SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 1-470
AMERICAN STANDARD INC.
(Exact name of Registrant as specified in its charter)
Delaware 25-0900465
(State or other jurisdiction of (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
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
X Yes No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock, $.01 par value, outstanding at
October 31, 1999 1,000 shares
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
AMERICAN STANDARD INC.
UNAUDITED SUMMARY STATEMENT OF OPERATIONS
(Dollars in millions)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
<S> <C> <C> <C> <C>
1999 1998 1999 1998
------ ------ ------ ------
SALES $1,899 $1,728 $5,509 $5,016
------ ------ ------ ------
COST AND EXPENSES
Cost of sales 1,418 1,298 4,093 3,737
Selling and administrative expenses 309 282 921 829
Restructuring charge - 35 - 35
Other expense (income) 2 (1) (3) 7
Interest expense 47 43 141 145
------ ------ ------ ------
1,776 1,657 5,152 4,753
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM 123 71 357 263
Income taxes 51 35 148 113
------ ------ ------ ------
INCOME BEFORE
EXTRAORDINARY ITEM 72 36 209 150
Extraordinary loss on retirement of debt,
net of tax - - - 50
------ ------ ------ ------
NET INCOME $ 72 $ 36 $ 209 $ 100
====== ====== ====== =====
<FN>
See accompanying notes
</FN>
</TABLE>
<PAGE>
Item 1. Financial Statements (continued)
<TABLE>
AMERICAN STANDARD INC.
UNAUDITED SUMMARY BALANCE SHEET
(Dollars in millions)
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 45 $ 65
Accounts receivable 1,166 939
Inventories
Finished products 307 269
Products in process 109 97
Raw Materials 118 92
------ ------
534 458
Other Current Assets 135 129
------ ------
TOTAL CURRENT ASSETS 1,880 1,591
FACILITIES, less accumulated depreciation;
Sept. 1999 - $620; Dec. 1998- $611 1,354 1,241
GOODWILL 1,036 833
OTHER ASSETS 943 885
------ ------
TOTAL ASSETS $5,213 $4,550
====== ======
CURRENT LIABILITIES
Loans payable to banks $ 780 $ 732
Current maturities of long-term debt 31 169
Accounts payable 532 544
Accrued payrolls 250 204
Other Accrued Liabilities 759 710
------ ------
TOTAL CURRENT LIABILITIES 2,352 2,359
LONG-TERM DEBT 1,944 1,528
RESERVE FOR POSTRETIREMENT BENEFITS 474 478
OTHER LIABILITIES 535 530
------ ------
TOTAL LIABILITIES 5,305 4,895
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S DEFICIT
Preferred stock, Series A, 1,000 shares issued
and outstanding, par value $.01 - -
Common stock, 1,000 shares issued and
outstanding, $.01 par value. - -
Capital surplus 585 571
Accumulated deficit (483) (692)
Foreign currency translation effects (194) (224)
------ ------
TOTAL STOCKHOLDER'S DEFICIT (92) (345)
------ ------
$5,213 $4,550
====== ======
<FN>
See accompanying notes
</FN>
</TABLE>
<PAGE>
Item 1. Financial Statements (continued)
<TABLE>
AMERICAN STANDARD INC.
UNAUDITED SUMMARY STATEMENT OF CASH FLOWS
(Dollars in millions)
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1999 1998
---- ----
<S> <C> <C>
CASH PROVIDED (USED) BY:
OPERATING ACTIVITIES:
Net income $209 $ 150
Depreciation 113 98
Amortization of goodwill and other intangibles 45 40
Restructuring charges - 35
Non-cash interest 5 30
Non-cash stock compensation - 4
Changes in assets and liabilities:
Accounts receivable (196) (177)
Inventories (38) (64)
Accounts payable and other accruals 66 140
Other Assets and Liabilities 28 (8)
---- ----
Net cash provided by operating activities 232 248
---- ----
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (140) (156)
Investments in affiliated companies
and other businesses (40) (16)
Investment in computer software (58) (14)
Acquisition of Armitage/Dolomite, net
of cash acquired (430) -
Other (1) (3)
---- ----
Net cash used by investing activities (669) (189)
---- ----
FINANCING ACTIVITIES:
Net loan from Parent 3 (35)
Proceeds from issuance of long-term debt 483 1,011
Repayments of long-term debt, including
redemption premium (173) (971)
Net change in revolving credit facility 92 (10)
Net change in other short-term debt 13 8
Financing costs and other (1) (34)
---- ----
Net cash provided (used) by financing activities 417 (31)
---- ----
Effect of exchange rate changes on cash and
cash equivalents - -
---- ----
Net increase (decrease) in cash and cash equivalents (20) 28
Cash and cash equivalents at beginning of period 65 29
---- ----
Cash and cash equivalents at end of period $ 45 $ 57
==== ====
<FN>
See accompanying notes
</FN>
</TABLE>
<PAGE>
AMERICAN STANDARD INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1. BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying condensed consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation of
financial data have been included. The results of operations for interim periods
are not necessarily indicative of the results that may be expected for the
entire year. The condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and accompanying notes
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1998.
Certain amounts in the 1998 financial statements have been reclassified to
conform to the 1999 presentation.
NOTE 2. RESTRUCTURING AND ASSET IMPAIRMENT CHARGES
In 1998, the Company committed to restructuring plans designed to achieve lower
product costs and improved efficiency. Key elements of the plans include the
transfer of significant manufacturing capacity to locations with lower labor
costs and the sale of certain assets. In connection therewith, the Company
determined that certain long-lived assets were impaired. Accordingly, in the
second half of 1998 the Company recorded charges totaling $200 million ($186
million net of tax benefits), including $185 million for Plumbing Products, $7
million for Air Conditioning Products, $5 million for Automotive Products and $3
million for Medical Systems.
The Plumbing Products charge of $185 million reflects the closure of five plants
in Europe and two in North America. The charge includes a loss on the sale of
the French distribution operations, costs related to a workforce reduction of
approximately 1,600 people and, applying the criteria of FAS 121, write-downs of
impaired fixed assets and related goodwill.
The Air Conditioning Products charge of $7 million involves the closure of one
plant in Australia, one plant in Europe and a workforce reduction of 115 people.
