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 March 31, 2000
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 1-11415
AMERICAN STANDARD COMPANIES INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-3465896
(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
April 30, 2000 70,226,846 shares
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
American Standard Companies Inc. (the "Company") is a Delaware corporation
that has as its only significant assets all the outstanding common stock of
American Standard Inc. and American Standard International Inc. ("ASII"), both
Delaware Corporations. Hereinafter, "American Standard" or "the Company" will
refer to the Company, or to the Company and American Standard Inc. and ASII
including their subsidiaries, as the context requires.
<TABLE>
AMERICAN STANDARD COMPANIES INC. AND SUBSIDIARIES
UNAUDITED SUMMARY STATEMENT OF OPERATIONS
(Dollars in millions except
per share amounts)
<CAPTION>
Three months ended
March 31,
<S> <C> <C>
2000 1999
------ ------
SALES $1,822 $1,649
------ ------
COST AND EXPENSES
Cost of sales 1,381 1,238
Selling and administrative expenses 296 283
Other income (3) (2)
Interest expense 48 46
------ ------
1,722 1,565
------ ------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 100 84
Income taxes 40 35
------ ------
INCOME FROM CONTINUING OPERATIONS 60 49
Loss from discontinued operations - (2)
------ ------
NET INCOME $ 60 $ 47
====== ======
Per basic common share:
Income from continuing operations $ .85 $ .70
Loss from discontinued operations - (.03)
------ ------
Net income $ .85 $ .67
====== ======
Per diluted common share:
Income from continuing operations $ .82 $ .68
Loss from discontinued operations - (.03)
------ ------
Net income $ .82 $ .65
====== ======
Average common shares outstanding
Basic 71,025,480 70,221,451
Diluted 73,059,767 71,903,290
<FN>
See accompanying notes
</FN>
</TABLE>
<PAGE>
Item 1. Financial Statements (continued)
<TABLE>
AMERICAN STANDARD COMPANIES INC. AND SUBSIDIARIES
UNAUDITED SUMMARY BALANCE SHEET
(Dollars in millions
except share data)
<CAPTION>
March 31, December 31,
2000 1999
--------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 40 $ 61
Accounts receivable 1,043 986
Inventories
Finished products 337 286
Products in process 111 99
Raw materials 125 120
----- -----
573 505
Net assets of discontinued
operations held for sale 52 51
Other current assets 130 123
----- -----
TOTAL CURRENT ASSETS 1,838 1,726
FACILITIES, less accumulated depreciation:
March 2000 - $582; Dec. 1999 - $571 1,393 1,414
GOODWILL 956 991
OTHER ASSETS 628 555
----- -----
TOTAL ASSETS $4,815 $4,686
====== ======
CURRENT LIABILITIES
Loans payable to banks $ 90 $ 737
Current maturities of long-term debt 19 19
Accounts payable 608 578
Accrued payrolls 203 225
Other accrued liabilities 825 728
----- -----
TOTAL CURRENT LIABILITIES 1,745 2,287
LONG-TERM DEBT 2,596 1,887
RESERVE FOR POSTRETIREMENT BENEFITS 416 436
OTHER LIABILITIES 535 572
----- -----
TOTAL LIABILITIES 5,292 5,182
STOCKHOLDERS' DEFICIT
Preferred stock, 2,000,000 shares authorized,
none issued and outstanding - -
Common stock $.01 par value, 200,000,000
shares authorized; 70,468,014
shares issued and outstanding
in 2000; 70,742,538 in 1999 1 1
Capital surplus and other 581 595
Treasury stock (367) (363)
Accumulated deficit (493) (553)
Foreign currency translation effects (199) (176)
----- -----
TOTAL STOCKHOLDERS' DEFICIT (477) (496)
----- -----
$4,815 $4,686
====== ======
<FN>
See accompanying notes
</FN>
</TABLE>
<PAGE>
Item 1. Financial Statements (continued)
<TABLE>
AMERICAN STANDARD COMPANIES INC. AND SUBSIDIARIES
UNAUDITED SUMMARY STATEMENT OF CASH FLOWS
(Dollars in millions)
<CAPTION>
Three months ended
March 31,
------------------
2000 1999
---- ----
<S> <C> <C>
CASH PROVIDED (USED) BY:
OPERATING ACTIVITIES:
Net income $ 60 $ 47
Adjustments to reconcile net income to net cash
used by opertions:
Loss from discontinued operations - 2
Depreciation and amortization 55 48
Other non-cash items 3 2
Changes in assets and liabilities:
Accounts receivable (66) (107)
Inventories (60) (60)
Accounts payable and other accruals (55) 76
Other assets and liabilities 36 (55)
---- ----
Net cash used by continuing operations (27) (47)
Net cash used by discontinued operations (4) (18)
---- ----
Net cash used by operating activities (31) (65)
---- ----
INVESTING ACTIVITIES:
Purchase of property, plant and equipment (37) (32)
Investments in affiliated companies
and other businesses (9) (19)
Investment in computer software (13) (8)
Acquisition of Armitage/Dolomite,
net of cash acquired - (430)
Other 8 5
---- ----
Net cash used by investing activities (51) (484)
---- ----
FINANCING ACTIVITIES:
Repayments of long-term debt (7) (18)
Net change in credit facility 110 459
Net change in other short-term debt 6 67
Purchases of treasury stock (49) (2)
Other 2 2
---- ----
Net cash provided by financing activities 62 508
---- ----
Effect of exchange rate changes on cash and
cash equivalents (1) (1)
Net decrease in cash and cash equivalents (21) (42)
Cash and cash equivalents at
beginning of period 61 63
---- ----
Cash and cash equivalents at end of period $ 40 $ 21
==== ====
<FN>
See accompanying notes
</FN>
</TABLE>
<PAGE>
AMERICAN STANDARD COMPANIES INC.
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, 1999.
