- Delivers record second-quarter sales, up 9.7 percent for
company's combined three businesses PISCATAWAY, N.J., July 18
/PRNewswire-FirstCall/ -- American Standard Companies Inc.
(NYSE:ASD) today announced second-quarter net income per diluted
share of 84 cents in accordance with Generally Accepted Accounting
Principles (GAAP), down from 93 cents a year ago. The decrease was
driven by separation costs, including separation-related taxes that
were previously not estimable. Net income per diluted share on an
adjusted basis was $1.05, up 14.1 percent from second quarter a
year ago. The company had provided second- quarter net income per
diluted share guidance of 98 cents-$1.04 on a GAAP basis and
$1.03-$1.09 on an adjusted basis. The company is in the process of
selling its Bath and Kitchen business and, in accordance with GAAP,
has classified it as a discontinued operation since first quarter.
(Please see table below.) Sales from continuing operations, which
include Air Conditioning Systems and Services and Vehicle Control
Systems, were $2.62 billion, up 10.6 percent. Sales for Bath and
Kitchen were $660.5 million. In total, sales for the company's
three businesses were up 9.7 percent. The company generated $225.9
million in net cash provided by operating activities and $158
million in free cash flow. SECOND-QUARTER EARNINGS SUMMARY 2Q07
2Q06 % 2Q07 change guidance GAAP net income per diluted share
Continuing operations 90 cents 91 cents (1)% N/A Discontinued
operations (Bath (6)cents 2 cents (400)% N/A and Kitchen) Total
company GAAP 84 cents 93 cents (9.7)% 98 cents - $1.04 Adjusted net
income per diluted share Continuing operations $1.00 88 cents 13.6
% N/A Discontinued operations (Bath and Kitchen) 5 cents 4 cents 25
% N/A Total company on an adjusted basis $1.05 92 cents 14.1 %
$1.03 - $1.09 (Please see the financial tables following the news
release text for reconciliation tables and a description of
adjusted results for continuing operations, discontinued operations
and the total company. The company provides adjusted results to
facilitate understanding of ongoing financial performance from year
to year. ) "With 14 percent earnings growth on an adjusted basis,
we delivered a good second quarter, particularly in light of some
challenges in the residential part of our air conditioning
business," said Fred Poses, chairman and CEO. "Continued strong
sales of commercial equipment and services drove our results in Air
Conditioning Systems and Services, more than compensating for the
softer housing market, cooler weather and a warranty charge that
affected our residential results. We see continued strength in the
global commercial air conditioning systems and services markets.
Combined with our strong position in residential markets, we expect
a good overall year for this business. "Vehicle Control Systems had
a strong quarter of sales and segment income expansion," said
Poses. "Sales growth in Western Europe, our largest region,
outpaced truck builds, which significantly exceeded original
industry forecasts. The unexpected new demand stretched the supply
chain and temporarily hampered WABCO's ability to fully convert the
increased volume into even higher margins. During the quarter,
WABCO also won new sales around the world that continue to build
its long-term sales growth pipeline. "We continue to be very
encouraged by Bath and Kitchen's improving performance, despite
challenging consumer market conditions in some key areas,
particularly the U.S. New products are being well received, and
operational improvements are accelerating our Bath and Kitchen
recovery. "We announced our separation plans on Feb. 1, and we're
very pleased with our progress so far. The Bath and Kitchen sales
process is moving ahead nicely, and we're confident of a successful
outcome. Last week we announced July 31 as WABCO's spinoff date,
ahead of the original early fall schedule," said Poses. FULL-YEAR
PERFORMANCE ESTIMATES "For the rest of the year, we see continued
good conditions in all three businesses," said Poses. "If we were
staying together as one company, we would expect full-year GAAP net
income per diluted share of $3.21-$3.31 (including $85-$88 million
for separation costs, net of tax, and separation-related tax costs)
and net income per diluted share of $3.30-$3.40 on an adjusted
basis (an increase of 24-27 percent over adjusted 2006 net income
per diluted share)." The adjusted full-year estimate is based on
the company as currently structured before separation costs and
some duplicate costs to run two companies. "For the company as
currently structured, we expect to generate the cash flow we
previously announced - about $1.015 billion in net cash provided by
operating activities and about $715 million in free cash flow,"
said Poses. "Because of the imminent spinoff, we are now providing
a full-year estimate for WABCO," he said. "After the spinoff, we
expect WABCO to have full-year 2007 net income per diluted share of
approximately $2.54 on a GAAP basis and $2.85 on an adjusted basis.
