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E-One lost more than $24 million last year
Federal Signal lists Ocala operation as discontinued, reports results separately.
By Rick Cundiff
STAR-BANNER
Published: Saturday, June 7, 2008 at 6:30 a.m.
OCALA - Firetruck manufacturer E-One lost nearly $25 million last year, documents from parent company Federal Signal Corp. show.
Fewer orders, lower production and high fixed costs led to the high losses for E-One, according to a Form 8-K that Federal Signal filed Wednesday with the U.S. Securities and Exchange Commission.
The filing shows E-One, which is for sale, as a discontinued operation - taking it out of the parent company's ongoing financial results. The document also restates Federal Signal's operating results for each quarter of last year.
For more than a decade, Federal Signal's Fire Rescue Group has reported only group results that included combined financial data for both E-One and the Finland-based Bronto Skylift. But the new filing shows results for last year for Bronto alone.
Federal Signal vice president and treasurer David Janek confirmed that comparing the numbers from the new filing and previous reports would yield an accurate portrait of E-One's finances.
Previous reports showed the Fire Rescue Group with an $11 million loss for the year on total orders of $397.5 million. The new report shows Bronto posted $13.6 million in operating income for the period on orders of $179.9 million, leaving E-One with a loss of $24.6 million on $217.6 million in orders.
Although nearly two-thirds of the loss occurred in the second half of the year, the loss shouldn't be attributed to E-One president Peter Guile, who took over in July, Janek said in an e-mailed statement.
"The second half of 2007 experienced a proportionally higher loss than the first half due to the lower production levels and restructuring charges incurred in the second half," Janek wrote. "Since the appointment of Peter Guile as president .Ê.Ê. progress for improving the future performance of E-One has been made in several key areas, including the reduction of overhead costs, a rebuilt and re-motivated dealer network resulting in a significant increase in orders and a positive cash flow which has more than offset the incurred operating losses."
A spokeswoman for Guile said Janek's statement would be the extent of the company's response.
Federal Signal announced in February that E-One is for sale. Talks with potential buyers are continuing, Janek said.
"These potential buyers are interested in the future growth of E-One through meeting the needs of customers through innovative products and services, and increasing the efficiency of the Ocala operations," he wrote.
Guile has committed to remain with E-One when the company sells, Janek wrote. That could help a potential sale, said analyst Walter Liptak, who covers Federal Signal for Barrington Research.
"I would think that's probably a plus," he said. A buyer would "want as much of the manufacturing knowledge as possible."
If Guile remains with E-One and it sells, he also will receive a payout from Federal Signal.
According to a Federal Signal proxy statement filed in March, Guile will receive a one-time payment of $400,000 from Federal Signal if E-One sells and he remains with the firetruck company.
He also would receive an additional amount equal to 1 percent of any sale proceeds that exceed the estimated liquidation value of E-One.
A sale probably won't take place until sometime in the third quarter, Liptak said.
"I think there's some concern out there in the market that municipal spending might be weak," he said.
E-One was founded in Ocala in 1974. Federal Signal has owned the company since 1979.
Rick Cundiff may be reached at
[email protected] or at 867-4130.