In the fourth quarter of 1999, the Board of Directors of the Company approved a
plan for the sale of the Medical Systems segment. The Company expects to
complete the sale in the second quarter of 2000. Accordingly, Medical Systems is
reported as a discontinued operation in the accompanying Unaudited Summary
Statement of Operations and the Company's net investment in that segment is
reported in the accompanying Unaudited Summary Balance Sheet as net assets of
discontinued operations held for sale. Financial statements for all prior
periods presented have been restated to reflect these classifications.
Borrowings under the revolving credit facilities of the Company's bank credit
agreement (the "1997 Credit Agreement") that were previously classified as
short-term debt, have been classified as long-term debt as of March 31, 2000, as
the Company has the ability to refinance such borrowings with long-term debt
under the terms of the 1997 Credit Agreement.
Note 2. Restructuring and Asset Impairment Charges
As described in Note 5 of Notes to Consolidated Financial Statements included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1999,
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 $197 million.
In 1999, after re-evaluating its plans, the Company recorded a net $15 million
restructuring and asset impairment charge that reflected: reversal of $29
million of unneeded amounts accrued in 1998 for certain Plumbing Products
facilities; accrual of additional charges of $17 million for the closure of five
Vehicle Control Systems manufacturing facilities; accrual of $14 million to
reflect current estimates of certain other charges; and a $13 million impairment
charge related to a minority equity investment that the Company does not expect
to recover.
<PAGE>
Following is a summary of the unpaid balances of the restructuring and asset
impairment accruals, and activity for the three months ended March 31, 2000
(dollars in millions):
<TABLE>
<CAPTION>
Paid in
Balance first three Balance
Dec. 31, months of March 31,
1999 2000 2000
--------- ---------- --------
<S> <C> <C> <C>
Termination payments
to employees $16.8 $ 5.9 $ 10.9
Other employee costs 7.4 - 7.4
Facilities write-downs 1.3 .9 .4
Other 3.1 - 3.1
------ ------ ------
$ 28.6 $ 6.8 $ 21.8
====== ====== ======
</TABLE>
The Company expects that essentially all of the $21.8 million balance as of
March 31, 2000 will be utilized by the end of 2000. Of the 2,260 employees being
terminated, 1,380 had been terminated as of March 31, 2000.
Note 3. Comprehensive Income
Total comprehensive income, consisting of net income and foreign currency
translation effects, for the three months ended March 31, 2000 and 1999 were $55
million and $65 million, respectively.
Note 4. Tax Matters
As described in Note 8 of Notes to Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999, there
are pending German tax issues for the years 1984 through 1994. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
Note 5. Earnings Per Share
The average number of outstanding shares of common stock used in computing
diluted earnings per share for the three months ended March 31, 2000 and 1999
included 2,034,287 and 1,681,839 average incremental shares, respectively, for
the assumed exercise of stock options.
Note 6. 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. Management believes that
the adoption of Statement No. 133 will not have a significant effect on the
Company's results of operations or financial position.
<PAGE>
Note 7. Supplemental Consolidating Condensed Financial Information
All of the Company's Senior Notes and the 9 1/4% Sinking Fund
Debentures were issued by its wholly owned subsidiary, American Standard Inc.
("ASI"). American Standard Companies Inc. (the "Parent Company") fully and
unconditionally guarantees the payment obligations under these securities. In
lieu of providing separate financial statements for ASI, the Company has
included the accompanying consolidating condensed financial information.
Management believes that separate financial statements of ASI are not material
to investors. The following supplemental financial information sets forth, on an
unconsolidated basis, statements of operations and statements of cash flows for
the three months ended March 31, 2000 and 1999, and balance sheets as of March
31, 2000 and December 31, 1999 for the Parent Company and ASI, and the
subsidiaries of the Parent Company which are not subsidiaries of ASI (the "Other
Subidiaries") for 2000 only. None of the Other Subsidiaries guarantee the debt
of ASI. On December 31, 1999 the Company completed an internal reorganization
whereby ASI transferred ownership of all the Other Subsidiaries and their
intellectual property rights to another wholly owned subsidiary, American
Standard International Inc. Prior to December 31, 1999, there were no Other
Subsidiaries. The equity method of accounting is used to reflect investments of
the Parent Company in ASI and Other Subsidiaries.
<TABLE>
CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Unaudited)
<CAPTION>
Parent Other Consolidated
(Dollars in millions) Company ASI Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C>
Sales $1,087 $787 $(52) $1,822
------ ---- ----- ------
Costs and expenses:
Cost of sales 828 595 (42) 1,381
Selling and administrative expenses 155 141 296
Other (income) expense 33 (26) (10) (3)
Interest expense 41 7 48
------ ---- ----- ------
Total expenses 1,057 717 (52) 1,722
------ ---- ----- ------
Income before income taxes and equity in
net income of consolidated subsidiaries 30 70 - 100
Income taxes 13 27 - 40
------ ---- ----- ------
Income before equity in net income of
consolidated subsidiaries 17 43 - 60
Equity in net income of consolidated subsidiaries $60 - - ($60) -
---- ------ ---- ----- ------
Net income $60 $ 17 $ 43 ($60) $60
==== ===== ==== === ===
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED BALANCE SHEETS
AS OF MARCH 31, 2000
(Unaudited)
<CAPTION>
Parent Other Consolidated
(Dollars in millions) Company ASI Subsidiaries Eliminations Total
------- --- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 40 $ 40