The Automotive Products charge of $5 million primarily reflects a workforce
reduction of 75 people in Europe related to outsourcing certain machining work
to lower-cost vendors and the closure of three small plants. A restructuring
charge of $3 million was also recorded for Medical Systems, relating to asset
write-offs and severance payments.
<PAGE>
<TABLE>
Following is a summary of the restructuring and asset impairment charges accrued
and activity through September 30, 1999 (dollars in millions):
<CAPTION>
Balance Paid first Balance
Initial Non-cash Paid in Dec. 31, nine months Sept. 30,
Charge Write-Off 1998 1998 OF 1999 1999
------ --------- ----- ------ --------- ----
<S> <C> <C> <C> <C> <C> <C>
Termination payments
to employees $49.8 $ - $10.4 $39.4 $28.0 $11.4
Other employee costs 33.6 - 4.3 29.3 7.0 22.3
Facilities write-downs (a) 88.3 72.4 - 15.9 3.5 12.4
Loss on sale of French
distribution business (b) 19.1 14.9 3.6 .6 .6 -
Other 9.5 1.4 .2 7.9 2.4 5.5
------ ----- ----- ----- ----- -----
$200.3 $88.7 $18.5 $93.1 $41.5 $51.6
====== ===== ===== ===== ===== =====
<FN>
(A)Includes goodwill write-down of $31.3 million related to the facilities
write-down for the french plumbing manufacturing operations.
(B) Includes goodwill write-off of $12.3 million.
</FN>
</TABLE>
The initial charge of $200.3 million was comprised of non-cash asset write-offs
of $88.7 million and accrued charges of $111.6 million. Of the $51.6 million
unpaid balance of accrued charges as of September 30, 1999, the Company expects
that most will be utilized by the end of 1999 and the remainder in 2000.
The accrued termination payments to employees include only severance payments
after termination. Other employee-related costs include negotiated supplemental
payments to pension funds and other payments to union organizations for the
benefit of terminated employees. Of the 1,800 employees being terminated,
approximately 1,500 are hourly factory workers and 300 are salaried
administrative personnel. As of September 30, 1999, approximately 1,250
employees had been terminated.
The facilities being closed and written down include eight owned and four leased
manufacturing plants, and the related manufacturing equipment. The owned plants
are being held for disposal and, accordingly, were written down to the lower of
carrying amount or fair value, less costs to sell. Two of those facilities will
be demolished and the land held for sale. Leases on the four rented facilities
will be terminated upon payment of obligations specified or negotiated under the
lease contracts. Manufacturing equipment being scrapped was written off and
equipment being sold has been written down to the lower of carrying amount or
fair value, less costs to sell. The net carrying value of land, buildings and
equipment held for sale as of September 30, 1999 was $12 million. The closure of
certain facilities necessitates the investigation of potential environmental
contamination or the legal or regulatory requirement to remediate the facility.
In addition, the sale of one facility contractually obligates the Company to
demolish and remediate the site.
Approximately one-half of other restructuring costs are leasehold termination
costs, with the remainder consisting of cash grants forfeited upon closure of a
facility in Italy and other miscellaneous costs.
NOTE 3. ACQUISITION
On February 2, 1999, the Company acquired the Bathrooms Division of Blue Circle
Industries PLC, a manufacturer of ceramic sanitaryware, brassware and integrated
plumbing systems, for approximately $430 million, including fees and expenses
and net of cash acquired, with borrowings under the Company's 1997 Credit
<PAGE>
Agreement. The acquired business consists of two principle businesses, Armitage
Shanks, a United Kingdom manufacturer, and Ceramica Dolomite, an Italian
manufacturer ("Armitage/Dolomite") and had 1998 sales of approximately $290
million and assets at December 31, 1998 of approximately $250 million. The
Company expects to complete its plans to integrate Armitage/Dolomite into
existing European operations by the end of 1999. This process could result in
additional expenses or increase the amount of goodwill.
This acquisition is being accounted for as a purchase. The Company is in the
process of valuing the assets acquired and liabilities assumed for purposes of
allocating the purchase price. Although the evaluation process is not expected
to be completed until the end of 1999, the Company's estimate indicates that
goodwill of approximately $250 million will be recorded.
NOTE 4. PUBLIC OFFERING OF DEBT
On May 28, 1999, American Standard Inc. completed the sale of the equivalent of
$460 million of Senior Notes, with an average interest rate of 7.7%, issued in
three series: 250 million Euro Senior Notes due 2006; 100 million U.S. Dollar
Senior Notes due 2009 and 60 million Sterling Senior Notes due 2009. Net
proceeds of $452 million from the offering were applied to refinance borrowings
incurred to pay $150 million of 10-7/8% Senior Notes at maturity on May 15, 1999
and to refinance a substantial portion of the purchase price of the February
1999 Armitage/Dolomite acquisition. The May 28, 1999 sale of Senior Notes, which
are not subject to redemption, was made pursuant to a shelf registration
statement jointly filed by American Standard Companies Inc. and its wholly-owned
subsidiary American Standard Inc. covering $1 billion of senior debt (the "1998
Shelf Registration"). Debt securities sold under the 1998 Shelf Registration are
issued by American Standard Inc. and unconditionally guaranteed by American
Standard Companies Inc.
NOTE 5. COMPREHENSIVE INCOME
Total comprehensive income, consisting of net income or loss and foreign
currency translation effects, for the three months ended September 30, 1999 and
1998 was $47 million and $26 million, respectively, and for the nine months
ended September 30, 1999 and 1998 was $239 million and $98 million,
respectively.
NOTE 6. TAX MATTERS
As described in Note 7 of Notes to Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998, there
are pending German tax issues for the years 1984 through 1990. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
<PAGE>
NOTE 7. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In 1998, the Financial Accounting Standards Board Issued Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities, which is required
to be adopted in years beginning after June 15, 2000. The Company's use of
derivative instruments and hedging activities are not significant and,
therefore, management believes that the adoption of Statement No. 133 will not
have a material effect on the Company's results of operations or financial
position.
