FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (“Form 10-K”) is being filed by Federal Signal Corporation and its subsidiaries (referred to collectively as the “Company,” “we,” “our” or “us” herein, unless the context otherwise indicates) with the United States (“U.S.”) Securities and Exchange Commission (the “SEC”), and includes comments made by management that may contain words such as “may,” “will,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “project,” “estimate” and “objective” or similar terminology, or the negative thereof, concerning the Company’s future financial performance, business strategy, plans, goals and objectives. These expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information concerning the Company’s possible or assumed future performance or results of operations and are not guarantees. While these statements are based on assumptions and judgments that management has made in light of industry experience as well as perceptions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances, they are subject to risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different.

ADDITIONAL INFORMATION

PART I

Federal Signal Corporation, founded in 1901, was reincorporated as a Delaware corporation in 1969. The Company designs, manufactures and manufacturessupplies a suite of products and integrated solutions for municipal, governmental, industrial and commercial customers. The Company’s portfolio of products that it manufactures includes sewer cleaners, vacuum trucks, street sweepers, waterblasters, dump truck bodies, trailers, and safety and security systems, including technology-based products and solutions for the public safety market,market. Following the acquisition of substantially all of the assets and vehicle-mounted aerial platforms.operations of Joe Johnson Equipment, Inc. and Joe Johnson Equipment (USA), Inc. (collectively, “JJE”) in 2016, the Company also distributes and re-sells products manufactured by other companies, which include refuse and recycling collection vehicles, camera systems, ice resurfacing equipment and snow-removal equipment. In addition, we sell parts and provide service, repair, equipment rentals and training as part of a comprehensive offering to our customers. Federal Signal Corporation and its subsidiaries operate twelve14 principal manufacturing facilities in sixfive countries around the world and provide products and integrated solutions to customers in all regions of the world.

Products manufactured and supplied, and services rendered, by the Company are divided into threetwo major operating segments: the Environmental Solutions Group and the Safety and Security Systems Group and the Fire Rescue Group. The individual operating businesses are organized as such because they share certain characteristics, including technology, marketing, distribution and product application, which create long-term synergies. Corporate contains those items that are not included in our operating segments.

Financial information (net sales, operating income, depreciation and amortization, capital expenditures and total assets) concerning the Company’s threetwo operating segments for each of the three years in the period ended December 31, 2014,2017, is included in Note 1315 – Segment Information to the accompanying consolidated financial statements and is incorporated herein by reference. Information regarding the Company’s discontinued operations is included in Note 1518 – Discontinued Operations to the accompanying consolidated financial statements and is incorporated herein by reference.

Under the Elgin brand name, the Company sells a leading U.S. brand of street sweepers primarily designed for large-scale cleaning of curbed streets, parking lots and other paved surfaces utilizing mechanical sweeping, vacuum and recirculating air technology. Vactor is a leading manufacturer of vacuum trucks used to maintain sewer lines, catch basins and storm sewers, as well as hydro-excavation trucks to meet the need for safe and non-destructive excavation. Guzzler is a leader in industrial vacuum loaders used to manage industrial waste or recover and recycle valuable raw materials. Westech is a manufacturer of high-quality, rugged vacuum trucks. Jetstream manufactures high pressure waterblast equipment and accessories for commercial and industrial cleaning and maintenance operations.

The Environmental Solutions and Fire Rescue groups use dealer networks and direct sales to service customers generally dependingDepending primarily on the type and geographic location of the customer.end-customer, the Environmental Solutions Group uses either a dealer network, including JJE, or direct sales to serve customers. The acquisition of TBEI increased the number of dealers within our network and also added additional direct sales resources. The dealer network serves both municipal and industrial end markets. Within municipal markets, the majority of our dealers operate exclusively in their assigned territory. In conjunction with selling vehicles to end-customers, dealer representatives demonstrate vehicle functionality and capability and provide vehicle service. In addition to selling products manufactured by the Company, JJE is a distributor of products manufactured by other companies. The Company believes its regional, national and global dealer networks for vehicles is a distinguishing factor from its competitors. The Environmental Solutions Group’s direct sales channel concentrates on the industrial, utility and construction market segments, whileand the dealer networks focus primarily onFS Solutions centers provide post-sale service, ancillary parts and equipment rentals. The acquisition of JJE increased the municipal markets. Dealer representatives demonstrate the vehicles’ functionalitiesnumber of service centers through which its parts, service and capabilitiesrental offerings can be provided to customerscurrent and service the vehicles on a timely basis. The Company believes its national and global dealer networks for vehicles distinguishes it from its competitors.potential customers.