Both of these estimates reflect the one-for-three stock
distribution ratio and WABCO's status as part of American Standard
for seven months and as an independent company for five months. The
adjusted estimate excludes 31 cents for WABCO's share of American
Standard's overall one-time separation costs. "We'll discuss our
performance estimates and separation costs in greater detail on
today's call for analysts and investors," said Poses. "As our
separation plans progress, we will provide full-year performance
estimates for the standalone Trane," said Poses. SECOND-QUARTER
2007 BUSINESS HIGHLIGHTS AIR CONDITIONING SYSTEMS AND SERVICES
sales were $2.038 billion, up 9.6 percent over second quarter 2006
(up 8.5 percent excluding foreign exchange effects) because of
improving pricing and volumes in commercial equipment and services.
Segment income was $288.8 million, up 3.8 percent from $278.1
million in 2006, as pricing and commercial volume as well as
materials productivity more than offset the continuing impact of
higher commodity costs, lower volume of residential sales and
residential warranty costs. Adjusted segment income was $287.2
million, excluding the impact of favorable foreign exchange effects
and operational consolidation expenses, up from $277.2 million in
second quarter 2006. American Standard Companies/Trane was one of
four energy services companies asked to join the Clinton Climate
Initiative (CCI), a global program to reduce greenhouse gas
emissions generated by urban buildings. The company will be
providing "green" upgrades that deliver significant energy and
operating cost reductions to buildings in 16 cities around the
world. Led by former President Bill Clinton, CCI has received $5
billion in financing pledges from banks to jump-start the project.
During the quarter, Air Conditioning Systems and Services signed
supply agreements with 28 new homebuilders. For the third year in a
row, David Weekley Homes named Trane a "Partner of Choice" with its
highest "A,A" rating for quality and service. No other heating,
ventilation and air conditioning (HVAC) company received such an
award. Large contracts signed during the quarter included ones for
Al Nour Mall (Saudi Arabia); Alamo Community College (San Antonio,
Texas); BryanLGH Medical Center (Lincoln, Neb.); Arena Plaza
(Hungary); Cerritos College (Norwalk, Calif.); Chongqing Long Hu
Estate villas (Chongqing, China); Dalian Wanda (Dalian, China);
Dongguan Wei Jian (Dongguan, China); Dunnes stores (10 locations in
Ireland); Mall of Arabia (Saudi Arabia); Minebea (three locations
in Thailand); Monessen City School District (Monessen, Pa.);
Ridgecrest Regional Hospital (Ridgecrest, Calif.); Sambil
Barquisimeto (Barquisimeto, Venezuela); Shanghai Kerry Everbright
City (Shanghai, China); UAB Women and Infants Health Center
(Birmingham, Ala.). VEHICLE CONTROL SYSTEMS second-quarter sales
were $582.3 million, up 13.9 percent over the same period in the
prior year (up 6.8 percent in local currencies). Segment income was
$67.1 million, up from $59.5 million a year ago, as increased
volume, lower warranty costs and materials savings more than offset
the unfavorable impact of typical price reductions, production and
logistics costs related to the unexpected demand, and escalating
commodity costs. Excluding favorable translational foreign exchange
effects, operational consolidation expenses and separation costs,
adjusted segment income was $70.5 million, up from $60.9 million in
second quarter 2006. During the quarter, WABCO continued to build
its sales pipeline with new and incremental business from
commercial vehicle, bus and passenger car manufacturers.
DaimlerChrysler selected WABCO as a supplier for the new platform
of all its EvoBus Citybus lines, strengthening the business'
position as a full system supplier for the bus market. The EvoBus
business includes the brake, chassis leveling, door and climate
control systems, as well as the electronic architecture. SsangYong
Motor Company, a leading manufacturer of sport utility vehicles
(SUVs) in Korea, chose WABCO to supply vacuum pumps for the Euro 5
diesel engine project covering its range of SUVs and Multi-Purpose
Vehicles (MPVs) including the Rexton, Kyron, Actyon and Rodius
models. In addition, SsangYong gave WABCO its "best supplier"
award. BATH AND KITCHEN, now classified as a discontinued
operation, had sales of $660.5 million, up 6.4 percent (up 1.8
percent excluding foreign exchange effects) from the same quarter a
year ago. Income from discontinued operations represented a loss of
$11.5 million net of tax, down from income of $2.5 million a year
ago, because of operational consolidation and separation expenses.
