day which is not a legal holiday.  If, for
any reason,  the annual  meeting shall not be held at the time herein  provided,
the same may be held at any time thereafter upon notice as hereinafter  provided
or the business thereof may be transacted at any special meeting of stockholders
called for that purpose.

        Section  2.3.  Special  meetings of  stockholders.  Special  meetings of
stockholders for any purpose or purposes,  unless  otherwise  prescribed by law,
may be  called  at any time by the Board or the  President  and Chief  Executive
Officer (amended  12/18/87).  The business  transacted at any special meeting of
stockholders  shall be limited to the  purpose  or  purposes  stated in the call
thereof.

        Section 2.4.  Notice of  meetings.  Written  notice of every  meeting of
stockholders  stating the place,  day and hour of the meeting,  unless otherwise
prescribed by law or the Certificate of Incorporation (meaning always herein the
Certificate of  Incorporation of the Corporation as the same may be amended from
time to time), shall be given, personally or by mail, not less than ten nor more
than sixty days before the date of the meeting,  to each  stock-holder of record
entitled to vote at such  meeting.  The notice of a special  meeting shall state
the purpose for which the meeting is called and shall also  indicate  that it is
being  issued by or at the  direction  of the  person  or  persons  calling  the
meeting.

        Section 2.5.  List of  stockholders.  The  Secretary of the  Corporation
shall make,  at least ten days before each meeting of  stockholders,  a complete
list  of  the  stockholders  entitled  to  vote  at  the  meeting,  arranged  in
alphabetical  order,  showing  the  address  of and the number of shares of each
class of stock of the  Corporation  registered in the name of each  stockholder.
Such list shall be open to the examination of any  stockholder,  for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the  meeting,  either at a place in the city where the meeting
is to be held, which place shall be specified in the notice of the meeting,  or,
if not so  specified,  at the place where the  meeting is to be held.  Such list
shall be produced at the time and place of the meeting and kept during the whole
time thereof for inspection by any stockholder who is present.

        Section 2.6. Quorum and  adjournments.  For the purpose of any action to
be taken by stockholders  at any meeting,  the presence in person or by proxy of
the  holders  of those of the  shares  of stock of the  Corporation  issued  and
outstanding  and entitled to vote thereat as shall have a majority of the voting
power of all such shares  shall be  necessary  and  sufficient  to  constitute a
quorum for the transaction of business,  except as otherwise  expressly provided
by law or by the Certificate of  Incorporation.  If, however,  such quorum shall
not  be  present  or  represented  at  any  meeting  of  the  stockholders,  the
stockholders  entitled to vote thereat present in person or represented by proxy
shall have power to adjourn the meeting from time to time,  without notice other
than  announcement  at  the  meeting,   until  a  quorum  shall  be  present  or
represented.  At such  adjourned  meeting at which a quorum  shall be present or
represented,  any business may be transacted which might have been transacted at
the meeting as originally  notified.  The absence from any meeting of the number
required by law, or by the Certificate of  Incorporation  or these by-laws,  for
action upon any given matter  shall not prevent  action at such meeting upon any
other matter or matters  which may properly  come before the meeting and subject
was on the  agenda of the  meeting,  if the number  required  in respect of such
other matter or matters shall be present.  Nothing in these by-laws shall affect
the right to adjourn any meeting from time to time where a quorum is present.

        Section 2.7. Organization. At any meeting of stockholders, the President
and Chief  Executive  Officer  (amended  12/18/87),  or in his  absence,  a Vice
President,  or in the  absence  of all of the  foregoing,  a person  chosen by a
majority of the votes entitled to be cast by the stockholders of the Corporation
present  in  person  or by proxy  and  entitled  to vote  thereat  shall  act as
chairman; and the Secretary, or in his absence an Assistant Secretary; or in the
absence  of the  Secretary  and all  Assistant  Secretaries,  a person  whom the
chairman of the meeting shall appoint shall act as secretary of the meeting. The
Board,  in  advance of any  meeting of  stockholders,  may  appoint  one or more
inspectors  of election to act at such meeting or any  adjournment  thereof.  If
inspectors  are not so  appointed,  the chairman of such meeting may, and on the
request of any stockholder  entitled to vote thereat shall,  appoint one or more
inspectors.  In case any person appointed fails to appear or to act, the vacancy
may be filled by the chairman of the meeting.  Each  inspector,  before entering
upon the  discharge  of his duties,  shall take and sign an oath  faithfully  to
execute the duties of inspector at such  meeting  with strict  impartiality  and
according to the best of his ability.  The duties of the inspectors  shall be to
ascertain  and  report  the  number of shares  represented  at the  meeting,  to
determine the validity and effect of all proxies,  to count all votes and report
the  results  thereof,  and to do such  other  acts  as are  proper  to  conduct
elections and voting with impartiality and fairness to the  stockholders.  If no
inspector is appointed as herein provided, such duties shall be performed by the
secretary of the meeting.

        The  chairman  of the  meeting  shall have the right to decide,  without
appeal,  the order of  business  for such  meeting and all  procedural  motions,
questions and other matters  (including  the right to limit  discussion as being
unreasonably  cumulative  or  prolonged  or  irrelevant  to a pending  question)
pending  before  the  meeting.   The  Corporation  shall  keep  minutes  of  the
proceedings of its stockholders.

        Section  2.8.  Voting by  stockholders.  Except as  otherwise  expressly
provided by law or by the Certificate of  Incorporation  or these by-laws,  each
stockholder  present in person or by proxy at any meeting  shall  have,  on each
matter on which such  stockholder  is entitled to vote, one vote with respect to
each share of stock registered in his name on the books of the Corporation:

            (a) On the date fixed  pursuant  to Section 8.5 hereof as the record
            date for the determination of stockholders entitled to notice of and
            to vote at such meeting, or

            (b) If no record date is so fixed,  then at the close of business on
            the day next  preceding  the day on which  notice of such meeting is
            given, or, if no notice is given and notice is waived,  at the close
            of business on the day next  preceding the day on which such meeting
            is held.

        Any  stockholder  entitled  to vote at any  meeting  may vote  either in
person  or by proxy  appointed  by an  instrument  in  writing,  signed  by such
stockholder  (or by his  attorney-in-fact  thereunto  authorized in writing) and
delivered  to the  secretary of the meeting;  provided,  however,  that no proxy
shall be valid  after  eleven  months  from  the  date of its  execution  unless
otherwise provided in the proxy.

        Every  matter  other than the  election  of  Directors  to be decided by
stockholders at any meeting (except as otherwise expressly provided by law or by
the Certificate of Incorporation)  shall be decided,  if a quorum be present, by
the vote of the  majority of the shares  voting with  respect to the issue to be
decided.  In the  election  of  directors,  these  persons  shall be elected who
receive the highest number of votes cast in the election.

        Unless  directed  by the  chairman  of the  meeting or  demanded  by the
holders  of a  majority  of the  shares of stock of the  Corporation  present in
person or by proxy at any meeting and entitled to vote thereon,  the vote on any
matter need not be by ballot.  Upon any such  direction  or demand for a vote by
ballot upon any matter,  such vote shall be so taken. On a vote by ballot,  each
ballot shall be signed by the  stockholder  voting or by his proxy,  if there be
such proxy, and shall state the number of shares voted by him.


                                   ARTICLE III

                               Board of Directors

        Section 3.1. General powers. The business and affairs of the Corporation
shall be  managed by the Board as from time to time  constituted.  The Board may
exercise all powers, rights and privileges of the Corporation (whether expressed
or implied in the Certificate of  Incorporation  or conferred by law) and do all
acts and things  which may be done by the  Corporation,  as are not by law,  the
Certificate  of  Incorporation  or these  by-laws  directed  or  required  to be
exercised or done by the stockholders.

        Section 3.2. Number, qualifications and term of office. The entire Board
shall consist of seven (7) directors (amended  4/20/00).  The directors shall be
divided  into three  classes;  Class I,  Class II and Class  III.  The number of
directors in each class shall be as nearly equal as possible. The term of office
of each of the initial Class I directors  shall expire at the annual  meeting of
stockholders  in  1970,  the  term of  office  of each of the  initial  Class II
directors  shall expire at the annual  meeting of  stockholders  in 1971 and the
term of office of each of the initial  Class III  directors  shall expire at the
annual meeting of stockholders  in 1972.  Subsequent term of office of directors
of each class shall expire at the third  annual  meeting  succeeding  the annual
meeting at which the preceding term of office of directors of that class expire.
Notwithstanding  the foregoing,  the term of office of a director shall continue
after the annual  meeting at which it is to expire  until the  successor to such
director shall be elected and qualified unless the directorship is eliminated in
which case the term of office shall expire at the appropriate annual meeting, or
at any earlier time when such office,  being  lawfully  vacant,  is  eliminated.
Directors  shall be at least  twenty-one  years of age.  A person  elected  as a
director  shall be deemed to have  qualified  as a director if he shall have met
the   qualifications  of  directors   prescribed  by  law,  the  Certificate  of
Incorporation  and these  by-laws  and if he shall have  indicated,  in any form
whatever, his willingness to serve as a director of the Corporation.

        Section 3.3.  Election of directors.  Directors of the class whose terms
then expire  shall be elected,  as  provided  in these  by-laws,  at each annual
meeting of the  stockholders,  or if for any reason the election  shall not have
been held at an annual  meeting,  at any special meeting called for that purpose
after proper  notice.  Directors  shall be elected solely from a list of persons
nominated for directors at the meeting.  Nominations  of candidates for election
as  directors  of the  Corporation  at any  meeting  of  stock-holders  to elect
director(s)  (an "Election  Meeting") may be made by the Board of Directors at a
meeting of the Board,  or by written  consent of directors in lieu of a meeting,
not less than 30 days prior to the date of the Election Meeting.  At the request

of the  Secretary of the  Corporation  each  proposed  nominee shall provide the
corporation  with such information  concerning  himself as is required under the
proxy  solicitation  rules  of  the  Securities  and  Exchange  Commission.  Any
stockholder  eligible  to vote at the  Election  Meeting  who  intends to make a
nomination at the meeting may do so by first delivering notice, at least 30 days
prior to the date of the Election  Meeting,  to the Secretary of the Corporation
setting forth: the name, age,  business and residence  addresses,  the principal
occupation or employment,  the number of Corporation  shares  beneficially owned
and a consent to serve as a director if elected for each such nominee that would
be required for a nominee under the Securities and Exchange Commission rules for
solicitation of proxies on behalf of the Corporation. In the event that a person
is validly designated as a nominee in accordance with this Section 3.3 and shall
thereafter  become  unable or  unwilling  to stand for  election to the Board of
Directors,  such person's nominator may designate a substitute  nominee.  If the
Chairman of the Election  Meeting  determines  that a nomination was not made in
accordance  with foregoing  procedures,  such  nomination  shall be void and not
allowed. (amended 6/19/87)

        Section 3.4. Removal of directors. A director may be removed from office
during  the term of such  office  but only upon a showing  of good  cause,  such
removal  to be by  affirmative  vote of a  majority  of the  outstanding  shares
entitled to vote for the election of such director and which removal may only be
taken at a special meeting of stockholders called for that purpose.

        A special meeting of the  stockholders as herein referred to may only be
held after a hearing  on the  matter of cause  claimed to exist has been held by
the full Board of  Directors  of the Company at which  hearing  the  director or
directors  proposed  for  removal  shall be given an  adequate  opportunity  for
preparation and attendance in person (together with  representation by counsel);
provided, however, that such hearing shall be held only after written notice has
been given to said  director or directors  proposed for removal  specifying  the
matters of cause  claimed to exist.  The  conclusions  of said hearing  shall be
reported by the Board of  Directors  in writing  accompanying  the notice of the
special stock-holders' meeting sent to each stockholder eligible to vote at said
special meeting. (amended 6/19/87)

        Section 3.5. Newly created  directorships  and vacancies.  Newly created
directorships  resulting  from  an  increase  in the  number  of  directors  and
vacancies occurring in the Board for any reason may be filled by the affirmative
vote of a majority of the remaining directors then in office, although less than
a quorum of the Board  exists.  A director  elected  to fill a vacancy  shall be
elected for the unexpired  portion of the term of his  predecessor in office.  A
director elected to fill a newly created  directorship  shall serve for the term
provided  herein for the class of directors for which such director was elected.
(amended 6/19/87)

        Section 3.6.  Place of meetings.  The Board may hold its meetings at any
place within or without the State of Delaware.

        Section 3.7. Annual meeting.  A meeting of the Board for the purposes of
organization,  election of officers and  transaction  of other business shall be
held, if  practicable,  on the day of each annual  meeting of  stockholders  for
election of directors and at the place of the holding of said annual meeting. No
notice  of any such  meeting  held at such time and  place  need be given.  Such
meeting  may be held at any  other  time and  place as shall be  specified  in a
notice given as hereinafter provided for special meetings of the Board.

        Section 3.8. Regular meetings. Regular meetings of the Board may be held
without  notice,  or with such notice  thereof  given by the Secretary as may be
prescribed from time to time, at such time and place as may from time to time be
specified in a resolution or resolutions adopted by the Board.

        Section  3.9.  Special  meetings.  Special  meetings of the Board may be
called at any time by the  Board,  the  President  and Chief  Executive  Officer
(amended  12/18/87),  or any three  directors.  Notice of such meetings shall be
given by the  Secretary,  either  personally  or by  telephone  or by mail or by
telegram or by  cable-gram,  to each  director not less than 48 hours before the
time of such meeting, which shall be fixed by the person or persons calling such
meeting, but need not state the purposes thereof except as otherwise required by
law or these by-laws. (amended 6/19/87)

        Section 3.10. Quorum and manner of acting. At each meeting of the Board,
the presence of a majority of the entire Board shall be necessary to  constitute
a  quorum  for the  transaction  of  business.  Any  vote of a  majority  of the
directors  present at the time of taking such vote, if a quorum shall be present
at  such  time,  shall  be the  act of the  Board,  except  as may be  otherwise
specifically provided by law, the Certificate of Incorporation or these by-laws.
Any meeting of the Board may be adjourned  from time to time by a majority  vote
of the directors  present at such meeting.  In the absence of a quorum at such a
meeting,  a majority of the  directors  present  thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting,  until
a quorum shall be present thereat.  Notice of any adjourned  meeting need not be
given.

        Section 3.11.  Presence at meetings.  Directors may  participate  in any
meeting of the Board,  or any meeting of the  Executive  Committee  or any other
committee  of the  Board  of  which  they are  members,  by means of  conference
telephone  or similar  communications  equipment  by means of which all  persons
participating in such meeting (whether participating by virtue of this provision
or otherwise) can hear each other,  and  participation  in a meeting pursuant to
this provision shall constitute presence in person at such meeting.

        Section 3.12.  Organization and procedure. At each meeting of the Board,
the President and Chief  Executive  Officer,  or in the absence of the President
and Chief Executive Officer (amended 12/18/87),  a director chosen by the Board,
shall act as Chairman of the meeting.  The  Secretary of the Board (if one shall
be appointed  pursuant to Section 3.16 of these by-laws),  or in his absence (or
if one shall not be so appointed)  the Secretary of the  Corporation,  or in his
absence an Assistant  Secretary of the Corporation,  or in the absence of all of
the  foregoing a person  appointed by the Chairman of the meeting,  shall act as
Secretary  of  the  meeting.   The  Chairman  of  the  meeting  shall,   without
relinquishing the chairmanship of the meeting, have full power of discussion and
voting power in respect of any matter before the meeting.

        Section  3.13.  Minutes of  meetings.  The Board  shall  have  minutes
kept of its proceedings.

        Section 3.14.  Informal action by unanimous  consent.  Unless  otherwise
restricted by statute,  the provisions of the  Certificate of  Incorporation  or
these  by-laws,  any action  required or permitted to be taken at any meeting of
the Board or the Executive  Committee or any other committee of the Board may be
taken  without a meeting if all members of the Board or  Executive  Committee or
other committee, as the case may be, consent thereto in writing, and the writing
or writings are filed with the minutes of  proceedings  of the Board,  Executive
Committee or other committee.

        Section 3.15. Compensation.  Directors shall be entitled to receive such
fees and  expenses,  if any,  for  attendance  at meetings of the Board,  and in
addition such fixed compensation for services as directors, as may be fixed from
time  to  time  by  resolution  of the  Board;  provided  that  no  such  fee or
compensation  shall  be  paid to any  director  who is at the  time a  regularly
salaried  officer  or  employee  of the  Corporation.  Directors  shall  also be
entitled to receive such  compensation for services  rendered to the Corporation
as officers,  members of  committees,  or in any other  capacity,  other than as
directors,  as may be provided from time to time by resolution of the Board, and
shall also be entitled to reimbursement for expenses incurred in the performance
of any such services.


                                   ARTICLE IV

                            Committees of the Board.

        Section 4.1.  Committees of the Board. The committees of the Board shall
consist of an  Executive  Committee,  an Audit  Committee,  a  Compensation  and
Benefits Committee (amended 4/20/00),  and such other committees of the Board as
may from time to time be  established  by a resolution  of the Board.  Except as
otherwise  provided in these by-laws,  each committee of the Board shall consist
of not less than two members of the Board.

        Section  4.2.  Appointment  and term of  office  of  committee  members,
designation  of alternates  and chairmen.  The members of each  committee of the
Board  shall be  appointed  by the  Board as the  Board  in its  discretion  may
determine, subject however, to any specific requirements of law, the Certificate
of Incorporation or these by-laws regarding  membership on such committees.  The
Board may designate one or more other  directors to serve as alternates  for the
members of any  committee  of the Board in such order and manner as may be fixed
by the Board. Unless otherwise provided by these by-laws or by the resolution of
the Board  designating or establishing  any such committee,  the members of each
such committee shall serve thereon for a term of office  beginning with the date
of appointment  thereto and until the next annual meeting of the Board and until
their respective  successors  shall be appointed;  provided,  however,  that any
member of any such committee may be removed or his office declared vacant at any
time by the Board without  assigning (and without there  existing) any reason or
cause as the basis  thereof.  A chairman of each  committee  of the Board may be
designated by the Board from among the members of each such committee subject to
any  limitations  imposed  by  these  by-laws,  but in the  absence  of any such
designation,  or in the absence of a  designated  chairman at any meeting of any
such  committee,  the members of such committee may designate one of its members
as chairman of such committee or the meeting, as the case may be.

