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): February 3, 1998
-------------------
AMERICAN STANDARD COMPANIES INC.
(Exact name of registrant as specified in its charter)
Delaware 1-11415 13-3465896
(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
<PAGE>
ITEM 5. Other Events
By press release dated February 3, 1998, the Company announced its
earnings for the quarter and full year ended December 31, 1997, a copy of which
press release is filed as an exhibit to this report.
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.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
( c ) Exhibits.
99.1 Press release dated February 3, 1998.
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.
<PAGE>
AMERICAN STANDARD COMPANIES INC.
By ____/s/ G. Ronald Simon____________
Name: G. Ronald Simon
Title: Vice President and Controller
DATE: February 6, 1998
NEWS RELEASE
FOR IMMEDIATE RELEASE
AMERICAN STANDARD COMPANIES INC.
REPORTS 17% INCREASE IN 1997 EARNINGS PER SHARE
Piscataway, NJ - February 3, 1998 - American Standard Companies Inc.
(NYSE:ASD) today announced that full year 1997 diluted per share earnings before
extraordinary item (and before a write-off of purchased research and
development) were a record $2.76, an increase of 17% over 1996 diluted per share
earnings of $2.36 (excluding a non-cash asset impairment charge). Fourth quarter
1997 diluted per share earnings were $.62, an increase of 11% over fourth
quarter 1996 diluted per share earnings of $.56. These results are consistent
with the Company's previously announced expectations.
Mr. Emmanuel A. Kampouris, Chairman, President and Chief Executive Officer,
remarked, "The Company posted solid growth in sales and earnings in 1997 despite
the adverse effect of cooler than normal weather on the air conditioning
business in both the U.S. and Europe and the effects of foreign exchange,
initially in Europe and more recently as a result of dramatic events in the Far
East. Our ability to partially overcome these adversities clearly validates our
strategies built on our global diversity and leadership positions worldwide,
which provide the foundation for strong sales and earnings growth. While we
expect weakness in the Far East outside China to continue and have adopted plans
to monitor and limit the impact, we also believe our improvements elsewhere will
continue."
Total Sales for 1997 reached a record $6.0 billion, an increase of 4% from
$5.8 billion in 1996 (an 8% increase excluding the $218 million unfavorable
foreign exchange effect). Excluding foreign exchange effects:
o Air Conditioning Products sales, although weakened by cooler than average
temperatures in important markets, increased 5% to $3.6 billion. Strength
in the U.S. commercial businesses, both applied systems and unitary
products, more than offset a decline in the residential business.
International sales also grew due to strong sales growth in Latin America
and modest growth in Europe and the Middle East.
o Plumbing Products sales increased 5% to $1.4 billion reflecting strong
markets in Latin America, increased sales through expanding major U.S home
improvement retailers and the effect of consolidating the operations in
China since the acquisition of a majority interest at the end of October.
Sales matched the prior year level in Europe and, despite recent economic
weakness, Far East sales for the full year (excluding China) were flat.
o Automotive Products sales increased 14% to $952 million driven by continued
strengthening in European commercial vehicle production, higher product
content per vehicle and increased export sales. Sales of anti-lock braking
systems (ABS) to the Company's U.S. marketing joint venture rose sharply,
reflecting the first-phase implementation of federal regulations requiring
ABS systems on all new heavy trucks, together with a rebound in heavy-duty
truck production.
<PAGE>
o Medical Systems sales were $50 million, reflecting the acquisition of the
diagnostic businesses at the end of June.
Operating Income in 1997 (excluding the write-off of purchased in-process
research and development) was $590 million, an increase of 3% from $573 million
in 1996, excluding an asset impairment charge. Operating income increased 7%
excluding the $22 million unfavorable effect of foreign exchange. Excluding
foreign exchange effects:
o Air Conditioning Products operating income rose 3% to $364 million despite
cooler than normal weather in both the U.S. and Europe. Increased volume
and improved margin in both the applied and unitary commercial businesses
more than offset weather related declines in both the U.S. residential and
European businesses and the effect of economic weakness in the Far East.
o Plumbing Products operating income increased 18% to $119 million on
increased volume and improved margin in both Latin America and U.S.
operations. Margin expansion in Europe, primarily from cost reductions in
France, also contributed to the increase. The Company's China operations,
consolidated for only the final two months of the year, offset the effects
of lower volume and margin elsewhere in the Far East.
o Automotive Products operating income increased 14% to $127 million.