Segment income was $21.9 million, up from $4.7 million in second
quarter 2006. Improved price, volume and mix as well as prior
operational consolidations and materials productivity more than
offset higher commodity costs. Adjusted segment income was $22.8
million, compared with $13.6 million in second quarter 2006,
excluding operational consolidation expenses and the favorable
impact of foreign exchange, and including depreciation and
amortization. At K/BIS, the largest bath and kitchen show in the
U.S., Bath and Kitchen displayed American Standard, Jado and
Porcher lines and introduced a number of well-received products,
including its Champion(R) 4 toilet with flushing capabilities
unmatched in the industry. Champion 4's Accelerator flush valve
pushes water into the bowl three times faster than the standard
two-inch flush valve and can move 40 percent larger mass than the
industry's second-best siphonic high-performance toilet. The
Cadet(R) 3 toilet continues its successful market performance. In
Asia, Bath and Kitchen hosted more than 400 top developers,
interior designers and architects in Beijing and Bangkok for the
"Celebration of the Senses" 2007 Bathroom Collection Show to share
global bathroom trends. It also opened two flagship showrooms in
Xian and Qingdao, China. New commercial contracts during the
quarter included ones for the Casa Riva luxury condominiums
(Bangkok, Thailand); International Commercial Centre (Hong Kong,
China), which will be the world's third-tallest building when
completed in 2010; La Defense T1 tower office complex (Paris,
France); National Gymnasium (Beijing, China), one of the city's new
major sports venues; Poseidon residence, office and shopping
complex (Pineto Teramo, Italy); Royal Air Force (Woodbridge,
Suffolk, U.K.); and the State Administration of Environmental
Protection's (SEPA) Convention Compliance Center Building (Beijing,
China), a showcase for advanced "green" building design. As part of
its ongoing initiatives to rebuild Bath and Kitchen's
profitability, the company announced plans to discontinue
production at its ceramics plant in Excelsior, U.K., resulting in
the elimination of about 140 jobs. These actions will cost about
$17 million ($12 million after taxes) and, once completed, will
generate annual savings of about $10 million starting in 2008. "We
will start to see some of the savings this year," said Poses. "We
very carefully consider any plans that affect people's jobs and
believe these and any possible future actions are essential to
improve Bath and Kitchen's profitability and continue to build its
global competitiveness." PLEASE NOTE: American Standard Chairman
and CEO Frederic Poses and CFO Peter D'Aloia will discuss the
company's performance and provide estimates on a two-way conference
call for financial analysts at 9 a.m. EDT 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 Second-Quarter 2007
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) 312-1264. 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 1
p.m. EDT today until 11:59 p.m. EDT on July 25. For the replay,
please dial (719) 457-0820. The replay access code is 4371743.
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 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; (iv)
periodic adjustments to reserves for contingent liabilities,
including reserves associated with litigation matters, government
investigations, asbestos liabilities and asbestos insurance
recoveries; and (v) the amount and timing of operational
consolidation expenses and gains or losses on asset sales and tax
items. In addition, there are risks and uncertainties relating to
the planned tax-free spinoff of our Vehicle Controls System
business and the sale of our Bath and Kitchen business, including
the timing and certainty of the completion of those transactions
and the ability of each business to operate as an independent
entity. The estimates for full-year 2007 are based on the company's
current structure and do not give effect to the separation of
Vehicle Control Systems into a newly independent public company and
the sale of Bath and Kitchen or related one-time tax costs
associated with those transactions. Additional factors that could
cause actual results to differ materially from expectations are set
forth in the company's 2006 Annual Report on Form 10-K, in the
"Management's Discussion and Analysis" section of the company's
Quarterly Reports on Form 10-Q and in the WABCO Holdings Inc.'s
Registration Statement on Form 10. American Standard does not
undertake any obligation to update such forward-looking statements.
To facilitate understanding of second- quarter results, several
tables follow this news release. The second-quarter 2006 and 2007
results that exclude operational consolidation expenses, gains on
sale of assets, tax items, foreign exchange translation and
separation costs are non-GAAP measures and include total company
segment income, adjusted net income, adjusted net income per
diluted share and free cash flow. In addition, certain results of
the Bath and Kitchen business in the accompanying tables are
non-GAAP measures. These measures should be considered in addition
to, not as a substitute for, GAAP measures. Management believes
that presenting these non-GAAP measures is useful to shareholders
because it enhances their understanding of how management assesses
the operating performance of the company's 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 an $11.2 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 62,000 people and has
manufacturing operations in 28 countries. American Standard is
included in both the S&P 500 and the Dow Jones Sustainability
North America Index, which recognizes the top 20 percent of leaders
in corporate sustainability in North America. On Feb. 1, 2007, the
company announced plans to separate its three businesses by
spinning off its vehicle control systems business, selling its bath
and kitchen business and then renaming itself Trane. On July 12,
2007, the company announced its intention to complete the tax-free
spinoff of its vehicle control systems business after the close of
business on July 31, 2007. American Standard Companies Inc.