        Section 4.3. Procedure,  meetings, voting and records. Each committee of
the  Board  may  prescribe  for the  conduct  of its  business  such  rules  and
regulations,  not  inconsistent  with these by-laws or with such resolutions for
the guidance and control of such committee as may from time to time be passed by
the  Board,  as  it  shall  deem  necessary  or  desirable,  including,  without
limitation,  rules  fixing the time and place of  meetings  and the notice to be
given  thereof,  if any. A majority of the  members of a committee  of the Board
shall  constitute a quorum.  The adoption of any resolution or the taking of any
other action by any committee of the Board shall require the affirmative vote of
a majority of the members of such committee as from time to time constituted. In
the absence or  disqualification  of any member of such committee or committees,
the member or members thereof present at any meeting and not  disqualified  from
voting,  whether or not he or they constitute a quorum, may unanimously  appoint
another  member of the Board of  Directors to act at the meeting in the place of
any such absent or  disqualified  member.  The  Executive  Committee  shall keep
minutes of its  proceedings,  but,  unless  required by resolution of the Board,
other  committees  of the Board need not keep minutes of their  proceedings  but
shall maintain such written  records of actions taken by such  committees as may
be necessary or  appropriate  to evidence  such  actions.  All actions  taken by
committees  of the Board shall be  reported to the Board at the meeting  thereof
held next after the taking of such action.

        Section 4.4. General power and authority and limitations. The committees
of the  Board  shall  have and may  exercise  such  power and  authority  as are
expressly provided by these by-laws or from time to time conferred by resolution
of the Board,  and such other  power and  authority  implicit  in or  incidental
thereto,  subject in all instances to all specific  limitation imposed by law or
by the Certificate of Incorporation.  No committee of the Board, however,  shall
have the  power or  authority  of the  Board  with  reference  to  amending  the
Certificate of Incorporation,  adopting an agreement of merger or consolidation,
recommending  to  the  stockholders  a  dissolution  of  the  Corporation  or  a
revocation  of a  dissolution  or amending  the by-laws of the  Corporation.  In
addition,  and unless such power and authority shall be conferred in whole or in
part by resolution of the Board,  no committee of the Board shall have the power
or  authority  of the Board to establish  any other  committee of the Board,  to
confer or withdraw the power or  authority of any other  committee of the Board,
or to  appoint or remove any  member of any other  committee  of the Board.  Any
power or authority of any committee of the Board  conferred by resolution of the
Board may at any time and from time to time  thereafter  be altered or withdrawn
by  resolution  of the Board,  provided,  however,  that any such  alteration or
withdrawal  shall  not  impair  or  invalidate  any  exercise  of such  power or
authority prior thereto.

        Section 4.5. Executive Committee.  The Executive Committee shall consist
of not less than two  members of the Board,  as from time to time  appointed  by
resolution of the Board,  one of whom shall be the President and Chief Executive
Officer  (amended  12/18/87).  The Board  shall also  designate  a member of the
Executive Committee to be the Chairman of the Executive Committee. The Executive
Committee shall have, to the fullest extent permitted by law, but subject to any
specific  limitation imposed by the Certificate of Incorporation,  these by-laws
or a  resolution  of the  Board,  all of the  power and  authority  vested in or
retained by the Board  (whether or not the Executive  Committee is  specifically
mentioned in the statute,  the provision of the Certificate of  Incorporation or
these by-laws,  the resolution or other instrument vesting or retaining any such
power or  authority);  and the  Executive  Committee may exercise such power and
authority  in such  manner  as it  shall  deem  for the  best  interests  of the
Corporation in all cases in which specific  directions shall not have been given
by the Board. (amended 6/19/87)

        Section 4.6. Audit  Committee.  The Audit Committee shall consist of not
less than two members of the Board as from time to time  appointed by resolution
of the Board.  No member of the Board who is also an employee of the Corporation
shall be eligible to serve on the Audit  Committee.  The Audit  Committee  shall
review  and,  as it shall  deem  appropriate,  recommend  to the Board  internal
accounting and financial  controls of the Corporation and accounting  principles
and auditing  practices and procedures  employed in the preparation of financial
statements  of the  Corporation  and the review  thereof of  independent  public
accountants for the Corporation.  The Audit Committee shall make recommendations
to the Board  concerning  the engagement of  independent  public  accountants to
audit the annual  financial  statements of the  Corporation and the scope of the
audit to be undertaken by such accountants.

        Section 4.7. Compensation and Benefits Committee (amended 4/20/00).  The
Compensation and Benefits Committee (amended  4/20/00)shall  consist of not less
than two members of the Board as from time to time  appointed by  resolution  of
the Board.  No member of the Board who is also an employee of their  Corporation
shall be eligible to serve on the Compensation and Benefits  Committee  (amended
4/20/00). The Compensation and Benefits Committee (amended 4/20/00) shall review
and, as it deems  appropriate,  recommend to the President  and Chief  Executive
Officer  (amended  12/18/87) and the Board  policies,  practices and  procedures
relating  to  compensation  of  managerial   employees  and  the  establishment,
investment of funds (amended  4/20/00) and  administration  of employee  benefit
plans,  shall have and exercise all authority  under employee stock option plans
as the  committee  therein  designated  to  administer  such  plans,  and  shall
otherwise  advise and consult with the  President  and Chief  Executive  Officer
(amended 12/18/87) as may be requested regarding managerial personnel policies.

        Section 4.8.  Other  committees  of the Board.  Other  committees of the
Board  shall  have such  power and  authority,  and such  functions,  duties and
compensation as the Board may designate.

                                    ARTICLE V

                                    Officers

        Section 5.1.  Designation.  The  principal  officers of the  Corporation
shall be a Chairman and Chief Executive  Officer,  President and Chief Operating
Officer, one or more Vice Presidents,  a Chief Financial Officer, a Secretary, a
Treasurer,  and a  Controller;  and there may be such other  officers,  and such
agents and employees, as shall be appointed in accordance with the provisions of
Section 5.5 of these  by-laws.  Any two or more  offices may be held by the same
person.

        Section 5.2. Election and qualifications.  The principal officers of the
Corporation  shall be elected  annually  by the Board at a meeting on the day of
the annual meeting of  stockholders.  The Chairman and Chief  Executive  Officer
shall be chosen from among the Directors.

        Section 5.3. Term of office.  Each principal  officer of the corporation
shall hold  office  until the next  annual  meeting of the Board  following  his
election and until his successor shall have been elected and qualified, or until
his death, or until he shall resign,  or until he shall have been removed at any
time by the Board with or without cause. The removal of an officer without cause
shall be without  prejudice to his contract  rights,  if any. The election of an
officer shall not of itself create contract rights.

        Section 5.4.  Vacancies.  A vacancy in the office of a principal officer
shall be filled for the unexpired  portion of the term in a manner prescribed in
these by-laws for regular  election to such office.  In the interim  between the
occurrence  of any such  vacancy and a meeting of the Board,  the  Chairman  and
Chief  Executive  Officer may by appointment  fill such vacancy for a term which
shall expire at the next meeting of the Board unless such  appointment  shall be
confirmed at such meeting.

        Section 5.5.  Appointive  officers and agents. The Board or the Chairman
and Chief  Executive  Officer may appoint such  officers,  other than  principal
officers,   including  one  or  more   Assistant  Vice   Presidents,   Assistant
Secretaries,  Assistant Treasurers,  Assistant Controllers,  and Divisional Vice
Presidents and other divisional officers, and such agents and employees,  as the
Board  or the  Chairman  and  Chief  Executive  Officer  may deem  necessary  or
advisable,  each of whom shall hold his office or his position,  as the case may
be, for such  period,  have such  authority,  and perform  such duties as may be
provided in these by-laws or as the Board may from time to time  determine.  The
Chairman  and Chief  Executive  Officer may  prescribe  additional  duties to be
performed by such  officers,  agents and  employees,  and the Chairman and Chief
Executive Officer may at any time suspend the duties, of whatever nature, of any
such officer, agent or employee.

        Section 5.6.  Compensation.  The  compensation of the Chairman and Chief
Executive  Officer  shall be fixed from time to time by the Board.  The Chairman
and Chief Executive  Officer shall fix and determine,  or delegate in any manner
he shall select the power to fix and determine,  the  compensation  of all other
officers,  agents and  employees of the  Corporation,  unless the Board shall by
resolution otherwise direct.

        Section 5.7. Bonds. The Treasurer and any Assistant Treasurer,  and such
other  officers and agents of the  Corporation  as the Board or the Chairman and
Chief Executive  Officer shall  prescribe,  may be required each to give bond to
the Corporation in such form and amount and with such surety as the Board or the
Chairman  and  Chief  Executive  Officer  may  determine,  conditioned  upon the
faithful  performance of the duties of his office,  and upon the  restoration to
the Corporation in the case of his death, resignation, retirement or removal, of
all books, vouchers, moneys or other papers or things in his possession or under
his control belonging to the Corporation.  The Corporation shall pay the premium
cost of such bonds.

        Section  5.8.  Employment  contracts.   Every  employment  for  personal
services  to be  rendered  to the  Corporation  shall be at the  pleasure of the
Corporation  unless under a contract in writing  which has been duly executed on
behalf of the Corporation  and has been approved,  authorized or ratified by the
Board or executed or approved by the Chairman and Chief Executive Officer.

        Section 5.9. Chief Executive Officer.  The Chief Executive Officer shall
be the chief executive  officer of the Corporation and shall preside at meetings
of the  shareholders  and the  Board  of  Directors.  Subject  to the  Board  of
Directors,  he shall be in general and active charge of the entire  business and
all the affairs of the company and shall be its chief policy-making  officer. He
shall have such other powers and perform such other duties as may be  prescribed
by the Board of Directors or provided in the By-Laws.  Whenever the President is
unable  to serve,  by  reason  of  sickness,  absence  or  otherwise,  the Chief
Executive  Officer  shall  perform all the duties and functions and exercise all
the powers of the President.

        Section  5.10.  President.  Under the  direction of the Chief  Executive
Officer, and subject to the Board of Directors, the President shall have general
charge of the  business  operations.  Whenever  the Chief  Executive  Officer is
unable to serve,  by reason of sickness,  absence or  otherwise,  the  President
shall have the powers and perform the duties of the Chief Executive Officer.  He
shall have such other powers and perform such other duties as may be  prescribed
by the Chief  Executive  Officer or the Board of Directors of as may be provided
in the By-Laws.

        Section 5.11. Vice Presidents. Each Vice President shall have such power
and perform  such duties as the Board may from time to time  prescribe or as the
Chairman and Chief  Executive  Officer may from time to time delegate to him. At
the request of the Chairman and Chief Executive  Officer,  the President may, in
the case of the absence or inability to act of the Chairman and Chief  Executive
Officer,  temporarily act in his place. In the case of the death of the Chairman
and Chief Executive  Officer,  or in the case of his absence or inability to act
without having  designated a Vice  President to act  temporarily in their place,
the  Vice  President  or  Vice  Presidents  so to  perform  the  duties,  or any
particular duty, of the President or Chief Executive Officer shall be designated
by the Board.

        Section 5.12. Chief Financial  Officer.  The Chief Financial  Officer of
the Corporation  shall,  under the direction of the Chairman and Chief Executive
Officer,  be responsible  for all financial and  accounting  matters and for the
direction of the offices of Treasurer  and  Controller.  Such officer shall have
such other powers and shall perform such other duties as the Board may from time
to time prescribe or the Chairman and Chief  Executive  Officer may from time to
time delegate to him.

        Section 5.13.  Secretary.  The Secretary of the Corporation shall attend
all meetings of the  stockholders  and shall be and act as the secretary of such
meetings.  Except where the Board has  appointed a person to act as Secretary of
the Board, he shall attend all meetings of the Board and Executive Committee and
shall be and act as the secretary of such  meetings.  He shall give, or cause to
be  given,  all  notices  provided  for in  these  by-laws  or  required  by the
Certificate of  Incorporation or by law; he shall be custodian of the records an
of the seal of the Corporation and see that the seal is affixed to all documents
the  execution  of which on  behalf  of the  Corporation  under its seal is duly
authorized in accordance  with these by-laws;  he shall have charge of the stock
certificate  books of the  Corporation,  and keep or cause to be kept the  stock
certificate  books,  stock transfer books and stock ledgers in such manner as to
show, at all times, the amount of the capital stock issued and outstanding,  the
classes and series  thereof,  if any,  the names  alphabetically  arranged,  the
places of residence of the holders of record thereof,  the number of shares held
by each and the time when each  became a holder of record;  he shall have charge
of all books, records and papers of the Corporation relating to its organization
as a Corporation, and shall see that all reports, statements and other documents
required by law are properly  kept or filed,  except to the extent that the same
are to be kept or filed by the  Controller or any appointive  officer,  agent or
employee;  he may sign with the Chairman and Chief Executive Officer or any Vice
President any of all  certificates of stock of the  Corporation;  and in general
shall  exercise  all powers and  perform  all duties  incident  to the office of
Secretary  and such other powers and duties as may from time to time be assigned
to him by the Board or the Chairman and Chief Executive Officer or be prescribed
by these by-laws.

        Section 5.14.  Assistant  Secretaries.  The Assistant  Secretaries shall
assist at all times in the  performance of the duties of the Secretary,  subject
to his  control  and  direction,  and,  in the  absence  of the  Secretary,  the
Assistant  Secretary  designated  therefor  by the Board or  Chairman  and Chief
Executive  Officer,  or in  the  absence  of  such  designation,  any  Assistant
Secretary,  shall  exercise the powers and perform the duties of the  Secretary.
The  Assistant  Secretaries  shall  exercise  such other powers and perform such
other  duties as may from time to time be  assigned  to them by the  Board,  the
Chairman and Chief Executive Officer or the Secretary, or be prescribed by these
by-laws.

        Section  5.15.  Treasurer.  The  Treasurer  shall have  charge of and be
responsible  for the  collection,  receipt,  custody  and  disbursements  of the
corporate funds and  securities;  he shall be responsible for the deposit of all
moneys,  and  other  valuable  effects,  in the  name and to the  credit  of the
Corporation  in such  depositories  as may be  designated by the Board (or by an
officer of the  corporation  pursuant to any delegation of such authority by the
Board);  he shall disburse the funds of the Corporation as may be ordered by the
Board or as may be pursuant  to  authorizations  of the Board or these  by-laws,
taking  proper  vouchers  for  such  disbursements;  he  shall,  subject  to the
supervision  and direction of the Chief  Financial  Officer,  be responsible for
carrying out policies of the Corporation with respect to the approving, granting
or extending of credit by the Corporation;  he shall, subject to the supervision
and direction of the Chief  Financial  Officer,  have the custody of such books,
receipted  vouchers  and other  books and  papers as in the  practical  business
operations of the Corporation shall naturally belong to the office or custody of
the  Treasurer,  or as shall be  placed  in his  custody  by the  Board,  by the
Executive  Committee,  by the Chairman and Chief Executive  Officer or the Chief
Financial  Officer,  and the Treasurer  shall give to the Board or any committee
thereof,  whenever  they may require it, an account of all his  transactions  as
Treasurer;  and in general he shall  exercise  all powers and perform all duties
incident to the office of Treasurer and such other powers and duties as may from
time to time be  assigned to him by the Board or  Chairman  and Chief  Executive
Officer or Chief Financial Officer or be prescribed by these by-laws.

        Section  5.16.  Assistant  Treasurers.  The Assistant  Treasurers  shall
assist at all times in the  performance of the duties of the Treasurer,  subject
to his  control  and  direction,  and,  in the  absence  of the  Treasurer,  the
Assistant  Treasurer  designated  therefor by the Board, the President and Chief
Executive  Officer,  or in  the  absence  of  such  designation,  any  Assistant
Treasurer shall exercise the powers and perform the duties of the Treasurer. The
Assistant  Treasurers  shall  exercise  such other powers and perform such other
duties as may from time to time be assigned to them by the Board,  the  Chairman
and Chief Executive Officer,  the Chief Financial Officer, or the Treasurer,  or
be prescribed by these by-laws.

        Section 5.17.  Controller.  The Controller shall be the Chief Accounting
Officer of the Corporation and shall have charge of the  Corporation's  books of
accounts,  and,  subject to the provisions of this Section 5.17,  shall be under
the  direction  of the  Chief  Financial  Officer.  He shall  maintain  full and
accurate  records  of  all  assets,   liabilities,   commitments  and  financial
transactions  of the  Corporation;  he shall  see  that an  adequate  system  of
internal  control is maintained  and that all  reasonable  measures are taken to
protect  the  Corporation's  assets;  he shall  supervise  the  approval  of all
expenditures;  he shall compile costs of production and  distribution;  he shall
prepare and interpret all statistical records and reports of the Corporation; he
shall render such financial  statements and other information as may be directed
by the Board;  and,  in  general,  he shall  perform  all the duties  ordinarily
connected  with the office of  Controller  and such other duties as from time to
time  may be  assigned  to him by the  Board  or any  committee  thereof  or the
Chairman and Chief Executive Officer or the Chief Financial Officer.  His duties
shall  extend to all  subsidiary  corporations  and,  so far as the Board or the
Chairman and Chief  Executive  Officer or the Chief  Financial  Officer may deem
practicable, to all affiliated corporations.  The Controller shall report to the
Chairman and Chief Executive  Officer and the Chief Financial  Officer from time
to time all matters affecting the financial  affairs of the Corporation.  He may
also consult with the Chairman and Chief Executive  Officer from time to time in
respect of matters affecting the financial affairs of the Corporation;  he shall
furnish the Chairman and Chief  Executive  Officer with such  information as the
Chairman and Chief Executive Officer may from time to time request; and he shall
report to the  Chairman  and Chief  Executive  Officer all matters  which in his
opinion  should be brought to the attention of the Board;  and in the event such
matters are not reasonably brought to the attention of the Board, he may present
the same to the Board in  writing.  When  requested  by the Board or a committee
thereof, he shall report directly to the Board or such committee in reference to
any and all matters  pertaining to his duties and falling within the function of
his office.