Accounts receivable, net $ 463 580 1,043
Inventories 295 278 573
Net assets of discontinued operations heldfor sale 52 - 52
Other current assets 49 81 130
------ ------ -----
Total current assets 859 979 1,838
Facilities, net 500 893 1,393
Goodwill, net 147 809 956
Investment in subsidiaries $ (77) - - $ 77 -
Intercompany receivables 76 408 (484) -
Loan receivable from parent 421 421 (842) -
Other assets 439 189 628
------- ------ ------ -------- -------
Total assets $ (77) $2,442 $3,699 $(1,249) $ 4,815
======= ====== ====== ======== =======
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
EQUITY
Current liabilities:
Loans payable to banks $ 90 $ 90
Current maturities of long-term debt $ 14 5 19
Other current liabilities 916 720 1,636
------ ------ -------
Total current liabilities 930 815 1,745
Long-term debt 2,121 475 2,596
Reserve for postretirement benefits 197 219 416
Intercompany payables 408 76 $ (484) -
Loans payable to subsidiaries $400 421 21 (842) -
Other long-term liabilities 299 236 535
------- ------ ------ -------- -------
Total liabilities 400 4,376 1,842 (1,326) 5,292
------- ------ ------ -------- -------
Total stockholders' (deficit) equity (477) (1,934) 1,857 77 (477)
------- ------ ------ -------- -------
Total liabilities and stockholders' $ (77) $2,442 $3,699 $(1,249) $ 4,815
(deficit) equity ======= ====== ====== ======== =======
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Unaudited)
<CAPTION>
Parent Other Consolidated
(Dollars in millions) Company ASI Subsidiaries Eliminations Total
--------------------- ------- --- ------------ --------------- -----
<S> <C> <C> <C> <C> <C>
Cash provided (used) by:
Operating activities:
Net income $ 60 $17 $ 43 $(60) $ 60
Adjustments to reconcile net income to net
cash provided (used) by operations:
Depreciation and amortization 18 37 55
Other non-cash items 1 3 - (1) 3
Equity in net income of subsidiary (60) 60 -
Changes in assets and liabilities:
Accounts receivable (10) (56) (66)
Inventories (51) (9) (60)
Accounts payable and other accruals (3) 88 (143) 3 (55)
Other assets and liabilities 1 35 36
---- ---- ---- ---- ----
Net cash provided (used) by continuing
operations (2) 66 (93) 2 (27)
Net cash used by discontinued operations (4) - (4)
---- ---- ---- ---- ----
Net cash provided (used) by operating
activities (2) 62 (93) 2 (31)
Investing Activities: ---- ---- ---- ---- ----
Purchase of property, plant and equipment (11) (26) (37)
Investments in affiliated companies and
other businesses (1) - (9) 1 (9)
Investments in computer software (10) (3) (13)
Other 5 3 8
---- ---- ---- ---- ----
Net cash used by investing activities (1) (16) (35) 1 (51)
---- ---- ---- ---- ----
Repayments of long-term debt (6) (1) (7)
Net change in credit facility (4) 114 110
Net change in other short-term debt - 6 6
Purchases of treasury stock (49) (49) - 49 (49)
Increase in loan from subsidiary 49 - - (49) -
Issuance of common stock 3 (3)
Other 2 2
---- ---- ---- ---- ----
Net cash provided (used) by financing activities 3 (57) 119 (3) 62
---- ---- ---- ---- ----
Effect of exchange rate changes on cash and
cash equivalents - (1) (1)
---- ---- ---- ---- ----
Net increase (decrease) in cash and
cash equivalents - (11) (10) - (21)
---- ---- ---- ---- ----
Cash and cash equivalents at beginning of
period 11 50 61
---- ---- ---- ---- ----
Cash and cash equivalents at end of period $ - $ - $ 40 $ - $40
===== ===== ===== ====== ====
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(Unaudited)
<CAPTION>
Parent Consolidated
(Dollars in millions) Company ASI Eliminations Total
------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Sales $1,649 $1,649
Costs and expenses:
Cost of sales 1,238 1,238
Selling and administrative expenses 283 283
Other income (2) (2)
Interest expense 46 46
----- ------
Total expenses 1,565 1,565
----- ------
Income from continuing operations before income taxes
and equity in net income of consolidated subsidiaries 84 84
Income taxes 35 35
----- ------
Income from continuing operations before equity in
net income of consolidated subsidiaries 49 49
Loss from discontinued operations (2) (2)
Equity in net income of subsidiaries $ 47 - $ (47) -
---- ----- ------ ----
Net income $ 47 $ 47 $ (47) $ 47
===== ===== ====== ====
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED BALANCE SHEETS
AS OF DECEMBER 31, 1999
<CAPTION>
Parent Other Consolidated
(Dollars in millions) Company ASI Subsidiaries Eliminations Total
------- ---- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 11 $ 50 $ 61
Accounts receivable, net 448 538 986
Inventories 244 261 505
Net assets of discontinued operations
held for sale 51 - 51
Other current assets 38 85 123
------ ------- -------
Total current assets 792 934 1,726
Facilities, net 503 911 1,414
Goodwill, net 148 843 991
Investment in subsidiaries $ (145) - - $ 145 -
Intercompany receivables 43 825 (868) -
Loan receivable from parent 351 - (351) -
Other assets 455 100 555
------ ------- ------- -------- -------
Total assets $ (145) $ 2,292 $ 3,613 $ (1,074) $ 4,686
====== ======= ======= ======== =======
LIABILITIES AND STOCKHOLDERS'
(DEFICIT) EQUITY
Current liabilities:
Loans payable to banks $ 586 $ 151 $ 737
Current maturities of long-term debt 18 1 19
Other current liabilities 750 781 1,531
------- ------- -------
Total current liabilities 1,354 933 2,287
Long-term debt 1,556 331 1,887
Reserve for postretirement benefits 204 232 436
Intercompany payables 825 43 $ (868) -
Loan payable to subsidiary $351 - - (351) -
Other long-term liabilities 299 273 572
------ ------- ------- -------- -------
Total liabilities 351 4,238 1,812 (1,219) 5,182
Total stockholders' (deficit) equity (496) (1,946) 1,801 145 (496)
------ ------- ------- -------- -------
Total liabilities and stockholders'
(deficit) equity $ (145) $ 2,292 $ 3,613 $ (1,074) $ 4,686
======= ======= ======= ======== =======
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(Unaudited)
<CAPTION>
Parent Consolidated
(Dollars in millions) Company ASI Eliminations Total
--------------------- ------- ----- ------------ ---------
<S> <C> <C> <C> <C>
Cash provided (used) by:
Operating activities:
Net income $ 47 $ 47 $(47) $ 47
