- Grows fourth-quarter sales by 8.2 percent, 10.6 percent in local
currencies PISCATAWAY, N.J., Jan. 31 /PRNewswire-FirstCall/ --
American Standard today announced fourth-quarter net income per
diluted share of 30 cents in accordance with Generally Accepted
Accounting Principles (GAAP), up from the loss of 41 cents per
diluted share in fourth quarter 2004. Excluding the impact of
operational consolidation expenses and tax items, net income per
diluted share was 46 cents, the same as fourth quarter 2004
adjusted for the same items and a fourth-quarter 2004 asbestos
charge. The company had estimated net income per diluted share of
28-32 cents for the quarter on a GAAP basis and 44-48 cents on an
adjusted basis. Sales for the quarter were $2.545 billion, up 8.2
percent from the prior year. "We came in at the middle of our
October guidance range, flat with fourth quarter 2004," said Fred
Poses, chairman and CEO. "For the quarter and the year, the
commercial part of Air Conditioning Systems and Services was as
strong as expected, with residential even stronger than expected.
Vehicle Control Systems once again delivered solid performance and
outperformed its markets. Bath and Kitchen's performance was
disappointing." FULL-YEAR RESULTS Sales for the year were $10.264
billion, up 7.9 percent from $9.509 billion a year ago (up 7.2
percent in local currencies). Full-year net income was $2.56 per
diluted share on a GAAP basis, up from $1.42 in 2004. On an
adjusted basis, net income per diluted share was $2.56, up 14.3
percent from $2.24 in 2004 excluding an asbestos charge taken in
fourth quarter 2004 as well as operational consolidation expenses
and tax items in 2004 and 2005. American Standard had estimated net
income per diluted share of $2.54-$2.58 on both a GAAP and adjusted
basis. For the year, the company generated a record $820.4 million
in net cash provided by operating activities and a record $511.5
million in free cash flow. In 2004, the company had generated a
record $764.7 million in net cash provided by operating activities
and a record $504.5 million in free cash flow. The company paid a
60-cent dividend for each share of common stock and repurchased
11.7 million shares of stock in 2005. 2006 GUIDANCE "For 2006, we
see continued strong organic growth and strong performance in Air
Conditioning Systems and Services. In Vehicle Control Systems,
where we expect markets to flatten at current high levels, we will
grow content and after-market sales," said Poses. "We will rebuild
the profitability of Bath and Kitchen by continuing to focus on new
products that give consumers improved performance and design and
continuing to improve productivity through simplification of our
business processes and product lines. With these efforts, Bath and
Kitchen should end the year significantly better than where it
started. "We anticipate 2006 sales growth of 6-7 percent in
constant currencies and net income per diluted share of
$2.65-$2.80," said Poses. The company did not expense stock options
in 2005. Stock option expensing would have reduced 2005 GAAP net
income per diluted share of $2.56 by 8 cents to $2.48. On this
basis, the 2006 GAAP estimate represents a 7-13 percent increase
over 2005. Starting in first quarter 2006, the company will adopt
Financial Accounting Standard 123 (revised 2004) for stock option
expensing, which will amount to 10 cents per diluted share in the
year. The 2006 net income per diluted share estimate anticipates
that gains and other benefits will offset any operational
consolidation expenses. "We expect to generate $835-860 million in
net cash provided by operating activities and $575-600 million in
free cash flow, up from our record 2005 results. We intend to
return nearly 100 percent of our free cash flow to shareowners
through our dividend and stock repurchases. We plan to raise our
quarterly dividend 20 percent, from 15 to 18 cents per share of
common stock, subject to approval by the board of directors at a
meeting later this week," said Poses. "For the first quarter, sales
should be up 6-8 percent and net income should be in the range of
37-41 cents per diluted share on a GAAP basis and 39-43 cents
excluding carryover expenses from previous operational
consolidations," he said. In first quarter 2005, net income per
diluted share was 57 cents on a GAAP basis and 45 cents when
adjusted by 2 cents for stock option expensing and 10 cents for tax