Consolidated Statement of Operations (Unaudited) Three Months Ended
Six Months Ended June 30, June 30, In millions except per share
data 2007 2006 2007 2006 Sales Air Conditioning Systems and
Services $2,037.7 $1,858.5 $3,645.2 $3,321.9 Vehicle Control
Systems 582.3 511.2 1,141.1 991.1 Total $2,620.0 $2,369.7 $4,786.3
$4,313.0 Segment income Air Conditioning Systems and Services
$288.8 $278.1 $446.2 $408.9 Vehicle Control Systems 67.1 59.5 140.8
127.3 Total 355.9 337.6 587.0 536.2 Equity in net income of
unconsolidated joint ventures 7.3 12.0 14.6 21.9 Interest expense
27.3 30.9 55.5 60.9 Corporate and other expenses 65.6 52.0 122.1
99.8 Income from continuing operations before income taxes 270.3
266.7 424.0 397.4 Income taxes 82.8 77.5 135.1 116.2 Income from
continuing operations 187.5 189.2 288.9 281.2 Income (loss) from
discontinued operations, net of tax (11.5) 2.5 60.4 (5.4) Net
Income $176.0 $191.7 $349.3 $275.8 Basic earnings per share: Income
from continuing operations $0.93 $0.94 $1.43 $1.38 Income (loss)
from discontinued operations (0.06) 0.01 0.30 (0.03) Net Income
$0.87 $0.95 $1.73 $1.35 Diluted earnings per share: Income from
continuing operations $0.90 $0.91 $1.39 $1.35 Income (loss) from
discontinued operations (0.06) 0.02 0.29 (0.03) Net Income $0.84
$0.93 $1.68 $1.32 Diluted earnings per share, on an adjusted basis:
(1) $1.05 $0.92 $1.63 $1.34 Average outstanding common shares:
Basic 202.8 202.4 201.7 203.7 Diluted 208.4 207.1 207.4 208.2 Note:
The presentation of total segment income and diluted earnings per
share, on an adjusted basis is not in conformity with generally
accepted accounting principles (GAAP). This measure may not be
comparable to similar measures of other companies as not all
companies calculate these measures in the same manner. (1) See
reconciliation on next page American Standard Companies Inc.
Reconciliation of Net Income to Adjusted Net Income and Adjusted
Net Income per Diluted Common Share (Unaudited) In millions except
per share data Three Months Ended Six Months Ended June 30, June
30, 2007 2006 2007 2006 Net income $176.0 $191.7 $349.3 $275.8
Adjustments: Operational consolidation expenses, net of tax 22.8
11.0 28.8 16.3 Tax items (11.0) (9.0) (10.4) (9.0) Separation
costs, net of tax and separation related taxes 47.8 - 54.5 - Gain
on sale of assets, net of tax - (4.0) (56.8) (4.0) Adjustment to
include depreciation and amortization of discontinued operations,
net of tax (1) (17.5) - (28.3) - Adjusted net income $218.1 $189.7
$337.1 $279.1 Adjusted net income per diluted common share $1.05
$0.92 $1.63 $1.34 Three Months Ended Six Months Ended June 30, June
30, 2007 2006 2007 2006 Income from Continuing Operations $187.5
$189.2 $288.9 $281.2 Adjustments: Operational consolidation
expenses, net of tax 5.3 0.3 6.1 1.3 Tax items (10.7) (7.0) (9.7)
(9.7) Separation costs, net of tax and separation related taxes
26.4 - 32.0 - Adjusted net income from continuing operations $208.5
$182.5 $317.3 $272.8 Adjusted income from continuing operations per
diluted common share $1.00 $0.88 $1.53 $1.31 2007 2006 2007 2006
Income (Loss) from Discontinued Operations $(11.5) $2.5 $60.4
$(5.4) Adjustments: Operational consolidation expenses, net of tax
17.5 10.7 22.7 15.0 Tax items (0.3) (2.0) (0.7) 0.7 Separation
costs, net of tax and separation related taxes 21.4 - 22.5 - Gain
on sale of assets, net of tax - (4.0) (56.8) (4.0) Adjustment to
include depreciation and amortization of discontinued operations,
net of tax (1) (17.5) - (28.3) - Adjusted net income from
discontinued operations $9.6 $7.2 $19.8 $6.3 Adjusted income from
discontinued operations per diluted common share $0.05 $0.04 $0.10
$0.03 (1) Assets are not depreciated or amortized once a business
is classified as a discontinued operation. As a result of the
decision to sell Bath and Kitchen, the GAAP results exclude Bath