        Section 5.18.  Assistant  Controllers.  The Assistant  Controllers shall
assist at all times in the performance of and duties of the Controller,  subject
to his  control  and  direction,  and,  in the  absence of the  Controller,  the
Assistant  Controller  designated  therefor by the Board, the Chairman and Chief
Executive  Officer,  or the Chief Financial  Officer,  or in the absence of such
designation, any Assistant Controller, shall exercise the powers and perform the
duties of the Controller.  The Assistant  Controllers  shall exercise such other
powers and  perform  such other  duties as may from time to time be  assigned to
them by the Board, the Chairman and Chief Executive Officer, the Chief Financial
Officer, or the Controller, or be prescribed by these by-laws.


                                   ARTICLE VI

                                Indemnification.

        Section 6.1.  Indemnification of directors and officers. The Corporation
shall,  to the fullest  extent to which it is  empowered to do so by the general
Corporation Law of Delaware,  or any other applicable laws, as from time to time
in effect,  indemnify  any person who was or is a party or is  threatened  to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal,  administrative or investigative, by reason of the fact
that he is or was a director or officer of the Corporation, or is or was serving
at  the  request  of  the  Corporation  as a  director  or  officer  of  another
corporation,  partnership, joint venture, trust or other enterprise, against all
expenses  (including  attorneys'  fees),  judgments,  fines and amounts  paid in
settlement  actually  and  reasonably  incurred by him in  connection  with such
action, suit or proceeding. Any director, officer or employee of the Corporation
who  is or  was  serving  as a  director  or  officer  of a  subsidiary  of  the
Corporation or of any entity in which the  Corporation  holds an equity interest
shall be deemed to serve in such capacity at the request of the Corporation.

        Expenses  incurred  in  defending a civil or  criminal  action,  suit or
proceeding may be paid by the Corporation in advance of the final disposition of
such action,  suit or  proceeding as authorized by the Board of Directors in the
specific case upon receipt of an  undertaking by or on behalf of the director or
officer to repay such amount unless it shall ultimately be determined that he or
she is entitled to be  indemnified  by the  Corporation  as  authorized  in this
Article VI.

        Section 6.2.  Contract  with the  Corporation.  The  provisions  of this
Article VI shall be deemed to be a contract  between  the  Corporation  and each
director  or  officer  who  serves in any such  capacity  at any time while this
Article and the relevant  provisions of the General Corporation Laws of Delaware
or other  applicable law, if any, are in effect,  and any repeal or modification
of this  Article VI or any such law shall not  affect any rights or  obligations
then existing with respect to any state of facts then or theretofore existing or
any action,  suit or proceeding  theretofore or thereafter brought or threatened
based in whole or in part upon any such state of facts.

        Section 6.3.  Indemnification  of employees and agents.  Persons who are
not covered by the  foregoing  provisions of this Article VI and who are or were
employees or agents of the Corporation, or are or were serving at the request of
the  Corporation  as  employees or agents of another  corporation,  partnership,
joint  venture,  trust or other  enterprise,  may be  indemnified  to the extent
authorized at any time or from time to time by the Board.

        Section  6.4.  Other  rights  of  indemnification.  The  indemnification
provided or permitted  by this  Article VI shall not be deemed  exclusive of any
other rights to which those indemnified may be entitled by law or otherwise, and
shall continue as to a person who has ceased to be a director, officer, employee
or  agent  and  shall  inure  to  the  benefit  of  the  heirs,   executors  and
administrators of such a person.


                                   ARTICLE VII

                  Checks, Contracts, Loans and Bank Accounts.

        Section 7.1. Checks,  drafts, etc. All checks, drafts, bills of exchange
or other orders for the payment of money, obligations, notes, or other evidences
indebtedness,  bills of lading, warehouse receipts and insurance certificates of
the corporation, shall be signed or endorsed as the Board may direct.

        Section 7.2.  Contracts.  The Board may authorize one or more  officers,
agents or employees of the Corporation to enter into any contract or execute and
deliver  any  contract  or other  instruments  in the name and on  behalf of the
Corporation,  and  such  authority  may  be  general  or  confined  to  specific
instances.

        Section  7.3.  Loans.  No loans shall be  contracted  on behalf of the
Corporation  and no  evidence  of  indebtedness  shall be  issued  in its name
unless  authorized  by a  resolution  of  the  Board.  Such  authority  may be
general or confined to specific instances.

        Section  7.4.  Deposits.   All  funds  of  the  Corporation  shall  be
deposited  from time to time to the credit of the  Corporation in such general
or special  bank account or accounts in such banks,  trust  companies or other
depositories as the Board, the President and Chief Executive  Officer,  or the
Treasurer  may from  time to time  designate;  and the  Board  may  make  such
general  or  special  rules  and  regulations   with  respect   thereto,   not
inconsistent  with the provisions of these by-laws,  as it may deem expedient.
(amended 12/18/87)


                                  ARTICLE VIII

                           Shares and Their Transfer.

        Section  8.1.  Certificates  of  stock.  Certificates  of  stock  of the
Corporation shall be in such form,  consistent with all applicable provisions of
law, as shall be approved  by the Board.  They shall be signed by the  President
and Chief Executive  Officer  (amended  12/18/87) or a Vice President and by the
Secretary  or an Assistant  Secretary,  which  signatures  may be by engraved or
imprinted  facsimile on any  certificate  countersigned  by a transfer  agent or
registered by a registrar. In case any officer who has signed or whose facsimile
signature  has been  placed  upon a  certificate  shall  have  ceased to be such
officer before such  certificate is issued,  it may be issued by the Corporation
with the same effect as if he were such officer at the date of issue.

        Section  8.2.  Transfer  of stock.  Transfers  of shares of stock of the
Corporation shall be made on payment of all taxes thereon and presentment to the
Corporation  or its  transfer  agent  for  cancellation  of the  certificate  or
certificates  for such  shares  (except as  hereinafter  provided in the case of
loss, destruction, theft or mutilation of certificates) properly endorsed by the
registered  holder  thereof or  accompanied  by proper  evidence of  succession,
assignment or authority to transfer,  together with such reasonable assurance as
the  Corporation or its transfer agent may require that the said  endorsement is
genuine and effective.  A person in whose name shares of stock are registered on
the  books  of  the  Corporation  shall  be  deemed  the  owner  thereof  by the
Corporation,  and, upon any transfer of shares, the person or persons into whose
name or names such shares  shall be  transferred  shall be  substituted  for the
person  or  persons  out of whose  name or names  such  shares  shall  have been
transferred,  with respect to all rights,  privileges and obligations of holders
of stock of the  Corporation  as against the  Corporation or any other person or
persons.

        Section 8.3. Lost, destroyed,  stolen, and mutilated  certificates.  The
holder of any stock of the Corporation shall immediately  notify the Corporation
of any loss,  destruction,  theft or mutilation of the certificates for any such
stock,  and the Board may,  in its  discretion,  cause to be issued to him a new
certificate  or  certificates  of stock,  upon the  surrender  of the  mutilated
certificate,  or in case of loss,  destruction or theft, upon satisfactory proof
of such loss,  destruction  or theft;  and,  the Board may,  in its  discretion,
require the owner of the lost,  destroyed  or stolen  certificate,  or his legal
representative,  to give the Corporation a bond in such sum and in such form and
with such  surety or sureties as it may direct,  to  indemnify  the  Corporation
against any claim that may be made against it with respect to the certificate or
certificates  alleged  to have  been  lost,  destroyed  or  stolen.  The  powers
hereinabove  vested  in the  Board  may be  delegated  by it to any  officer  or
officers of the Corporation.

        Section  8.4.   Transfer  agent  and  registrar  and  regulations.   The
Corporation shall, if and whenever the Board shall so determine, maintain one or
more  transfer  offices or  agencies,  each in the  charge of a  transfer  agent
designated by the Board,  where the shares of the stock of the Corporation shall
be directly  transferable,  and also one or more registry  offices,  each in the
charge of a registrar  designated by the Board, where such shares of stock shall
be  registered,  and no  certificate  for shares of stock of the  Corporation in
respect of which a transfer agent and registrar shall have been designated shall
be valid unless  countersigned  by such  transfer  agent and  registered by such
registrar.  The Board may also make such additional  rules and regulations as it
may  deem  expedient   concerning  the  issue,   transfer  and  registration  of
certificates  for shares of the stock of the  Corporation.  The  Corporation may
itself,  at the discretion of the Board,  act as transfer agent in such a manner
as the Board shall direct.

        Section  8.5.   Record  date.  For  the  purpose  of   determining   the
stockholders  entitled to notice of or to vote at any meeting of stockholders or
any adjournment  thereof,  or to express consent to or dissent from any proposal
without a meeting,  or for the purpose of determining the stockholders  entitled
to receive  payment of any dividend or the  allotment of any rights,  or for the
purpose of any other action, the Board may fix, in advance, a date as the record
date for any such  determination  of  stockholders.  Such date shall not be more
than sixty nor less than ten days  before the date of any  meeting nor more than
sixty days prior to any such action.  When a  determination  of  stockholders of
record entitled to notice of or to vote at any meeting of stockholders  has been
made as provided  herein,  such  determination  shall  apply to any  adjournment
thereof, unless the Board fixes a new record date for the adjourned meeting.


                                   ARTICLE IX

                            Miscellaneous Provisions.

        Section  9.1.  Seal.  The seal of the  Corporation  shall be in circular
form,  with the name of the  Corporation  on the  circumference,  and the  words
"Incorporated  under the laws of the State of Delaware" in the center. Said seal
may be used by causing it or a facsimile or  equivalent  thereof to be impressed
or affixed or reproduced.

        Section 9.2. Fiscal year. The Fiscal year of the  Corporation  shall end
on December 31 of each year.

        Section 9.3. Notices. Any notice required by these by-laws or otherwise,
to be given shall be deemed to have been given in person if  delivered in person
to the person to whom such notice is addressed, and shall be deemed to have been
deposited in the United States mail, enclosed in a postage prepaid envelope, and
shall be deemed to have been given by wireless, telegraph or cable when the same
shall have been delivered for prepaid transmission into the custody of a company
ordinarily  engaged in the  transmission of such messages;  such postage prepaid
envelope or such  wireless,  telegraph or cable message being  addressed to such
person  at  his  address  as it  appears  on  such  books  and  records  of  the
Corporation,  or if no address  appears on such book and  records,  then at such
address as shall be  otherwise  known to the  Secretary,  or if no such  address
appears on such books and records or is otherwise  known to the Secretary,  then
in care of the  registered  agent of the  Corporation  in the State of Delaware.
Whenever,  by any  provisions  of the  Certificate  of  Incorporation  or  these
by-laws,  or otherwise,  any notice is required to be given any specified number
of days  before  any  meeting or event,  the day on which such  notice was given
shall be  counted,  but the day of such  meeting  or other  event  shall  not be
counted, in determining whether or not notice has been given in proper time in a
particular case.

        Section  9.4.  Waiver of notice.  Whenever  any notice is required to be
given under the provisions of the laws of the State of Delaware, the Certificate
of  Incorporation or these by-laws,  a waiver thereof in writing,  signed by the
person  entitled  to such  notice,  or his  proxy in the case of a  stockholder,
whether  before or after the time  stated  therein,  shall be deemed  equivalent
thereto.  Except as may be otherwise specifically provided by law, any waiver by
mail, telegraph,  cable or wireless,  bearing the name of the person entitled to
notice  shall be deemed a waiver in writing  duly  signed.  The  presence of any
stockholder  at any meeting,  either in person or by proxy,  without  protesting
prior to the conclusion of the meeting the lack of notice of such meeting, shall
constitute  a waiver of notice  by him;  and  attendance  by a  director  at any
meeting  of the  Board,  without  protesting  prior to such  meeting,  or at its
commencement  the lack of notice to him, shall  constitute a waiver of notice by
him of such meeting.

        Section  9.5.  Resignations.  Any officer or director  may resign at any
time by giving  written  notice to the  President  and Chief  Executive  Officer
(amended  12/18/87) or the Secretary.  Such resignation shall take effect at the
time  specified  in the  notice,  or if no time is  specified,  at the time such
notice shall be given.  Unless otherwise specified in any notice of resignation,
the acceptance of such resignation  shall not be necessary to make it effective.
No such  resignation  shall serve to release the person  submitting  it from any
liability or duty to the Corporation, whether created by law, the Certificate of
Incorporation,  these  by-laws,  a resolution or directive of the Board or under
any  contract  between such person and the  Corporation,  unless the Board shall
expressly and specifically release such person from any such liability or duty.

        Section 9.6. Emergency  by-laws.  The Board may adopt emergency by-laws,
as permitted  by law to be  operative  during any  emergency  resulting  from an
attack on the United States or on a locality in which the  Corporation  conducts
its business or customarily holds meetings of the Board or its stockholders,  or
during  any  nuclear  or  atomic  disaster,  or  during  the  existence  of  any
catastrophe,  or other similar emergency condition as a result of which a quorum
of the Board or of the  Executive  Committee  cannot  readily  be  convened  for
action.  The  provisions  of such  Emergency  by-laws  shall,  while  operative,
supersede all contrary  provisions of law, the Certificate of Incorporation,  or
these by-laws.


                                    ARTICLE X

                            Severability; Amendments.

        Section 10.1.  Severability.  If any provision of these by-laws,  or its
application thereof to any person or circumstance is held invalid, the remainder
of these  by-laws and the  application  of such  provision  to other  persons or
circumstances shall not be affected thereby.

        Section  10.2.  Amendments.  These  by-laws may be amended or repealed
by the  Board  at  any  annual,  regular  or  special  meeting  thereof  by an
affirmative vote of 2/3's of the directors.  (amended 6/19/87).


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.G
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>EMPLOYMENT AGREEMENT WITH ANDREW E. GRAVES
<TEXT>



                                    February 1, 2001


Dear Andrew E. Graves:

Pursuant to authorization  of its Board of Directors (the "Board"),  this letter
will set forth certain of the terms and conditions of your continuing employment
by Federal Signal Corporation ("Federal") as an executive officer of Federal. By
your acceptance  hereof you agree that your  employment  shall continue upon the
terms and conditions hereinafter set forth.

1.    Term, Compensation and Services

      1.1 The term of your employment  pursuant to this agreement shall continue
from the date hereof until the December 31 following your 65th birthday, subject
to earlier termination of employment by Federal or you as hereinafter provided.

      1.2 During the term of your  employment,  you will be  compensated  at the
annual  rate as may  from  time to time be  fixed by  resolution  of the  Board,
provided,  however,  that your annual rate of compensation  shall in no event be
less than  $325,000  and provided  further that such minimum  annual rate may be
increased  by  resolution  of the Board  which  resolution  shall be  binding on
Federal for the remaining term of this agreement. Your annual compensation shall
be  payable  monthly  and you  shall be  reimbursed  for  business,  travel  and
entertainment  expenses in accordance with Federal's prevailing policies. In its
discretion, the Board may pay you additional salary or bonuses.

      1.3 You  agree to  devote  your  full  business  time and  efforts  to the
rendition  of  such  services  to  Federal  as may be  designated  by the  chief
executive officer or the Board,  subject,  however,  to customary  vacations and
provided that you shall be excused from performing services during any period of
absence or inability relating to illness or physical or mental  disability.  You
will at all times be  subject  to the  direction  and  supervision  of the chief
executive  officer and the Board. You may devote a reasonable  amount of time to
civic and community  affairs but shall not perform  services  during the term of
your employment for any other business  organization in any capacity without the
prior consent of the Board.

2.    Termination

      2.1 Your employment shall be subject to termination by Federal at any time
for cause if you shall  fail in any  material  respect to  perform  your  duties
hereunder  (other than by reason of illness or  physical or mental  disability),
shall breach any provision  hereof in any material  respect,  or shall engage in
any dishonest or fraudulent acts or conduct in the performance of your duties to
Federal. Termination by Federal pursuant to the preceding sentence shall require
that you receive thirty days prior written  notice of the basis for  termination
and that you fail to cure or correct the basis for the  termination  during such
thirty day period. In addition,  you may, at your option,  voluntarily terminate
your  employment  hereunder  by giving  Federal at least 90 days  prior  written
notice thereof.  Upon any termination  under this paragraph 2.1, all obligations
of Federal  hereunder  shall  immediately  terminate and,  without  limiting the
foregoing,  Federal  shall  have no  obligation  under  this  agreement  to make
payments  to you in  respect  of any  period  subsequent  to  such  termination.
However,   termination   under  this  paragraph   shall  not  affect   Federal's
obligations,  if any, to make  payments as  required  by other  compensation  or
employee benefit plans maintained by Federal.

      2.2 Your employment shall be subject to termination by Federal at any time
without cause by notifying you in writing of such  termination not less than ten
days prior to the effective  date thereof.  Upon any  termination  of employment
pursuant to this paragraph 2.2,  Federal shall be obligated to pay to you, or to
your designated  beneficiary if you shall not be living,  an amount equal to one
year's salary at the minimum annual rate then in effect,  or, if less, an amount
equal to the period from  termination  until the December 31 following your 65th
birthday.  The total amount owing to you or your  designated  beneficiary  under
this  paragraph  2.2  shall  be  paid  in  twelve  equal  monthly  installments.
Installment  payments  shall  commence  as soon  as  practicable  following  the
effective date of termination and shall not bear interest.  For purposes of this
paragraph 2.2 any material breach by Federal of its obligations  hereunder which
are not cured after thirty days written  notice given to Federal by you, may, at
your  option,  be treated by you as a  termination  of your  employment  without
cause.  Amounts  payable to you under this paragraph 2.2 shall be in addition to
other payments, if any, required by other compensation or employee benefit plans
maintained by Federal.

      2.3 (a) In the event that a "change of control" (as  hereinafter  defined)
of Federal  occurs  during the term of this  agreement,  you may at your  option
terminate  this  agreement any time during the one year following such change of
control by giving thirty days prior written  notice of  termination  to Federal.
Upon  such  termination,  Federal  shall  be  obligated  to pay  to you or  your
designated  beneficiary  (if you are  deceased),  immediately in one lump sum an
amount  equal to your  average  annualized  W-2  compensation  for the five most
recent  taxable  years  ending  before  the date on which the  change of control
occurs,  multiplied  by  three  and  then  reduced  by  $1.00.  In the  event of
termination  by you under this  paragraph  2.3,  you shall also be  entitled  to
receive all payments and compensation  under any other  compensation or employee
benefit  plans of Federal.  Furthermore,  to the extent you are not fully vested
under  any such  plan,  amounts  payable  under  any such  other  plan  shall be
supplemented  by Federal to the extent  necessary  so that the  amounts  payable
under such plan are at least equal to the amount you would have received had you
remained  employed  by Federal at the minimum  salary then in effect  until your
65th birthday.