items and operational consolidation expenses incurred during the
quarter. FOURTH-QUARTER BUSINESS HIGHLIGHTS AIR CONDITIONING
SYSTEMS AND SERVICES sales were $1.531 billion, up 18.6 percent
over fourth quarter 2004 (up 19 percent excluding foreign exchange
effects) because of robust residential sales, improving commercial
equipment sales, and growing parts and services sales. Segment
income was $139.1 million, up 57.2 percent, as pricing, volume and
mix driven by strong market demand more than offset the continuing
impact of higher commodity costs, increased investments in the
business for new products and labor cost escalations. Excluding
fourth-quarter operational consolidation expenses of $0.7 million,
adjusted segment income was $139.8 million. "The North American
commercial air conditioning market improved," said Poses. "We
successfully converted our residential manufacturing to the new 13
Seasonal Energy Efficiency Ratio (SEER) products required this
month under federal regulation and continued to drive our sales mix
to higher efficiency products." During the quarter, the company
started manufacturing its new whole-house residential air cleaning
systems, Trane CleanEffects(TM) and American Standard
AccuClean(TM), and prepared for its first-quarter launch to
consumers. The company improved the energy efficiency of its
CenTraVac(R) chillers, giving Trane a 13.5 percent advantage over
the next best competitive chiller. In addition, more than 350
commercial customers attended product reviews at the Lexington,
Ky., factory for the Trane Custom Climate Changer(TM), a new
portfolio of custom air handling products. Large contracts signed
during the quarter included ones for Ambridge High School
(Ambridge, Pa.); Ball State University Residence Hall (Muncie,
Ind.); Bangsar Village (Kuala Lumpur, Malaysia); Choice Homes for
all homes constructed in Georgia and Texas; Chongqing Long Hu Villa
Phase II (Chongqing, China); Discovery Gardens (Dubai, United Arab
Emirates); Famous Barr (St. Louis, Mo.); George Mason University
(Fairfax, Va.); Goldsby Gaming Center (Norman, Okla.); Indo Rama
Synthetics (1) Ltd. (Butibori, India); Lockheed Martin (Marietta,
Ga.); Mallard Creek High School (Charlotte, N.C.); St. Jude Patient
Care and Research Building (Memphis, Tenn.); Sydney Entertainment
Center (Sydney, Australia); Taiwan Semiconductor Manufacturing
Company Ltd. (Taiwan); University of California at Davis and Wall
Homes (Texas). Bath and Kitchen sales were $575.7 million, down 4.7
percent (down 1.5 percent excluding foreign exchange effects).
Segment income was $0.5 million, down from $41.1 million in fourth
quarter 2004. Excluding fourth-quarter operational consolidation
expenses of $7.3 million, adjusted segment income was $7.8 million
compared with $56.1 million in fourth quarter 2004. The decline in
segment income was caused by lower volume and poorer mix, higher
commodity costs, investments related to product launches and
unfavorable foreign exchange. These declines exceeded benefits from
materials savings, higher pricing and previous operational
consolidations. "We initiated actions in the fourth quarter that
will improve our 2006 performance," said Poses. "For example, we
reduced ceramics inventory, improved availability of higher-value
products in Europe, effectively consolidated some European fittings
operations, reduced the number of product models in Europe, made
progress on product launches and planned a price increase for first
quarter. These actions will help us deliver better price, increased
volume and improved productivity, initially offsetting higher
commodity costs and then increasing margins beginning in second
quarter." During the quarter, Bath and Kitchen launched its
Lifetime(TM) whirlpool tubs, which feature flat jets designed for
greater comfort and easier cleaning, at The Home Depot throughout
the U.S. In addition, the business continued its rollout of the
Champion(R) toilet in China, Korea and Thailand. New commercial
sales included ones for Bridgewater Boatwerks Tower luxury
condominiums (Grand Rapids, Mich.); Fort Drum (Watertown, N.Y.);
Hilton Molino Stucky (Venice, Italy); North Manchester (England)
Hospital and Rosen Shingle Creek Resort (Orlando, Fla.). The
Beijing Bathaus, one of Bath and Kitchen's showrooms, won a bronze
award in the retail category of the Hong Kong Designer
Association's 2005 awards, a leading Asia design competition.