The Safety and Security Systems Group sells to industrial customers through wholesalers and distributors who are supported by Company sales personnel and/or independent manufacturers’manufacturer representatives. Products are also sold to municipal and governmental customers through active independent distributors, as well as through original equipment manufacturers and the direct sales.sales force. The Company sells comprehensive integrated warning and interoperable communications through a combination of athe direct sales force and independent distributors. International sales are made through the Group’s independent foreign distributors or on a direct basis.

Total orders in 2014 were $957.4 million, of which approximately 38% were to U.S. municipal and governmental customers, 29% were to U.S. commercial and industrial customers and 33% were to non-U.S. customers. No single customer accounted for 10% or more of the Company’s business.net sales in any year within the three-year period ended December 31, 2017. Of the $1,018.0 million total orders reported in 2017, approximately 35% were from U.S. municipal and governmental customers, 42% were from U.S. commercial and industrial customers and 23% were from non-U.S. customers.

During 2014,2017, the Company’s U.S. municipal and governmental orders increased 21% from 2013,by 18% compared to a 2% increase in these orders in 2013 as compared to 2012, primarily2016 levels, driven by improved orders of ourfor street sweepersweepers and sewer cleaner productscleaners, as well as additional orders for dump truck bodies following the acquisition of TBEI. During 2016, the Company’s U.S. municipal and solid municipal demand.governmental orders decreased by 6% compared to 2015, driven by declines in orders of street sweepers and outdoor warning systems.

During 2017, the Company’s U.S. commercial and industrial orders increased by 140% from 2016 levels, largely attributable to improved orders for sewer cleaners and vacuum trucks, the addition of orders following the TBEI acquisition, the effects of a full year of JJE orders in 20142017 compared to seven months of activity in 2016, and increased 18%orders from 2013,industrial markets within the Safety and Security Systems Group. During 2016, the Company’s U.S. commercial and industrial orders were essentially unchanged in comparison to 2015 levels, with orders as a result of new product offerings, such as rental equipment and refuse and recycling vehicles, resulting from the JJE acquisition, being largely offset by reduced orders of waterblasting equipment, vacuum trucks and used equipment within the Environmental Solutions Group, as well as lower orders from U.S. industrial markets within the Safety and Security Systems Group.

During 2017, the Company’s non-U.S. orders increased by 21% from 2016, largely due to a $35.6 million increase within the Environmental Solutions Group, reflecting increased Canadian orders following the acquisition of JJE in June of 2016. Within the Safety and Security Systems Group, non-U.S. orders increased by $5.2 million, driven by improved orders in industrial and coal markets, partially offset by reduced orders from international public safety markets. This compared to an increase of 9%4% in thesenon-U.S orders in 2013 as compared2016 versus 2015, largely due to 2012, largely attributablea substantial increase in Canadian orders, which reflected orders acquired in, and received subsequent to, higherthe JJE acquisition, partially offset by declines in orders of vacuum trucks inclusive of hydro-excavation products,and sewer cleaners and a $8.5 million decrease in orders for street sweepers and waterblasting equipment in the Middle East. Within the Safety and Security Systems Group, there was a decrease in orders from overseas industrial markets, including international oil, gas and coal markets, as well as increased U.S.reduced orders from international public safety markets.

Of the Company’s non-U.S. orders increased 5%received in 2017, approximately 65% were from 2013, compared to a decrease of 4% in 2013 as compared to 2012.Canada, 18% were from Europe and less than 10% were from any other particular region. Non-U.S. municipal and governmental markets are similar to the U.S. municipal and governmental marketmarkets in that they are largely dependent on tax revenues to support spending and orders may be subject to budgetary cycles and public-entity bid procedures. Improvements in non-U.S. municipal and governmental market segments have more recently lagged those experienced in the U.S. Of the Company’s non-U.S. orders for 2014, approximately 35% were derived from Europe, 20% from Canada, 20% from the Asia Pacific, 18% from the Middle East and Africa and less than 10% from any other particular region.