Adjustments to reconcile net income to net
provided (used) by operations:
Loss from discontinued operations 2 2
Depreciation and amortization 48 48
Other non-cash items 2 2
Equity in net income of subsidiary (47) - 47 -
Changes in assets and liabilities:
Accounts receivable (107) (107)
Inventories (60) (60)
Accounts payable and other accruals 76 76
Other assets and liabilities (55) (55)
------- ----- ---- ---
Net cash used by continuing operations - (47) - (47)
Net cash used by discontinued operations (18) (18)
------- ----- ---- ---
Net cash used by operating activities (65) (65)
------- ----- ---- ---
Investing activities:
Purchase of property, plant and equipment (32) (32)
Investments in affiliated companies and
other businesses (5) (19) 5 (19)
Investments in computer software (8) (8)
Acquisition of Armitage/Dolomite (430) (430)
Other 5 5
------- ----- ---- ---
Net cash used by investing activities (5) (484) 5 (484)
------- ----- ---- ---
Financing activities:
Repayments of long-term debt (18) (18)
Net change in credit facility 459 459
Net change in other short-term debt 67 67
Purchases of treasury stock (2) (2) 2 (2)
Other 7 2 (7) 2
------- ----- ---- ---
Net cash provided by financing activities 5 508 (5) 508
------- ----- ---- ---
Effect of exchange rate changes on cash
and cash equivalents (1) (1)
------- ----- ---- ---
Net increase (decrease) in cash and
cash equivalents - (42) - (42)
------- ----- ---- ---
Cash and cash equivalents at beginning of period - 63 63
------- ----- ---- ---
Cash and cash equivalents at end of period $ - $ 21 $ - $21
======= ===== ===== ===
</TABLE>
<PAGE>
Note 8. Segment Data
<TABLE>
Summary Segment and Income Data
Dollars in millions
(Unaudited)
<CAPTION>
Three Months Ended
March 31,
2000 1999
<S> <C> <C>
Sales:
Air Conditioning Systems and Services $1,067 $ 942
Plumbing Products 459 415
Vehicle Control Systems 296 292
------ ------
Total sales $1,822 $1,649
====== ======
Segment income:
Air Conditioning Systems and Services $ 94 $ 76
Plumbing Products 40 34
Vehicle Control Systems 44 39
------ ------
Total segment income 178 149
Equity in net income of unconsolidated
joint ventures 10 8
------ ------
188 157
Interest expense (48) (46)
Corporate items (40) (27)
------ ------
Income from continuing operations
before income taxes $ 100 $ 84
====== ======
<FN>
For a comparative analysis of this Summary Segment and Income Data, see
Management's Discussion and Analysis of Financial Position and Results of
Operations.
</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 First Quarter of 2000 Compared with the First
Quarter of 1999
The Company achieved record first quarter sales of $1,822 million in
2000, an increase of 10% (14% excluding unfavorable foreign exchange effects)
from $1,649 million in the first quarter of 1999. Sales increased 13% for Air
Conditioning Systems and Services, 11% for Plumbing Products and 1% for
Vehicle Control Systems.
Segment income was $178 million for the first quarter of 2000, an
increase of 19% (25% excluding unfavorable foreign exchange effects) from
$149 million in the first quarter of 1999. Segment income increased 24% for
Air Conditioning Systems and Services, 18% for Plumbing Products and 13% for
Vehicle Control Systems.
The sales and segment income amounts reflect results from continuing
operations only, as the Medical Systems business is reported as a
discontinued operation.
Sales of Air Conditioning Systems and Services increased 13% (14%
excluding foreign exchange effects) to $1,067 million for the first quarter
of 2000 from $942 million for the first quarter of 1999. Worldwide Applied
Systems sales increased 13% (14% excluding foreign exchange effects) due to
strong performance in the U.S. commercial equipment business and sales and
service operations. U.S. sales of commercial applied products and services
increased because of higher volumes, reflecting continued strength in the
U.S. commercial market and benefiting from the introduction of a new line of
high-efficiency chillers. Additionally, there was significant improvement in
the Far East outside of China. Worldwide Unitary Systems sales increased 14%
primarily from higher volumes in U.S. residential and commercial operations,
reflecting continued strength in the U.S. commercial and residential unitary
markets. International unitary sales also increased principally as a result
of volume improvements in Latin America, the Middle East and the Far East,
except for China.
Segment income of Air Conditioning Systems and Services increased 24%
(with little effect from foreign exchange) to $94 million in the first
quarter of 2000 from $76 million in the first quarter of 1999 as margins
improved from 8.1% to 8.8%. Worldwide Applied Systems benefited primarily
from improved volume in the U.S. and Far East. Worldwide Unitary Systems
posted strong growth in the U.S. from volume increases and improved
internationally due to volume increases and cost improvements.
Sales of Plumbing Products increased 11% (16% excluding foreign
exchange effects) to $459 million in the first quarter of 2000, from $415
million in the first quarter of 1999 as a result of gains in Europe and the
Americas. The European increase (23% excluding foreign exchange) reflected
the effects of the Armitage/Dolomite acquisition in February 1999 and
improving economic conditions. Sales in the Americas increased 12% (with
little effect from foreign exchange) due to strong growth in the U.S., partly
offset by a decline in Latin America. The increase in the U.S. was the result
of higher volume, through both the expanding retail and wholesale market
channels. Sales in other international operations declined moderately.
<PAGE>
Segment income of Plumbing Products increased $6 million, or 18% (29%
excluding foreign exchange) to $40 million for the first quarter of 2000 from
$34 million for the 1999 first quarter. The increase was principally
attributable to volume increases and cost improvements from the restructuring
of European operations as part of a low-cost sourcing program, the
Armitage/Dolomite acquisition and substantial volume improvements in the U.S.