VEHICLE CONTROL SYSTEMS fourth-quarter sales were $438.7 million,
down 4 percent (up 2.8 percent excluding foreign exchange effects)
from the prior year's robust sales. Higher content per vehicle and
increased after-market sales offset typical pricing reductions and
a modest decline in truck and bus production in various markets,
including Western Europe. Segment income was $56.8 million, down
8.5 percent from the strong fourth quarter in 2004. Excluding
fourth-quarter operational consolidation expenses of $5.7 million
and foreign exchange effects, adjusted segment income was flat with
2004. Productivity improvements and benefits from previously
announced operational consolidations essentially offset the
unfavorable impact of typical price reductions, mix, labor
escalations, investments and warranty. During the quarter, WABCO
received new contracts from a number of customers. China National
Heavy Duty Truck Group Co. Ltd. (CNHTC), a leading Chinese truck
manufacturer, selected WABCO's advanced worldwide modular twin- air
compressor, the first WABCO will produce in China. LAZ, a leading
Ukrainian bus manufacturer, began installing anti-lock and
conventional braking systems across its model range, and PAZ, the
leading Russian bus manufacturer, awarded WABCO a contract for
anti-lock braking systems for its leading models beginning January
2006. PLEASE NOTE: American Standard Chairman and CEO Frederic
Poses and CFO Peter D'Aloia will discuss the company's performance
and provide guidance on a two-way conference call for financial
analysts at 9:30 a.m. EST today. Related financial charts,
reconciliations between GAAP and non-GAAP financial measures, and
certain other information to be discussed on the conference call
are available in the accompanying financial tables and under the
heading, "American Standard's Fourth-quarter 2005 Results" on the
company's Web site, http://www.americanstandard.com/. Reporters and
the public are invited to listen to the call, which will be
broadcast on the Web site and archived for one year. If you're
unable to connect to the company's Web site, you may listen via
telephone. The dial-in number is (913) 981-5536. Please call five
to 10 minutes before the scheduled start time. The number of
telephone connections is limited. A replay of the conference call
will be available from 12:30 p.m. EST today until 11:59 p.m. EST on
Feb. 7. For the replay, please dial (719) 457-0820. The replay
access code is 2424251. Comments in this news release, particularly
those related to earnings guidance, contain certain forward-looking
statements, which are based on management's good faith expectations
and belief concerning future developments. Forward-looking
statements can be identified by the use of words such as "believe,"
"expect," "plans," "strategy," "prospects," "estimate," "project,"
"anticipate," "intends" and other words of similar meaning. Actual
results may differ materially from these expectations as a result
of many factors including (i) pricing changes to materials used to
produce its products and the ability to offset those changes
through price increases; (ii) changes in U.S. or international
economic conditions, such as inflation and interest rate and
exchange rate fluctuations; (iii) the actual level of construction
activity and commercial vehicle production in the company's
end-markets; and (iv) periodic adjustments to litigation reserves,
including asbestos liabilities and asbestos insurance recoveries.