The Company’s backlog totaled $328.2$257.5 million at December 31, 20142017 compared to $305.8$137.0 million at December 31, 2013.2016. The increase of $120.5 million, or 88%, was attributable to both organic growth, with higher demand for vacuum trucks, sewer cleaners and street sweepers, and the effects of the TBEI acquisition, whose backlog at December 31, 2017 was $42.5 million. Backlogs vary by Groupgroup due to the nature of the Company’s products and the buying patterns of its customers. TheTBEI’s product lines typically experience average lead times ranging from one to three months. Following the acquisition of TBEI, the Environmental Solutions Group experiences anGroup’s weighted average backlog of fouris expected to fiverange from three to six months of shipments, theshipments. The Safety and Security Systems Group typically experiences an average backlog of approximately two months of shipments and the Fire Rescue Group normally experiences an average backlog of five months of shipments, excluding service and maintenance contracts that generally cover a period of more than one year.shipments. Production of the Company’s December 31, 20142017 backlog is expected to be substantially completed during 2015.2018.

The Company purchases a wide variety of raw materials from around the world for use in the manufacture of its products, although the majority of current purchases are from North American sources. To minimize risks relating to availability, price and quality of key products and components, the Company is party to numerous strategic supplier arrangements. Although certain materials are obtained from either a single-source supplier or a limited number of suppliers, the Company has generally identified alternative sources to minimize the interruption of its business in the event of supply problems.disruptions.

Components critical to the production of the Company’s vehicles, such as engines, and hydraulic systems, are purchased from a select number of suppliers. The Company also purchases raw and fabricated steel, as well as commercial chassis, with certain specifications from multiple sources.

While there are risks and uncertainties with respect to the supply of certain raw materials and components that could impact their price, quality and availability in sufficient quantities.

Within specific product categories and domestic markets, the companiesbusinesses within the Safety and Security Systems Group are among the leaders with between one and four significant competitors and several additional ancillary market participants.leaders. The Group’s international market position varies from leader to ancillary participant depending on the geographic region and product line. Generally, competition is intense within all of the Group’s product lines and purchase decisions are made based on competitive bidding, price, features, reputation, performance and service.

The Company invests in research to support the development of new products and the enhancement of existing products and services. The Company believes this investment is important to maintain and/or enhance its leadership position in key markets. Expenditures for research and development by the Company were $16.6$13.0 million in 2014, $11.02017, $13.4 million in 20132016 and $10.0$14.0 million in 2012,2015, and were reported within selling,Selling, engineering, general and administrative expenses.(“SEG&A”) expenses on the Consolidated Statement of Operations.

trademarks are important in connection with the identification of our products and associated goodwill with customers, but no material part of the Company’s business is dependent on suchour trademarks.

The Company employed approximately 2,7003,100 people in its businesses at December 31, 20142017, with the Company’s U.S. hourly workers accounting for approximately 42%52% of its total workforce. Approximately 24%18% of the Company’s U.S. hourly workers were represented by unions at December 31, 2014.2017. We believe that our labor relations with our employees are good.

The Company believes it substantially complies with federal, state and local provisions that have been enacted or adopted regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment. The Company endeavors to establish environmentally-friendly policies and objectives, and believes that these actions are also consistent with cost-effective operating practices. Capital expenditures in 20142017 attributable to compliance with such laws were not material. The Company believes that the overall impact of compliance with environmental regulations will not have a material adverse effect on our financial position, results of operations or cash flow.

In May 2012, the Company sold a facility in Pearland, Texas. The facility was previously used by the Company’s discontinued Pauluhn business, which manufactured marine, offshore and industrial lighting products. While the Company has not finalized its plans, itIt is probable that the site will require remediation. Asremediation and as such, as of December 31, 20142017 and 2013, $1.32016, $0.5 million and $1.4$0.6 million, respectively, of reserves related to the environmental remediation of the Pearland facility arehave been included in liabilities of discontinued operations on the Consolidated Balance Sheets. The Company’s estimate may change as more information becomes available; however, the costs are not expected to have a material adverse effect on the Company’s results of operations, financial position or cash flow.

Certain of the Company businesses are susceptible to the influences of seasonal buying or delivery patterns. The Company tends to have lower sales in the first quarter compared to other quarters as a result of these influences.