The successful restructuring of both the Americas and European Plumbing
businesses has lowered their cost structures, resulting in improving trends
in margins and profitability. Margins improved from 8.2% in the first quarter
of 1999 to 8.7% in the first quarter of 2000.
Sales of Vehicle Control Systems for the first quarter of 2000 were
$296 million, an increase of 1% (10% excluding the unfavorable effects of
foreign exchange) from $292 million in the first quarter of 1999, primarily
from higher volume in Europe. Unit volumes of truck and bus production
increased 6% in Western Europe and were essentially flat in the U.S. compared
with the first quarter of 1999. In addition, sales increased because of
higher product content per vehicle, sales by the U.S. compressor
manufacturing joint venture and increased shipments of anti-lock braking
systems (ABS) to the Company's U.S. braking systems joint venture. The higher
sales to the U.S. joint venture in the first quarter of 2000 reflected the
first-quarter 1999 full phase-in of regulations requiring ABS on all new
heavy-duty trucks and trailers. Additionally, sales increased 19% in Brazil
despite a 15% decline in that country's commercial vehicle production.
Segment income for Vehicle Control Systems for the first quarter of
2000 increased $5 million, or 13% (29% excluding foreign exchange effects) to
$44 million from $39 million in the first quarter of 1999. This reflected
higher volumes and cost reductions. Margins improved from 13.4% in the first
quarter of 1999 to 14.9% in the first quarter of 2000.
Other Summary Segment and Income Data Items
Equity in net income of unconsolidated joint ventures increased to $10
million in the first quarter of 2000 from $8 million in the year-earlier
quarter, reflecting the continued strong growth of Vehicle Control Systems'
U.S. braking systems joint venture and the Company's financial services joint
venture.
Interest expense increased $2 million in the first quarter of 2000
compared with the year-earlier quarter principally due to higher average
interest rates. Corporate and other expenses in the first quarter of 2000
increased $13 million from the prior year first quarter mainly due to:
increased minority interest in net income of consolidated joint ventures;
higher incentive compensation accruals due to expected profitability
improvement; increased receivables discount fees paid to the financial
services joint venture as a result of higher sales; and transition costs due
to management changes.
The income tax provision for the first quarter of 2000 was $40 million,
or 39.75% of income from continuing operations, compared with a provision of
$35 million, or 41.5% of income from continuing operations in the first
quarter of 1999. The effective income tax rate is lower in 2000 primarily
because of an internal reorganization of the Company's subsidiary ownership
which should be more tax efficient.
<PAGE>
Liquidity and Capital Resources
Net cash used by operating activities, after cash interest paid of $46
million, was $31 million for the first quarter of 2000, compared with net
cash used of $65 million for the same period of 1999. The $34 million
improvement resulted primarily from higher net income and higher depreciation
and amortization. Accounts receivable and inventories increased in the first
quarter of both years, reflecting the normal seasonal pattern and growth in
the business. The receivables increase of $66 million in 2000 was smaller
than the first quarter 1999 increase primarily because the average days
outstanding improved by four days. The inventory increase of $60 million was
essentially the same as in the 1999 first quarter, but turnover was one-half
turn lower and reflected a decision to increase certain air conditioning
inventories to better serve customers in the upcoming summer season. The
Company made capital expenditures of $46 million for the first quarter of
2000, including $9 million of investments in affiliated companies and other
businesses. This compared with capital expenditures of $51 million in the
1999 first quarter, including $19 million of investments in affiliated
companies and other businesses (but excluding the Armitage/Dolomite
acquisition described below). The Company also invested $13 million in
computer software in the first quarter of 2000, compared with $8 million in
the 1999 period. Additionally, the Company purchased approximately 1.3
million shares of its common stock for $49 million in the first quarter of
2000.
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"), 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 contains restrictive covenants
and other requirements with which the Company believes it is currently in
compliance.
In December 1998, the 1997 Credit Agreement was amended to permit
American Standard to issue up to an additional $500 million principal amount
of senior or subordinated unsecured debt securities, to reorganize ownership
of certain subsidiaries and intellectual property rights, 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. In November 1999, the 1997 Credit
Agreement was amended to permit the Company to sell its Medical Systems
business and to increase the limit on annual lease payments.
Borrowings under the revolving credit facilities of the Company's 1997
Credit Agreement that were previously classified as short-term debt, have
been classified as long-term debt as of March 31, 2000, as the Company has
the ability to refinance such borrowings with long-term debt under the terms
of the 1997 Credit Agreement.
At March 31, 2000, the Company had borrowings of $725 million
outstanding under the Revolving Facilities. There was $569 million available
under the Revolving Facilities after reduction for borrowings and for $81
million of letters of credit usage. The Company's foreign subsidiaries had
$89 million available at March 31, 2000, under overdraft facilities that can
be withdrawn by the banks at any time. In addition, the Company's operations
in China have $17 million available under bank credit facilities after
reduction for borrowings of $18 million and letters of credit usage of $20
million.
<PAGE>
On May 28, 1999, the Company 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 described below. The May 28, 1999 sale
of Senior Notes, which are not subject to redemption, was made pursuant to a
$1 billion shelf registration filed with the Securities and Exchange
Commission in November 1998 (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. 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 February 2, 1999, the Company acquired Armitage/Dolomite, a
manufacturer of ceramic sanitaryware, brassware and integrated plumbing
systems, for approximately $427 million (including fees and expenses) with
borrowings under the Company's 1997 Credit Agreement. The acquired business
consists of two principle businesses: Armitage Shanks, a United Kingdom
manufacturer, and Ceramica Dolomite, an Italian manufacturer. The acquired
business has facilities 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. Armitage/Dolomite had 1999 sales
of $279 million (for the eleven months following the acquisition). This
transaction was accounted for as a purchase and the results of operations
have been included in the accompanying financial statements since the date of
acquisition. The purchase price was allocated based upon the fair value of
the assets acquired and liabilities assumed at the date of acquisition. This
resulted in an excess of purchase price over the value of net assets acquired
(goodwill) of $300 million which is being amortized over 40 years.
