AMERICAN STANDARD REPORTS RECORD RESULTS FOR
BOTH FULL YEAR AND FOURTH QUARTER
2000 EPS Increased 16 Percent to $4.35, with Fourth Quarter Up
11 Percent to 81 Cents
PISCATAWAY, N.J., Feb. 6 American Standard Companies Inc.
today announced record sales, earnings and operating margin for
full-year 2000 and fourth quarter. Full-year revenues rose to $7.6 billion,
up 6 percent over 1999 (up 10 percent in local currencies). Operating margin
for the year grew 0.7 percentage points to 11.1 percent, and diluted per share
earnings from continuing operations increased 16 percent to $4.35. After a
charge for restructuring and a gain from the sale of the Calorex water heater
business, diluted per share earnings were $4.36.
American Standard's fourth-quarter revenues totaled $1.8 billion, up
1 percent over the prior year (up 6 percent in local currencies). Operating
margin for the quarter increased 0.5 percentage points to 9.5 percent. Fourth
quarter diluted per share earnings from continuing operations rose 11 percent
to 81 cents. After the charge for restructuring and the gain from the sale of
Calorex, diluted per share earnings were 82 cents.
"We delivered sales, earnings and margin results in line with the 2000
targets we announced a year ago," said Frederic Poses, chairman and chief
executive officer. "We achieved solid growth even in the midst of a slowing
economy and negative foreign exchange impact.
"In 2001, we look forward to another good year for American Standard,
targeting 5-6 percent sales growth, a 13-17 percent increase in earnings per
share and a 0.5 percentage point increase in margin," said Poses. "While we
expect the first quarter to show little economic growth, we do anticipate
improving conditions throughout the year. This economic outlook, coupled with
our productivity actions, materials management and Six Sigma initiatives,
gives us confidence in delivering these results."
FULL YEAR 2000 FINANCIAL HIGHLIGHTS
Segment income was $840 million, up 12 percent over the prior year
(up 15 percent in local currencies), reflecting the combination of strong
sales growth and cost productivity. Income from continuing operations
increased 15 percent, excluding the restructuring charge and Calorex gain.
Air Conditioning Systems and Services sales were $4.7 billion, up
9 percent from last year (up 10 percent in local currencies), driven by
share growth in equipment and expanded solutions and services sales.
Segment income increased 17 percent to $531 million, and margin improved
from 10.4 percent to 11.2 percent. Solid sales growth, coupled with cost
improvements in U.S. commercial and international operations, absorbed
development expenses for a new generation of commercial and residential
unitary air conditioners.
Plumbing Products sales were $1.8 billion, up 3 percent over the prior
year (up 9 percent in local currencies). Segment income was
$162 million, a decrease of $2 million or 1 percent (an increase of
3 percent in local currencies). Margin was 9 percent, or a decrease of
0.3 percentage points. The impact of rising energy and labor costs in
some markets as well as the softening U.S. economy lowered segment income
and margin.
Vehicle Control Systems sales for the year were $1.1 billion, down
3 percent from last year. In local currencies, sales were up 10 percent.
Sales benefited from strong European truck builds during the first part of
the year. Even as truck builds slowed later in the year, the business
maintained sales growth because of increased penetration, new applications
to existing customers, acceleration of sales in new product lines and
geographic expansion. Segment income rose $13 million to $147 million, or
10 percent (up 27 percent in local currencies). Margin grew from
12.2 percent to 13.8 percent, with improvements coming from volume
increases and productivity initiatives. Decreasing U.S. truck builds
reduced equity income from the Meritor WABCO joint venture, which operates
in North America, by $8 million, resulting in total equity income of
$30 million for American Standard.
American Standard completed 2000 with $208 million in free cash flow.
"Although less than planned, we still produced record cash flow, up 32
percent over last year. Including asset dispositions, we generated more
than $300 million in cash," said Poses.
FOURTH QUARTER SUMMARY
Segment income was $168 million, up 7 percent over the prior year
(up 11 percent in local currencies), reflecting sales growth and cost
productivity. Income from continuing operations increased 9 percent,
excluding the restructuring charge and the Calorex gain.
Air Conditioning Systems and Services sales were $1.1 billion, up 8
percent (up 10 percent in local currencies), driven by market growth,
increases in solutions and services business, and share gains. Segment
income increased 22 percent to $101 million, and margin improved from
8.1 percent to 9.1 percent. Sales growth, mix improvements and
productivity programs contributed to the profitability gains, even as
development expenses for new products increased.
During the quarter, growth initiatives included the first performance
contract in Canada, a four-year energy management agreement with Inco
Limited; a new parts center in Houston, raising the total to 166; and
continued growth of the ComfortSite(R) e-commerce site, now with more than
1,200 dealers enrolled. The successful global/national accounts program
continues to grow, with sales to a number of firms, including, Bally Total
Fitness, Biogen Inc., Popeyes Chicken & Biscuits, and Triad Hospitals,
Inc. For the year, the global/national accounts revenue grew 21 percent.