The following is a list of the Company’s executive officers, their ages, business experience and positions as of February 1, 2015:2018:

Dennis J. Martin,Jennifer L. Sherman, age 64,53, was appointed President and Chief Executive Officer in October 2010 andeffective January 1, 2016. Ms. Sherman was also appointed to the Board of Directors effective January 1, 2016. Since joining the Company in March 2008. Mr. Martin had been an independent business consultant from 2005 to October 2010 and was the Chairman,1994, Ms. Sherman has served in various roles of increasing responsibility, most recently as Senior Vice President and Chief ExecutiveOperating Officer of General Binding Corporation from 2001April 2014 to 2005.

Julie A. Cook, age 53,56, was appointed Vice President, Human Resources in September 2012. Ms. Cook served as Johnson Controls, Inc.’s Director of Human Resources, Building Efficiency Programs and then Vice President of Human Resources, Global Manufacturing, Supply Chain and Communications, from 2010 through 2012. Ms. Cook previously served as the Company’s Environmental Solutions Group Vice President of Human Resources with responsibility for Corporate Human Resources from 2008 through 2010. Ms. Cook was Group Vice President of Human Resources for the Environmental Solutions Group from 2001 to 2007.

Brian S. Cooper,Daniel A. DuPré, age 58,61, was appointed Vice President, General Counsel and Secretary in November 2015. Mr. DuPré joined the Company in 2006, most recently serving as its Deputy General Counsel. Mr. DuPré previously held senior legal positions at Sears Holdings Corporation, Bank One Corporation, and Brunswick Corporation and served as an Assistant United States Attorney for the Northern District of Illinois.

Ian A. Hudson, age 41, was appointed Senior Vice President and Chief Financial Officer in May 2013. Prior to joiningOctober 2017. Mr. Hudson joined the Company Mr. Cooper servedin August 2013 as Chief Financial Officer of Westell Technologies, Inc. from 2009 to 2013. Prior to Westell, Mr. Cooper served as Chief Financial Officer of Fellowes, Inc. from 2007 to 2009 and as Senior Vice President and Treasurer of United Stationers Inc. from 2001 to 2007. Prior to joining United Stationers, Mr. Cooper served as Treasurer of Burns International Services Corporation, and held various financial positions during his 12-year tenure with Amoco Corporation.

Svetlana Vinokur, age 63,38, was appointed Vice President, Treasurer and Corporate Development in April 2015. Prior to joining the Company, Ms. Vinokur worked as Assistant Treasurer at Illinois Tool Works Inc. Prior to that role, Ms. Vinokur served as Finance Head of Bronto Skylift Oy AbM&A Strategy at Mead Johnson Nutrition Company and as a senior associate for Robert W. Baird & Company’s Consumer and Industrial Investment Banking group. Ms. Vinokur started her career at Ford Motor Company, serving in July 2007. Mr. Peltola was Managing Director of Bronto Skylift from 1998 to 2007.various finance roles.

Jennifer L. Sherman,Mark D. Weber, age 50,60, was appointed Senior Vice President and Chief Operating Officer in April 2014. Since joiningJanuary 2018, upon rejoining the Company after four years at Supreme Industries, Inc. (“Supreme”). Mr. Weber joined Supreme in 1994, Ms. Sherman has servedMay 2013 as President and Chief Executive Officer, serving in various rolesthat capacity up to the sale of increasing responsibility, most recentlySupreme to Wabash National Corporation, which was completed in September 2017. Prior to joining Supreme, Mr. Weber worked for 17 years as Senior Vice President, Chief Administrative Officer, General Counsel and Secretary from 2010 to April 2014. Ms. Sherman also servedan executive within the Company’s Environmental Solutions Group, including a decade as Senior Vice President, Human Resources, General Counsel and Secretary from 2008 to 2010, and Vice President, General Counsel and Secretary from 2004 to 2008.Group President.

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

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

We may occasionally make forward-looking statements and estimates such as forecasts and projections of our future performance or statements of our plans and objectives. These forward-looking statements may be contained in, but are not limited to, filings with the SEC, including this Form 10-K, press releases made by us and oral statements made by our officers. Actual results could differ materially from those contained in such forward-looking statements. Important factors that could cause our actual results to differ from those contained in such forward-looking statements include, but are not limited to, the risks described below.