As described in Note 8 of Notes to Consolidated Financial Statements in
the Company's Annual Report on Form 10-K for the year ended December 31,
1999, there are pending German Tax issues for the years 1984 through 1994.
There has been no change in the status of these issues since that report was
filed.
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 1999 Annual Report
on Form 10-K and in the "Management's Discussion and Analysis" section of the
Company's 1999 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.
At its annual meeting on May 4, 2000, the Board of Directors of
American Standard Companies Inc. elected the following persons to the offices of
the Company set forth below opposite their names:
Frederic M. Poses Chairman and Chief Executive Officer
G. Peter D'Aloia Senior Vice President and
Chief Financial Officer
W. Craig Kissel Senior Vice President
J. Paul McGrath Senior Vice President, General
Counsel and Secretary
Thomas S. Battaglia Vice President and Treasurer
Gary Brogoch Vice President
Wilfried Delker Vice President
George H. Kerckhove Vice President
Alberto Loreti Vice President
G. Eric Nutter Vice President
David R. Pannier Vice President
Raymond D. Pipes Vice President
James H. Schultz Vice President
G. Ronald Simon Vice President and Controller
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 March 31, 2000, 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 COMPANIES INC.
/s/ G. Ronald Simon
Vice President and Controller
(Principal Accounting Officer)
May 15, 2000
<PAGE>
AMERICAN STANDARD COMPANIES INC.
INDEX TO EXHIBITS
(The File Number of the Registrant, American Standard Companies Inc. is 1-11415)
Exhibit No. Description
(12) Ratio of Earnings to Fixed Charges
(27) Financial Data Schedule
(99) (i) Press release dated February 10, 2000
Exhibit 12
<TABLE>
AMERICAN STANDARD INC.
COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Millions)
Three Months
<CAPTION>
For the Years ended December 31, Ended March 31,
--------------------------------- ---------------
1995 1996 1997 1998 1999 1999 2000
----- ----- ----- ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Income from continuing
operations before income taxes $234.0 $71.1 $347.0 $189.8 $451.5 $83.9 $99.7
Equity in net (income) loss of
associated companies net of dividends
received 11.0 11.8 (2.9) (3.6) (5.1) (4.7) (3.2)
Amortization of capitalized interest 1.1 1.3 1.4 1.6 1.8 .4 .5
Interest expense 213.3 198.2 192.2 188.4 192.1 45.9 48.3
Rental expense factor 23.0 27.3 25.0 26.5 33.9 8.2 11.7
------- ------ ------ ------ ------ ------ ------
Earnings available for fixed charges $482.4 $309.7 $562.7 $402.7 $674.2 $133.7 $157.0
======= ====== ======= ======= ======= ======= ======
Interest expense $213.3 $198.2 $192.2 $188.4 $192.1 $45.9 $48.3
Capitalized interest 4.0 3.9 3.8 4.5 3.3 .8 .5
Rental expense factor 23.0 27.3 25.0 26.5 33.9 8.2 11.7
------- ------ ------ ------ ------ ------ ------
Fixed charges $240.3 $229.4 $221.0 $219.4 $229.3 $54.9 $60.5
======= ======= ======= ======= ======= ====== =======
Ratio of earnings to fixed charges (a) 2.0 1.3 2.5 1.8 2.9 2.4 2.6
<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.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 40
<SECURITIES> 0
<RECEIVABLES> 1,080
<ALLOWANCES> 37
<INVENTORY> 573
<CURRENT-ASSETS> 1,838
<PP&E> 1,975
<DEPRECIATION> 582
<TOTAL-ASSETS> 4,815
<CURRENT-LIABILITIES> 1,745
<BONDS> 2,596
0
0
<COMMON> 1
<OTHER-SE> (478)
<TOTAL-LIABILITY-AND-EQUITY> 4,815
<SALES> 1,822
<TOTAL-REVENUES> 1,822
<CGS> 1,381
<TOTAL-COSTS> 1,381
<OTHER-EXPENSES> (3)
<LOSS-PROVISION> 4
<INTEREST-EXPENSE> 48
<INCOME-PRETAX> 100
<INCOME-TAX> 40
<INCOME-CONTINUING> 60
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 60
<EPS-BASIC> .85
<EPS-DILUTED> .82
</TABLE>
NEWS RELEASE
FOR IMMEDIATE RELEASE
AMERICAN STANDARD REPORTS FOR ITS FULL YEAR:
RECORD SALES OF $7.2 BILLION, UP 10% OVER 1998
RECORD EPS FROM CONTINUING OPERATIONS OF $3.76, UP 19% OVER 1998
Piscataway, NJ - February 10, 2000 - American Standard Companies Inc.
(NYSE:ASD) today announced record results for 1999. Revenues from continuing
operations were $7.2 billion (excluding the results of the Medical businesses to
be sold), up 10% over 1998. Diluted per share earnings from continuing
operations increased 19% to $3.76. After the loss on the sale of the Medical
businesses and the impact of an impairment charge principally related to a
minority equity interest outside of the three core businesses, fully diluted per
share earnings for 1999 were $1.90.
Frederic Poses, Chairman and Chief Executive Officer remarked, "We are
pleased to report record sales and earnings for 1999. Our businesses achieved
strong overall top line growth and share gains in the important U.S. and
European markets. Our businesses performed well despite weakness in the Far East
and Latin America as well as a softening in the European commercial vehicle
market. The overall sales growth of 10% reflects our global diversity and
business balance.
"For the year, the Company's earnings growth and operating margin
expansion, from 10% to 10.4%, reflect our continued success in leveraging sales
growth and reducing costs. Operating earnings and margin improvement were better
in both our Plumbing and Air Conditioning businesses. Braking and Control
System's operating income and margin, while still at good levels, were below
last year reflecting higher warranty and product development costs in 1999. The
overall Braking business, after including increased equity income from our U.S.
marketing joint venture, was comparable to last year.