NOTE 8. SEGMENT DATA
<TABLE>
Summary Segment and Income Data
(Dollars in millions)
(Unaudited)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -----------------------
1999 1998 1999 1998
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
Sales:
Air Conditioning Products $ 1,179 $ 1,053 $ 3,309 $ 3,003
Plumbing Products 443 387 1,316 1,129
Automotive Products 255 265 811 811
Medical Systems 22 23 73 73
------- ------- ------- -------
$ 1,899 $ 1,728 $ 5,509 $ 5,016
======= ======= ======= =======
Segment income (loss):
Air Conditioning Products (a) $ 141 $ 114 $ 369 $ 326
Plumbing Products 42 27 122 79
Automotive Products 27 33 103 117
Medical Systems (10) (6) (20) (15)
------- ------- ------- -------
200 168 574 507
Restructuring expenses - (35) - (35)
Equity in net income of
unconsolidated joint ventures 9 9 27 21
------- ------- ------- -------
209 142 601 493
Interest expense (47) (43) (141) (145)
Corporate and other expenses (39) (28) (103) (85)
------- ------- ------- -------
Income before income taxes and
extraordinary item $ 123 $ 71 $ 357 $ 263
======= ====== ======= =======
<FN>
(a)Financing fees paid by Air Conditioning to the Company's financial
services joint venture of $7 million and $19 million for the three and
nine months ended September 30, 1998, respectively, have been reclassified
to Corporate expenses upon adoption of the new segment reporting standard
as of December 31, 1998.
</FN>
</TABLE>
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THIRD QUARTER AND FIRST NINE MONTHS OF 1999
COMPARED WITH THE THIRD QUARTER AND FIRST NINE MONTHS OF 1998
The Company achieved record third quarter sales in 1999 of $1,899 million,
an increase of $171 million, or 10% (12% excluding unfavorable foreign exchange
effects), from $1,728 million in the third quarter of 1998. Sales increased 12%
for Air Conditioning Products and 14% for Plumbing Products, declined 4% for
Automotive Products and were essentially at the same level as the third quarter
of 1998 for Medical Systems.
Segment income for the third quarter of 1999 was also a record at $200
million, an increase of $32 million, or 19% (22% excluding foreign exchange
effects), from $168 million in the third quarter of 1998. Segment income
increased 24% for Air Conditioning Products and 56% for Plumbing Products but
declined 18% for Automotive Products. Medical Systems' segment loss was $10
million compared with a loss of $6 million in the year-earlier quarter.
Sales for the first nine months of 1999 were $5,509 million, an increase of
$493 million, or 10% (11% excluding foreign exchange effects), from $5,016
million in the first nine months of 1998. Sales increased 10% for Air
Conditioning Products, 17% for Plumbing Products, while sales for Automotive
Products and Medical Systems were at the same level as the first nine months of
1998. Segment income was $574 million for the first nine months of 1999, an
increase of 13% (15% excluding the unfavorable effects of foreign exchange),
compared with $507 million in the first nine months of 1998. Segment income
increased 13% for Air Conditioning Products and 54% for Plumbing Products but
declined 12% for Automotive Products. The segment loss for Medical Systems was
$20 million for the first nine months of 1999 compared with a loss of $15
million for the first nine months of 1998.
Sales for Air Conditioning Products were $1,179 million for the third
quarter of 1999, an increase of 12% (with little effect from foreign exchange)
from $1,053 million for the third quarter of 1998. U.S. markets expanded an
estimated 5% to 6%, as replacement and renovation continued to grow and new
housing and commercial construction remained near record high levels. Markets
outside the US were mixed, with Europe up slightly while markets in Asia and
Latin America were down. Worldwide Applied Systems sales increased 12% due to
increases in the U.S. commercial equipment business, a strong performance in
sales and service operations and a 3% increase in the international applied
business, where gains in Europe and Canada more than offset declines in Latin
America and Asia. U.S. sales of commercial applied products increased 16%
because of higher volumes, reflecting continued strength in the U.S. commercial
applied business and the acquisition of sales and service offices. Worldwide
Unitary Systems sales also increased 12% (with little foreign exchange effect)
primarily from higher volumes in U.S. residential and commercial operations,
partly offset by a small decrease in the international unitary business. U.S.
unitary sales increased 15% reflecting continued strength in the U.S. commercial
and residential unitary markets, aided by the effects of warmer-than-normal
weather. International unitary sales declined 3% (2% excluding foreign exchange
effects) principally as a result of volume decreases in Latin America. Sales for
Air Conditioning Products for the first nine months of 1999 increased 10% (with
little foreign exchange effect) to $3,309 million from $3,003 million in the
<PAGE>
first nine months of 1998, primarily for the same reasons explaining the third
quarter increase and the adverse effect in the first quarter of 1998 of a
four-week strike at the Lexington, Kentucky, air handling facility.
Segment income for Air Conditioning Products increased 24% (with little
effect from foreign exchange) to $141 million in the third quarter of 1999 from
$114 million in the 1998 third quarter. Worldwide Applied Systems benefited from
improved volume in the U.S., plus cost improvements in international businesses,
primarily Europe. Worldwide Unitary Systems posted strong growth, primarily in
the U.S., as both volume and margins improved over an excellent prior year
performance. This primarily reflected the effects of warmer-than-normal weather
on U.S. sales of residential products and increased volumes in the U.S
commercial unitary business. Segment income for the first nine months of 1999
increased 13% (with little foreign exchange effect) to $369 million from $326
million in the first nine months of 1998. This gain resulted essentially for the
reasons mentioned for the third quarter increase and the effect in the first
quarter of 1998 of the strike at Lexington, partly offset by the effect of a
three-week strike at the Clarksville commercial facility in the first quarter of
1999.
Sales for Plumbing Products increased 14% (18% excluding unfavorable
foreign exchange effects) to $443 million in the third quarter of 1999 from $387
million in the third quarter of 1998, primarily as a result of gains in Europe
and the Americas. The gain reflected an increase of 14% in the U.S. and 29% in
international sales excluding unfavorable foreign exchange effects. The European
increase included $74 million of sales from the Armitage/Dolomite businesses
acquired in February 1999 (see Note 3 of Notes to Financial Statements), partly
offset by a reduction of $17 million of sales related to the divestiture of
French distribution operations in the fourth quarter of 1998. Excluding the
acquisition and the divestiture, sales in Europe were essentially flat with the
prior year third quarter. Sales in Asia declined slightly. Sales in the Americas
increased 3% (5% excluding unfavorable foreign exchange effects) due to
continued strong market growth and gains in market share in the U.S., partly
offset by a decrease in Latin America, where markets declined significantly.
