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Discontinued Operations | 9 Months Ended
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Sep. 30, 2012
Discontinued Operations [Abstract] |
DISCONTINUED OPERATIONS | 12. DISCONTINUED OPERATIONS The following table presents the operating results of the Company’s discontinued operations for the three and nine-month periods ended September 30, 2012 and 2011, respectively:
Federal Signal Technologies |  | Three months ended September 30, |  |  | Nine months ended September 30, |
($ in millions) |  | 2012 |  |  | 2011 |  |  | 2012 |  |  | 2011 |
Net sales |  | $ | 24.9 |  |  | $ | 26.4 |  |  | $ | 87.0 |  |  | $ | 78.6 |
Interest allocated to discontinued operations |  |  | 1.7 |  |  |  | — |  |  |  | 4.8 |  |  |  | — |
Other costs and expenses |  |  | 33.1 |  |  |  | 27.3 |  |  |  | 99.9 |  |  |  | 84.6 |
Loss before income taxes |  |  | (9.9 | ) |  |  | (0.9 | ) |  |  | (17.7 | ) |  |  | (6.0 | )
Income tax benefit |  |  | 2.9 |  |  |  | 0.3 |  |  |  | 3.5 |  |  |  | 0.3 |
Loss from discontinued operations |  | $ | (7.0 | ) |  | $ | (0.6 | ) |  | $ | (14.2 | ) |  | $ | (5.7 | )
China WOFE |  | Three months ended September 30, |  |  | Nine months ended September 30, |
($ in millions) |  | 2012 |  |  | 2011 |  |  | 2012 |  |  | 2011 |
Net sales |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 0.2 |
Costs and expenses |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (0.5 | )
Loss before income taxes |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (0.3 | )
Income tax benefit |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Loss from discontinued operations |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | (0.3 | )
On June 21, 2012, the Company announced that it had signed a definitive agreement to sell the FSTech Group for $110.0 million, subject to working capital adjustments. On September 4, 2012, the Company completed the disposition of the assets of the FSTech Group for $110.0 million in cash, subject to working capital adjustments in favor of the buyer of $5.9 million. The Company received $82.1 million in cash at closing and the remaining $22.0 million was placed into escrow as security for indemnification obligations provided by the Company pursuant to the sale agreement including defense and other costs associated with the Neology lawsuits discussed in Note 9. A significant portion of the escrow identified for general indemnification obligations will be held for a period of 18 months with the remaining general escrow funds to be held for 36 months. The portion of escrow associated with the Neology lawsuits and certain other indemnifications are to be held for a period of up to 48 months, but may be released earlier under certain conditions. If and when the relevant conditions associated with the Neology lawsuits and certain other contingencies are resolved and any remaining escrowed proceeds are released, the Company may recognize an adjustment to the loss from discontinued operations in its financial statements. The net carrying amount of the escrow receivable at September 30, 2012 is $8.0 million and is classified in Deferred charges and other assets. As discussed in Note 5, the Company used $75.0 million of the sale proceeds to repay obligations under its existing credit facilities pursuant to mandatory prepayment provisions under those facilities. The Company recorded a loss of $35.7 million on disposal for the nine months ended September 30, 2012. In accordance with ASC 360, the Company met held for sale criteria during the second quarter of 2012 and the FSTech Group was reported as a discontinued operation in the Company’s condensed consolidated financial statements. In accordance with ASC 360-10, net assets held for sale with a carrying value of $121.1 million were written down to fair value less cost to sell or $97.6 million (fair value of $101.0 million and costs to sell of $3.4 million). This write-down resulted in a $23.5 million loss for the six months ended June 30, 2012. The valuation methodology for the net assets held for sale was based upon a contract price which is an observable input (Level 2). As required by ASC 350-20, goodwill of a reporting unit is to be tested for impairment between annual tests whenever events or changes in circumstances indicate that the carrying value may not be recoverable. An interim test for goodwill and indefinite-lived asset impairment was completed for the FSTech Group during the second quarter of 2012. The Company determined that the trade names associated with the FSTech Group reporting unit were impaired and recorded an impairment charge of $0.6 million. Goodwill was reviewed for impairment based on a two-step test. The first step, used to identify potential impairment, compared the fair value of the FSTech Group with its carrying amount. The carrying amount of the FSTech Group exceeded its fair value; therefore, the second step of the goodwill impairment test was required to be performed to measure the amount of impairment loss, if any. The second step compared the implied fair value of the FSTech Group goodwill with the carrying amount of that goodwill. The Company determined that the carrying amount of the goodwill was less than the implied fair value of that goodwill, and consequently was not required to recognize an impairment loss. In accordance with ASC 205-20-45-6, Allocation of Interest to Discontinued Operations, the Company has allocated interest on debt that is required to be repaid as a result of a disposal transaction to discontinued operations. The condensed consolidated financial statements for all periods presented have been recast to present the operating results of the FSTech Group and previously divested or exited businesses as discontinued operations. During the nine months ended September 30, 2012, the Company recorded a gain of $0.1 million on discontinued operations associated with the liquidation of the assets of the China WOFE business. In May 2012, the Company sold its Pearland, Texas facility, which was previously used by the Company’s discontinued Pauluhn business, for proceeds of $0.9 million and recorded a pre-tax gain of $0.4 million. The following table shows an analysis of assets and liabilities of discontinued operations as of September 30, 2012 and December 31, 2011:
($ in millions) |  | September 30, 2012 |  |  | December 31, 2011 |
Current assets |  | $ | 1.3 |  |  | $ | 37.4 |
Properties and equipment |  |  | — |  |  |  | 2.7 |
Long-term assets |  |  | 1.0 |  |  |  | 93.7 |
Financial service assets, net |  |  | 0.6 |  |  |  | 1.0 |
Total assets of discontinued operations |  | $ | 2.9 |  |  | $ | 134.8 |
Current liabilities |  | $ | 15.8 |  |  | $ | 22.7 |
Long-term liabilities |  |  | 6.7 |  |  |  | 20.7 |
Financial service liabilities |  |  | — |  |  |  | 0.9 |
Total liabilities of discontinued operations |  | $ | 22.5 |  |  | $ | 44.3 |
Included in current liabilities at September 30, 2012 and December 31, 2011 is $1.9 million and $2.2 million, respectively, related to environmental remediation at the Pearland, Texas facility, which was previously used by the Company’s discontinued Pauluhn business. Included in long-term liabilities at September 30, 2012 and December 31, 2011 is $4.9 million and $5.1 million, respectively, relating to estimated product liability obligations of the North American refuse truck body business. Long-term liabilities include $0.5 million of insurance reserves for estimated product liability and workers’ compensation obligations of the FSTech Group.

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- Definition The entire disclosure for the facts and circumstances leading to the completed or expected disposal, manner and timing of disposal, the gain (loss) recognized in the income statement and the income statement caption that includes that gain (loss), amounts of revenues and pretax profit or loss reported in discontinued operations, the segment in which the disposal group was reported, and the classification (whether sold or classified as held for sale) and carrying value of the assets and liabilities comprising the disposal group. Includes all disposal groups, including those classified as components of the entity (discontinued operations). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1474-107760 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1361-107760 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 144 -Paragraph 43-48 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e957-107759 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1436-107760 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6391110&loc=d3e2941-110230 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -SubTopic 10 -Section 45 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=8077374&loc=d3e2443-110228 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1012-107759 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6360339&loc=d3e1510-107760 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -Section 45 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6892542&loc=d3e1020-107759 + Details
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