In 2014,2017, we generated approximately 65%75% of our net sales in the U.S. Our ability to be profitable depends heavily on varying conditions in the U.S. governmental and municipal markets, as well as the overall U.S. economy. The industrial markets in which we compete are subject to considerable cyclicality, and move in response to cycles in the overall business environment. Many of our customers are municipal government agencies, and as a result, we are dependent on municipal government spending. Spending by our municipal customers can be affected by federal, state and local political circumstances, budgetary constraints, changing priorities, potential government shutdowns and other factors. The U.S. government and municipalities depend heavily on tax revenues as a source of spending and accordingly, there is a historical correlation that suggests a lag of a one or two-year lagto two years between the condition of the U.S. economy and our sales to the U.S. government and municipalities. Therefore, downturns in the U.S. economy are likely to result in decreases in demand for our products. During previous economic downturns, we experienced decreases in sales and profitability, and we expect our business to remain subject to similar economic fluctuations in the future. In addition, the extent of any potential impact of the enactment of the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) on the U.S. economy is currently uncertain. Changes in federal, state and local tax revenues which may result from the 2017 Tax Act may have an impact on demand for our products.

Our business is subject to fluctuations in demand and changing international economic, legal and political conditions that are beyond our control. In 2014,2017, approximately 35%25% of our net sales were generatedto customers outside the U.S. and we expect a significant portion of our revenues to come from international sales in the foreseeable future. Operating in the international marketplace exposes us to a number of risks, including the need to comply with U.S. and foreign laws and regulations applicable to our foreign operations, such as the Foreign Corrupt Practices Act, (the “FCPA”), the United Kingdom (“U.K.”) Bribery Act and their counterparts in other foreign jurisdictions in which we operate, restrictive domestic and international trade regulations, including the imposition of tariffs and trade barriers on our products, changes in these laws, regulations and policies by the U.S. and foreign governments, political and economic instability in the jurisdictions in which we operate, foreign receivables collection risk, local labor market conditions, and, in some cases, international hostilities. The costs of compliance with these various laws, regulations and policies can be significant and penalties for non-compliance could significantly impact our business.

To the extent that our international operations are affected by adverse foreign economic or political conditions, we may experience disruptions and losses which could have a material impact on our financial position, results of operations or cash flow. To mitigate the risk of foreign receivables collection, we typicallymay obtain letters of credit from international customers to satisfy concerns regarding the collectibilitycollectability of amounts billed to customers.

Some of our contracts are denominated in foreign currencies, which exposesmay expose us to the riskrisks of fluctuating currency values and exchange rates, hard currency shortages and controls on currency exchange. Changes in the value of foreign currencies over the long term could increase our U.S. dollar costs for, or reduce our U.S. dollar revenues from, our foreign operations. Any increased costs or reduced revenues as a result of foreign currency fluctuations could adversely affect our results of operations.

Economic downturns result in tighter credit markets, which could adversely affect our customers’ ability to secure financing or to secure financing at favorable terms or interest rates necessary to proceed or continue with purchases of our products and services. Our customers’ or potential customers’ inability to secure financing for projects could result in the delay, cancellation or downsizing of new purchases or the suspension of purchases already under contract, which could cause a decline in the demand for our products and services and negatively impact our financial position, results of operations or cash flow.

We place a high priority on developing new products and services, as well as enhancing our existing products and services. As a result of these efforts, we may be required to expend substantial research, development and marketing resources, and the time and expense required to develop a new product or service or enhance an existing product or service are difficult to predict. We may not succeed in developing, introducing or marketing new products or services or product or service enhancements. In addition, we cannot be certain that any new or enhanced product or service will generate sufficient revenue to justify the expense and resources devoted to thisthe related product diversification effort.

We continue to evaluate opportunities to restructure our business and rationalize our manufacturing operations in an effort to optimize our cost structure. These actions could result in significant charges that could adversely affect our financial condition and results of operations. Future actions could result in restructuring and related charges, including but not limited to impairments, employee termination costs and charges for pension and other postretirement contractual benefits and pension curtailments that could be significant and could have an adverse effect on our financial condition, results of operations or cash flow.

The markets in which we operate are highly competitive. Many of our competitors have significantly greater financial resources than we do. The intensity of this competition, which is expected to continue, can result in price discounting and margin pressures throughout the industry and may adversely affect our ability to increase or maintain prices for our products. In addition, certain of our competitors may have lower overall labor or material costs. In some cases, our contracts with municipal and other governmental customers are awarded and renewed through competitive bidding. We may not be successful in obtaining or renewing these contracts, which could have an adverse effect on our financial condition, results of operations or cash flow.