           (b) A  "change  of  control"  shall  mean  (i) the  filing  with  the
Securities  and  Exchange  Commission  by any  person  or  "group"  of a  report
disclosing  beneficial  ownership  by such  person  or group of  shares of stock
entitled  to cast more than 40% of the votes in the  election of  directors,  or
(ii) the  election  of any person or persons as a  director  or  directors  at a
meeting  of  Federal's  stockholders  at which  proxies  solicited  on behalf of
Federal's  Board or  management  were not voted in favor of the election of such
person or  persons,  or (iii) the  occurrence  of any other  event  which  would
require  an  affirmative  response  to Item  6(e) of  Schedule  14A  (the  Proxy
Statement Disclosure Rules) as now in effect, regarding a change of control. The
date of a change of control  specified in clause (iii) shall be the date Federal
is first  advised by its counsel or counsel  specified in the next sentence that
an event of the type  specified in clause (iii) has occurred.  Any dispute as to
whether  an event  specified  in  clause  (iii) of the  preceding  sentence  has
occurred shall be  conclusively  resolved by an opinion of  independent  counsel
selected by the  Chairman of the  Securities  Law  Committee  of the Chicago Bar
Association, which may be requested by you or Federal at any time.

      2.4 In the  event  of  your  death  prior  to the  effective  date  of any
termination of your  employment  pursuant to paragraphs  2.1, 2.2 or 2.3 hereof,
Federal shall be obligated to pay to your  designated  beneficiary,  in not more
than  eighteen  equal  monthly  installments,  an  amount  equal  to one  year's
compensation  at the  minimum  annual  rate in effect  hereunder  at the date of
death.  Installment payments shall commence as soon as practicable following the
date of death and shall not bear interest.

      2.5 In no  event  shall  any  termination  of your  employment  under  any
provision  of  this  agreement  relieve  you  from  complying  fully  with  your
agreements set forth in paragraphs 3.1 and 3.2 hereof.

3.    Non-competition and Trade Secrets Agreements

      3.1  During  the term of your  employment  and for a period of  thirty-six
months  following  termination  of  employment  for  any  reason,  or  following
expiration  of the  term  hereof,  you  agree  that you  will  not  directly  or
indirectly act as an officer,  director,  consultant,  employee or principal for
any entity which is competitive  with Federal.  An entity is deemed  competitive
with Federal if it is engaged in a line of business in which Federal has derived
at least 10% of its  revenues  during  the two  years  prior to  termination  of
employment in the same geographic area in which Federal conducts such business.

      3.2 You further  covenant that at no time  following  such  termination of
employment will you, without prior written consent of Federal, divulge to anyone
any trade secret or confidential  corporation  information concerning Federal or
otherwise use any such information to the detriment of Federal.

      3.3 Paragraph 3.1 shall not prohibit you from  investing in any securities
of any corporation which is competitive with Federal whose securities, or any of
them,  are  listed  on  a  national   securities   exchange  or  traded  in  the
over-the-counter  market if you shall own less than 3% of the outstanding voting
stock of such corporation.

4.    General Provisions

      4.1 In the event you shall inquire, by written notice to Federal,  whether
any proposed action on your part would be considered by Federal to be prohibited
by or in breach of the terms hereof,  Federal shall have  forty-five  days after
the giving of such  notice,  to express  in  writing  to you its  position  with
respect  thereto,  and in the event such writing shall not be given to you, such
proposed  action  (as set  forth  in your  notice  to  Federal)  shall  not be a
violation of or in breach of the terms hereof.

      4.2 The term "designated beneficiary" as used in this agreement shall mean
such person or persons as you  designate  to receive  payments  hereunder in the
latest written notice  received by the Company from you which specifies a person
or persons as a  designated  beneficiary  hereunder  and in the  absence of such
written  notice shall mean your  estate.  Federal may  conclusively  rely on any
written notice specifying or changing a designated beneficiary which it believes
to be authentic.

      4.3  Except as context  otherwise  requires,  reference  herein to Federal
shall  include  its  subsidiaries  and  references  to the Board  shall  include
committees  thereof to the extent that any applicable powers of the Board are or
shall be delegated to any such committees.

      4.4 The terms and conditions  hereof shall constitute the entire agreement
between the parties and shall supersede all prior written or oral understandings
between you and Federal  concerning the subject matter hereof. The agreement may
not be amended or altered  except in writing  signed by the parties and approved
by a  resolution  of the Board.  Neither  party may assign its rights  hereunder
without the written consent of the other.

      4.5 All  notices  required  or  permitted  to be  given  pursuant  to this
agreement shall be given in writing, if to you, then at the address set forth at
the  beginning  hereof or at such other address as you may specify in writing to
Federal;  and,  if to Federal,  then to the  Secretary  of Federal at  Federal's
corporate office.  All notices shall be deemed to have been given when delivered
in person,  or if mailed,  48 hours after  depositing  same in the United States
mail, properly addressed, and postage prepaid.

      4.6 In the event that you or your designated beneficiary shall be required
to commence  litigation to enforce you rights under this  agreement or otherwise
your rights under this agreement shall ever be involved in any  litigation,  the
Company shall indemnify you or your designated beneficiary against all costs and
expenses  (including  attorneys fees)  reasonably  incurred by you in connection
with such litigation  except to the extent that it is determined by the court in
such  litigation that you are not entitled to such  indemnification  because you
breached your obligations hereunder.  The Company shall, prior to the outcome or
settlement  of  such  litigation,  advance  funds  to  you  or  your  designated
beneficiary  as you or your  designated  beneficiary  request for the purpose of
paying your reasonable legal fees and expenses pending the outcome or settlement
of such litigation  provided that, as a condition of such advances,  you or your
designated  beneficiary execute a written undertaking  agreeing to return to the
Company all amounts so advanced  together with 12% per annum interest thereon if
it is determined by the court that you are not entitled to indemnification under
this paragraph 4.6.

                                    Very truly yours,

                                    FEDERAL SIGNAL CORPORATION



                                    By:    /s/   Paul W. Jones

                                          Chairman of the Compensation
                                          and Benefits Committee

Acceptance:

The foregoing terms and
conditions are accepted and
agreed to effective this _____
day of _____________, 2001


/s/ Andrew E. Graves

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>4
<FILENAME>0004.txt
<DESCRIPTION>2000 ANNUAL REPORT TO SHAREHOLDERS
<TEXT>



                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

                            SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                               2000       1999      1998     1997     1996     1995     1994     1993     1992     1991     1990
                               ----       ----      ----     ----     ----     ----     ----     ----     ----     ----     ----
<S>                          <C>        <C>        <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>      <C>
OPERATING RESULTS (DOLLARS
  IN MILLIONS):
  Net sales (a)              $1,106.1   $  977.2   $936.8   $858.6   $814.1   $744.9   $611.1   $506.7   $462.1   $407.9   $368.1
  Income before income
    taxes (a,b)              $   84.4   $   79.3   $ 79.4   $ 81.5   $ 86.6   $ 77.8   $ 66.2   $ 57.6   $ 51.7   $ 47.4   $ 38.5
  Income from continuing
    operations (b)           $   57.7   $   54.4   $ 55.1   $ 56.9   $ 57.8   $ 51.9   $ 44.3   $ 39.0   $ 35.6   $ 32.1   $ 25.6
  Operating margin (a)          10.5%      10.4%    10.4%    11.2%    11.8%    12.1%    12.2%    12.4%    12.3%    12.8%    11.8%
  Return on average common
    shareholders' equity
    (b,c)                       16.2%      17.0%    19.1%    20.6%    23.8%    22.0%    22.3%    21.0%    20.0%    20.0%    20.4%
COMMON STOCK DATA (PER
  SHARE) (d):
  Income from continuing
    operations -- diluted    $   1.27   $   1.18   $ 1.20   $ 1.24   $ 1.26   $ 1.13   $  .96   $  .85   $  .77   $  .70   $  .56
  Cash dividends             $    .76   $    .74   $  .71   $  .67   $  .58   $  .50   $  .42   $  .36   $  .31   $  .27   $  .22
  Market price range:
    High                     $  24.13   $  28.06   $27.50   $26.75   $28.25   $25.88   $21.38   $21.00   $17.63   $15.19   $10.75
    Low                      $  14.75   $  15.06   $20.00   $19.88   $20.88   $19.63   $16.88   $15.75   $12.38   $ 9.25   $ 6.19
  Average common shares
    outstanding (in
    thousands)                 45,521     45,958   45,846   45,840   45,885   45,776   45,948   46,155   46,157   46,126   46,038
FINANCIAL POSITION AT YEAR-END
  (DOLLARS IN MILLIONS):
  Working capital (e)        $   60.0   $   71.6   $116.0   $ 41.6   $ 40.6   $ 48.8   $ 53.9   $ 52.8   $ 49.5   $ 44.9   $ 42.7
  Current ratio (e)               1.2        1.3      1.6      1.2      1.2      1.3      1.4      1.5      1.6      1.5      1.5
  Total assets               $  991.1   $  948.6   $836.0   $727.9   $703.9   $620.0   $521.6   $405.7   $363.7   $341.2   $295.8
  Long-term debt, net of
    current portion          $  125.4   $  134.4   $137.2   $ 32.1   $ 34.3   $ 39.7   $ 34.9   $ 21.1   $ 16.2   $ 15.6   $ 15.8
  Shareholders' equity       $  357.4   $  354.0   $321.8   $299.8   $272.8   $248.1   $220.3   $199.2   $179.0   $164.8   $146.4
  Debt-to-capitalization
    ratio (e)                     45%        42%      37%      30%      28%      29%      22%       1%       2%       1%       2%
OTHER (DOLLARS IN MILLIONS):
  New business (a)           $1,113.7   $1,018.8   $967.9   $888.8   $851.3   $704.9   $631.5   $526.0   $455.0   $405.2   $398.2
  Backlog (a)                $  361.0   $  344.1   $305.0   $254.7   $227.6   $190.0   $204.0   $167.6   $143.4   $146.8   $142.0
  Net cash provided by
    operating activities     $   64.4   $   57.7   $ 75.5   $ 64.2   $ 61.4   $ 62.9   $ 53.8   $ 48.8   $ 40.2   $ 43.9   $ 48.3
  Net cash (used for)
    investing activities     $  (64.8)  $ (105.1)  $(93.0)  $(38.4)  $(54.2)  $(88.1)  $(96.9)  $(38.1)  $(26.9)  $(47.8)  $(14.7)
  Net cash provided by
    (used for) financing
    activities               $    5.2   $   40.9   $ 22.2   $(27.5)  $ (4.1)  $ 29.9   $ 45.1   $(10.3)  $(11.2)  $  2.5   $(34.6)
  Capital expenditures (a)   $   22.3   $   23.4   $ 19.2   $ 18.2   $ 15.2   $ 14.2   $  9.9   $  9.1   $  7.6   $ 10.4   $  6.6
  Depreciation (a)           $   19.5   $   17.1   $ 14.9   $ 13.3   $ 11.8   $ 10.5   $  8.9   $  7.5   $  6.8   $  6.2   $  5.9
  Employees (a)                 6,936      6,750    6,531    6,102    5,721    5,469    4,638    3,847    3,635    3,505    3,356
</TABLE>

- ---------------

(a) continuing operations only; amounts prior to 2000 restated for
    discontinuance of the Sign Group operations
(b) in 1996, includes gain on sale of subsidiary of $4.7 million pre-tax, $2.8
    million after-tax or $.06 per share
(c) in 1995, includes the impact of a nonrecurring charge for a litigation
    settlement related to a discontinued business of $4.2 million after-tax
(d) reflects 3-for-2 stock splits in 1990, 1991 and 1992, and a 4-for-3 stock
    split in 1994
(e) manufacturing operations only

<PAGE>



                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                                ----------------------------
                                                                    2000            1999
                                                                    ----            ----
<S>                                                             <C>             <C>
ASSETS
  Manufacturing activities:
     Current assets
       Cash and cash equivalents                                $ 13,556,000    $  8,764,000
       Accounts receivable, net of allowances for doubtful
          accounts of $2,629,000 and $2,901,000,
          respectively                                           167,964,000     152,956,000
       Inventories--Note B                                       157,619,000     159,970,000
       Prepaid expenses                                            9,797,000       8,895,000
                                                                ------------    ------------
     Total current assets                                        348,936,000     330,585,000
     Properties and equipment--Note C                            112,596,000     111,212,000
     Other assets
       Intangible assets, net of accumulated amortization        274,925,000     273,844,000
       Other deferred charges and assets                          25,873,000      23,592,000
                                                                ------------    ------------
     Total manufacturing assets                                  762,330,000     739,233,000
                                                                ------------    ------------
  Net assets of discontinued operations, including financial
     assets                                                       14,558,000      18,132,000
  Financial services activities--Lease financing and other
     receivables, net of allowances for doubtful accounts of
     $683,000 and $976,000, respectively, and net of
     unearned finance revenue--Note D                            214,230,000     191,261,000
                                                                ------------    ------------
     Total assets                                               $991,118,000    $948,626,000
                                                                ============    ============
LIABILITIES AND SHAREHOLDERS' EQUITY
  Manufacturing activities:
     Current liabilities
       Short-term borrowings--Note E                            $145,813,000    $ 99,204,000
       Accounts payable                                           60,878,000      68,533,000
       Accrued liabilities
          Compensation and withholding taxes                      25,387,000      22,071,000
          Other                                                   48,395,000      60,851,000
       Income taxes--Note F                                        8,447,000       8,340,000
                                                                ------------    ------------
     Total current liabilities                                   288,920,000     258,999,000
     Other liabilities
       Long-term borrowings--Note E                              125,449,000     134,410,000
       Deferred income taxes--Note F                              27,835,000      28,574,000
                                                                ------------    ------------
     Total manufacturing liabilities                             442,204,000     421,983,000
                                                                ------------    ------------
  Financial services activities--Borrowings--Note E              191,483,000     172,610,000
                                                                ------------    ------------
     Total liabilities                                           633,687,000     594,593,000
                                                                ------------    ------------
  Shareholders' equity--Notes I and J
     Common stock, $1 par value, 90,000,000 shares
       authorized, 47,067,000 and 46,889,000 shares issued,
       respectively                                               47,067,000      46,889,000
     Capital in excess of par value                               68,693,000      66,762,000
     Retained earnings--Note E                                   299,985,000     276,951,000
     Treasury stock, 1,763,000 and 775,000 shares,
       respectively, at cost                                     (34,302,000)    (17,023,000)
     Deferred stock awards                                        (1,847,000)     (2,238,000)
     Accumulated other comprehensive income                      (22,165,000)    (17,308,000)
                                                                ------------    ------------
     Total shareholders' equity                                  357,431,000     354,033,000
                                                                ------------    ------------
     Total liabilities and shareholders' equity                 $991,118,000    $948,626,000
                                                                ============    ============
</TABLE>

                See notes to consolidated financial statements.

<PAGE>



                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                          FOR THE YEARS ENDED DECEMBER 31,
                                                 --------------------------------------------------
                                                      2000              1999              1998
                                                      ----              ----              ----
<S>                                              <C>               <C>               <C>
Net sales                                        $1,106,127,000    $  977,209,000    $  936,834,000
Costs and expenses
  Cost of sales                                    (768,783,000)     (676,607,000)     (646,455,000)
  Selling, general and administrative              (220,690,000)     (199,250,000)     (192,507,000)
                                                 --------------    --------------    --------------
Operating income                                    116,654,000       101,352,000        97,872,000
Interest expense                                    (31,401,000)      (23,339,000)      (19,336,000)
Other income (expense), net                            (839,000)        1,296,000           824,000
                                                 --------------    --------------    --------------
Income before income taxes                           84,414,000        79,309,000        79,360,000
Income taxes--Note F                                (26,759,000)      (24,926,000)      (24,225,000)
                                                 --------------    --------------    --------------
Income from continuing operations                    57,655,000        54,383,000        55,135,000
Income from discontinued operations, net of
  taxes                                                 726,000         3,154,000         4,261,000
Cumulative effect of change in accounting              (844,000)
                                                 --------------    --------------    --------------
Net income                                       $   57,537,000    $   57,537,000    $   59,396,000
                                                 ==============    ==============    ==============
Basic net income per share
  Income from continuing operations              $         1.27    $         1.19    $         1.21
  Income from discontinued operations, net of
     taxes                                                  .02               .07               .09
  Cumulative effect of change in accounting                (.02)
                                                 --------------    --------------    --------------
  Net income                                     $         1.27    $         1.26    $         1.30
                                                 ==============    ==============    ==============
Diluted net income per share
  Income from continuing operations              $         1.27    $         1.18    $         1.20
  Income from discontinued operations, net of
     taxes                                                  .02               .07               .09
  Cumulative effect of change in accounting                (.02)
                                                 --------------    --------------    --------------
  Net income*                                    $         1.26    $         1.25    $         1.30
                                                 ==============    ==============    ==============
</TABLE>

- ---------------
* amounts may not add to total due to rounding

                See notes to consolidated financial statements.

<PAGE>



                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<TABLE>
<CAPTION>
                                                            FOR THE YEARS ENDED DECEMBER 31,
                                                        -----------------------------------------
                                                           2000           1999           1998
                                                           ----           ----           ----
<S>                                                     <C>            <C>            <C>
Net income                                              $57,537,000    $57,537,000    $59,396,000
Other comprehensive income (loss)--Foreign currency
  translation adjustment, net                            (4,857,000)    (6,590,000)     2,059,000
                                                        -----------    -----------    -----------
Comprehensive income                                    $52,680,000    $50,947,000    $61,455,000
                                                        ===========    ===========    ===========
</TABLE>

                See notes to consolidated financial statements.