Increased volume and improved margin in European operations was partially
offset by lower margin in Brazil and start-up costs of new, majority-owned
ventures in the U.S. and China.
o Medical Systems operating loss reflected continued costs of development and
of integrating operations of the diagnostic businesses acquired in June.
Write-off of Purchased Research and Development of $90 million results from
the accounting for the June 30, 1997 acquisition of the medical diagnostic
businesses.
Interest Expense declined by $6 million from the prior year as lower
interest rates achieved through the Company's 1997 Credit Agreement and
redemption of $250 million 11 3/8% Senior Debentures in May 1997, financed under
the Credit Agreement, offset the effect of increased debt arising from share
repurchases and acquisition of the medical diagnostic businesses.
Equity in Net Income of Unconsolidated Joint Ventures increased to $12
million compared to 1996 income of $3 million reflecting strong growth of
Automotive Products' U.S. joint venture, benefits from the restructuring of Air
Conditioning Products' scroll compressor joint venture and increased income from
the Company's financing joint venture established in 1996. Plumbing Products'
rapidly expanding businesses in China also contributed to the increase prior to
the consolidation of such operations at the end of October when the Company
acquired controlling interest in those businesses.
Corporate and Other Expense was essentially flat.
Income Taxes were $117 million, or 35.8% of pretax income excluding the
write-off of purchased R&D, compared to 35.6% for 1996 excluding an asset
impairment charge.
<PAGE>
Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings per Share" ("FAS 128"), which simplifies
the standards for computing earnings per share, changes the manner of
presentation on the income statement and requires the restatement of all prior
periods presented. Accordingly, the Company has reported 1997 diluted income per
common share of $2.76 (excluding a write-off of purchased in-process research
and development related to the acquisition of the medical diagnostics
businesses), compared with restated 1996 diluted income per common share of
$2.36 (excluding an asset impairment loss).
Overall, foreign exchange effects unfavorably impacted sales by 4%, or $218
million, and operating income by 4%, or $22 million. Offsetting favorable
foreign exchange effects in interest, accretion and taxes brought the net
unfavorable impact of foreign exchange to an after-tax effect of $.12 per share.
Sales in the Far East (excluding China), approximately 6% of total consolidated
sales, were down $27 million from 1996 and pre-tax income was $17 million, down
$13 million from 1996.
Fourth quarter 1997 sales were $1.5 billion, an increase of 7% from $1.4
billion in 1996 (a 12% increase excluding an unfavorable foreign exchange
effect). Sales were strong for most U.S. businesses (particularly commercial air
conditioning) and for Automotive Products, with sales of the new Medical Systems
segment contributing to the gain. Far East sales, excluding China, declined.
Operating income for the fourth quarter of 1997 was $138 million, an
increase of 6% from $130 million in the 1996 quarter (a 12% increase excluding
unfavorable foreign exchange effects). Air Conditioning gained 14% and Plumbing
6% (despite weakness in the Far East) which, together with a small gain for
Automotive, were partly offset by a loss for Medical Systems.
American Standard is the global, diversified manufacturer of Trane (R) and
American Standard(R) air conditioning products, American Standard(R), Ideal
Standard(R), Standard(R) and Porcher(R) plumbing products, WABCO(R) commercial
and utility vehicle braking and control systems, LARA(TM) and Copalis(TM)
medical diagnostic systems and DiaSorin(TM) and INCSTAR(R) medical diagnostic
products.
For Further Information, Contact:
Ray Pipes (732) 980-6139 or,
Phil Bradtmiller (732) 980-6038
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 World Wide Web site http://www.americanstandard.com
<PAGE>
<TABLE>
<CAPTION>
AMERICAN STANDARD COMPANIES INC.
