Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. FEDERAL SIGNAL CORP /DE/ (277509) 10-Q published on May 02, 2019 at 12:12 pm
Reporting Period: Mar 30, 2019
Upon adoption, the Company recognized operating lease right-of-use assets and liabilities on its Condensed Consolidated Balance Sheet of $27.1 million and $29.5 million, respectively. In addition, the Company recognized the remaining deferred gain of $8.7 million associated with the sale-leaseback transactions that the Company entered into in July 2008 for its Elgin, Illinois and University Park, Illinois plant locations, net of the related deferred tax asset of $2.2 million, as a cumulative effect adjustment to opening retained earnings as of the January 1, 2019 adoption date. Prior to the adoption of Topic 842, the deferred gain, which initially totaled $29.0 million, had been amortized through the Company’s Condensed Consolidated Statements of Operations on a straight-line basis over the 15-year life of the respective leases. Effective in 2019, approximately $1.9 million of the deferred gain, which had been recognized each year since 2008, will no longer be recognized through the Condensed Consolidated Statements of Operations.
The Company leases certain facilities within the U.S., Europe and Canada from which the Company provides sales, service and/or equipment rentals, some of which contain options to renew. In addition, eight of the Company’s 14 principal manufacturing plants are leased. The Company also leases vehicles and various other equipment. The Company’s lease agreements may contain lease and non-lease components, which are accounted for separately.
The Company determines if an arrangement is a lease at inception. Operating lease right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental collateralized borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Implicit rates are used when readily determinable. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating lease payments is recognized on a straight-line basis over the respective lease term.
Non-U.S. orders increased by $4.6 million, or 7%, primarily due to a $5.6 million increase within the Environmental Solutions Group, primarily due to a $6.0 million improvement in orders for vacuum trucks and a $3.4 million increase in aftermarket demand. Partially offsetting these improvements was a $3.1 million decrease in orders for products manufactured by other companies, such as refuse trucks, and a $1.1 million reduction in orders for waterblasting equipment. Within the Safety and Security Solutions Group, non-U.S. orders decreased by $1.0 million, primarily due to decreases in orders for public safety products and warning systems, as well as unfavorable foreign currency translation effects, which were partially offset by higher orders for industrial signaling equipment.
Submission of Matters to a Vote of Security Holders
The Company held its 2019 Annual Meeting of Stockholders on April 30, 2019. As of the March 4, 2019 record date, there were 60,253,987 shares of the Company’s common stock outstanding. The holders of 55,461,674 shares of common stock, representing 92.04% of the outstanding shares entitled to vote as of the record date, were represented at the meeting in person or by proxy. This amount represented a quorum. Set forth below are the final voting results for each of the three proposals submitted to a vote of the Company’s stockholders at the meeting. The proposals are described in detail in the Company’s 2019 Proxy Statement filed with the SEC on March 15, 2019 (the “2019 Proxy Statement”).