Additional factors that could cause actual results to differ
materially from expectations are set forth in the company's 2004
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. To facilitate understanding of fourth-
quarter and full-year results, several tables follow this news
release. The fourth-quarter and full-year results that exclude
operational consolidation expenses, tax items, an asbestos charge
and foreign exchange translation are non-GAAP measures. Segment
income and free cash flow, other measures used by the company, are
also non-GAAP. These measures should be considered in addition to,
not as a substitute for, GAAP measures. Management uses free cash
flow and segment income to measure the company's operating
performance and analyzes year-over-year changes in segment income
with and without the effect of operational consolidation expenses
and the impact of foreign exchange translation. Management believes
that excluding these effects is helpful in assessing the overall
performance of the business. In addition, the company uses segment
income to make strategic and capital investment decisions, allocate
resources and report business performance to the board of
directors. Certain non-GAAP measures may be used, in part, to
determine incentive compensation for current employees. American
Standard is a $10.3 billion global manufacturer with market-
leading positions in three businesses: air conditioning systems and
services, sold under the Trane(R) and American Standard(R) brands
for commercial, institutional and residential buildings; bath and
kitchen products, sold under such brands as American Standard(R)
and Ideal Standard(R); and vehicle control systems, including
electronic braking and air suspension systems, sold under the
WABCO(R) name to the world's leading manufacturers of heavy-duty
trucks, buses, SUVs and luxury cars. The company employs
approximately 61,000 people and has manufacturing operations in 28
countries. American Standard is included in the S&P 500.
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) In millions Three Months Ended
December 31, except per share data 2005 2004 Sales Air Conditioning
Systems and Services $1,530.7 $1,291.1 Bath & Kitchen 575.7
604.2 Vehicle Control Systems 438.7 457.1 Total $2,545.1 $2,352.4
Segment income Air Conditioning Systems and Services $139.1 $88.5
Bath & Kitchen 0.5 41.1 Vehicle Control Systems 56.8 62.1 Total
196.4 191.7 Equity in net income of unconsolidated joint ventures
7.4 6.3 203.8 198.0 Interest expense 29.1 28.4 Asbestos indemnity
expenses - 307.0 Corporate and other expenses 48.2 50.1 Income
(loss) before income taxes 126.5 (187.5) Income taxes 62.1 (100.6)
Net income (loss) $64.4 $(86.9) Net income (loss) per common share:
Basic $0.31 $(0.41) Diluted $0.30 $(0.41) Average outstanding
common shares: Basic 208.6 214.5 Diluted 213.7 214.5 Reconciliation
of Net Income to Adjusted Net Income and Adjusted Net Income per
Diluted Common Share Adjusted for Operational Consolidation
Expenses, Asbestos Indemnity Charge and Tax Items. 2005 2004 Net
income (loss) $64.4 $(86.9) Adjustments Q4 2004 asbestos indemnity
charge, net of tax - 188.0 Operational consolidation expenses, net
of tax 9.2 18.3 Tax Items 21.2 (18.5) Effect of tax items included
in full year rate 3.4 - Adjusted net income $98.2 $100.9 Adjusted
net income per diluted common share $0.46 $0.46 Average outstanding
common shares: Diluted 213.7 220.2 Note: The presentation of total
segment income and adjusted net income and adjusted net income per
diluted common share is not in conformity with generally accepted
accounting principles (GAAP). Management believes that presenting
these measures is useful to shareholders because it enhances their
understanding of how management assesses the performance of the
Company's businesses. Management also uses data adjusted in this
manner for purposes of determining incentive compensation. These
measures may not be comparable to similar measures of other
companies as not all companies calculate these measures in the same
manner. American Standard Companies Inc. Consolidated Statement of
Operations (Unaudited) In millions Twelve Months Ended December 31,
except per share data 2005 2004 Sales Air Conditioning Systems and
Services $6,014.7 $5,345.5 Bath & Kitchen 2,418.7 2,439.5
Vehicle Control Systems 1,831.0 1,723.8 Total $10,264.4 $9,508.8
Segment income Air Conditioning Systems and Services $660.5 $556.1
Bath & Kitchen 102.2 196.9 Vehicle Control Systems 249.8 231.3
Total 1,012.5 984.3 Equity in net income of unconsolidated joint
ventures 34.8 28.2 1,047.3 1,012.5 Interest expense 118.3 114.9
Asbestos indemnity expenses - 320.2 Corporate and other expenses
203.1 214.5 Income before income taxes 725.9 362.9 Income taxes
169.6 49.5 Net income $556.3 $313.4 Net income per common share:
