UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 1, 1998
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AMERICAN STANDARD INC.
(Exact name of registrant as specified in its charter)
Delaware 33-64450 25-0900465
(State or other jurisdiction of (Commission File No.) (I.R.S. Employer
incorporation or organization) Identification No.)
One Centennial Avenue, P.O. Box 6820, Piscataway, NJ 08855-6820
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (732)980-6000
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ITEM 5. OTHER EVENTS
RECENT MANAGEMENT CHANGES AND OTHER DEVELOPMENTS
On December 10, 1997, American Standard Inc. ("the Company") announced,
effective January 1, 1998, certain changes in its management and
organizational structures in anticipation of the retirement of certain key
executive officers and to provide focus for the continued growth of the
Company's businesses:
Mr. Horst Hinrichs, Senior Vice President Automotive Products was appointed
to the newly created position of Vice Chairman;
Mr. Craig Kissel, Vice President and Group Executive Unitary Products
Group, was named Senior Vice President Automotive Products;
Mr. George Kerckhove, Senior Vice President Plumbing Products, was named
Vice President and Chief Financial Officer and, until further notice, the Office
of the Chief Executive Officer will oversee management of Plumbing Products;
Mr. Fred Allardyce, Vice President and Chief Financial Officer, was named
Senior Vice President Medical Systems;
Mr. Benson Stein, Vice President, General Auditor was named Vice President
- - Operations Medical Systems; and
Mr. Raymond Pipes, Vice President, Corporate Development, was named Vice
President - Investor Relations.
In addition, effective January 1, 1998, the Company will realign its Air
Conditioning Products Sector into three separate businesses: Applied Products
will be organized into one global business and Unitary Products will be
organized into the North American Unitary and the International Unitary Groups.
Leading the Applied Global Systems business as Vice President and Group
Executive will be Mr. James Schultz, currently Vice President and Group
Executive of the North American Commercial Group. Mr. Roberto Canizares,
Business Leader of the Trane Asia Pacific region, will lead the applied business
outside North America and report directly to Mr. Schultz. Leading the North
American Unitary business as a newly-elected Vice President and Group Executive
will be Mr. David Pannier, previously holding the senior marketing position with
the Unitary Products Group. Mr. Bruce Achenbach, Business Leader of Trane's
European business, will lead the International Unitary Products Group. Mr.
William Klug, Vice President and Group Executive of the Trane International
Group, will provide oversight and assistance in the transition of the Trane
organization pending his planned retirement in 1998.
During the past several years, the Company has been implementing a
strategy of low-cost product sourcing across all of its businesses. With respect
to Plumbing Products, in 1996 the Company commenced production of chinaware
products for its U. S. and Latin American markets at a newly-constructed
facility in Aguascalientes, Mexico. Production of plumbing fittings was expanded
at a plant in Vidima, Bulgaria as a source for certain products sold in European
markets. In addition, the Company is currently completing construction of a
vitreous china production facility in Bulgaria. Although the identification and
timing of plant closures has not been finally determined, the Company expects to
reorganize certain of its European Plumbing Products operations, including
shifting certain production capability to the Bulgarian chinaware facility, and
that such reorganizations and product source shifts could result in the Company
recording a charge to earnings in 1998 of as much as $75 million to $100
million. With respect to Automotive Products and Air Conditioning Products, the
Company has also commenced implementation of its low-cost sourcing strategy,
although such implementation is expected to be substantially smaller in scope
than with respect to Plumbing Products.
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The Company has previously disclosed that German tax authorities have
raised questions regarding the treatment of certain significant matters in
connection with examinations of the tax returns of the Company's German
subsidiaries for the years 1984 to 1990, and have begun a subsequent examination
of German tax returns for the years 1991-1994 (See Note 6 of Notes to
Consolidated Financial Statements filed as an Exhibit to the Company's Annual
Report on Form 10-K for the year ended December 31, 1996). In addition to the
matters previously disclosed, based on recent preliminary indications, the
Company believes that the German tax authorities are considering proposing
additional tax adjustments of approximately $50 million for the years 1991 to
1994 with respect to the substantial repayment of an intercompany financing
instrument. The Company is currently unable to predict the time that or extent
to which an assessment, if any, in respect of such potential adjustment would be
made. The Company believes, however, that the tax returns of its German
subsidiaries are substantially correct as filed.
Recent currency devaluations and related economic weakness in certain
Far East countries have had an adverse impact on the Company's sales and
earnings. The Company's sales in the Far East (excluding China) are estimated to
have accounted for 6% of the Company's total sales in 1997. Excluding China, the
Company estimates that Far East sales declined $30 million from 1996, and
income, net of minority interest, declined $13 million.
Capital expenditures in 1998 are expected to be approximately $350
million and to be funded principally from operating cash flow.
Information Concerning Forward-Looking Statements. Certain of the
statements contained in this report (other than the historical financial data
and other statements of historical fact), including, without limitation,
statements as to management's expectations and belief are forward-looking
statements. Forward-looking statements are made based upon management's
expectations and belief concerning future developments and their potential
effect upon the Company. There can be no assurance that future developments will
be in accordance with management's expectations or that the effect of future
developments on the Company will be those anticipated by management. Many
important factors could cause actual results to differ materially from
management's expectations, including the level of new construction activity in
the Company's Air Conditioning Products' and Plumbing Products' markets; the
timing of completion and success in the start-up of new production facilities;
changes in U. S. or international economic conditions, such as inflation or
interest rate fluctuations or recessions in the Company's markets; pricing
changes to the Company's products or those of its competitors, and other
competitive pressures on pricing and sales; integration of acquired businesses;
risks generally relating to the Company's international operations, including
governmental, regulatory or political changes; and transactions or other events
affecting the need for, timing and extent of the Company's capital expenditures.
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SIGNATURES
Pursuant to the requirements 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.
By ____/s/ G. Ronald Simon_____________
Name: G. Ronald Simon
Title: Vice President and Controller
DATE: January 8, 1998