<PAGE>



                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                              FOR THE YEARS ENDED DECEMBER 31,
                                                       -----------------------------------------------
                                                           2000             1999             1998
                                                           ----             ----             ----
<S>                                                    <C>              <C>              <C>
Operating activities
  Net income                                           $  57,537,000    $  57,537,000    $  59,396,000
  Adjustments to reconcile net income to net cash
     provided by operating activities:
     Cumulative effect of change in accounting               844,000
     Depreciation                                         19,482,000       17,057,000       14,938,000
     Amortization                                          9,575,000        8,740,000        7,141,000
     Provision for doubtful accounts                         881,000        2,098,000        1,358,000
     Deferred income taxes                                  (220,000)         983,000        4,961,000
     Other, net                                             (102,000)         365,000          345,000
     Changes in operating assets and liabilities,
       net of effects from acquisitions of
       companies
       Accounts receivable                               (10,012,000)     (10,162,000)      (5,943,000)
       Inventories                                         7,522,000      (29,634,000)     (13,213,000)
       Prepaid expenses                                     (120,000)      (4,020,000)       1,116,000
       Accounts payable                                   (9,567,000)      12,490,000        9,372,000
       Accrued liabilities                               (10,702,000)          46,000       (1,562,000)
       Income taxes                                         (728,000)       2,156,000       (2,416,000)
                                                       -------------    -------------    -------------
          Net cash provided by operating activities       64,390,000       57,656,000       75,493,000
                                                       -------------    -------------    -------------
Investing activities
  Purchases of properties and equipment                  (22,288,000)     (23,404,000)     (19,173,000)
  Principal extensions under lease financing
     agreements                                         (143,850,000)    (131,791,000)    (109,132,000)
  Principal collections under lease financing
     agreements                                          122,412,000      108,004,000      102,342,000
  Payments for purchases of companies, net of cash
     acquired, excludes $15,715,000 of common stock
     issued in 1999                                      (24,401,000)     (57,932,000)     (64,349,000)
  Other, net                                               3,297,000           27,000       (2,717,000)
                                                       -------------    -------------    -------------
          Net cash used for investing activities         (64,830,000)    (105,096,000)     (93,029,000)
                                                       -------------    -------------    -------------
Financing activities
  Addition to short-term borrowings, net                  61,482,000       78,768,000       58,184,000
  Increase (reduction) in long-term borrowings            (4,961,000)      (2,883,000)       4,902,000
  Purchases of treasury stock                            (17,279,000)      (3,592,000)      (9,842,000)
  Cash dividends paid to shareholders                    (34,534,000)     (33,574,000)     (32,145,000)
  Other, net                                                 524,000        2,169,000        1,067,000
                                                       -------------    -------------    -------------
          Net cash provided by financing activities        5,232,000       40,888,000       22,166,000
                                                       -------------    -------------    -------------
Increase (decrease) in cash and cash equivalents           4,792,000       (6,552,000)       4,630,000
Cash and cash equivalents at beginning of year             8,764,000       15,316,000       10,686,000
                                                       -------------    -------------    -------------
Cash and cash equivalents at end of year               $  13,556,000    $   8,764,000    $  15,316,000
                                                       =============    =============    =============
</TABLE>

                See notes to consolidated financial statements.

<PAGE>



                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A--SIGNIFICANT ACCOUNTING POLICIES

     PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include
the accounts of Federal Signal Corporation and all of its subsidiaries. All
significant intercompany balances and transactions have been eliminated.

     CASH EQUIVALENTS: The company considers all highly liquid investments with
a maturity of three-months or less, when purchased, to be cash equivalents.

     INVENTORIES: Inventories are stated at the lower of cost or market. At
December 31, 2000 and 1999, approximately 52% and 55%, respectively, of the
company's inventories are costed using the LIFO (last-in, first-out) method. The
remaining portion of the company's inventories is costed using the FIFO
(first-in, first-out) method.

     PROPERTIES AND DEPRECIATION: Properties and equipment are stated at cost.
Depreciation, for financial reporting purposes, is computed principally on the
straight-line method over the estimated useful lives of the assets.

     INTANGIBLE ASSETS: Intangible assets principally consist of costs in excess
of fair values of net assets acquired in purchase transactions and are generally
being amortized over forty years. Accumulated amortization aggregated
$41,876,000 and $34,184,000 at December 31, 2000 and 1999, respectively. The
company makes regular periodic assessments to determine if factors are present
which indicate that an impairment of intangibles may exist. If factors indicate
that an impairment may exist, the company makes an estimate of the related
future cash flows. The undiscounted cash flows, excluding interest, are compared
to the related book value including the intangibles. If such cash flows are less
than the book value, the company makes an estimate of the fair value of the
related business to determine the amount of impairment loss, if any, to be
recorded as a reduction of the recorded intangibles.

     USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

     FINANCIAL INSTRUMENTS: The company enters into agreements (derivative
financial instruments) to manage the risks associated with interest rates and
foreign exchange rates. The company does not actively trade such instruments nor
enter into such agreements for speculative purposes. The company principally
utilizes two types of derivative financial instruments: 1) interest rate swaps
to manage its interest rate risk, and 2) foreign currency forward exchange
contracts to manage risks associated with sales and purchase commitments
denominated in foreign currencies. The differential between the interest to be
received and the interest to be paid under interest rate swap agreements is
accrued as interest rates change and is recognized as an adjustment to interest
expense; the related amount payable to or receivable from the counterparties is
included in accrued liabilities or other assets. Unrealized gains and losses on
the forward exchange contracts are deferred and recognized in income in the same
period as the related hedged foreign currency transaction.

     REVENUE RECOGNITION: Effective January 1, 2000, the company changed its
method of accounting for recognizing revenues as required by Staff Accounting
Bulletin No. 101 issued by the Securities and Exchange Commission. Effective
with the change, the company recognizes revenues for product sales based upon
the respective terms of delivery for each sale agreement. In years prior to
2000, the company recognized substantially all of its revenues for product sales
as products were shipped, as this method was then in compliance with generally
accepted accounting principles. See Note P.

     INCOME PER SHARE: Basic net income per share is calculated using income
available to common shareholders (net income) divided by the weighted average
number of common shares outstanding during the year. Diluted net income per
share is calculated in the same manner except that the denominator is increased
to include the weighted number of additional shares that would have been
outstanding had dilutive stock option shares been actually issued. The company
uses the treasury stock method to calculate dilutive shares. See Note N for the
calculation of basic and diluted net income per share.

<PAGE>


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE B--INVENTORIES

     Inventories at December 31 are summarized as follows:

<TABLE>
<CAPTION>
                                                                2000            1999
                                                                ----            ----
    <S>                                                     <C>             <C>
      Finished goods                                        $ 45,636,000    $ 40,590,000
      Work in process                                         45,127,000      60,893,000
      Raw materials                                           66,856,000      58,487,000
                                                            ------------    ------------
      Total inventories                                     $157,619,000    $159,970,000
                                                            ============    ============
</TABLE>

     If the first-in, first-out cost method, which approximates replacement
cost, had been used exclusively by the company, inventories would have
aggregated $166,956,000 and $169,404,000 at December 31, 2000 and 1999,
respectively.

NOTE C--PROPERTIES AND EQUIPMENT

     A comparative summary of properties and equipment at December 31 is as
follows:

<TABLE>
<CAPTION>
                                                                2000            1999
                                                                ----            ----
    <S>                                                     <C>             <C>
      Land                                                  $  5,291,000    $  5,717,000
      Buildings and improvements                              51,755,000      50,365,000
      Machinery and equipment                                184,990,000     169,110,000
      Accumulated depreciation                              (129,440,000)   (113,980,000)
                                                            ------------    ------------
      Total properties and equipment                        $112,596,000    $111,212,000
                                                            ============    ============
</TABLE>

NOTE D--LEASE FINANCING AND OTHER RECEIVABLES

     As an added service to its customers, the company is engaged in financial
services activities. These activities primarily consist of providing long-term
financing for certain U.S. customers purchasing vehicle-based products from the
company's Environmental Products and Fire Rescue groups. A substantial portion
of these receivables is due from municipalities. Financing is provided through
sales-type lease contracts with terms that range typically two to ten years.

     At the inception of the lease, the company records the product sales price
and related costs and expenses of the sale. Financing revenues are included in
income over the life of the lease. The amounts recorded as lease financing
receivables represent amounts equivalent to normal selling prices less
subsequent customer payments.

     Lease financing and other receivables will become due as follows:
$67,180,000 in 2001, $39,711,000 in 2002, $30,732,000 in 2003, $23,336,000 in
2004, $16,722,000 in 2005 and $37,232,000 thereafter. At December 31, 2000 and
1999, unearned finance revenue on these leases aggregated $34,354,000 and
$31,290,000, respectively.

NOTE E--DEBT

     Short-term borrowings at December 31 consisted of the following:

<TABLE>
<CAPTION>
                                                                2000            1999
                                                                ----            ----
    <S>                                                     <C>             <C>
      Commercial paper                                      $299,073,000    $210,602,000
      Notes payable                                           32,027,000      57,278,000
      Current maturities of long-term debt                     6,196,000       3,934,000
                                                            ------------    ------------
      Total short-term borrowings                           $337,296,000    $271,814,000
                                                            ============    ============
</TABLE>

     Of the above amounts, $191,483,000 and $172,610,000 are classified as
financial services activities borrowings at December 31, 2000 and 1999,
respectively.

<PAGE>


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     Long-term borrowings at December 31 consisted of the following:

<TABLE>
<CAPTION>
                                                                2000            1999
                                                                ----            ----
    <S>                                                     <C>             <C>
    6.79% unsecured note payable in annual installments
      of $10,000,000 in 2007-2011                           $ 50,000,000    $ 50,000,000
    7.59% unsecured note payable in 2001 ($4,000,000)
      and 2002 ($8,000,000)                                   12,000,000      12,000,000
    7.99% unsecured note payable in 2004                      15,000,000      15,000,000
    Floating rate (5.79% at December 31, 2000) secured
      note payable in monthly installments ending in
      2004                                                     2,889,000       6,907,000
    Notes payable backed by long-term credit lines (7.6%
      at December 31, 2000)                                   50,000,000      50,000,000
    Other                                                      1,756,000       4,437,000
                                                            ------------    ------------
                                                             131,645,000     138,344,000
    Less current maturities                                    6,196,000       3,934,000
                                                            ------------    ------------
    Total long-term borrowings                              $125,449,000    $134,410,000
                                                            ============    ============
</TABLE>

     Aggregate maturities of long-term debt amount to approximately $6,196,000
in 2001, $9,525,000 in 2002, $924,000 in 2003, $65,000,000 in 2004 and
$50,000,000 thereafter. The fair values of borrowings are not substantially
different from recorded amounts.

     The 7.59% and 7.99% notes contain various restrictions relating to
maintenance of minimum working capital, payments of cash dividends, purchases of
the company's stock, and principal and interest of any subordinated debt. At
December 31, 2000, all of the company's retained earnings were free of any
restrictions and the company was in compliance with the financial covenants of
its debt agreements.

     The company paid interest of $31,780,000 in 2000, $24,888,000 in 1999 and
$18,600,000 in 1998. Weighted average interest rates on short-term borrowings
were 7.6% and 6.2% at December 31, 2000 and 1999, respectively. See Note H
regarding the company's utilization of derivative financial instruments relating
to outstanding debt.

     At December 31, 2000, the company had unused credit lines of $375,000,000,
of which $241,000,000 expires June 14, 2001 and $134,000,000 expires June 17,
2004. Commitment fees, paid in lieu of compensating balances, were
insignificant.

NOTE F--INCOME TAXES

     The provisions for income taxes consisted of the following:

<TABLE>
<CAPTION>
                                                   2000           1999           1998
                                                   ----           ----           ----
    <S>                                         <C>            <C>            <C>
    CURRENT:
      Federal                                   $19,119,000    $17,942,000    $14,150,000
      Foreign                                     5,036,000      3,759,000      2,486,000
      State and local                             2,824,000      2,242,000      2,628,000
                                                -----------    -----------    -----------
                                                 26,979,000     23,943,000     19,264,000
    DEFERRED:
      Federal                                       426,000        291,000      3,222,000
      Foreign                                      (424,000)       347,000      1,619,000
      State and local                              (222,000)       345,000        120,000
                                                -----------    -----------    -----------
                                                   (220,000)       983,000      4,961,000
                                                -----------    -----------    -----------
    Total income taxes                          $26,759,000    $24,926,000    $24,225,000
                                                ===========    ===========    ===========
</TABLE>

<PAGE>


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     Differences between the statutory federal income tax rate and the effective
income tax rate are summarized below:

<TABLE>
<CAPTION>
                                                                2000      1999      1998
                                                                ----      ----      ----
    <S>                                                         <C>       <C>       <C>
    Statutory federal income tax rate                           35.0%     35.0%     35.0%
    State income taxes, net of federal tax benefit               2.0       2.1       2.2
    Tax-exempt interest                                         (3.3)     (3.2)     (3.2)
    Other, net                                                  (2.0)     (2.5)     (3.5)
                                                                ----      ----      ----
    Effective income tax rate                                   31.7%     31.4%     30.5%
                                                                ====      ====      ====
</TABLE>

     The company had net current deferred income tax benefits of $2,877,000 and
$3,396,000 recorded in the balance sheet at December 31, 2000 and 1999,
respectively. The company paid income taxes of $24,481,000 in 2000, $21,933,000
in 1999 and $24,419,000 in 1998.

     Net deferred tax liabilities (assets) comprised the following at December
31, 2000: Depreciation and amortization--$32,748,000; revenue recognized on
custom manufacturing contracts--$3,406,000; accrued pension
benefits--$6,002,000; accrued expenses deductible in future
periods--$(14,135,000); and other--$(3,063,000).

     Net deferred tax liabilities (assets) comprised the following at December
31, 1999: Depreciation and amortization--$28,909,000; revenue recognized on
custom manufacturing contracts--$2,484,000; accrued pension
benefits--$5,030,000; accrued expenses deductible in future
periods--$(10,319,000); and other--$(926,000).

     Income before taxes consisted of the following:

<TABLE>
<CAPTION>
                                                   2000           1999           1998
                                                   ----           ----           ----
    <S>                                         <C>            <C>            <C>
    United States                               $71,734,000    $65,753,000    $66,886,000
    Non-U.S.                                     12,680,000     13,556,000     12,474,000
                                                -----------    -----------    -----------
                                                $84,414,000    $79,309,000    $79,360,000
                                                ===========    ===========    ===========
</TABLE>

NOTE G--POSTRETIREMENT BENEFITS

     The company and its subsidiaries sponsor a number of defined benefit
retirement plans covering certain of its salaried employees and hourly employees
not covered by plans under collective bargaining agreements. Benefits under
these plans are primarily based on final average compensation and years of
service as defined within the provisions of the individual plans. The company
also participates in several multiemployer retirement plans that provide defined
benefits to employees under certain collective bargaining agreements.

U.S. BENEFIT PLANS

     The components of net periodic pension (credit) are summarized as follows:

<TABLE>
<CAPTION>
                                                   2000           1999           1998
                                                   ----           ----           ----
    <S>                                         <C>            <C>            <C>
    Company-sponsored plans
      Service cost                              $ 2,251,000    $ 3,036,000    $ 2,546,000
      Interest cost                               4,537,000      4,313,000      3,947,000
      Expected return on plan assets             (8,961,000)    (8,165,000)    (7,225,000)
      Amortization of transition amount            (230,000)      (230,000)      (183,000)
      Other                                        (228,000)        (8,000)        (8,000)
                                                -----------    -----------    -----------
                                                 (2,631,000)    (1,054,000)      (923,000)
    Multiemployer plans                             636,000        690,000        661,000
                                                -----------    -----------    -----------
    Net periodic pension (credit)               $(1,995,000)   $  (364,000)   $  (262,000)
                                                ===========    ===========    ===========
</TABLE>

<PAGE>


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     The following summarizes the changes in the projected benefit obligation
and plan assets, the funded status of the company-sponsored plans and the major
assumptions used to determine these amounts.

<TABLE>
<CAPTION>
                                                                2000            1999
                                                                ----            ----
    <S>                                                      <C>            <C>
    Projected benefit obligation, January 1                  $52,024,000    $ 62,079,000
    Service cost                                               2,251,000       3,036,000
    Interest cost                                              4,537,000       4,313,000
    Actuarial (gain)loss                                       6,369,000     (15,411,000)
    Benefits paid                                             (3,686,000)     (1,993,000)
    Curtailment credit                                          (839,000)
                                                             -----------    ------------
    Projected benefit obligation, December 31                $60,656,000    $ 52,024,000
                                                             ===========    ============
    Fair value of plan assets, January 1                     $69,008,000    $ 72,903,000
    Adjustment to prior year actual return                     1,805,000
    Actual return on plan assets                                 951,000      (1,917,000)
    Company contribution                                                           3,000
    Benefits paid                                             (3,686,000)     (1,981,000)
                                                             -----------    ------------
    Fair value of plan assets, December 31                   $68,078,000    $ 69,008,000
                                                             ===========    ============
    Funded status of plan, December 31                       $ 7,422,000    $ 16,984,000
    Unrecognized actuarial (gain)loss                          3,708,000      (9,080,000)
    Unrecognized prior service cost                              (96,000)       (110,000)
    Unrecognized net transition obligation                    (1,078,000)     (1,308,000)
                                                             -----------    ------------
    Net amount recognized as prepaid benefit cost in the
      balance sheet                                          $ 9,956,000    $  6,486,000
                                                             ===========    ============
</TABLE>

     Plan assets consist principally of a broadly diversified portfolio of
equity securities and corporate and U.S. government obligations. Included in
plan assets at December 31, 2000 and 1999 were 653,400 shares of the company's
common stock valued at $12,823,000 and $10,495,000, respectively. Dividends paid
on the company's common stock to the pension trusts aggregated $497,000 and
$484,000, respectively, for the years ended December 31, 2000 and 1999. The
company curtailed the pension benefits of employees of a discontinued business
in 2000; the resulting credit of $839,000 was reported as a component of income
from discontinued operations.

     The following significant assumptions were used in determining pension
costs for the three-year period ended December 31, 2000:

<TABLE>
<CAPTION>
                                                                  2000    1999    1998
                                                                  ----    ----    ----
    <S>                                                           <C>     <C>     <C>
    Discount rate                                                 8.1%    6.8%    7.2%
    Rate of increase in compensation levels                         4%      4%      4%
    Expected long-term rate of return on plan assets               12%     12%     12%
</TABLE>

     The weighted average discount rates used in determining the actuarial
present value of all pension obligations at December 31, 2000 and 1999 were 7.7%
and 8.1%, respectively.