Plumbing Products fourth quarter sales were $414 million, down 6 percent
(slightly positive in local currencies). Segment income was $32 million,
a decrease of $10 million. In local currencies, segment income decreased
22 percent. Margin was 7.7 percent, or a decrease of 1.9 percentage
points. Rising energy costs, adverse currency effects and retail
inventory reductions in the U.S. caused the decrease. The company's
luxury position continued to grow, particularly with designer offerings as
well as the Porcher(R) and JADO(R) brands.
During the quarter, Plumbing Products introduced new products around the
world, including the ClearTap(TM) water filtering faucet for the bathroom,
bathroom fixtures that are packaged to simplify decision-making and
installation, a new suite for the Renzo Piano designer line and a new
range of wellness products, including whirlpools and "power showers."
ClearTap(TM) continues to exceed expectations, and replacement filter
sales already equal faucet sales.
Vehicle Control Systems fourth quarter sales were down 15 percent to
$245 million. In local currencies, sales were up 2 percent, despite a
double-digit worldwide decline in truck builds. Sales grew because of
additional aftermarket success, new products and applications, and
expansion in Asia. Segment income rose $3 million to $35 million, or
9 percent (up 30 percent in local currencies). Margin improved from
11.2 percent to 14.3 percent as a result of reduced warranty expense,
materials management and cost reduction programs. U.S. truck builds were
down more than 40 percent in the fourth quarter, reducing equity income
from the Meritor WABCO joint venture by $5 million compared with fourth
quarter 1999.
During the quarter, IVECO, a leading European truck manufacturer, named
WABCO(R) its preferred partner for electronic control systems development
and its supplier of electronic braking systems for medium range trucks.
The electronic braking systems agreement, with production scheduled to
start in 2002, expands WABCO's current position with IVECO as a system
supplier for its medium and heavy range truck line. In addition, WABCO
began development of stability control system projects with another
leading European truck manufacturer, following last quarter's announcement
with DaimlerChrysler.
Other highlights -- During the quarter, the company also made progress on
a number of key initiatives:
* The company completed the sale of its Calorex water heater unit and its
exit from the medical business with the sale of DiaSorin.
* American Standard began an operational restructuring to eliminate
redundant work, enhance productivity and improve profitability. The
$75 million restructuring will generate about $50 million in annualized
cost savings, with initial benefits starting late this year.
* As part of its materials management initiative, American Standard
signed five new supplier agreements and held its first e-auction for
plumbing materials during the quarter. During 2000, the company
established a total of 12 new agreements that will result in price
reductions in 2001 of 10-15 percent on annual spending of $100 million.
* Six Sigma efforts continue to advance, with 520 projects under way. To
date, more than 500 black belts and green belts have received training
or certification.
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 1999 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. American Standard does not undertake any obligation to
update such forward-looking statements.
American Standard is a global manufacturer with market leading positions
in three businesses: Trane(R), the United States' leading supplier of central
air conditioning systems and service 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 58,000 people in 36 countries. American Standard is
included in the Standard & Poor's MidCap 400 Index.
Additional information is available at http://www.americanstandard.com.
U.S. callers can listen to the latest news release and other corporate
information by dialing 888-ASD-NEWS.
AMERICAN STANDARD COMPANIES INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended December 31,
2000 1999
Adjusted Adjusted
2000 (a) 1999 (b)
In millions except per share data
Sales
Air Conditioning Systems and
Services $1,110 $1,028
Plumbing Products 414 439
Vehicle Control Systems 245 287
Total $1,769 $1,754
Segment income
Air Conditioning Systems and
Services $101 $83
Plumbing Products 32 42
Vehicle Control Systems 35 32
Total 168 157
Equity in net income of
unconsolidated joint ventures 4 10
172 $172 167 $167
Gain on sale of business 57 -- -- --
Restructuring and asset
impairment charge (70) -- (15) --
159 172 152 167
Interest expense 50 50 47 47
Corporate and other expenses 26 26 30 30
Income from continuing operations
before taxes 83 96 75 90
Income taxes 24 38 31 37
Income from continuing operations $59 $58 $44 $53
Per basic common share:
Income from continuing
operations $0.85 $0.84 $0.62 $0.75
Per diluted common share:
Income from continuing
operations $0.82 $0.81 $0.60 $0.73
Average basic outstanding common
shares 69.4 69.4 70.7 70.7
Average diluted outstanding common
shares 71.6 71.6 72.9 72.9
(a) Excludes the gain on the sale of the Calorex Water Heater
business and the restructuring and asset impairment charges
consisting of $75 million of charges for 2000 and a $5 million
reversal of prior year charges.
(b) Excludes restructuring and asset impairment charges.