We are exposed to product liability and warranty claims in the normal course of business in the event that our products actually or allegedly fail to perform as expected, or the use of our products results, or is alleged to result, in bodily injury and/or property damage. For example, we have been sued by firefighters seeking damages claiming that exposure to our sirens has

impaired their hearing and that the sirens are, therefore, defective. In addition, we are subject to other claims and litigation from time to time as further described in the accompanying notes to our consolidated financial statements. We could experience material warranty or product liability costs in the future and incur significant costs to defend ourselves against these claims. While we carry insurance and maintain reserves for product liability claims, our insurance coverage may be inadequate if such claims do arise, and any defense costs and liability not covered by insurance could have a material adverse impact on our financial condition, results of operations or cash flow. A future claim could involve the imposition of punitive damages, the award of which, pursuant to state laws, may not be covered by insurance. In addition, warranty and certain other claims are not typically covered by insurance. Any product liability or warranty issues may adversely impact our reputation as a manufacturer of high quality, safe products and may have a material adverse effect on our business.

We are engaged in an industry that will be affected by future technological developments. The introduction of products or processes utilizing new technologies could render our existing products or processes obsolete or unmarketable. Our success will depend upon our ability to develop and introduce on a timely and cost-effective basis new products, applications and processes that keep pace with technological developments and address increasingly sophisticated customer requirements. We may not be successful in identifying, developing and marketing new products, applications and processes and product or process enhancements. We may experience difficulties that could delay or prevent the successful development, introduction and marketing of product or process enhancements or new products, applications or processes. Our products, applications or processes may not adequately meet the requirements of the marketplace and achieve market acceptance. Our financial condition, results of operations or cash flow could be materially and adversely affected if we were to incur delays in developing new products, applications or processes or product or process enhancements, or if our products do not gain market acceptance.

We purchase from suppliers raw materials, and component parts and finished goods to be used in the manufacturing and sale of our products. In addition, we purchase certain finished goods from suppliers.may incorporate vehicle chassis provided directly by our customers in our production process. Changes in our relationships with suppliers, shortages or production delays, whether due to our suppliers or customers, regulatory restrictions or work stoppages by the employees of suchour suppliers or the chassis suppliers for our customers could have a material adverse effect on our ability to timely manufacture and market products. In addition, increases in the costs of purchased raw materials, component parts or finished goods could result in manufacturing interruptions, delays, inefficiencies or our inability to market products. In addition, our profit margins would decrease if prices of purchased raw materials, component parts or finished goods increase and we are unable to pass on those increases to our customers.

Our ability to operate our businesses and implement our strategies depends in part on the efforts of our executive officers and other key employees. In addition, our future success will depend on, among other factors, our ability to attract and retain qualified personnel, including finance personnel, research professionals, technical sales professionals and engineers.personnel. The loss of the services of any key employee or the failure to attract or retain other qualified personnel could have a material adverse effect on our business or business prospects.

We rely on a national and global dealer networknetworks to market certain of our products and services. A disruption in our dealer network, or with a significant dealer, or within a specific market, could have an adverse impact on our business within the affected market. In addition, our dealers require adequate liquidity to finance their operations, including purchases of our products. Dealers are subject to numerous risks and uncertainties that could unfavorably affect their liquidity positions, including, among other things, continued access to adequate financing sources on a timely basis on reasonable terms. These sources of financing are vital to our ability to sell products through our dealer network. Deterioration in the liquidity or credit worthiness of our dealers could have a significant adverse effect on our business. The loss or termination of a significant dealer, or a significant number of dealers, could cause difficulties in marketing and distributing our products and have an adverse effect on our business, financial condition, results of operations or cash flow.

WeAs a portion of our workforce is unionized, we are subject to risk of work stoppages and other labor relations matters because a portion of our workforce is unionized.matters. As of December 31, 2014,2017, approximately 24%18% of our U.S. hourly workers were represented by labor unions and were covered by collective bargaining agreements.agreements with various unions. Many of these agreements include provisions that limit our ability to realize cost savings. Any strikes, threats of strikes or other organized disruptions in connection with the negotiation of new labor agreements or other negotiations could materially adversely affect our business as well as impair our ability to implement further measures to reduce costs and improve production efficiencies.