U.S. operations achieved a 14% sales increase on higher volume, primarily
through expanding retail and wholesale market channels. Sales of Plumbing
Products for the first nine months of 1999 increased 17% (19% excluding foreign
exchange effects) to $1,316 million from $1,129 million in the first nine months
of 1998 due principally to the same factors affecting the third quarter results.
Segment income of Plumbing Products for the third quarter of 1999 was
$42 million, an increase of 56% (68% excluding unfavorable foreign exchange
effects) from $27 million for the 1998 third quarter. The increase was
principally attributable to the Armitage/Dolomite acquisition, substantial
volume improvements in the Americas and margin improvements from the
restructuring of European operations as part of a low-cost sourcing program. The
successful restructuring of both the Americas and European Plumbing businesses
has substantially lowered their cost structures resulting in improving trends in
margins and profitability. In the U.S., segment income improved because of
higher sales volume. Latin American operations were flat to the prior-year third
quarter despite a volume decrease. Segment income for the first nine months of
1999 increased by 54% (62% excluding foreign exchange effects) from the first
nine months of 1998, primarily for the reasons responsible for the third quarter
increase.
Sales of Automotive Products for the third quarter of 1999 were $255
million, a decrease of 4% (but an increase of 2% excluding unfavorable foreign
exchange effects) from $265 million in the third quarter of 1998. Increased
shipments of anti-lock braking systems (ABS) to the Company's U.S. braking
systems joint venture, higher product content per vehicle on new models
introduced in 1998 and sales by the U.S. compressor manufacturing joint venture
were more than offset by unfavorable foreign exchange effects. Increased export
<PAGE>
sales to the U.S. in the third quarter of 1999 reflected the full phase-in of
regulations requiring ABS on all new heavy-duty trucks and trailers, and a 20%
increase in U.S. truck production. Sales to European commercial vehicle
manufacturers declined slightly in the quarter, as unit volumes of truck and bus
production in Western Europe decreased 5% from the third quarter of 1998.
Brazilian sales also experienced a decline, as truck production decreased 38%.
Sales of Automotive Products for the first nine months of 1999 were $811
million, unchanged from the like 1998 period, but increased 3% excluding
unfavorable foreign exchange effects, primarily for the reasons explaining the
third quarter increase.
Segment income for Automotive Products for the third quarter of 1999
decreased $6 million ($4 million excluding unfavorable foreign exchange effects)
to $27 million from $33 million in the third quarter of 1998. This was primarily
the result of a one-time shared cost associated with a design change, increased
product development spending in Europe and a product mix reflecting increased
export sales, partly offset by increased income from the U.S. compressor
manufacturing joint venture. Segment income for Automotive Products for the
first nine months of 1999 was $103 million, a decrease of 12% (8% excluding
unfavorable foreign exchange effects) from $117 million in the first nine months
of 1998, principally for the same reasons cited for the third quarter decrease.
Medical Systems sales were $22 million in the third quarter of 1999, flat
to the prior-year third quarter, reflecting increased sales of new diagnostic
products offset by the expected sales decline of older radioimmunoassay
products. The segment loss of $10 million was $4 million higher than the third
quarter of 1998, entirely due to a one-time charge associated with the
discontinuance of in-house manufacturing of breath test instruments and kits in
favor of lower-cost vendor sourcing. Development costs of new diagnostic
products and accelerated virus research continued at a high level. Medical
Systems sales for the first nine months of 1999 were $73 million, the same as
for the first nine months of 1998, and the operating loss was $20 million, $5
million larger than for the same 1998 period, primarily for the reasons
explaining the third quarter changes.
OTHER SUMMARY INCOME DATA ITEMS
Equity in net income of unconsolidated joint ventures was $9 million in
the third quarter of 1999, the same as in the year-earlier quarter, and
increased to $27 million in the first nine months of 1999 from $21 million in
the first nine months of 1998. This reflected the continued strong growth of
Automotive Products' U.S. braking systems joint venture, offset in the third
quarter of 1999 by small declines in other joint ventures.
Interest expense increased by $4 million in the third quarter of 1999
compared to the year-earlier quarter due to the effect of increased debt arising
principally from the Armitage/Dolomite acquisition, partly offset by lower
average interest rates achieved through 1998 and 1999 debt refinancings. For the
first nine months of 1999, interest expense was $4 million lower compared with
the first nine months of 1998, where the effect of the lower average interest
rates more than offset the effect of increased debt arising from the February
1999 Armitage/Dolomite acquisition. Corporate and other expenses in the third
quarter of 1999 were $39 million, $11 million higher than in the prior-year
third quarter. This increase was mainly due to a one-time charge related to
pension benefits, increased financing fees paid to the Company's financial
services joint venture because of increased volumes in the U.S. businesses and
other Corporate spending. For the same reasons, in the first nine months of
1999, corporate and other expenses were $18 million higher than in the first
nine months of 1998.
<PAGE>
The income tax provision for the third quarter of 1999 was $51 million
and for the first nine months of 1999 was $148 million, at an effective income
tax rate of 41.5% of pretax income for both periods. The income tax provisions
for the third quarter and first nine months of 1998 were $35 million and $113
million, respectively. Those provisions reflect an unusually high effective tax
rate because there is little tax benefit on the restructuring charges incurred
in the third quarter of 1998. Excluding those restructuring charges, the
effective rates for the third quarter and first nine months of 1998 were 39.1%
and 40.5% of income before extraordinary item. The lower effective rate in the
third quarter of 1998 reflects the year-to-date adjustment to 40% from the 40.5%
rate used in the first half of the year.
Results for the nine months ended September 30, 1998 included an
extraordinary charge of $50 million, net of income taxes, attributable to call
premiums and the write-off of unamortized debt issuance costs on debt redeemed
in the second quarter of 1998 as described below.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities, after cash interest paid of
$133 million, was $232 million for the first nine months of 1999, compared with
net cash provided of $248 million for the same period of 1998. The $16 million
decrease resulted, despite higher earnings, primarily from unfavorable changes
in working capital items principally related to growth of the business, payments
against the restructuring reserve, and differences in the timing of accruals and
disbursements in the two periods. The Company made capital expenditures of $180
million for the first nine months of 1999, including $40 million of investments
in affiliated companies and other businesses (but excluding the
Armitage/Dolomite acquisition described below) compared with capital
expenditures of $172 million in the first nine months of 1998, including $16
million of investments in affiliated companies. The Company also invested $58
million in computer software in the first nine months of 1999, compared with $14
million in the 1998 period.