Basic $2.63 $1.46 Diluted $2.56 $1.42 Average outstanding common
shares: Basic 211.3 214.8 Diluted 217.0 220.6 Reconciliation of Net
Income to Adjusted Net Income and Adjusted Net Income per Diluted
Common Share Adjusted for Operational Consolidation Expenses,
Asbestos Indemnity Charge and Tax Items. 2005 2004 Net income
$556.3 $313.4 Adjustments Q4 2004 asbestos indemnity charge, net of
tax - 188.0 Operational consolidation expenses, net of tax 47.2
32.0 Tax Items (46.9) (39.2) Adjusted net income $556.6 $494.2
Adjusted net income per diluted common share $2.56 $2.24 Average
outstanding common shares: Diluted 217.0 220.6 Note: The
presentation of total segment income and adjusted net income and
adjusted net income per diluted common share is not in conformity
with generally accepted accounting principles (GAAP). Management
believes that presenting these measures is useful to shareholders
because it enhances their understanding of how management assesses
the performance of the Company's businesses. Management also uses
data adjusted in this manner for purposes of determining incentive
compensation. These measures may not be comparable to similar
measures of other companies as not all companies calculate these
measures in the same manner. American Standard Companies Inc. Data
Supplement Sheet (Unaudited) This Data Supplement Sheet includes
information on backlog and information excluding the effects of
foreign exchange translation on operating results. Approximately
half of the Company's business is outside the U.S., therefore
changes in exchange rates can have a significant effect on results
of operations when presented in U.S. Dollars. Year-over-year
changes in sales and segment income, and in certain cases, segment
income as a percentage of sales, for 2005 compared with 2004 are
presented both with and without the effects of foreign exchange
translation. Additionally, management analyzes year-over-year
changes to its operating performance with and without operational
consolidation expenses. Operational consolidation expenses have
been noted below. Presenting results of operations excluding the
translation effects of foreign exchange amounts and operational
consolidation expenses is not in conformity with generally accepted
accounting principles (GAAP), but management analyzes the data in
this manner because it is useful to them for understanding
operational performance of the business. Management also uses data
adjusted in this manner for purposes of determining incentive
compensation. Changes in sales and segment income excluding foreign
exchange effects are calculated using current year sales and
segment income translated at prior year exchange rates. The
presentation of sales, segment income, total segment income and
segment income and total segment income as a percentage of sales
with and without the effects of foreign currency translation are
not meant to be a substitute for measurements prepared in
accordance with GAAP, nor to be considered in isolation. In
millions Three Months Ended December 31, Reported Reported % Chg
vs. % Chg vs. % Chg vs. 2004 2005 (1) 2004 (2) 2004 2004 Excl. FX
& Op. Excl. FX(3) Cons. Exp(4) Air Conditioning Systems and
Services Sales 1,530.7 1,291.1 18.6% 19.0% Segment Income 139.1
88.5 57.2% 57.7% 46.9% Segment Income as a Percentage of Sales 9.1%
6.9% 2.2pts 2.2pts 1.7pts Bath & Kitchen Sales 575.7 604.2
-4.7% -1.5% Segment Income 0.5 41.1 -98.8% -100.2% -86.1% Segment
Income as a Percentage of Sales 0.1% 6.8% -6.7pts -6.8pts -8.0pts
Vehicle Control Systems Sales 438.7 457.1 -4.0% 2.8% Segment Income
56.8 62.1 -8.5% -3.5% -0.3% Segment Income as a Percentage of Sales
12.9% 13.6% -0.7pts -0.9pts -0.4pts Total Company Sales 2,545.1
2,352.4 8.2% 10.6% Segment Income 196.4 191.7 2.5% 4.0% -1.7%
Segment Income as a Percentage of Sales 7.7% 8.1% -0.4pts -0.4pts
-1.1pts Net Income/(loss) Applicable to Common Shareholders 64.4
-86.9 174.1% Net Income/(loss) Applicable to Common Shareholders as
a Percentage of Sales 2.5% -3.7% 6.2pts (1) Segment income includes
$13.7 million for operational consolidation expenses, comprised of
$0.7 million for Air Conditioning Systems and Services, $7.3
million for Bath & Kitchen, and $5.7 million for Vehicle
Control Systems. (2) Segment income includes $26.2 million for
operational consolidation expenses, comprised of $7.0 million for
Air Conditioning Systems and Services, $15.0 million for Bath &
Kitchen, and $4.2 million for Vehicle Control Systems. (3)
Excluding the impact of foreign exchange translation (4) Excluding
the impact of foreign exchange and operational consolidation
expenses. Note: See Consolidated Statement of Operations for a
reconciliation of total segment income to income before income
taxes. In addition, see table above for presentation of net income
applicable to common shareholders as a percentage of sales.
