American Standard Reports For Its Full Year
10 February 2000
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, N.J., Feb. 10 -- American Standard Companies Inc.
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.
-- 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 3
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.
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, the nation's leading supplier of central air
conditioning equipment for commercial and institutional buildings and a
premier brand for residential buildings; American Standard and Ideal Standard,
the world's largest manufacturer of plumbing products; and WABCO, 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
888-ASD-NEWS. Additional information on American Standard is available on the
Company's Worldwide Web site at http://www.americanstandard.com.
AMERICAN STANDARD COMPANIES INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
In millions except
per share data Year Ended December 31,
1999 1999 1998 1998
Reported Adjusted(a) Reported Adjusted(a)
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
(a) Adjusted results exclude restructuring and asset impairment charges
in 1999 and 1998.
AMERICAN STANDARD COMPANIES INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
In millions except
per share data Three Months Ended December 31,
1999 1999 1998 1998
Reported Adjusted(a) Reported Adjusted(a)
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
(a) Adjusted results exclude restructuring and asset impairment charges
in 1999 and 1998.
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.
1999 1998 1998 Adj. 1998
Air Conditioning Systems and Services
Sales 1,028 10% 930 11%
Segment Income 83 38% 61 36%
Margin 8.1% 1.7 pts 6.6% 1.5 pts
Backlog -- -- -- --
Plumbing Products
Sales 439 16% 362 21%
Segment Income 42 5% 39 8%
Margin 9.6% (1.2) pts 10.8% (1.2) pts
Backlog -- -- -- --
Braking and Control Systems
Sales 287 -3% 268 7%
Segment Income 32 -11% 32 0%
Margin 11.1% (1.1) pts 11.9% (0.8) pts
Backlog
Total Company
Sales 1,754 9% 1,560 12%
Segment Income 157 15% 132 19%
Margin 9.0% 0.5 pts 8.5% 0.5 pts
$ in millions
12 Months Ended December 31
Reported % Chg vs. Adj* % Chg vs.
1999 1998 1998 Adj. 1998
Air Conditioning Systems and Services
Sales 4,337 10% 3,931 10%
Segment Income 453 17% 387 17%
Margin 10.4% .6 pts 9.8% .6 pts
Backlog 661 -- 652 --
Plumbing Products
Sales 1,755 16% 1,465 20%
Segment Income 164 38% 114 44%
Margin 9.3% 1.4 pts 7.8% 1.5 pts
Backlog 154 -- 80 --
Braking and Control Systems
Sales 1,098 -1% 1,054 4%
Segment Income 134 -12% 144 -7%
Margin 12.2% (1.6) pts 13.7% (1.5) pts
Backlog 405 -- 396 --
Total Company
Sales 7,190 10% 6,450 11%
Segment Income 751 14% 645 16%
Margin 10.4% 0.4 pts 10.0% 0.4 pts