     The company also sponsors a number of defined contribution pension plans
covering a majority of its employees. Participation in the plans is at each
employee's election. Company contributions to these plans are based on a
percentage of employee contributions. The cost of these plans, including the
plans of companies acquired during the three-year period ended December 31,
2000, was $4,886,000 in 2000, $3,993,000 in 1999, and $3,790,000 in 1998.

     The company also provides certain medical, dental and life benefits to
certain eligible retired employees. These benefits are funded when the claims
are incurred. Participants generally become eligible for these benefits at age
60 after completing at least fifteen years of service. The plan provides for the
payment of specified percentages of medical and dental expenses reduced by any
deductible and payments made by other primary group coverage and government
programs. The company will continue to reduce the percentage of the cost of
benefits that it will pay since the company's future costs are limited to 150%
of the 1992 cost. Accumulated

<PAGE>


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

postretirement benefit liabilities of $3,890,000 and $3,522,000 at December 31,
2000 and 1999, respectively, were fully accrued. The net periodic postretirement
benefit costs have not been significant during the three-year period ended
December 31, 2000.

NON-U.S. BENEFIT PLAN

     A wholly-owned subsidiary sponsors a defined benefit plan for substantially
all of its employees in the United Kingdom. Benefits under this plan are based
on final compensation and years of service as defined within the provisions of
the plan.

     Net periodic pension credits during the three-year period ended December
31, 2000 were not significant. The following summarizes the changes in the
projected benefit obligation and plan assets, the funded status of the
company-sponsored plans and the major assumptions used to determine these
amounts.

<TABLE>
<CAPTION>
                                                                 2000           1999
                                                                 ----           ----
    <S>                                                       <C>            <C>
    Projected benefit obligation, October 1                   $37,068,000    $40,520,000
    Service cost                                                  542,000        696,000
    Interest cost                                               2,240,000      2,308,000
    Actuarial (gain)loss                                         (630,000)    (3,430,000)
    Employee contributions                                        102,000        112,000
    Benefits paid                                              (1,766,000)    (1,884,000)
    Increase (decrease) due to translation                     (3,907,000)    (1,254,000)
                                                              -----------    -----------
    Projected benefit obligation, September 30                $33,649,000    $37,068,000
                                                              ===========    ===========
    Fair value of plan assets, October 1                      $39,540,000    $39,222,000
    Actual return on plan assets                                4,372,000      3,276,000
    Company contribution                                          397,000        164,000
    Employee contribution                                         102,000        112,000
    Benefits paid                                              (1,766,000)    (1,884,000)
    Plan expenses                                                (135,000)      (124,000)
    Increase (decrease) due to translation                     (4,317,000)    (1,226,000)
                                                              -----------    -----------
    Fair value of plan assets, September 30                   $38,193,000    $39,540,000
                                                              ===========    ===========
    Funded status of plan, September 30                       $ 4,544,000    $ 2,472,000
    Unrecognized actuarial loss                                   749,000      2,794,000
                                                              -----------    -----------
    Net amount recognized as prepaid benefit cost in the
      balance sheet                                           $ 5,293,000    $ 5,266,000
                                                              ===========    ===========
</TABLE>

     Plan assets consist principally of a broadly diversified portfolio of
equity securities, U.K. government obligations and fixed interest securities.
The following significant assumptions were used in determining pension costs for
the three-year period ended December 31, 2000:

<TABLE>
<CAPTION>
                                                                  2000    1999    1998
                                                                  ----    ----    ----
    <S>                                                           <C>     <C>     <C>
    Discount rate                                                 6.5%      6%    7.5%
    Rate of increase in compensation levels                         3%    3.5%      4%
    Expected long-term rate of return on plan assets              8.5%      8%      8%
</TABLE>

     The weighted average discount rate used in determining the actuarial
present value of all pension obligations at September 30, 2000 and 1999 was
6.5%.

NOTE H--DERIVATIVE FINANCIAL INSTRUMENTS

     At December 31, 2000, the company had one agreement with a financial
institution to swap interest rates. This agreement is based on a notional amount
of $25,000,000. The company pays interest at a fixed rate of 5.13% and receives
interest at the three-month LIBOR rate. The swap expires in February 2008. The
agreement allows the counterparty to cancel the swap at three-month intervals
commencing in February 2001. If at any three-

<PAGE>


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

month extension date the counterparty decides not to extend the swap, it is
terminated and no further obligations are due by either party.

     At December 31, 1999, the company had similar swap agreements on notional
amounts totaling $150 million. The estimated cost (benefit) to terminate these
agreements was $169,000 and ($599,000) at December 31, 2000 and 1999,
respectively. Except for the agreement described above, these swap agreements
expired or were terminated in 2000 resulting in insignificant gains or losses.

     In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" as later amended,
the adoption of which will be required by no later than January 1, 2001. This
statement standardizes the accounting treatment for derivative instruments. The
company has determined that this statement will have an insignificant effect on
its reported results of operations; the company is required to adopt the
provisions of this statement on January 1, 2001.

NOTE I --STOCK-BASED COMPENSATION

     The company's stock benefit plans, approved by the company's shareholders,
authorize the grant of benefit shares or units to key employees and directors.
The plan approved in 1988 authorized, until May 1998, the grant of up to
2,737,500 benefit shares or units (as adjusted for subsequent stock splits and
dividends). The plan approved in 1996 and amended in 1999 authorizes the grant
of up to 2,500,000 benefit shares or units until April 2006. These share or unit
amounts exclude amounts that were issued under predecessor plans. Benefit shares
or units include stock options, both incentive and non-incentive, stock awards
and other stock units.

     Stock options are primarily granted at the fair market value of the shares
on the date of grant and become exercisable one year after grant at a rate of
one-half annually and are exercisable in full on the second anniversary date.
All options and rights must be exercised within ten years from date of grant. At
the company's discretion, vested stock option holders are permitted to elect an
alternative settlement method in lieu of purchasing common stock at the option
price. The alternative settlement method permits the employee to receive,
without payment to the company, cash, shares of common stock or a combination
thereof equal to the excess of market value of common stock over the option
purchase price.

     The company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB 25). Under APB 25, no
compensation expense is recognized when the exercise price of stock options
equals the market price of the underlying stock on the date of grant.

     Stock option activity for the three-year period ended December 31, 2000
follows (number of shares in 000's, prices in dollars per share):

<TABLE>
<CAPTION>
                                                OPTION SHARES       WEIGHTED AVERAGE PRICE ($)
                                            ---------------------   ---------------------------
                                            2000    1999    1998     2000      1999      1998
                                            ----    ----    ----     ----      ----      ----
    <S>                                     <C>     <C>     <C>     <C>       <C>       <C>
    Outstanding at beginning of year        2,312   2,025   2,036    19.29     18.80     17.98
    Granted                                    63     489     180    18.65     18.57     23.56
    Canceled or expired                       (36)    (35)    (59)   21.74     21.99     22.43
    Exercised                                (161)   (167)   (132)   11.05     10.65     11.77
                                            -----   -----   -----
    Outstanding at end of year              2,178   2,312   2,025    19.84     19.29     18.80
                                            =====   =====   =====
    Exercisable at end of year              1,588   1,468   1,523    19.95     18.71     18.00
                                            =====   =====   =====
</TABLE>

<PAGE>


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     For options outstanding at December 31, 2000, the number (in thousands),
weighted average exercise prices in dollars per share, and weighted average
remaining terms were as follows:

<TABLE>
<CAPTION>
                                                PERIOD IN WHICH OPTIONS WERE GRANTED
                                          -------------------------------------------------
                                          00-99   98-97   96-95   94-93   92-91   AGGREGATE
                                          -----   -----   -----   -----   -----   ---------
    <S>                                   <C>     <C>     <C>     <C>     <C>     <C>
    Number outstanding                      513     549     442     305     369       2,178
    Exercise price range ($):
      High                                26.13   25.38   24.75   20.62   15.87       26.13
      Low                                 14.94   20.06   20.12   16.00   11.17       11.17
    Weighted average:
      Exercise price ($)                  18.53   21.71   23.98   19.81   13.93       19.84
      Remaining term (years)                  9       7       5       3       1           6
</TABLE>

     The weighted average fair value of options granted was $4.86 per share
during 2000, $3.58 per share during 1999 and $5.24 per share during 1998. The
fair value of options was estimated at the grant date using a Black-Scholes
option pricing model with the following weighted average assumptions; risk free
interest rates of 5.0% in 2000, 6.4% in 1999 and 4.6% in 1998; dividend yield of
3.9% in 2000, 4.8% in 1999 and 2.5% in 1998; market volatility of the company's
common stock of .27 in 2000, .23 in 1999 and .20 in 1998; and a weighted average
expected life of the options of approximately 8 years for 2000 and 7 years for
1999 and 1998. For purposes of pro forma disclosure, the estimated fair value of
the options is amortized to expense over the option's vesting period. On a pro
forma basis, the company's net income would have been $56,800,000 or $1.25 per
share for the year ended December 31, 2000, $56,523,000 or $1.23 per share for
the year ended December 31, 1999 and $58,202,000 or $1.27 per share for the year
ended December 31, 1998. The calculated pro forma impact on 1998-2000 net income
and net income per share amounts are not necessarily indicative of future
amounts until application of the disclosure rules are applied to all
outstanding, nonvested awards.

     The intent of the Black-Scholes option valuation model is to provide
estimates of fair values of traded options that have no vesting restrictions and
are fully transferable. Option valuation models require the use of highly
subjective assumptions including expected stock price volatility. The company
has utilized the Black-Scholes method to produce the pro forma disclosures
required under Statement of Financial Accounting Standards No. 123, "Accounting
and Disclosure of Stock-Based Compensation". In management's opinion, existing
valuation models do not necessarily provide a reliable single measure of the
fair value of its employee stock options because the company's employee stock
options have significantly different characteristics from those of traded
options and the assumptions used in applying option valuation methodologies,
including the Black-Scholes model, are highly subjective.

     Stock award shares are granted to employees at no cost. Awards primarily
vest at the rate of 25% annually commencing one year from the date of award,
provided the recipient is still employed by the company on the vesting date. The
cost of stock awards, based on the fair market value at the date of grant, is
being charged to expense over the four-year vesting period. The company granted
stock award shares of 69,500 in 2000, 65,000 in 1999 and 58,000 in 1998. The
fair values of these shares were $1,108,000, $1,712,000 and $1,289,000,
respectively. Compensation expense related to stock award shares recorded during
these periods was $1,499,000, $1,308,000 and $1,173,000, respectively.

     Under the 1988 plan, no benefit shares or units were available for future
grant during the three-year period ending December 31, 2000. Under the 1996
plan, the following benefit shares or units were available for future grant:
937,000 at December 31, 2000, 1,040,000 at December 31, 1999 and 69,000 at
December 31, 1998.

<PAGE>


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE J--SHAREHOLDERS' EQUITY

     The company has 90,000,000 authorized shares of common stock, $1 par value
and 800,000 authorized and unissued shares of preference stock, $1 par value.

     The changes in shareholders' equity for each of the three years in the
period ended December 31, 2000 were as follows:

<TABLE>
<CAPTION>
                                                                                                                     ACCUMULATED
                                              COMMON      CAPITAL IN                                   DEFERRED         OTHER
                                               STOCK       EXCESS OF      RETAINED       TREASURY        STOCK      COMPREHENSIVE
                                             PAR VALUE     PAR VALUE      EARNINGS        STOCK         AWARDS         INCOME
                                             ---------    ----------      --------       --------      --------     -------------
<S>                                         <C>           <C>           <C>            <C>            <C>           <C>
Balance at December 31, 1997--
  46,501,000 shares issued                  $46,501,000   $61,029,000   $226,432,000   $(19,695,000)  $(1,718,000)  $(12,777,000)
Net income                                                                59,396,000
Cash dividends declared                                                  (32,462,000)
Exercise of stock options:
  Cash proceeds                                 100,000     1,292,000
  Exchange of shares                             31,000       129,000                      (160,000)
Stock awards granted                             58,000     1,231,000                                  (1,289,000)
Tax benefits related to stock compensation
  plans                                                       265,000
Retirement of treasury stock                    (22,000)     (482,000)                      504,000
Purchases of 444,000 shares of treasury
  stock                                                                                  (9,466,000)
Amortization of deferred stock awards                                                                   1,173,000
Foreign currency translation adjustment,
  net                                                                                                                  2,059,000
Other                                                          (3,000)                     (344,000)
                                            -----------   -----------   ------------   ------------   -----------   ------------
Balance at December 31, 1998--
  46,668,000 shares issued                   46,668,000    63,461,000    253,366,000    (29,161,000)   (1,834,000)   (10,718,000)
Net income                                                                57,537,000
Cash dividends declared                                                  (33,952,000)
Exercise of stock options:
  Cash proceeds                                 147,000     1,472,000
  Exchange of shares                             21,000        99,000                      (120,000)
Stock awards granted                             65,000     1,647,000                                  (1,712,000)
Tax benefits related to stock compensation
  plans                                                       363,000
Retirement of treasury stock                    (12,000)     (280,000)                      292,000
Purchases of 141,000 shares of treasury
  stock                                                                                  (3,582,000)
Issued 706,000 shares from treasury for
  purchases of companies                                                                 15,715,000
Amortization of deferred stock awards                                                                   1,308,000
Foreign currency translation adjustment,
  net                                                                                                                 (6,590,000)
Other                                                                                      (167,000)
                                            -----------   -----------   ------------   ------------   -----------   ------------
Balance at December 31, 1999--
  46,889,000 shares issued                   46,889,000    66,762,000    276,951,000    (17,023,000)   (2,238,000)   (17,308,000)
Net income                                                                57,537,000
Cash dividends declared                                                  (34,503,000)
Exercise of stock options:
  Cash proceeds                                  82,000       961,000
  Exchange of shares                             79,000       697,000                      (776,000)
Stock awards granted                             69,000     1,039,000                                  (1,108,000)
Tax benefits related to stock compensation
  plans                                                       302,000
Retirement of treasury stock                    (52,000)   (1,068,000)                    1,120,000
Purchases of 988,000 shares of treasury
  stock                                                                                 (17,279,000)
Amortization of deferred stock awards                                                                   1,499,000
Foreign currency translation adjustment,
  net                                                                                                                 (4,857,000)
Other                                                                                      (344,000)
                                            -----------   -----------   ------------   ------------   -----------   ------------
Balance at December 31, 2000--
  47,067,000 shares issued                  $47,067,000   $68,693,000   $299,985,000   $(34,302,000)  $(1,847,000)  $(22,165,000)
                                            ===========   ===========   ============   ============   ===========   ============
</TABLE>

     In July 1998, the company declared a dividend distribution of one preferred
share purchase right on each share of common stock outstanding on and after
August 18, 1998. This plan replaces a similar plan approved in 1988. The rights
are not exercisable until the rights distribution date, defined as the earlier
of: 1) the tenth day following a public announcement that a person or group of
affiliated or associated persons acquired or obtained

<PAGE>


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

the right to acquire beneficial ownership of 20% or more of the outstanding
common stock or 2) the tenth day following the commencement or announcement of
an intention to make a tender offer or exchange offer, the consummation of which
would result in the beneficial ownership by a person or group of 30% or more of
such outstanding common shares. Each right, when exercisable, entitles the
holder to purchase from the company one one-hundredth of a share of Series A
Preferred stock of the company at a price of $100 per one one-hundredth of a
preferred share, subject to adjustment. The company is entitled to redeem the
rights at $.10 per right, payable in cash or common shares, at any time prior to
the expiration of twenty days following the public announcement that a 20%
position has been acquired. In the event that the company is acquired in a
merger or other business combination transaction or 50% or more of its
consolidated assets or earning power is sold, proper provision will be made so
that each holder of a right will thereafter have the right to receive, upon the
exercise thereof at the then current exercise price of a right, that number of
shares of common stock of the acquiring company which at the time of such
transaction would have a market value of two times the exercise price of the
right. The rights expire on August 18, 2008 unless earlier redeemed by the
company. Until exercised, the holder of a right, as such, will have no rights as
a shareholder, including, without limitation, the right to vote or to receive
dividends.

NOTE K--ACQUISITIONS

     During the three-year period ended December 31, 2000, the company made the
following acquisitions, principally all for cash, except as otherwise noted. In
March 2000, the company acquired P.C.S. Company. Located near Detroit, Michigan,
P.C.S. offers a comprehensive line of tooling components for the plastic
injection mold and the die cast industries. The company also made a small
Environmental Products Group acquisition during the first quarter of 2000. As a
result of the 2000 acquisitions, the company recorded approximately $9.9 million
of working capital, $3.8 million of fixed and other assets and $10.7 million of
costs in excess of fair value. The assigned values of these acquisitions are
based upon preliminary estimates. In July 1999, the company acquired Clapp &
Haney Tool Company for cash and stock. Located near Toledo, Ohio, Clapp & Haney
is the leading U.S. manufacturer and marketer of polycrystalline diamond and
cubic boron nitride consumable tooling. The company also made a small Safety
Products Group acquisition during the early part of 1999. As a result of the
1999 acquisitions, the company recorded approximately $4.9 million of working
capital, $12.2 million of fixed and other assets and $56.1 million of costs in
excess of fair value. In January 1998, the company acquired Saulsbury Fire
Equipment Corporation and Five Star Manufacturing Company. In August 1998, the
company acquired Jetstream of Houston. Saulsbury, located in Tully, New York, is
the leading manufacturer of stainless steel-bodied fire trucks and rescue
vehicles in the United States. Five Star, based in Youngsville, North Carolina,
manufactures mechanical and recirculating air street sweepers. Located in
Houston, Texas, Jetstream is a leading manufacturer of high-pressure
waterblasting equipment. The company also made several small Safety Products
Group acquisitions during the last half of 1998. As a result of the 1998
acquisitions, the company recorded approximately $10.5 million of working
capital, $8.0 million of fixed and other assets and $47.9 million of costs in
excess of fair value.

     All of the acquisitions in the three-year period ended December 31, 2000
have been accounted for as purchases. Accordingly, the results of operations of
the acquired companies have been included in the consolidated statements of
income from the effective dates of the acquisitions. Assuming the 2000 and 1999
acquisitions occurred January 1, 1999, the company estimates that reported
consolidated net sales would have changed less than 1% in 2000 and increased by
4% in 1999, while reported net income would have changed less than 1% in 2000
and increased by 4% in 1999. The company made no significant changes to the
values originally assigned to assets and liabilities recorded as a result of
acquisitions made prior to 2000.