"We have made significant progress on the sale of the Medical
businesses and recorded the estimated loss on the sale of these discontinued
businesses in the fourth quarter. In addition to the cash we will receive from
the sale, the Company expects to share in the potential future value of the
business.
"With the selling of the Medical businesses and the strengths of our
three core businesses, I am confident that 2000 will be another outstanding
year."
Recent Business Highlights
Air Conditioning Systems and Services
Trane was awarded a $13 million equipment and building control
systems contract for the new UPS distribution center, Hub
2000, in Louisville, Kentucky. The center, covering 47 acres
under one roof, will be the largest single distribution
structure of its kind in the world.
The Consumers Digest Annual Buying Guide named Trane's
residential gas furnace (XL 80) a "Best Buy" in its category.
<PAGE>
Plumbing Products
The Marriot hotel chain selected American Standard as its
exclusive U.S. supplier of bathroom fixtures and faucets for
new construction and renovations.
Braking and Control Systems
The two leading producers of transmissions in Europe selected
WABCO as their development partner for gearbox automation on
medium-sized commercial vehicles.
Freightliner selected Meritor WABCO as its development partner
for an advanced vehicle roll stability protection system.
Production is scheduled for late 2000.
Full Year 1999
Revenues from continuing operations were $7.2 billion, up 10% over 1998 and up
11% excluding unfavorable foreign exchange effects. Excluding the effects of the
Plumbing and Air Conditioning service acquisitions and foreign exchange, sales
increased a solid 7%. Segment income from continuing operations was $751
million, an increase of 14% from $658 million last year (16% excluding a $13
million unfavorable foreign exchange effect).
Air Conditioning Systems and Services sales were $4,337 million, up 10%
from last year. U.S. markets expanded 5% to 6% as replacement and
renovation continued to grow and new housing and commercial
construction remained near record high levels. Markets outside the U.S.
were mixed with Europe up slightly while markets in Asia and Latin
America were down. Segment income increased $67 million, or 17%, to
$453 million and margin improved from 9.8% to 10.4% reflecting improved
volume in the U.S. and cost improvements in international markets,
primarily Europe.
Plumbing Products sales were $1,755 million, up 16% from last year.
Excluding the effects of the Armitage/Dolomite acquisition in February
1999 and the divestiture of the Porcher distribution business, sales
increased 2% (5% excluding exchange). Markets in the U.S. expanded by
over 5% as renovation and remodeling, driven by the large retail home
center expansion, continued to grow and new housing starts remained at
high levels. Markets were flat in Europe, continued to be soft in Asia
and were down significantly in Latin America. Segment income increased
$45 million, or 38% (44% excluding exchange), to $164 million, mainly
due to the acquired Armitage/Dolomite businesses, strong volume
increases in the U.S. and cost improvements from the European
restructuring program. Margin improved substantially from 7.9% to 9.3%.
Braking and Control Systems sales were $1,098 million, down 1%, but up
4% excluding exchange. European and Brazilian commercial vehicle
production rates were down 1% and 28%, respectively, while U.S.
commercial vehicle production increased 21%. Export sales and sales by
the U.S. compressor manufacturing joint venture were significantly
higher. Segment income decreased $19 million ($10 million excluding
exchange) to $134 million mainly due to warranty costs and increased
product development spending, compressing margin from 13.8% to 12.2%.
The decline in segment income, however, was substantially offset by
increased equity income from the U.S. marketing joint venture which
expanded its market leading position, shipping more than 600,000
antilock braking systems to the North American commercial vehicle
market in 1999, an increase of 33% over the prior year.
Restructuring and asset impairment reflects a charge of $27 million
principally in Braking and Control Systems related to the movement of production
from Western Europe to a low-cost facility in Poland. This charge is largely
offset by a reduction of charges taken in 1998 to restructure North American
operations. Also included is a $13 million impairment charge related to a
minority equity interest outside the Company's three core businesses.
<PAGE>
Corporate and Other Expense of $134 million was $24 million higher than
the prior year mainly due to costs associated with certain corporate officer
retirements, a related pension adjustment and increased financing fees paid to
the Company's financial services joint venture resulting from increased volumes
in the U.S. businesses.
Foreign Exchange had a negative effect on diluted per share earnings of
$0.08.
Discontinued operations include the Medical Systems 1999 operating loss
of $23 million ($14 million net of tax). The estimated loss on the sale of the
Medical businesses is $112 million net of tax. Including the Medical Systems
operating loss for 1999, the total Company full year results were sales of $7.3
billion and diluted per share earnings of $3.56.
Fourth Quarter Summary
Total sales from continuing operations for the fourth quarter 1999 of $1.75
billion were up 9% (12% excluding a $52 million unfavorable foreign exchange
effect). Segment income from continuing operations in the fourth quarter of 1999
was $157 million, an increase of 15% from $136 million last year (19% excluding
a $4 million unfavorable foreign exchange effect). Net income from continuing
operations (excluding restructuring charges) was $53 million or $0.73 diluted
earnings per share, an increased of 16% from fourth quarter 1998.
Air Conditioning Systems and Services sales increased 10% to $1,028
million and segment income increased 38% to $83 million driven by
increased volume and cost improvements.
Plumbing Products sales increased 16% (21% excluding exchange) to $439
million reflecting strong increases in the U.S., plus the
Armitage/Dolomite acquisition. Segment income increased 5% (8%
excluding exchange) to $42 million over a strong fourth quarter 1998
performance. Improved performance resulting from higher U.S. volumes,
European restructuring and the acquired Armitage/Dolomite business was
partly offset by weakness in Latin America and onetime costs associated
with the consolidation and integration of manufacturing facilities in
the U.K. and rapid expansion of production in Bulgaria.
Braking and Control Systems sales decreased 3%, but increased 7%
excluding exchange, to $287 million reflecting the continuing strong
shipments to the U.S. marketing joint venture and good levels of
European commercial vehicle production. Segment income decreased $4
million or 11%, but was unchanged excluding exchange. Margin declined
due to increased warranty costs and product development spending.