Our funding obligations and pension expense for our defined benefit pension plans are driven by the performance of assets set aside in trusts for these plans, the discount rate used to value the plans’ liabilities, actuarial assumptions and experience and legal and regulatory funding requirements. Changes in these factors could have an adverse impact on our financial condition, results of operations or cash flow. In addition, a portion of our pension plan assets are invested in equity securities, which can experience significant declines if financial markets weaken. The level of the funding of our defined benefit pension plan liabilities was approximately 77%80% as of December 31, 2014.2017. Funding of the Company’s U.S. defined benefit pension plan is determined in accordance with guidelines set forth in the Employee Retirement Income Security Act (“ERISA”). The current year funding status was impacted by a lower discount rates and revised mortality assumptions which project longer life expectancy.rate than in the prior year. Our future pension expenses and funding requirements could increase significantly due to the effect of adverse changes in the discount rate, asset values or the estimated expected return on plan assets. In addition, we could bebecome legally required to make increased cash contributions to the pension plans, and these contributions could be material and negatively affect our cash flow.

We, like other manufacturers, continue to face heavy governmental regulation of our products, especially in the areas of the environment and employee health and safety. Complying with environmental and safety requirements has added and will continue to add to the cost of our products, and could increase the capital required to support our business. While we believe that we are in compliance in all material respects with these laws and regulations, we may be adversely impacted by costs, liabilities or claims with respect to our operations under existing laws or those that may be adopted. These requirements are complex, change frequently and have tended to become more stringent over time. Therefore, we could incur substantial costs, including cleanup costs, fines and civil or criminal sanctions as a result of violation of, or liabilities under, environmental laws and safety regulations.

Our long-term strategy includes exploring acquisitionacquisitions of companies or businesses to facilitate our growth, enhance our global market position and broaden our product offerings. Such acquisitions may help us expand into adjacent markets, add complementary products and services or allow us to leverage our distribution channels. In connection with this strategy, we could face certain risks and uncertainties in addition to those we face in the day-to-day operations of our business. We also may be unable to identify suitable targets for acquisition or to make acquisitions at favorable prices. If we identify a suitable acquisition candidate, our ability to successfully implement the acquisition would depend on a variety of factors, including our ability to obtain financing on acceptable terms. In addition, our acquisition activities could be disrupted by overtures from competitors for the targeted companies, governmental regulation and rapid developments in our industry that decrease the value of a potential target’s products or services.

Acquisitions involve risks, including those associated with the following:

We also may not achieve anticipated revenue and cost benefits associated with our acquisitions. Acquisitions may not be accretive to our earnings and may negatively impact our results of operations as a result of, among other things, the incurrence of debt, acquisition costs, impairment of goodwill and amortization of other intangible assets. In addition, future acquisitions could result in dilutive issuances of equity securities.

We may assume liabilities in connection with the acquisition of businesses. There may be liabilities that we fail or are unable to discover in the course of performing due diligence investigations on the acquired businesses.businesses, or that may be more material than we discovered. In these circumstances, we cannot assure that our rights to indemnification from the sellers of the acquired businesses to us will be sufficient in amount, scope or duration to fully offset the possible liabilities associated with the businesses or property acquired. Further, these liabilities could result in unexpected legal or regulatory exposure, unexpected increases in taxes or other adverse effects on our business. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our financial condition, results of operations or cash flow.

None.

As of December 31, 2014,2017, the Company utilized sixten principal manufacturing plants located throughout the U.S., as well as fivetwo in Europe, one in Canada and one in South Africa. The Company also leases certain facilities within the U.S., Europe and EuropeCanada from which we sell partsprovide sales, service and/or provide service.equipment rentals. As of December 31, 2014,2017, the Company devoted approximately 1.01.6 million square feet to manufacturing and 0.60.7 million square feet to sales, service, warehousing and office space. Of the total square footage, approximately 46%77% is devoted to the Environmental Solutions Group 39%and 23% to the Safety and Security

Systems Group and 15% to the Fire Rescue Group. Approximately 21%42% of the total square footage is owned by the Company with the remaining 79%58% being leased. Owned facilities are subject to lien under the Company’s Senior SecuredAmended and Restated Credit FacilityAgreement dated March 13, 2013 (the “Senior SecuredJanuary 27, 2016 (as amended on June 2, 2017, the “Amended 2016 Credit Facility”Agreement”).

All of the Company’sThe Company believes its properties, as well as theand 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 Company’s current business needs.

The information concerning the Company’s legal proceedings included in Note 911 – Legal Proceedings to the accompanying consolidated financial statements is incorporated herein by reference.

Not applicable.

PART II