NOTE L--LEGAL PROCEEDINGS

     The company is subject to various claims, other pending and possible legal
actions for product liability and other damages and other matters arising out of
the conduct of the company's business. The company believes, based on current
knowledge and after consultation with counsel, that the outcome of such claims
and actions will not have a material adverse effect on the company's
consolidated financial position or the results of operations.

NOTE M--SEGMENT AND RELATED INFORMATION

     The company has four continuing operating segments as defined under
Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and Related Information". Business units are


<PAGE>


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

organized under each segment because they share certain characteristics, such as
technology, marketing, and product application, which create long-term
synergies. The principal activities of the company's operating segments are as
follows:

     ENVIRONMENTAL PRODUCTS--Environmental Products manufactures a variety of
self-propelled street cleaning vehicles, vacuum loader vehicles, municipal catch
basin/sewer cleaning vacuum trucks and waterblasting equipment. Environmental
Products sells primarily to municipal customers, contractors and government
customers.

     FIRE RESCUE--Fire Rescue manufactures chassis; fire trucks, including Class
A pumpers, mini-pumpers and tankers; airport and other rescue vehicles, aerial
access platforms and aerial ladder trucks. This group sells primarily to
municipal customers, volunteer fire departments and government customers.

     SAFETY PRODUCTS--Safety Products produces a variety of visual and audible
warning and signal devices; paging, local signaling, and building security,
parking and access control systems; hazardous area lighting; and equipment for
storage, transfer, use and disposal of flammable and hazardous materials. The
group's products are sold primarily to industrial, municipal and government
customers.

     TOOL--Tool manufactures a variety of consumable tools which include die
components for the metal stamping industry, a large selection of precision metal
products for nonstamping needs and a line of precision cutting and grooving
tools including polycrystalline diamond and cubic boron nitride products for
superhard applications. The group's products are sold predominately to
industrial markets.

     Net sales by operating segment reflect sales of products and services and
financial revenues to external customers, as reported in the company's
consolidated statements of income. Intersegment sales are insignificant. The
company evaluates performance based on operating income of the respective
segment. Operating income includes all revenues, costs and expenses directly
related to the segment involved. In determining segment operating income,
neither corporate nor interest expenses are included. Operating segment
depreciation expense, identifiable assets and capital expenditures relate to
those assets that are utilized by the respective operating segment. Corporate
assets consist principally of cash and cash equivalents, notes and other
receivables and fixed assets. The accounting policies of each operating segment
are the same as those described in the summary of significant accounting
policies.

     See Note K for a discussion of the company's acquisition activity during
the three-year period ended December 31, 2000.

     Non-U.S. sales, which include sales exported from the U.S. and sales made
by non-U.S. operations, aggregated $274,168,000 in 2000, $265,249,000 in 1999
and $266,562,000 in 1998. Sales exported from the U.S. aggregated $102,402,000
in 2000, $104,940,000 in 1999 and $98,135,000 in 1998.

<PAGE>


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     A summary of the company's continuing operations by segment for the
three-year period ended December 31, 2000 is as follows:

<TABLE>
<CAPTION>
                                                      2000              1999              1998
                                                      ----              ----              ----
    <S>                                          <C>               <C>               <C>
    Net sales
      Environmental Products                     $  255,269,000    $  247,097,000    $  219,812,000
      Fire Rescue                                   389,311,000       310,008,000       318,038,000
      Safety Products                               267,062,000       261,940,000       253,020,000
      Tool                                          194,485,000       158,164,000       145,964,000
                                                 --------------    --------------    --------------
      Total net sales                            $1,106,127,000    $  977,209,000    $  936,834,000
                                                 ==============    ==============    ==============
    Operating income
      Environmental Products                     $   23,101,000    $   24,454,000    $   19,559,000
      Fire Rescue                                    24,940,000        10,900,000        14,526,000
      Safety Products                                43,721,000        41,384,000        40,601,000
      Tool                                           35,298,000        33,303,000        31,426,000
      Corporate expense                             (10,406,000)       (8,689,000)       (8,240,000)
                                                 --------------    --------------    --------------
      Total operating income                        116,654,000       101,352,000        97,872,000
    Interest expense                                (31,401,000)      (23,339,000)      (19,336,000)
    Other income (expense)                             (839,000)        1,296,000           824,000
                                                 --------------    --------------    --------------
    Income before income taxes                   $   84,414,000    $   79,309,000    $   79,360,000
                                                 ==============    ==============    ==============
    Depreciation and amortization
      Environmental Products                     $    5,030,000    $    4,609,000    $    3,869,000
      Fire Rescue                                     5,304,000         5,299,000         4,605,000
      Safety Products                                 8,978,000         8,925,000         8,210,000
      Tool                                            8,907,000         6,115,000         4,448,000
      Corporate                                         838,000           849,000           947,000
                                                 --------------    --------------    --------------
      Total depreciation and amortization        $   29,057,000    $   25,797,000    $   22,079,000
                                                 ==============    ==============    ==============
    Identifiable assets
      Manufacturing activities
         Environmental Products                  $  149,622,000    $  143,320,000    $  139,819,000
         Fire Rescue                                201,960,000       200,950,000       178,818,000
         Safety Products                            220,867,000       227,073,000       224,605,000
         Tool                                       175,884,000       155,095,000        85,013,000
         Corporate                                   13,997,000        12,795,000        10,803,000
                                                 --------------    --------------    --------------
         Total manufacturing activities             762,330,000       739,233,000       639,058,000
                                                 --------------    --------------    --------------
      Financial services activities
         Environmental Products                      69,055,000        66,096,000        51,499,000
         Fire Rescue                                145,175,000       125,165,000       114,163,000
                                                 --------------    --------------    --------------
         Total financial services activities        214,230,000       191,261,000       165,662,000
                                                 --------------    --------------    --------------
      Total identifiable assets                  $  976,560,000    $  930,494,000    $  804,720,000
                                                 ==============    ==============    ==============
    Additions to long-lived assets
      Environmental Products                     $    5,574,000    $    3,241,000    $   32,685,000
      Fire Rescue                                     4,958,000         4,598,000        18,603,000
      Safety Products                                 5,333,000        13,496,000        17,348,000
      Tool                                           19,857,000        70,243,000         6,404,000
      Corporate                                          23,000            26,000            33,000
                                                 --------------    --------------    --------------
      Total additions to long-lived assets       $   35,745,000    $   91,604,000    $   75,073,000
                                                 ==============    ==============    ==============
    Financial revenues (included in net
      sales)
      Environmental Products                     $    6,113,000    $    5,170,000    $    3,904,000
      Fire Rescue                                     8,082,000         7,166,000         7,606,000
                                                 --------------    --------------    --------------
      Total financial revenues                   $   14,195,000    $   12,336,000    $   11,510,000
                                                 ==============    ==============    ==============
</TABLE>

<PAGE>


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

     Due to the nature of the company's customers, a significant portion of the
Environmental Products and Fire Rescue financial revenues is exempt from federal
income tax.

     A summary of the company's continuing operations by geographic area for the
three-year period ended December 31, 2000 is as follows:

<TABLE>
<CAPTION>
                                                 2000            1999            1998
                                                 ----            ----            ----
    <S>                                      <C>             <C>             <C>
    UNITED STATES
      Net sales                              $934,361,000    $816,900,000    $768,407,000
      Operating income                        103,704,000      88,012,000      83,199,000
      Long-lived assets                       344,367,000     334,833,000     266,337,000
    ALL NON-U.S. (principally Europe)
      Net sales                              $171,766,000    $160,309,000    $168,427,000
      Operating income                         12,950,000      13,340,000      14,673,000
      Long-lived assets                        69,027,000      73,815,000      75,448,000
</TABLE>

     The company had no significant amounts of sales to or long-lived assets in
an individual country outside of the United States.

     During 2000, the company decided to divest the operations of the Sign Group
and began to search for a qualified buyer of that business. Sign manufactures
for sale or lease illuminated, non-illuminated and electronic advertising sign
displays primarily for commercial and industrial markets. It also enters
contracts to provide maintenance service for the signs it manufactures as well
as for signs manufactured by others. The results of the Sign operations are
reported as discontinued operations in the financial statements; 1999 and 1998
financial statements have been appropriately restated.

     The company also incurred $3,744,000 in restructuring charges during 2000
relating to the consolidation of facilities and operations. Of this amount, the
Environmental Products Group incurred costs of $2,773,000 and the Tool Group
incurred $971,000.

NOTE N--NET INCOME PER SHARE

     The following table summarizes the information used in computing basic and
diluted income per share for the three-year period ending December 31, 2000:

<TABLE>
<CAPTION>
                                                   2000           1999           1998
                                                   ----           ----           ----
    <S>                                         <C>            <C>            <C>
    Numerator for both basic and diluted
      income per share computations -- net
      income                                    $57,537,000    $57,537,000    $59,396,000
                                                ===========    ===========    ===========
    Denominator for basic income per share--
      weighted average shares outstanding        45,388,000     45,775,000     45,568,000
    Effect of employee stock options
      (dilutive potential common shares)            133,000        183,000        278,000
                                                -----------    -----------    -----------
    Denominator for diluted income per
      share -- adjusted shares                   45,521,000     45,958,000     45,846,000
                                                ===========    ===========    ===========
</TABLE>

NOTE O--COMMITMENTS

     The company leases certain facilities and equipment under operating leases,
some of which contain options to renew. Total rental expense on all operating
leases was $8,297,000 in 2000, $8,037,000 in 1999 and $8,426,000 in 1998.
Sublease income and contingent rentals relating to operating leases were
insignificant. At December 31, 2000, minimum future rental commitments under
operating leases having noncancelable lease terms in excess of one year
aggregated $30,701,000 payable as follows: $7,097,000 in 2001, $5,515,000 in
2002, $3,777,000 in 2003, $3,295,000 in 2004, $2,798,000 in 2005 and $8,219,000
thereafter.

     At December 31, 2000, the company had outstanding standby letters of credit
aggregating $17,214,000 principally to act as security for retention levels
related to casualty insurance policies and to guarantee the performance of
subsidiaries that engage in export transactions to foreign governments and
municipalities.

<PAGE>


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE P--CHANGE IN ACCOUNTING

     In the fourth quarter of 2000, the company changed its method of accounting
for recognizing revenues for product sales. Effective with this change,
retroactively applied to January 1, 2000, the company recognizes revenues based
upon the respective terms of delivery for each sale agreement. This change was
required by Staff Accounting Bulletin (SAB) No. 101 issued by the Securities and
Exchange Commission. In years prior to 2000, the company recognized
substantially all of its revenues for product sales as products were shipped, as
this method was then in compliance with generally accepted accounting
principles.

     For the restated three-month period ended March 31, 2000 and the year ended
December 31, 2000, the company recognized sales of $10,052,000 and the related
operating income of $1,362,000 resulting from the change in accounting method;
these amounts were previously recognized in sales and income in 1999 under the
company's previous accounting method. These sales and the related income also
account for the cumulative effect of the change in accounting method on prior
years, which resulted in a charge to net income of $844,000 (net of taxes of
$518,000), or $.02 per diluted share. This charge reflects the adoption of SAB
No. 101 and is included in the restated three-month period ended March 31, 2000
and the year ended December 31, 2000. Pro-forma net income amounts for the
three-year period ending December 31, 2000, assuming the change in method was
retroactively applied to the beginning of that period, are as follows:

<TABLE>
<CAPTION>
                                                   2000           1999           1998
                                                   ----           ----           ----
    <S>                                         <C>            <C>            <C>
    Net income                                  $58,381,000    $57,268,000    $59,436,000
    Diluted net income per share                $      1.28    $      1.25    $      1.30
</TABLE>

     Presented below is a summary of the originally reported and restated income
statement data for the first three three-month periods of the year ended
December 31, 2000:

<TABLE>
<CAPTION>
                                              MARCH 31                  JUNE 30                 SEPTEMBER 30
                                       ----------------------    ----------------------    ----------------------
                                       ORIGINALLY                ORIGINALLY                ORIGINALLY
                                        REPORTED     RESTATED     REPORTED     RESTATED     REPORTED     RESTATED
                                       ----------    --------    ----------    --------    ----------    --------
<S>                                    <C>           <C>         <C>           <C>         <C>           <C>
Net sales                               $271,670     $260,181     $278,217     $286,825    $  270,884    $258,577
Gross margin                              85,323       82,807       87,245       88,786        83,019      80,534
Income from continuing operations         14,297       13,763       16,012       16,198        15,715      14,705
Income (loss) from discontinued
  operations                                 939          939          172          172           (25)        (25)
Cumulative effect of change in
  accounting                                             (844)
Net income                                15,236       13,858       16,184       16,370        15,690      14,680
Per share data--diluted:
  Income from continuing operations          .31          .30          .35          .36           .35         .32
  Income (loss) from discontinued
     operations                              .02          .02
  Cumulative effect of change in
     accounting                                          (.02)
  Net income*                                .33          .30          .36          .36           .35         .32
</TABLE>

* amounts may not add due to rounding



<PAGE>


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE Q-- SELECTED QUARTERLY DATA (UNAUDITED)
        (in thousands of dollars except per share amounts)

<TABLE>
<CAPTION>
                                                   FOR THE THREE-MONTH PERIOD ENDED
                       -----------------------------------------------------------------------------------------
                                          2000                                          1999
                       -------------------------------------------   -------------------------------------------
                        MARCH       JUNE     SEPTEMBER    DECEMBER    MARCH       JUNE     SEPTEMBER    DECEMBER
                         31*        30*         30*          31         31         30         30           31
                        -----       ----     ---------    --------    -----       ----     ---------    --------
<S>                    <C>        <C>        <C>          <C>        <C>        <C>        <C>          <C>
Net sales              $260,181   $286,825   $258,577     $300,544   $235,661   $242,991   $237,243     $261,314
Gross margin             82,807     88,786     80,534      85,217      72,058     73,582     74,244       80,718
Income from
  continuing
  operations             13,763     16,198     14,705      12,989      12,239     12,677     13,373       16,094
Income (loss) from
  discontinued
  operations                939        172        (25)       (360)        808      1,015        416          915
Cumulative effect of
  change in
  accounting               (844)
Net income               13,858     16,370     14,680      12,629      13,047     13,692     13,789       17,009
Per share data--
  diluted:
    Income from
      continuing
      operations            .30        .36        .32         .29         .27        .28        .29          .35
    Income (loss)
      from
      discontinued
      operations            .02                              (.01)        .02        .02        .01          .02
    Cumulative effect
      of change in
      accounting           (.02)
  Net income                .30        .36        .32         .28         .29        .30        .30          .37
Pro-forma amounts
  assuming change in
  accounting
  (Note P):
    Net income           14,702     16,370     14,680      12,629      12,834     13,389     14,263       16,782
    Diluted net
      income per
      share                 .32        .36        .32         .28         .28        .29        .31          .36
Dividends paid per
  share                    .190       .190       .190        .190        .185       .185       .185         .185
Market price range
  per share
  High                    18.50      21.50      22.94       24.13       28.06      26.19      22.38        20.13
  Low                     14.75      16.50      16.75       17.13       20.00      19.81      18.69        15.06
</TABLE>

* indicates periods restated for change in accounting (see Note P)

     In 2000 the company incurred pre-tax restructuring charges (see Note M) of
$75,000, $837,000 and $2,832,000 for each of the three-month periods ending June
30, September 30 and December 31, respectively.

<PAGE>



REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Shareholders and Board of Directors
  of Federal Signal Corporation

     We have audited the accompanying consolidated balance sheets of Federal
Signal Corporation and subsidiaries as of December 31, 2000 and 1999 and the
related consolidated statements of income, comprehensive income and cash flows
for each of the three years in the period ended December 31, 2000. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Federal Signal
Corporation and subsidiaries as of December 31, 2000 and 1999, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States.

     As discussed in Notes A and P to the financial statements, in 2000 the
company changed its method of revenue recognition.

                                                   [ERNST & YOUNG LLP SIGNATURE]

Chicago, Illinois
January 25, 2001

<PAGE>



                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
                                FINANCIAL REVIEW

CONSOLIDATED RESULTS OF OPERATIONS

     Federal Signal Corporation's net sales increased 13% in 2000 to $1.11
billion compared to the $.98 billion in 1999. Income from continuing operations
increased 6% to $57.7 million in 2000; excluding restructuring charges incurred
in the company's Environmental Products and Tool groups, income from continuing
operations increased 10%. Diluted income per share from continuing operations
increased 8% to $1.27 in 2000; excluding restructuring charges, income per share
from continuing operations increased 12% to $1.32. Net income in 2000 remained
flat at $57.5 million with diluted net income per share increasing $.01 to $1.26
in 2000. Net income and net income per share amounts included $.7 million ($.02
per share) income from the discontinued operations of the Sign Group and a
charge of $.8 million ($.02 per share) for the cumulative effect of a change in
accounting for revenue recognition. The improved results from the company's
continuing operations reflected growth in sales and earnings before
restructuring charges in all four continuing groups, led by the significantly
increased results of the Fire Rescue Group. Federal Signal's 13% sales increase
in 2000 was a result of a 1% increase in prices and a 12% increase in volume
including approximately 3% relating to added volume from acquired businesses.
Sales to customers in the United States increased 17% in 2000 and sales to
non-U.S. customers increased 3% (9% in functional currency). Incoming orders
increased 9% in 2000 with orders from U.S. customers increasing 10% and orders
from non-U.S. customers increasing 8%.

     Net sales increased to $.98 billion in 1999 from $.94 billion in 1998.
Income from continuing operations declined 1% to $54.4 million in 1999, or $1.18
per share on a diluted basis, compared to $55.1 million in 1998, or $1.20 per
share. This decline was principally a result of lower earnings in the company's
Fire Rescue Group. The 1999 sales increase of 4% was a result of a 1% increase
in prices and a 3% increase in volume including 3% relating to added volume from
acquired businesses. Sales to customers in the United States increased 6% in
1999 while sales to non-U.S. customers declined slightly. Incoming orders also
increased 5% in 1999 with orders from U.S. customers increasing 5% and orders
from non-U.S. customers increasing 7%.