Equity income from the U.S. marketing joint venture increased
substantially in the quarter.
American Standard is a global manufacturer with market leading positions in
three businesses: Trane(R), the nation's leading supplier of central air
conditioning equipment for commercial and institutional buildings and a premier
brand for 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 Index.
Comments in this earnings release contain certain forward-looking
statements, which 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 Quarterly Reports on Form 10-Q
and 1998 Annual Report to Shareholders.
For Further Information Contact:
Ray Pipes (732) 980-6095 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 Worldwide Web site at http://www.americanstandard.com
<PAGE>
<TABLE>
AMERICAN STANDARD COMPANIES INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
In millions except
per share data Year Ended
December 31,
------------------------------------------------------------------
1999 1999 1998 1998
Reported Adjusted (a) Reported Adjusted (a)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales
Air Conditioning Systems and Services $ 4,337 $ 3,940
Plumbing Products 1,755 1,510
Braking and Control Systems 1,098 1,106
------------- -------------
Total $ 7,190 $ 6,556
============= =============
Segment income
Air Conditioning Systems and Services $ 453 $ 386
Plumbing Products 164 119
Braking and Control Systems 134 153
------------- -------------
Total 751 $ 751 658 $ 658
Equity in net income of unconsolidated
joint ventures 37 37 27 27
------------- ------------- ------------- -------------
788 788 685 685
Restructuring and asset impairment charge 15 - 197 -
------------- ------------- ------------- -------------
773 788 488 685
Interest expense 188 188 188 188
Corporate and other expenses 134 134 110 110
------------- ------------- ------------- -------------
Income from continuing operations before
income taxes and extraordinary item 451 466 190 387
Income taxes 187 193 141 155
-------------
------------- ------------- -------------
Income from continuing operations before
extraordinary item 264 273 49 232
Discontinued operations:
Loss from operations, net of tax benefit 14 14 15 15
Loss on disposition, net of tax benefit 112 112 - -
------------- ------------- ------------- -------------
Loss from discontinued operations 126 126 15 15
Extraordinary loss on retirement of debt,
net of tax benefit - - 50 50
------------- ------------- ------------- -------------
Net income (loss) $ 138 $ 147 $ (16) $ 167
============= ============= ============= =============
Basic per common share
income from continuing operations $ 3.74 $ 3.87 $ 0.68 $ 3.24
Loss from discontinued operations (1.78) (1.78) (0.21) (0.21)
Extraordinary loss on retirement of debt - - (0.70) (0.70)
------------- ------------- ------------- -------------
Net income (loss) $ 1.96 $ 2.09 $ (0.22) $ 2.33
============= ============= ============= =============
Diluted per common share
income from continuing operations $ 3.63 $ 3.76 $ 0.66 $ 3.15
Loss from discontinued operations (1.73) (1.73) (0.20) (0.20)
Extraordinary loss on retirement of debt - - (0.68) (0.68)
------------- ------------- ------------- -------------
Net income (loss) $ 1.90 $ 2.02 $ (0.22) $ 2.27
============= ============= ============= =============
Average basic outstanding common shares 70.5 70.5 71.7 71.7
Average diluted outstanding common shares 72.7 72.7 73.7 73.7
<FN>
(a) Adjusted results exclude restructuring and
asset impairment charges in 1999 and 1998.
</FN>
</TABLE>
<PAGE>
<TABLE>
AMERICAN STANDARD COMPANIES INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
In millions except Three Months Ended December 31,
per share data --------------------------------------------------------------------
1999 1999 1998 1998
Reported Adjusted (a) Reported Adjusted (a)
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Sales
Air Conditioning Systems and Services $ 1,028 $ 937
Plumbing Products 439 381
Braking and Control Systems 287 295
-------------- --------------
Total $ 1,754 $ 1,613
============== ==============
Segment income
Air Conditioning Systems and Services $ 83 $ 60
Plumbing Products 42 40
Braking and Control Systems 32 36
-------------- --------------
Total 157 $ 157 136 $ 136
Equity in net income of unconsolidated
joint ventures 10 10 6 6
-------------- -------------- -------------- --------------
167 167 142 142
Restructuring and asset impairment charge 15 - 163 -
-------------- -------------- -------------- --------------
152 167 (21) 142
Interest expense 47 47 43 43
Corporate and other expenses 30 30 25 25
-------------- -------------- -------------- --------------
Income (loss) from continuing operations before
income taxes and extraordinary item 75 90 (89) 74
Income taxes 31 37 21 29
-------------- -------------- -------------- --------------
Income (loss) from continuing operations 44 53 (110) 45
Discontinued Operations:
Loss from operations, net of tax benefit 2 2 7 7
Loss on disposition, net of tax benefit 112 112 - -
-------------- -------------- -------------- --------------
Loss from discontinued operations 114 114 7 7
-------------- -------------- -------------- --------------
Net income (loss) $ (70) $ (61) $(117) $ 38
============== ============== ============== ==============
Basic per common share
income from continuing operations 0.62 0.75 (1.57) 0.64
Loss from discontinued operations (1.61) (1.61) (0.10) (0.10)
-------------- -------------- -------------- --------------
Net income (loss) $ (0.99) $ (0.86) $ (1.67) $ 0.54
============== ============== ============== ==============
Diluted per common share
Income from continuing operations 0.60 0.73 (1.57) 0.63
Loss from discontinued operations (1.56) (1.56) (0.10) (0.10)
-------------- -------------- -------------- --------------
Net income (loss) $ (0.96) $ (0.83) $ (1.67) $ 0.53
============== ============== ============== ==============
Average basic outstanding common shares 70.7 70.7 70.2 70.2
Average diluted outstanding common shares 72.9 72.9 70.2 71.7
<FN>
(a) Adjusted results exclude restructuring and asset impairment
charges in 1999 and 1998.
</FN>
</TABLE>