In January 1997 the Company entered into the 1997 Credit Agreement
which requires no repayment of principal prior to its expiration in 2002, and
provides the Company with senior secured credit facilities aggregating $1.75
billion as follows: (a) a $750 million U.S. dollar revolving credit facility and
a $625 million multi-currency revolving credit facility (the "Revolving
Facilities"), which by their nature are short-term, and (b) a $375 million
multi-currency periodic access credit facility. Up to $500 million of the
Revolving Facilities may be used to issue letters of credit. The 1997 Credit
Agreement and certain other American Standard Inc. debt instruments contain
restrictive covenants and other requirements with which the Company believes it
is in compliance.
In December 1998, the 1997 Credit Agreement was amended principally to
permit American Standard to issue up to an additional $500 million principal
amount of senior or subordinated unsecured debt securities, and to lower the
interest coverage ratios and increase the debt coverage ratios applicable to the
Company beginning for periods ending December 31, 1998. The purpose of the
amendment was primarily to accommodate the refinancing of $150 million of
American Standard's 10-7/8% senior notes due May 15, 1999 and the financing of
other proposed capital expenditures, including the acquisition of
Armitage/Dolomite described below.
On February 2, 1999, the Company acquired Armitage/Dolomite, a
manufacturer of ceramic sanitaryware, brassware and integrated plumbing systems,
for approximately $430 million, including fees and expenses and net of cash
acquired, with borrowings under the Company's 1997 Credit Agreement. This
<PAGE>
acquisition is being accounted for as a purchase. Armitage/Dolomite had 1998
sales of approximately $290 million and assets at December 31, 1998 of
approximately $250 million. The acquired business has 3 large and 9 small
facilities, located in the United Kingdom and Italy, and employs approximately
3,200 people. The primary markets for its products are in the United Kingdom,
Italy, Ireland and Germany. The Company expects to complete its plans to
integrate Armitage/Dolomite into existing European operations by the end of
1999. This process could result in additional expenses or increase the amount of
goodwill (see Note 3 of Notes to the Financial Statements).
At September 30, 1999, the Company had borrowings of $708 million
outstanding under the Revolving Facilities. There was $597 million available
under the Revolving Facilities after reduction for borrowings and for $70
million of letters of credit usage. The Company's foreign subsidiaries had $113
million available at September 30, 1999, under overdraft facilities that can be
withdrawn by the banks at any time. In addition, the Company's operations in
China have $28 million available under bank credit facilities after reduction
for borrowings of $17 million and letters of credit usage of $10 million.
On May 28, 1999, American Standard Inc. completed the sale of the
equivalent of $460 million of Senior Notes, with an average interest rate of
7.7%, issued in three series: 250 million Euro Senior Notes due 2006; 100
million U.S. Dollar Senior Notes due 2009 and 60 million Sterling Senior Notes
due 2009. Net proceeds of $452 million from the offering were applied to
refinance borrowings incurred to pay $150 million of 10-7/8% Senior Notes at
maturity on May 15, 1999 and to refinance a substantial portion of the purchase
price of the Armitage/Dolomite acquisition. The May 28, 1999 sale of Senior
Notes, which are not subject to redemption, was made pursuant to the 1998 Shelf
Registration (see Note 4 of Notes to Financial Statements). Debt securities sold
under the 1998 Shelf Registration are issued by American Standard Inc. and
unconditionally guaranteed by American Standard Companies Inc. The Company
intends to use the net proceeds from any future sales of such debt securities
under the 1998 Shelf Registration for general corporate purposes, which may
include certain investments, acquisitions, additions to working capital or
capital expenditures.
On May 6, 1999, the Company engaged Goldman Sachs & Co. and Prudential
Vector Healthcare Group. as advisors (the "Advisors") to evaluate the potential
and prospects for the Company's Medical Systems business and to review and make
recommendations to the Company's Board of Directors concerning its strategic
options. On July 20, 1999 the Company issued a press release related to the
status and progress to date of research that has identified a virus ("SEN-V")
present in blood samples of certain humans afflicted with liver diseases of
unknown cause. On October 7, 1999, the Board of Directors directed the Company's
management to pursue the sale of Medical Systems. The Company's management is
now working with the Advisors to develop and implement a plan.
As described in Note 7 of Notes to Consolidated Financial Statements in
the Company's Annual Report on Form 10-K for the year ended December 31, 1998,
there are pending German Tax issues for the years 1984 through 1990. There has
been no change in the status of these issues since that report was filed.
YEAR 2000 READINESS DISCLOSURE
The following is a Year 2000 Readiness Disclosure in accordance with
the Year 2000 Information and Readiness Disclosure Act.
<PAGE>
YEAR 2000 COMPLIANCE PLAN. The Company has established a comprehensive Year 2000
initiative, having appointed teams responsible for all of its locations
worldwide, coordinated by team leaders reporting directly to the business group
leaders, and in some cases employing third-party experts. The Vice President of
Information Technology, who reports directly to the Chairman and Chief Executive
Officer, heads the project. Progress reports are made periodically to the Audit
Committee of the Board of Directors. The teams are responsible for assuring that
all core business systems and transactions with customers, suppliers, financial
institutions and other third parties will be Year 2000 ready. Additionally, a
consultant has been retained at corporate headquarters to provide overall
guidance and assistance with the compliance plan. Consultants have also been
employed at various operating locations to augment the efforts of the local Year
2000 teams or to provide expertise in certain areas. In general, a coordinated
approach has been undertaken by the Company's Year 2000 teams worldwide, with
"best practices" shared among teams. The principal phases of the initiative
include:
INVENTORY - identification of all technology and systems,
including imbedded technology in manufacturing and other operating and
control systems that could be affected by the Year 2000 issue. This
phase is complete.
ASSESSMENT - testing and evaluating whether remediation is
necessary and prioritizing tasks based on whether the system is
evaluated as "critical", the size of the system and the perceived
risk. This phase is ongoing but was essentially complete by the end of
the first quarter of 1999.
REMEDIATION AND TESTING - Remediation includes the replacement or
modification of non-compliant technology with technology that is Year
2000 compliant. Remediation of core systems was essentially complete
as of October 31, 1999, with final tasks expected to be completed in
November 1999. Remediation of non-core systems is approximately 97%
completed as of October 31, 1999, and remediation of the remainder is
expected to be completed in November 1999. Wherever possible, new or
modified systems will be tested in a Year 2000 environment from the
beginning of the transaction process to the end. However, since in
many cases mainframe systems have been replaced with vendor provided
software that has already been fully tested for Year 2000 compliance,
testing of those systems is not expected to reveal any problems.