American Standard Companies Inc. Data Supplement Sheet (Unaudited)
This Data Supplement Sheet includes information on backlog and
information excluding the effects of foreign exchange translation
on operating results. Approximately half of the Company's business
is outside the U.S., therefore changes in exchange rates can have a
significant effect on results of operations when presented in U.S.
Dollars. Year-over-year changes in sales and segment income, and in
certain cases, segment income as a percentage of sales, for 2005
compared with 2004 are presented both with and without the effects
of foreign exchange translation. Additionally, management analyzes
year-over-year changes to its operating performance with and
without operational consolidation expenses. Operational
consolidation expenses have been noted below. Presenting results of
operations excluding the translation effects of foreign exchange
amounts and operational consolidation expenses is not in conformity
with generally accepted accounting principles (GAAP), but
management analyzes the data in this manner because it is useful to
them for understanding operational performance of the business.
Management also uses data adjusted in this manner for purposes of
determining incentive compensation. Changes in sales and segment
income excluding foreign exchange effects are calculated using
current year sales and segment income translated at prior year
exchange rates. The presentation of sales, segment income, total
segment income and segment income and total segment income as a
percentage of sales with and without the effects of foreign
currency translation are not meant to be a substitute for
measurements prepared in accordance with GAAP, nor to be considered
in isolation. In millions Twelve Months Ended December 31, Reported
Reported % Chg vs. % Chg vs. % Chg vs. 2004 2005 (1) 2004 (2) 2004
2004 Excl. FX & Op. Excl. FX(3) Cons. Exp(4) Air Conditioning
Systems and Services Sales 6,014.7 5,345.5 12.5% 11.9% Segment
Income 660.5 556.1 18.8% 18.5% 21.5% Segment Income as a Percentage
of Sales 11.1% 10.4% 0.6pts 0.6pts 0.9pts Backlog 719.4 663.4 8.4%
9.8% Bath & Kitchen Sales 2,418.7 2,439.5 -0.9% -1.6% Segment
Income 102.2 196.9 -48.1% -50.2% -43.3% Segment Income as a
Percentage of Sales 4.2% 8.1% -3.9pts -4.0pts -4.0pts Vehicle
Control Systems Sales 1,831.0 1,723.8 6.2% 5.1% Segment Income
249.8 231.3 8.0% 5.4% 9.0% Segment Income as a Percentage of Sales
13.6% 13.4% 0.2pts 0.0pts 0.5pts Backlog 716.6 853.8 -16.1% -3.4%
Total Company Sales 10,264.4 9,508.8 7.9% 7.2% Segment Income
1,012.5 984.3 2.9% 1.7% 4.1% Segment Income as a Percentage of
Sales 9.9% 10.4% -0.4 pts -0.5 pts -0.3pts Net Income Applicable to
Common Shareholders 556.3 313.4 77.5% Net Income Applicable to
Common Shareholders as a Percentage of Sales 5.4% 3.3% 2.1 pts (1)
Segment income includes $71.0 million for operational consolidation
expenses, comprised of $25.6 million for Air Conditioning Systems