     The company focuses on operating margin, rather than either the gross
margin component or the selling, general, and administrative (SG&A) cost
component of operating margin when setting overall Federal Signal performance
targets and monitoring results. The reasons for this focus are: 1) the distinct
differences in the cost structures of the company's businesses, and 2) the
varying growth rates of these individual businesses. This combination dictates
that the separate operating margin components are only useful in managing
individual business performance. In looking at total profitability of the
company's U.S. and non-U.S. operations, the company recognizes that some of its
U.S. operations have benefited from selling their products through distribution
channels of non-U.S. operations. The following table summarizes the company's
gross margins and operating margins for the last five years (percent of sales):

<TABLE>
<CAPTION>
                                                2000     1999     1998     1997     1996
                                                ----     ----     ----     ----     ----
    <S>                                         <C>      <C>      <C>      <C>      <C>
      Net sales                                 100.0%   100.0%   100.0%   100.0%   100.0%
      Cost of sales                              69.5     69.2     69.0     68.4     69.1
                                                -----    -----    -----    -----    -----
      Gross profit margin                        30.5     30.8     31.0     31.6     30.9
      SG&A expenses                              20.0     20.4     20.6     20.4     19.1
                                                -----    -----    -----    -----    -----
      Operating margin                           10.5%    10.4%    10.4%    11.2%    11.8%
                                                =====    =====    =====    =====    =====
</TABLE>

     Gross profit margins of 30.5% in 2000 are somewhat lower than the average
of the 1996-1999 period (31.1%). SG&A expenses as a percent of sales began
improving somewhat in 1999 and improved again in 2000 to 20.0%, which includes
the effect of $3.7 million of restructuring charges incurred in the company's
Environmental Products and Tool groups. Excluding restructuring charges, SG&A
expenses were 19.6% of sales in 2000; this compares favorably to the 1996-1999
average of 20.1%. Operating margin for 2000 excluding the restructuring charges
was 10.9%, the highest since 1997 and compares to the average of 11.0% for the
1996-1999 period. Since operating margins have declined from the company's rate
achieved in 1996, an explanation of that trend is warranted. The decline in the
company's operating margin prior to 2000, for the most part, reflects lower
operating margins of the Fire Rescue Group. Operating margins of the company's
continuing businesses outside of the Fire Rescue Group were 14.8% in 2000 and
compared favorably to a fairly consistent level of 14.6% averaged in the
1996-1999 period. In 1997 through 1999, significant operating issues in the Fire
Rescue Group adversely affected the company's margins. Chassis and related
component supply shortages, while affecting many of the company's vehicle-based
businesses in 1997 and 1998, had its most severe impact on the U.S.-based fire
<PAGE>


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
                          FINANCIAL REVIEW (CONTINUED)

rescue business. Shortages of components and skilled people and installation of
an enterprise resource planning system adversely affected Fire Rescue sales and
earnings in 1999. During 2000, Fire Rescue achieved dramatic improvements in
throughput, productivity, customer service and quality and saw the group's
operating margin expand to 6.4% from the 3.5% experienced in 1999.

     Interest expense increased $8.1 million in 2000, largely as a result of
borrowings related to businesses acquired for cash in mid-1999 and early 2000, a
$17 million purchase of company stock and a $23 million increase in financial
services assets. The increase in interest expense of $4.0 million in 1999 was
largely a result of borrowings related to acquisitions of businesses for cash in
1999, production-related increases in inventories and increases in financial
services assets, partially offset by lower interest rates. Weighted average
interest rates on short-term borrowings were 6.5% in 2000, 5.4% in 1999 and 5.8%
in 1998.

     The company's effective tax rate in 2000 of 31.7% was up slightly from the
31.4% in 1999 with no significant changes in the underlying factors influencing
these rates. The 1999 rate increased from the 30.5% in 1998 largely as a result
of a few individually insignificant factors.

     At the end of 2000, the company changed its assumptions for discount rates
used in determining the actuarial present values of accumulated and projected
benefit obligations for its postretirement plans. The company reduced the
discount rate to 7.7% at the end of 2000 from the 8.1% used at the end of 1999
for its U.S. plan because of the lower interest rate environment experienced at
the end of 2000. The company expects that the change in this assumption will not
have a significant impact on 2001 results of operations.

     Certain of the company's businesses are susceptible to the influences of
seasonal buying or delivery patterns. The company's businesses which tend to
have lower sales in the first calendar quarter compared to other quarters as a
result of these influences are street sweeping, fire rescue products, outdoor
warning, municipal emergency signal products, parking systems and signage.

GROUP OPERATIONS

     All four of the company's continuing operating segments achieved higher
sales and earnings excluding restructuring charges in 2000 with Fire Rescue
achieving significant increases. Tool Group sales and earnings also were well
above 1999 as a result of solid performances by newly-acquired businesses.

  ENVIRONMENTAL PRODUCTS

     Environmental Products orders rose 12% and sales increased 3% in 2000 while
operating income declined 6%. Excluding restructuring charges of $2.8 million
incurred to consolidate the group's vacuum truck operations into its Streator,
Illinois facility, operating income increased 6%. The group's sales growth was
due to broadly good performance in sweepers, waterblasters and municipal vacuum
trucks. In 1999 group sales and earnings increased 12% and 25%, respectively,
while orders increased 5%. Sales and earnings from municipal sewer cleaners
increased significantly in 1999, due in part from a very large backlog at the
beginning of the year; the group's 1999 results also benefited from a 1998
acquisition of a manufacturer of high pressure waterblasters. Offsetting a part
of these increases were lower sales and a profit decline in industrial vacuum
trucks reflecting weak markets for this product line in 1999.

  FIRE RESCUE

     In 2000 Fire Rescue orders increased 10%; earnings more than doubled on a
26% increase in sales. Orders for the group were strong in good North American
municipal markets. The group's Florida-based manufacturing operations increased
productivity, throughput and quality and saw operating margin improve to 6.4% in
2000 from 3.5% in 1999. Sales at the Finland-based operations were modestly
higher, despite the markka weakening against the U.S. dollar, and income
declined as this unit incurred costs related to the rollout of several new
products. In 1999 Fire Rescue sales declined 3% and earnings fell 25%. Fire
Rescue orders improved 6% as markets remained active throughout 1999. The
group's sales and earnings declines reflected the significant production
problems experienced throughout 1999 by the Florida-based operations. Component
supply problems continued into 1999 and the Florida-based operation's April 1,
1999 implementation of an enterprise resource planning system and shortages of
qualified workers also had a negative effect on production. The Florida-based


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
                          FINANCIAL REVIEW (CONTINUED)

operation saw fourth quarter 1999 production and shipments improve substantially
over levels achieved in the first part of 1999 establishing the foundation for
improved levels of performance in 2000.

  SAFETY PRODUCTS

     Safety Products orders decreased 3% in 2000 while sales increased 2%;
operating income increased 6%. An improved operating margin reflected municipal
market sales strength offsetting continued weak oilfield-related sales. In 1999
Safety Products Group sales increased 4% and earnings increased 2%; orders
increased 4%. The group's emergency vehicle signal, parking and outdoor warning
system product lines saw significant sales and earnings gains in 1999. These
improvements were partially offset in 1999 by lower sales and earnings of
hazardous area lighting products, which resulted from very weak energy-related
market conditions, and lower earnings from sales of hazardous liquid containment
products.

  TOOL

     Tool Group orders increased 24% and sales increased 23% in 2000; earnings
increased 6% including restructuring charges of $1.0 million. Excluding the
restructuring charges, operating income increased 9%. The group's results
reflected the benefits of two acquisitions, which performed strongly,
restructuring charges incurred to consolidate two superhard cutting tool
operations, and weak U.S. auto and broad industrial markets in the second half
of the year. In 1999 Tool Group orders and sales increased 7% and 8%,
respectively; earnings increased 6%. The mid-1999 acquisition of Clapp & Haney
Tool Company more than offset the effects of slow markets, which produced lower
sales and earnings in some of the group's other tool businesses. Excluding the
effect of the acquisition in 1999, U.S. sales increased 1% while non-U.S. sales
declined 5% reflecting lower automotive die build programs in Germany and Japan.

  SIGN

     The company decided to divest the Sign Group and began searching for a
buyer of this business. The group saw markets weaken in 2000 and sales and
operating income declined from 1999 results. The results of this group are
reported as discontinued operations in the company's consolidated financial
statements.

FINANCIAL SERVICES ACTIVITIES

     The company maintains a large investment ($214 million and $191 million at
December 31, 2000 and 1999, respectively) in lease financing and other
receivables that are generated by its environmental products and fire rescue
operations. For the five-year period ending December 31, 2000, these assets
continued to be leveraged in accordance with the company's stated financial
objectives (see further discussion in "Financial Position and Cash Flow").

     Financial services assets have repayment terms generally ranging from two
to ten years. The increases in these assets resulted from increasing sales of
environmental and fire rescue products as well as continuing acceptance by
customers of the benefits of using the company as their source of financing
vehicle purchases.

FINANCIAL POSITION AND CASH FLOW

     The company emphasizes generating strong cash flows from operations,
reaching a record $75.5 million in 1998. Cash flow from operations declined to
$57.7 million in 1999 as inventory levels increased to support higher production
in vehicle businesses, particularly Fire Rescue. Cash flow from operations again
increased in 2000 to $64.4 million largely reflecting improvements in
receivables management. The company expects improvement in its operating cash
flow as it continues to focus aggressively on earnings growth as well as working
capital management, particularly inventories.

     During the 1996-2000 period, the company utilized its strong cash flows
from operations and available debt capacity to: 1) fund in whole or in part
strategic acquisitions of companies operating in markets related to those
already served by the company; 2) purchase increasing amounts of equipment
principally to provide for further cost reductions and increased productive
capacity for the future as well as tooling for new products; 3) increase


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
                          FINANCIAL REVIEW (CONTINUED)

its investment in financial services activities; 4) pay increasing amounts in
cash dividends to shareholders; and 5) repurchase a small percentage of its
outstanding common stock each year.

     Cash flows for the five-year period ending December 31, 2000 are summarized
as follows (in millions):

<TABLE>
<CAPTION>
                                           2000       1999      1998      1997      1996
                                           ----       ----      ----      ----      ----
    <S>                                   <C>        <C>       <C>       <C>       <C>
    Cash provided by (used for):
      Operating activities                $  64.4    $ 57.7    $ 75.5    $ 64.2    $ 61.4
      Investing activities                  (64.8)   (105.1)    (93.0)    (38.4)    (54.2)
      Financing activities                    5.2      40.9      22.2     (27.5)     (4.1)
</TABLE>

     In order to show the distinct characteristics of the company's investment
in its manufacturing activities and its investment in its financial services
activities, the company has presented separately these investments and their
related liabilities. Different ratios of debt and equity support each of these
two types of activities.

     One of the company's financial objectives is to maintain a strong financial
position. At December 31, 2000, the company's debt-to-capitalization ratio of
its manufacturing operations was 45% compared to 42% a year earlier. The
increase largely reflects the $24 million used for acquisitions of businesses
during 2000; the company expects to modestly reduce the debt-to-capitalization
ratio of its manufacturing operations during 2001. The company believes that its
financial assets, due to their overall quality, are capable of sustaining a
leverage ratio of 87%. At both December 31, 2000 and 1999, the company's
debt-to-capitalization ratio for its financial services activities was 87% for
its continuing operations.

     As indicated earlier, management focuses substantial effort on improving
the utilization of the company's working capital. The company's current ratio
for its manufacturing operations was 1.2 at December 31, 2000 and 1.3 at
December 31, 1999. The decline in 2000 is largely due to additional short-term
borrowings incurred primarily to fund acquisitions and repurchase common stock.
The company anticipates that its financial resources and major sources of
liquidity, including cash flow from operations, will continue to be adequate to
meet its operating and capital needs in addition to its financial commitments.

MARKET RISK MANAGEMENT

     The company is subject to risks associated with changes in interest rates
and foreign exchange rates. The company principally utilizes two types of
derivative financial instruments: 1) interest rate swaps and 2) foreign exchange
forward contracts to manage risks associated with sales and purchase commitments
denominated in foreign currencies. The company does not hold or issue derivative
financial instruments for trading or speculative purposes and is not a party to
leveraged derivatives.

     The company uses interest rate swap agreements to reduce interest rate
risk. Interest rate swaps change the fixed/floating interest rate mix of the
company's debt portfolio. At December 31, 2000, the company was party to an
interest rate swap agreement with a notional amount of $25,000,000. See Note H
to the consolidated financial statements for a description of this agreement.

     The company manages its exposure to interest rate movements by maintaining
a proportionate relationship between fixed-rate debt to total debt within
established percentages. The company uses actual fixed-rate borrowings as well
as interest rate swap agreements to provide fixed interest rates.

     Approximately 40% of the company's debt is used to support financial
services assets; the average remaining life of those assets is typically under
three years. The company is currently comfortable with a sizeable portion of
floating rate debt, since a rise in borrowing rates would normally correspond
with a rise in lending rates in a reasonable period.


                  FEDERAL SIGNAL CORPORATION AND SUBSIDIARIES
                          FINANCIAL REVIEW (CONTINUED)

     Significant interest rate sensitive instruments at December 31, 2000 and
1999 were as follows (dollars in millions):

<TABLE>
<CAPTION>
                                                                     2000                                        1999
                                     --------------------------------------------------------------------   ---------------
                                                                                                    FAIR              FAIR
                                      2001    2002    2003   2004    2005    THEREAFTER   TOTAL    VALUE    TOTAL    VALUE
                                      ----    ----    ----   ----    ----    ----------   -----    -----    -----    -----
<S>                                  <C>      <C>     <C>    <C>     <C>     <C>          <C>      <C>      <C>      <C>
Long-term debt
  Fixed rate
    Principal                        $  5.5   $ 8.1   $0.2   $15.0             $ 50.0     $ 78.8   $ 79.4   $ 81.4   $ 74.7
    Average interest rate              7.1%    7.1%   7.1%    7.1%               6.8%       7.0%              6.9%
  Variable rate
    Principal                        $  0.7   $ 1.4   $0.8   $50.0                        $ 52.9   $ 52.9   $ 56.9   $ 56.9
    Average interest rate              7.5%    7.5%   7.6%    7.6%                          7.6%              6.1%
Short-term debt -- variable rate
    Principal                        $331.1                                               $331.1   $331.1   $267.9   $267.9
    Average interest rate              7.6%                                                 7.6%              6.2%
Interest rate swaps (pay fixed,
  receive variable)
    Notional amount                                                            $ 25.0     $ 25.0   $ (0.2)  $150.0   $  0.6
    Average pay rate                                                             5.1%
    Average receive rate                                                         6.8%
</TABLE>

     The company had an insignificant amount of foreign exchange forward
contracts outstanding at
December 31, 2000.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>SUBSIDIARIES OF REGISTRANT
<TEXT>



                                                                   EXHIBIT 21




                           FEDERAL SIGNAL CORPORATION
                         Subsidiaries of the Registrant


The following table sets forth information concerning  significant  subsidiaries
of the Registrant.


                                                    Jurisdiction
                                                     in which
                   Name                              Organized

      Akusta IFE, Ltd.                              United Kingdom
      Aplicaciones Tecnologicas VAMA S.A.           Spain
      Bronto Skylift Oy Ab                          Finland
      Clapp Dico Corporation                        Ohio
      Dayton Progress Canada, Ltd.                  Ontario, Canada
      Dayton Progress Corporation                   Ohio
      Dayton Progress International Corporation     Ohio
      Dayton Progress (U.K.), Ltd.                  United Kingdom
      Dunbar-Nunn Corporation                       California
      Elgin Sweeper Company                         Delaware
      Emergency One, Inc.                           Delaware
      Federal APD, Inc.                             Michigan
      Federal Signal Credit Corporation             Delaware
      Federal Signal International (FSC), Ltd.      Jamaica, W.I.
      Five Star Manufacturing                       North Carolina
      Guzzler Manufacturing, Inc.                   Alabama
      Jamestown Punch and Tooling, Inc.             New York
      Jetstream of Houston, Inc.                    Texas
      Jetstream of Houston, LLP                     Texas
      Justrite Manufacturing Company, L.L.C.        Delaware
      Manchester Tool Company                       Delaware
      M.J. Industries, S.A.                         France
      Nippon Dayton Progress K.K.                   Japan
      NRL Corp.                                     Alberta, Canada
      Pauluhn Electric Manufacturing Company        New York
      Pauluhn Electric Manufacturing Company, LLP   Texas
      P.C.S. Company                                Michigan
      Ravo International (Van Raaij Holdings BV
       and its subsidiaries)                        Netherlands
      Saulsbury Fire Equipment Corp.                New York
      Schneider Stanznormalien GmbH                 Germany
      Superior Emergency Vehicles, Ltd.             Alberta, Canada
      Technical Tooling, Inc.                       Minnesota
      Vactor Manufacturing, Inc.                    Illinois
      Victor Industrial Equipment Ltd.              South Africa
      Victor Industries, Ltd.                       United Kingdom
      Victor Products USA Inc.                      Delaware

</TEXT>

</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>6
<FILENAME>0006.txt
<DESCRIPTION>CONSENT OF INDEPENDENT AUDITORS
<TEXT>



                                                                   EXHIBIT 23


                         CONSENT OF INDEPENDENT AUDITORS


We consent to the  incorporation  by reference in this Annual Report (Form 10-K)
of Federal Signal Corporation of our report dated January 25, 2001,  included in
the Federal Signal  Corporation Annual report to Shareholders for the year ended
December 31, 2000.

Our audits also  included the  financial  statement  schedule of Federal  Signal
Corporation  listed in Item 14(a)2.  This schedule is the  responsibility of the
Company's  management.  Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements taken as a
whole,  presents  fairly in all  material  respects  the  information  set forth
therein.

We also consent to the incorporation by reference in the Registration Statements
(Form S-8 Nos. 33-12876,  33-22311,  33-38494,  33-41721, 33-49476, 33-14251 and
33-89509)  pertaining  to  the  Stock  Option  Plan  and  Employee  Savings  and
Investment  Plans of our report  dated  January 25,  2001,  with  respect to the
consolidated  financial  statements  incorporated  herein by reference,  and our
report  included  in the  preceding  paragraph  with  respect  to the  financial
statement  schedule included in this Annual Report (Form 10-K) of Federal Signal
Corporation.




                                      Ernst & Young LLP



Chicago, Illinois
March 29, 2001


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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