Testing is expected to continue for some systems during the fourth
quarter of 1999.
CONTINGENCY PLANNING - development of contingency plans in
situations where there is substantial risk that compliance will not be
achieved at any Company location or by any critical supplier in time
to avoid Year 2000 problems. Substantially all contingency plans were
in place as of October 31, 1999.
THIRD PARTY RELATIONSHIPS - communicating and working with
suppliers, customers and other third parties with whom the Company
does business to minimize the potential adverse effects of Year 2000
problems. This includes evaluating new and previously sold products
that incorporate equipment controls with imbedded technology to
identify and resolve any problems that customers may have with Company
products as a result of the arrival of the year 2000.
<PAGE>
STATE OF READINESS. As of October 31, 1999, more than 98% of the Company's Year
2000 plan has been completed. When situations are identified where there is
substantial risk that any important objectives of the project will not be met,
the Company has dedicated and will continue to dedicate additional resources.
For several years the Company has been converting most of its mainframe computer
applications and systems worldwide to client server technology and, in
conjunction therewith, has been installing software that is Year 2000 compliant.
For all systems other than mainframe, software that is Year 2000 compliant is
also being installed, including desktop applications. Most of these initiatives
were undertaken irrespective of Year 2000 considerations and, with few
exceptions, implementation would have been completed before the year 2000. For
those installations not scheduled to be completed until the year 2000, revisions
have been made to existing systems to ensure readiness.
THIRD-PARTY RELATIONSHIPS. The Company has initiated communications with
suppliers, customers and other third parties to identify and assess Year 2000
risks and to develop solutions that will minimize any adverse impact on the
Company. The overwhelming majority of the Company's critical suppliers have
responded positively as to their Year 2000 compliance efforts. The Company
expects to resolve timely any identified problems with critical or
non-responding suppliers and to develop contingency plans where possible. The
Company's manufacturing facilities are highly dependent on public utilities,
especially electrical power, natural gas, water and communications companies.
There is a risk that suppliers or others on whom the Company relies will not
successfully address Year 2000 issues. Should one or more critical suppliers be
unable to supply products or services at any of the Company's 120 manufacturing
locations, and the Company or the supplier not have established appropriate
contingency plans, such failure could result in the inability of the Company, at
that location, to deliver products on a timely basis and have a material adverse
effect on the results of operations at that location.
The Company does not believe that it has material Year 2000 exposure with
respect to products sold to customers. The only Company products containing
imbedded electronic systems subject to Year 2000 issues are commercial air
conditioning and medical products. The Company has evaluated the imbedded
electronic control systems in products sold to its commercial air conditioning
systems and medical products customers. Computer controls for commercial air
conditioning systems have been checked and replaced or modified where necessary.
This process has been completed. For medical products, the Company has completed
90% of the modifications and expects to complete the remainder before the end of
the year.
The Company is evaluating delivery commitments to customers, product warranties
and representations made with respect to Year 2000 compliance of its products.
Management believes that it is adequately addressing such issues and that,
subject to the considerations described above, any potential material liability
to third parties for Year 2000 failures in its products or inability to deliver
products timely is remote.
RISKS AND CONTINGENCY PLANS. Management believes that the Company's most
reasonably likely worst case scenario is short-term, localized disruptions of
systems, manufacturing operations, facilities or suppliers that will affect
individual business operations, rather than broad-based, systemic, or long-term
problems affecting operating segments or groups of operations. The most
significant uncertainties relate to critical suppliers, particularly electrical
power, water, natural gas and communications companies, and suppliers of parts
and materials that are vital to the continuity of operations. The Company
believes that the greatest risks of such disruptions exist outside the U.S. and
Western Europe, where approximately 14% of the Company's sales occur, and that
<PAGE>
such disruptions, if any, will not have a material effect on the Company's
results of operations or financial position. Contingency plans have been
formulated and put in place, where possible, for all critical suppliers. These
measures include finding alternative sources of supply, purchasing safety stocks
of certain parts and materials and forming emergency response teams at each
operating location to deal with any problems which develop.
COSTS. The Company's estimated cost to become Year 2000 compliant is
approximately $22 million. Of this, approximately $15 million are costs being
charged to expense as incurred, including internal and external labor to repair
or modify existing software, and costs of consultants employed at various
locations to assist with implementation of the Company's plan. The balance of
estimated costs represent replacement hardware and software which is being
capitalized. Through September 30, 1999, approximately $19 million had been
expended, of which $13 million had been charged to expense. These costs are
generally not incremental to existing information technology budgets, as
existing internal resources were redeployed and the costs of consultants
employed are less than 10% of total Year 2000 costs. The costs of implementing
client server technology and other software changes made for reasons other than
the Year 2000 and which were not accelerated are not included in these
estimates. There were no significant deferrals of information technology
projects because of the Company's response to Year 2000 issues. Information
technology planning has incorporated client server and Year 2000 initiatives for
several years and, therefore, there has been little effect on the Company's
operations because of unexpected deferrals of projects important to growth or
competitiveness. All costs are being funded from operating cash flows or other
resources available to the Company. Based upon information currently available
and current estimates, management believes that the Company's costs to become
Year 2000 compliant will not have a material adverse effect on the Company's
financial position, results of operations or cash flows in future periods. Total
costs, anticipated impact and the expected dates to complete the various phases
of the project are based on management's best estimates using information
currently available and certain assumptions about future events. However, no
assurance can be given that actual results will be consistent with such
estimates and, therefore, actual costs, impacts and completion dates could
differ materially from those plans. See "Disclosure Regarding Forward Looking
Statements".
- -----------------------
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
Comments in this Quarterly Report on Form 10-Q contain certain
forward-looking statements that are based on management's good faith
expectations and belief concerning future developments. Actual results may
differ materially from these expectations as a result of many factors, relevant
examples of which are set forth in the Company's 1998 Annual Report on Form 10-K
and in the "Management's Discussion and Analysis" section of the Company's 1998
Annual Report to Shareholders and Quarterly Reports on Form 10-Q.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
For a discussion of German tax issues see "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources" in Part I of this report which is incorporated herein by
reference.