and Services, $31.7 million for Bath & Kitchen, and $13.7
million for Vehicle Control Systems. Additionally, Corporate and
Other expenses include $1.9 million of income related to
operational consolidations. (2) Segment income includes $46.1
million for operational consolidation expenses, comprised of $7.7
million for Air Conditioning Systems and Services, $33.0 million
for Bath & Kitchen, and $5.4 million for Vehicle Control
Systems. (3) Excluding the impact of foreign exchange translation
(4) Excluding the impact of foreign exchange and operational
consolidation expenses. Note: See Consolidated Statement of
Operations for a reconciliation of total segment income to income
before income taxes. In addition, see table above for presentation
of net income applicable to common shareholders as a percentage of
sales. American Standard Companies Inc. 2006 Earnings Per Share
Reconciliation (Unaudited) Q1 2006 FY 2006 Net Income Reported
$77.8 - $86.2 $548.6 - $579.8 Streamlining Expenses, Net of Tax 3.0
6.2 Asset Sales and Other Gains -- (6.2) Adjusted Net Income $80.8
- $89.2 $548.6 - $579.8 Adjusted EPS $0.39 -$0.43 $2.65 - $2.80
Reported EPS $0.37 - $0.41 $2.65 - $2.80 Diluted Shares 209.0 207.1
2005 Earnings Per Share Reconciliation (Unaudited) Q1 2005 FY 2005
Net Income Reported $124.9 $556.3 Streamlining Expenses, Net of Tax
14.8 47.2 Other Tax Items (36.4) (46.9) Adjusted Net Income $103.3
$556.6 FAS 123 Expense, Net of Tax (5.3) (20.0) Adjusted Net Income
Including FAS 123 Expense $98.0 $536.6 Adjusted EPS $0.47 $2.56
Adjusted EPS Including FAS 123 Expense $0.45 $2.48 Reported EPS
$0.57 $2.56 Note: The presentation of adjusted net income and
adjusted net income per diluted common share is not in conformity
with generally accepted accounting principles (GAAP). Management
believes that presenting these measures is useful to shareholders
because it enhances their understanding of how management assesses
the performance of the Company's businesses. Management also uses
data adjusted in this manner for purposes of determining incentive
compensation. These measures may not be comparable to similar
measures of other companies as not all companies calculate these
measures in the same manner. American Standard Companies Inc.
Consolidated Balance Sheet (Unaudited) (dollars in millions)
December 31, December 31, 2005 2004 Current Assets: Cash and cash
equivalents $390.7 $229.4 Accounts receivable, less allowance for
doubtful accounts 1,161.3 1,154.5 Dec. 2005 - $46.9; Dec. 2004 -
$46.2 Inventories: Finished products 659.8 658.0 Products in
process 228.2 233.2 Raw materials 190.2 196.0 1,078.2 1,087.2
Future income tax benefits 99.3 114.5 Other current assets 336.7
304.2 Total Current Assets 3,066.2 2,889.8 Facilities, less
accumulated depreciation: 1,622.2 1,616.6 Dec. 2005 - $1,101.9;
Dec. 2004 - $1,123.7 Goodwill 1,152.9 1,267.7 Capitalized software,
less accumulated amortization: 200.6 230.0 Dec. 2005 - $321.8; Dec.