SUMMARY SEGMENT DATA
(Unaudited)
In millions Three Months Ended December 31,
-------------------------------
1997 1996
------- -------
Operating Operating
Reported Margin Reported Margin
-------- ------ -------- ------
<S> <C> <C> <C> <C>
Sales
Air Conditioning Products $ 883 $ 835
Plumbing Products 377 373
Automotive Products 253 229
Medical Systems 26 --
----- -----
$1,539 $1,437
====== ======
Operating income (loss)
Air Conditioning Products $ 79 8.9% $ 69 8.3%
Plumbing Products 33 8.8% 31 8.3%
Automotive Products 33 13.0% 32 14.0%
Medical Systems (7) -- (2) --
------- ------
$ 138 9.0% $ 130 9.0%
======= ======
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1997 1996
---- -----
Operating Operating
Adjusted Margin Adjusted Margin
-------- ------ -------- ------
<S> <C> <C> <C> <C>
Sales
Air Conditioning Products $3,567 $3,437
Plumbing Products 1,439 1,452
Automotive Products 952 916
Medical Systems 50 --
------ ------
$6,008 $5,805
====== ======
Operating income (loss) before write-off
of purchased research and development
and asset impairment loss
Air Conditioning Products $ 364 10.2% $ 353 10.3%
Plumbing Products 119 8.3% 110 7.6%
Automotive Products 127 13.3% 123 13.4%
Medical Systems (20) -- (13) --
------- ------
$ 590 9.8% $ 573 9.9%
======= ======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN STANDARD COMPANIES INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
In millions except
per share data Three Months Ended December 31,
-------------------------------
1997 1996
----- -----
<S> <C> <C>
Sales $1,539 $ 1,437
Operating income $ 138 $ 130
Equity in net income of
unconsolidated joint ventures 3 6
---- ----
141 136
Interest expense 48 47
Corporate and other expenses 21 19
---- ----
Income before income taxes 72 70
Income taxes 26 25
---- ----
Net income $ 46 $ 45
======= =====
Net income per common share:
Basic $ .64 $ .57
==== =======
Diluted $ .62 $ .56
==== =======
Average outstanding common shares-basic 71.9 78.5
Average outstanding common shares-diluted 74.0 80.7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN STANDARD COMPANIES INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
In millions except Year Ended December 31,
-----------------------
per share data
1997 1996
---- -----
Reported Adjusted(a) Reported Adjusted(b)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales $6,008 $6,008 $5,805 $5,805
Operating income before write-off
of purchased research and development
and asset impairment loss $ 590 $ 590 $ 573 $ 573
Write-off of purchased research and development (a) 90 -- -- --
Asset impairment loss (b) -- -- 235 --
------ ------ ------ ------
Operating income 500 590 338 573
Equity in net income of
unconsolidated joint ventures 12 12 3 3
------ ------ ------ ------
512 602 341 576
Interest expense 192 192 198 198
Corporate and other expenses 83 83 85 85
------ ------ ------ ------
Income before income taxes
and extraordinary item 237 327 58 293
Income taxes 117 117 104 104
---- ---- ---- ---
Income (loss) before extraordinary item 120 210 (46) 189
Extraordinary loss on retirement of
debt, net of tax (24) (24) -- --
------ ------ ------ ------
Net income (loss) $ 96 $ 186 $ (46) $ 189
===== ====== ====== =====
Per common share (c):
Basic:
Income (loss) before extraordinary item $ 1.62 $ 2.85 $ (.60) $ 2.42
Extraordinary loss on retirement of debt (.32) (.32) -- --
----- ----- --- --
Net income (loss) $ 1.30 $ 2.53 $ (.60) $ 2.42
===== ====== ======== =====
Diluted:
Income (loss) before extraordinary item $ 1.57 $ 2.76 $ (.60) $ 2.36
Extraordinary loss on retirement of debt (.31) (.31) -- --
----- ----- --- --
Net income (loss) $ 1.26 $ 2.45 $ (.60) $ 2.36
====== ======= ======== ======
Average outstanding common shares-basic 73.8 73.8 78.0 78.0
Average outstanding common shares-diluted 76.2 76.2 78.0 79.8
<FN>
(a) In connection with the June 30, 1997 acquisition of the medical diagnostics
businesses, the value of purchased in-process research and development was
written off in accordance with applicable accounting rules.
(b) Effective January 1, 1996, the Company adopted FAS 121 which resulted in an
asset impairment loss of $235 million resulting predominantly from the
write-down of goodwill for which no tax benefit was available.
(c) Earnings per common share for all periods presented have been presented in
accordance with FAS 128, "Earnings per Share", adopted effective December
31, 1997.
</FN>
</TABLE>