ITEM 5. OTHER INFORMATION
As previously announced, on October 7, 1999, the Company's Board of
Director's directed management to pursue the sale of its Medical Systems
segment, elected Jared L. Cohon and Frederic M. Poses directors of the Company
and, effective January 1, 2000, elected Mr. Poses to be the Company's Chairman
and Chief Executive Officer.
As previously announced, on October 27, 1999 Joseph S. Schuchert resigned
as a director of the Company. The press release of the announcement is attached
as Exhibit 99(i) to this quarterly report on Form 10-Q.
As previously announced, on November 4, 1999 Fred A. Allardyce, Senior Vice
President of the Medical Systems segment, resigned his position. The press
release of the announcement is attached as Exhibit 99 (ii) to this quarterly
report on Form 10-Q.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS. The exhibits listed on the accompanying Index to
Exhibits are filed as part of this quarterly report on Form 10-Q.
(B) REPORTS ON FORM 8-K. During the quarter ended September 30, 1999,
the Company filed no Current Reports on Form 8-K.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN STANDARD INC.
/s/ G. Ronald Simon
Vice President and Controller
(Principal Accounting Officer)
November 12, 1999
<PAGE>
<TABLE>
AMERICAN STANDARD INC.
<CAPTION>
INDEX TO EXHIBITS
<S> <C> <C>
EXHIBIT NO. DESCRIPTION
(10) Employment Agreement of Frederic M. Poses
(12) Ratio of Earnings to Fixed Charges
(27) Financial Data Schedule
(99)(i) Press release dated October 29, 1999
(99)(ii) Press release dated November 4, 1999
</TABLE>
October 13, 1999
Mr. Frederic M. Poses
1125 Park Avenue
New York, NY 10128
Dear Mr. Poses:
This letter will set forth the agreement between yourself and American Standard
Companies Inc., relative to your employment with the Company.
The term of your employment will begin January 1, 2000, and will continue for a
five-year period with automatic one-year renewals thereafter unless either you
or the Company notifies the other that the term is not to renew. Such notice of
non-renewal is to be given at least 12 months before scheduled expiration.
Notwithstanding the foregoing, the Company retains the right to terminate you
with or without cause at any time subject to satisfaction of its payment
obligations to you under the existing severance plan of the Company; provided
that, any payment obligation to you shall be conditioned upon your execution and
delivery of a release in a form satisfactory to the Company. Your employment
shall automatically terminate upon your death or disability, as determined by
the Board of Directors.
Your position with the Company will be that of Chairman and Chief Executive
Officer, reporting to the Board of Directors.
The base salary for your position will be $1,000,000 per year, and will be
subject to annual review for increase at the discretion of the Board of
Directors. In addition, you will be eligible for an Annual Incentive with a
target award of 100% of your base salary. For the years 2000 and 2001 this award
will be no less than $1,300,000. You will also become a participant in the
Company's Long Term Incentive Plan, on a prorated basis, for the 1998-2000 and
1999-2001 performance periods. Your entitlement to payment of the Annual
Incentive award and the Long-Term Incentive Plan award upon your termination of
employment shall be governed by the terms of the Officers Severance Plan.
As a result of your election to the Board of Directors on October 7, 1999, you
have been awarded a stock option grant of 1,000,000 shares. This grant will have
an exercise price equal to the Fair Market Value of the Company's common stock
on October 6. These options will vest in three equal installments on October 7,
2000, October 7, 2001, and October 7, 2002.
<PAGE>
Mr. Frederic M. Poses
Page 2
Upon the commencement of your employment you will be awarded 250,000 restricted
shares of the Company's common stock, with vesting of such shares occurring in
three equal installments on January 1, 2003, January 1, 2004, and January 1,
2005. You should consult with your financial advisor regarding the advisability
of making an 83(b) election with respect to the grant of these restricted shares
within the appropriate 30-day period.
In the event the Company terminates your employment for reasons other than
"Cause" (as defined in the Stock Incentive Plan) prior to the vesting of any of
the aforementioned stock options, such vesting will be accelerated to coincide
with the date of such termination of employment. The exercise period with regard
to any such accelerated vested options or shares shall be governed by the terms
of the Stock Incentive Plan. In the event the Company terminates your employment
for reasons other than "Cause" (as defined in the Stock Incentive Plan) prior to
the vesting of any of the aforementioned restricted shares, you will be entitled
to receive such shares upon their originally scheduled vesting dates. If
termination of your employment is for "Cause" you will forfeit any right to
unvested stock options and/or restricted stock.
You hereby agree that during the term of your employment, and at all times
thereafter, you shall not use any confidential business materials or information
of the Company or any affiliate or any trade or proprietary information of the
Company or any affiliate other than in the course of your employment with the
Company.
You further agree that during your term of employment and for one year
thereafter if you resign or are terminated for cause you shall not engage in, or
have any ownership interest in or financial participation in, or be employed by,
or offer services to, any business that competes with the business then
conducted by the Company.
You agree that during your term of employment and for one year thereafter, you
shall not, directly or indirectly, solicit any employee of the Company or its
affiliates to terminate his or her employment. You represent that you have the
full authority to execute this agreement and that you are not a party to any
other agreement or obligation that would conflict with your duties and
responsibilities hereunder.
Your participation in the Company's Supplemental Executive Retirement Plan will
commence January 1, 2000, and the five-year service requirement for vesting will
be waived. As a result you will begin immediate vesting of any benefit payable
under such plan.
<PAGE>
Mr. Frederic M. Poses
Page 3
In addition to the above, you shall become eligible to participate in, and be
governed by, the various benefit plans and policies, applicable to the senior
executives of the Corporation, and perquisites traditionally made available to
the Chief Executive Officer of the Company.
This agreement represents the full agreement of the parties and supersedes any
and all previous discussions and negotiations.
Dated: October 13 , 1999 Compensation Committee
Piscataway, NJ
BY:/s/ R.W. Parsons
Title: Chairman of Compensation
Committee
/s/ Frederic M. Poses
Executive
<TABLE>
EXHIBIT 12
AMERICAN STANDARD INC.
COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
<CAPTION>
For the Nine
Months Ended
For the Years Ended December 31, September 30,
---------------------------------------- -------------
1994 1995 1996 1997 1998 1998 1999
----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) from continuing
operations before taxes $(15.2) $226.9 $57.6 $236.8 $165.4 $263.4 $357.1
Equity in net (income) loss of
associated companies net of dividends
received 1.1 11.0 11.8 (2.9) (3.6) (2.6) (5.2)
Amortization of capitalized interest 1.0 1.1 1.3 1.4 1.6 1.2 1.3
Interest expense 259.4 213.3 198.2 192.2 188.4 145.4 140.5
Rental Expense Factor 17.6 23.0 27.3 25.0 26.5 19.7 31.8
----- ----- ----- ----- ----- ----- -----
EARNINGS AVAILABLE FOR FIXED CHARGES $263.9 $475.3 $296.2 $452.5 $378.3 $427.1 $525.5
====== ====== ====== ====== ====== ====== ======
Interest expense $259.4 $213.3 $198.2 $192.2 $188.4 $145.4 $140.5
Capitalized interest 2.9 4.0 3.9 3.8 4.5 2.9 2.5
Rental Expense Factor 17.6 23.0 27.3 25.0 26.5 19.7 31.8
----- ----- ----- ----- ----- ----- -----
FIXED CHARGES $279.9 $240.3 $229.4 $221.0 $219.4 $168.0 $174.8
====== ====== ====== ====== ====== ====== ======
Ratio of earnings to fixed charges (a) - (b) 2.0 1.3 2.0 1.7 2.5 3.0
<FN>
(a) For the purpose of computing the ratio of earnings to fixed charges, fixed
charges consist of interest on debt (including capitalized interest),
amortization of debt discount and expense, and a portion of rentals
determined to be representative of interest. Earnings consist of
consolidated net income before income taxes, plus fixed charges other than
capitalized interest but including the amortization thereof, adjusted by
the excess or deficiency of dividends over income of entities accounted for
by the equity method.
(b) Earnings were insufficient to cover fixed charges for the year ended
December 31, 1994 by $16.0 million.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000005850
<NAME> American Standard Inc.
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 45
<SECURITIES> 0
<RECEIVABLES> 1,203
<ALLOWANCES> 37
<INVENTORY> 534
<CURRENT-ASSETS> 1,880
<PP&E> 1,974
<DEPRECIATION> 620
<TOTAL-ASSETS> 5,213
<CURRENT-LIABILITIES> 2,352
<BONDS> 1,944
0
0
<COMMON> 0
<OTHER-SE> (92)
<TOTAL-LIABILITY-AND-EQUITY> 5,213
<SALES> 5,509
<TOTAL-REVENUES> 5,509
<CGS> 4,093
<TOTAL-COSTS> 4,093
<OTHER-EXPENSES> (3)
<LOSS-PROVISION> 14
<INTEREST-EXPENSE> 141
<INCOME-PRETAX> 357
<INCOME-TAX> 148
<INCOME-CONTINUING> 209
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 209
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
NEWS RELEASE
FOR IMMEDIATE RELEASE
AMERICAN STANDARD
ANNOUNCES RETIREMENT OF DIRECTOR
Piscataway, NJ - October 29, 1999 - American Standard Companies Inc.
(NYSE:ASD) today announced that Mr. Joseph S. Schuchert has informed the Company
of his decision to retire now from his service on the Board of Directors. He has
been a Director for more than ten years since leading the Company's leveraged
buy-out in 1988 and will reach the age of 71 this December. With the Board's
recent election of a new Chairman and Chief Executive Officer, Mr. Schuchert
decided it would be timely to leave the Board and expressed his confidence that
the Company is well positioned to enter a new phase of its development.
AMERICAN STANDARD is a $7 billion global, diversified manufacturer of Trane(R)
and AMERICAN STANDARD(R) air conditioning products, AMERICAN STANDARD(R), IDEAL
STANDARD(R), STANDARD(R) , PORCHER(R), ARMITAGE SHANKS(R) AND DOLOMITE(R)
plumbing products, WABCO(R) commercial and utility vehicle braking and control
systems, COPALIS(R) and Pylori-Chek (TM) medical diagnostic systems and
DiaSorin(TM) medical diagnostic products. The company operates 116 manufacturing
facilities in 33 countries and employs approximately 57,000 people worldwide.
For Further Information Contact:
Ray Pipes (732) 980-6095 or
Lisa Glover (732) 980-6048
THE LATEST NEWS RELEASE AND CORPORATE INFORMATION CAN BE HEARD ON
1-888-ASD-NEWS. ADDITIONAL INFORMATION ON AMERICAN STANDARD IS AVAILABLE ON THE
COMPANY'S WORLDWIDE WEB SITE AT HTTP://WWW.AMERICANSTANDARD.COM
NEWS RELEASE
FOR IMMEDIATE RELEASE
FRED A. ALLARDYCE, SENIOR EXECUTIVE OF AMERICAN STANDARD'S
MEDICAL BUSINESS GROUP, RESIGNS
Piscataway, New Jersey - November 4, 1999 - American Standard announced
today that Fred A. Allardyce, Senior Vice President of American Standard and
Business Leader of the Medical Systems Group, has resigned his position to
pursue other interests. Allardyce has led the Medical Systems Group since it was
established in 1997. American Standard announced its intent to sell the business
in October, and is actively engaged in preparations to sell the business.
American Standard, with annual sales exceeding $7 billion, is a global
manufacturer with market leading positions in three principal businesses:
TRANE(R), the nations' leading supplier of central air conditioning equipment
for commercial and institutional buildings and the primer brand for the
residential buildings; AMERICAN STANDARD(R) AND IDEAL STANDARD(R), the world's
largest manufacturer of plumbing products; and WABCO(R), the leading supplier of
electronic braking and control systems to the world's manufacturers of
heavy-duty trucks and buses. The Company employs approximately 57,000 people in
33 countries. American Standard is included in the Standard & Poor's MidCap 400.
FOR FURTHER INFORMATION CONTACT:
Lisa Glover (732) 980-6048 (Press Inquiries)
Ray Pipes (732) 980-6095 (Analyst Inquiries)
THE LATEST NEWS RELEASE AND CORPORATE INFORMATION CAN BE HEARD ON
1-888-ASD-NEWS. ADDITIONAL INFORMATION ON AMERICAN STANDARD IS AVAILABLE ON THE
COMPANY'S WORLDWIDE WEB SITE AT HTTP://WWW.AMERICANSTANDARD.COM