2004 - $274.5 Debt issuance costs, net of accumulated amortization:
13.9 15.4 Dec. 2005 - $33.1; Dec. 2004 - $28.2 Long-term asbestos
indemnity recoveries 384.0 399.6 Long-term future income tax
benefits 93.5 78.4 Investment in associated companies 98.2 77.5
Other assets 236.3 266.8 Total Assets $6,867.8 $6,841.8 Current
Liabilities: Loans payable to banks $17.5 $76.6 Current maturities
of long-term debt 2.6 2.2 Accounts payable 844.5 887.2 Accrued
payrolls 339.5 331.2 Current portion of warranties 181.9 155.1
Taxes on income 91.8 130.5 Other accrued liabilities 751.1 763.9
Total Current Liabilities 2,228.9 2,346.7 Long-Term Debt 1,676.1
1,429.1 Other Long-Term Liabilities Reserve for post-retirement
benefits 631.6 744.1 Long-term portion of asbestos indemnity
liability 673.0 683.4 Long-term portion of warranties 246.7 242.4
Deferred taxes on income 131.1 94.3 Other liabilities 357.9 371.5
Total Liabilities 5,945.3 5,911.5 Shareholders' Equity Preferred
stock, 2,000,000 shares authorized none issued and outstanding - -
Common stock $.01 par value, 560,000,000 shares authorized; shares
issued: 251,769,794 in 2005; 251,768,741 in 2004; and shares
outstanding: 206,741,396 in 2005; 214,947,988 in 2004 2.5 2.5
Capital surplus 834.4 794.5 Treasury stock (1,181.4) (760.1)
Retained earnings 1,576.5 1,146.6 Foreign currency translation
effects (212.6) (102.8) Deferred gain on hedge contracts, net of
tax 20.9 9.3 Minimum pension liability adjustment, net of tax
(117.8) (159.7) Total Shareholders' Equity 922.5 930.3 Total
Liabilities & Shareholders' Equity $6,867.8 $6,841.8 American
Standard Companies Inc. Reconciliation of Net Cash Provided By
Operating Activities to Free Cash Flow (Unaudited) In millions
Three Months Ended December 31, 2005 2004 Cash provided by
operating activities: Net Income/(Loss) $64.4 $(86.9) Adjustments
to reconcile net income/(loss) to net cash provided by operating
activities 219.5 389.0 Net cash provided by operating activities
283.9 302.1 Other deductions or additions to reconcile to Free Cash
Flow: Proceeds from initial sale of receivables, net - (27.1)
Purchases of property, plant, equipment and computer software
(115.7) (112.8) Proceeds from disposals of property 1.7 15.5 Free
cash flow $169.9 $177.7 Note: This statement reconciles net cash
provided by operating activities to free cash flow. Management uses
free cash flow, which is not defined by US GAAP, to measure the
Company's operating performance. Free cash flow is also one of
several measures used to determine incentive compensation for
certain employees. American Standard Companies Inc. Reconciliation
of Net Cash Provided By Operating Activities to Free Cash Flow
(Unaudited) In millions Twelve Months Ended December 31, 2005 2004
Cash provided by operating activities: Net Income $556.3 $313.4
Adjustments to reconcile net income to net cash provided by
operating activities 264.1 451.3 Net cash provided by operating
activities 820.4 764.7 Other deductions or additions to reconcile
to Free Cash Flow: Proceeds from initial sale of receivables, net -
(27.1) Purchases of property, plant, equipment and computer
software (337.1) (262.5) Proceeds from disposals of property 28.2
29.4 Free cash flow $511.5 $504.5 Note: This statement reconciles
net cash provided by operating activities to free cash flow.
Management uses free cash flow, which is not defined by US GAAP, to
measure the Company's operating performance. Free cash flow is also
one of several measures used to determine incentive compensation
for certain employees. American Standard Companies Inc.
Reconciliation of Net Cash Provided By Operating Activities to Free
Cash Flow (Unaudited) In millions Twelve Months Ended December 31,
2006 2005 Net cash provided by operating activities $835.0 - 860.0
$820.4 Other deductions or additions to reconcile to Free Cash
Flow: Purchases of property, plant, equipment and computer software
Approx. (285.0) (337.1) Proceeds from disposals of property Approx.
25.0 28.2 Free cash flow $575.0 - 600.0 $511.5 Note: This statement
reconciles net cash provided by operating activities to free cash
flow. Management uses free cash flow, which is not defined by US
GAAP, to measure the Company's operating performance. Free cash
flow is also one of several measures used to determine incentive
compensation for certain employees. FCMN Contact:
lglover@americanstandard.com DATASOURCE: American Standard
Companies Inc. CONTACT: Reporters, Lisa Glover, +1-732-980-6048, ,
or Shelly London, +1-732-980-6175, ; or Investors and financial
analysts, Bruce Fisher, +1-732-980-6095, , or Todd Gleason, +1-
732-980-6399, , all of American Standard Companies Inc. Web site:
http://www.americanstandard.com/
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