AMERICAN STANDARD COMPANIES INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Twelve Months Ended December 31,
2000 1999
Adjusted Adjusted
2000 (a) 1999 (b)
In millions except per share data
Sales
Air Conditioning Systems and
Services $4,726 $4,337
Plumbing Products 1,803 1,755
Vehicle Control Systems 1,069 1,098
Total $7,598 $7,190
Segment income
Air Conditioning Systems and
Services $531 $453
Plumbing Products 162 164
Vehicle Control Systems 147 134
Total 840 751
Equity in net income of unconsolidated
joint ventures 30 37
870 $870 788 $788
Gain on sale of business 57 -- -- --
Restructuring and asset impairment
charge (70) -- (15) --
857 870 773 788
Interest expense 199 199 188 188
Corporate and other expenses 149 149 134 134
Income from continuing operations
before taxes 509 522 451 466
Income taxes 194 208 187 193
Income from continuing operations $315 $314 $264 $273
Per basic common share:
Income from continuing operations $4.49 $4.48 $3.74 $3.87
Per diluted common share:
Income from continuing operations $4.36 $4.35 $3.63 $3.76
Average basic outstanding common shares 70.1 70.1 70.5 70.5
Average diluted outstanding
common shares 72.2 72.2 72.7 72.7
(a) Excludes the gain on the sale of the Calorex Water Heater business
and the restructuring and asset impairment charges
consisting of $75 million of charges for 2000 and a $5 million
reversal of prior year charges.
(b) Excludes restructuring and asset impairment charges.
American Standard Companies Inc.
Data Supplement Sheet
*Prior Year Shown at Current Exchange Rates
Continuing Operations (Excludes Medical)
This Data Supplement Sheet includes information on backlog and
information excluding the effect of foreign exchange on operating
results. With approximately half of the Company's business from outside
the U.S., the impact of changes in exchange rates can have significant
impact on results when reported in U.S. Dollars. Management believes that
excluding exchange effects is helpful in assessing the overall
performance of the business.
$ in millions Three Months Ended December 31,
Reported % Chg vs. Adj* % Chg vs.
2000 1999 1999 Adj. 1999
Air Conditioning Systems and Services
Sales 1,110 8% 1,011 10%
Segment Income 101 22% 84 20%
Margin 9.1% 1.0 pts 8.3% 0.8 pts
Backlog
Plumbing Products
Sales 414 -6% 412 0%
Segment Income 32 -24% 41 -22%
Margin 7.7% -1.9 pts 10.0 pts -2.3 pts
Backlog
Vehicle Control Systems
Sales 245 -15% 241 2%
Segment Income 35 9% 27 30%
Margin 14.3% 3.2 pts 11.2% 3.1 pts
Backlog
Total Company
Sales 1,769 1% 1,664 6%
Segment Income 168 7% 152 11%
Margin 9.5% 0.5 pts 9.1% 0.4 pts
$ in millions Twelve Months Ended December 31,
Reported % Chg vs. Adj* % Chg vs.
2000 1999 1999 Adj. 1999
Air Conditioning Systems and Services
Sales 4,726 9% 4,288 10%
Segment Income 531 17% 456 16%
Margin 11.2% 0.8 pts 10.6% 0.6 pts
Backlog 681 702
Plumbing Products
Sales 1,803 3% 1,653 9%
Segment Income 162 -1% 158 3%
Margin 9.0% -0.3 pts 9.6% -0.6 pts
Backlog 106 144
Vehicle Control Systems
Sales 1,069 -3% 975 10%
Segment Income 147 10% 116 27%
Margin 13.8% 1.6 pts 11.9% 1.9 pts
Backlog 385 377
Total Company
Sales 7,598 6% 6,916 10%
Segment Income 840 12% 730 15%
Margin 11.1% 0.7 pts 10.6% 0.5 pts
AMERICAN STANDARD COMPANIES INC.
CONSOLIDATED BALANCE SHEET
(Dollars in millions)
December 31, December 31,
2000 1999
Current assets
Cash and cash equivalents $85 $61
Accounts receivable 1,027 986
Inventories 606 505
Other current assets 161 123
Assets held for sale (medical
companies) 0 51
Total current assets 1,879 1,726
Net facilities 1,383 1,414
Goodwill 935 991
Other assets 548 555
$4,745 $4,686
Current liabilities
Short-term debt $96 $756
Accounts payable 660 578
Accrued liabilities and taxes 1,051 953
Total current liabilities 1,807 2,287
Long-term debt 2,376 1,887
Other long-term liabilities
Reserve for postretirement
benefits 408 436
Deferred taxes on income 45 55
Other 502 517
Total liabilities 5,138 5,182
Stockholders' deficit
Common stock, capital surplus and
other 610 596
Treasury stock (453) (363)
Accumulated deficit (238) (553)
Foreign currency translation
effects (312) (176)
Total stockholder's deficit (393) (496)
$4,745 $4,686