and Kitchen depreciation and amortization. Adjusted results include
Bath and Kitchen depreciation and amortization. The Company
provides adjusted results to facilitate understanding of ongoing
financial performance Note: The presentation of adjusted income
from continuing operations, adjusted income per diluted common
share from continuing operations, adjusted net income / (loss) from
discontinued operations, adjusted net income per diluted common
share from discontinued operations, adjusted net income and
adjusted net income per diluted common share is not in conformity
with generally accepted accounting principles (GAAP). 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. Reconciliation of
Statement of Operations (Unaudited) In millions except per share
data Before Discontinued Reported BK Ops 2007 Adjustments 2007(1)
Sales Air Conditioning Systems and Services $2,037.7 $2,037.7 Bath
& Kitchen - 660.5 660.5 Vehicle Control Systems 582.3 582.3
Total $2,620.0 660.5 $3,280.5 Segment income Air Conditioning
Systems and Services $288.8 $288.8 Bath & Kitchen - 21.9 21.9
Vehicle Control Systems 67.1 67.1 Total 355.9 21.9 377.8 Equity in
net income of unconsolidated joint ventures 7.3 - 7.3 Interest
expense 27.3 0.6 27.9 Corporate and other expenses 65.6 13.5 79.1
Income from continuing operations before income taxes 270.3 7.8
278.1 Income taxes 82.8 19.3 102.1 Income from continuing
operations 187.5 (11.5) 176.0 Income (loss) from discontinued
operations, net of tax (11.5) 11.5 0.0 Net Income $176.0 $176.0 (1)
Includes Bath & Kitchen as if not a discontinued operation,
except for the absence of depreciation and amortization following
the decision to sell Bath & Kitchen. American Standard
Companies Inc. Reconciliation of Statement of Operations
(Unaudited) In millions except per share data Reported BK
Previously 2006 Adjustments Reported 2006 Sales Air Conditioning
Systems and Services $1,858.5 $1,858.5 Bath & Kitchen - 621.0
621.0 Vehicle Control Systems 511.2 511.2 Total $2,369.7 621.0
$2,990.7 Segment income Air Conditioning Systems and Services
$278.1 $278.1 Bath & Kitchen - 4.7 4.7 Vehicle Control Systems
59.5 59.5 Total 337.6 4.7 342.3 Equity in net income of
unconsolidated joint ventures 12.0 - 12.0 Interest expense 30.9 0.5
31.4 Corporate and other expenses 52.0 6.5 58.5 Income from
continuing operations before income taxes 266.7 (2.3) 264.4 Income
taxes 77.5 (4.8) $72.7 Income from continuing operations 189.2 2.5
191.7 Income from discontinued operations, net of tax 2.5 (2.5) 0.0
Net Income $191.7 $191.7 Note: The presentation of the results of
operations before adjustments to reflect discontinued operations,
previously reported 2006 results of operations before adjustments
to reflect discontinued operations and total segment income is not
in conformity with generally accepted accounting principles (GAAP).
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. Reconciliation of
Statement of Operations (Unaudited) In millions Six Months Ended
June 30, except per share data Before Discontinued Reported BK Ops
2007 Adjustments 2007 (1) Sales Air Conditioning Systems and
Services $3,645.2 $3,645.2 Bath & Kitchen - 1,318.4 1,318.4
Vehicle Control Systems 1,141.1 1,141.1 Total $4,786.3 1,318.4
$6,104.7 Segment income Air Conditioning Systems and Services
$446.2 $446.2 Bath & Kitchen - 127.8 127.8 Vehicle Control
Systems 140.8 140.8 Total 587.0 127.8 714.8 Equity in net income of
unconsolidated joint ventures 14.6 0.2 14.8 Interest expense 55.5
0.9 56.4 Corporate and other expenses 122.1 22.9 145.0 Income from
continuing operations before income taxes 424.0 104.2 528.2 Income
taxes 135.1 43.8 178.9 Income from continuing operations 288.9 60.4
349.3 Income (loss) from discontinued operations, net of tax 60.4
(60.4) 0.0 Net Income $349.3 $349.3 (1) Includes Bath & Kitchen
as if not a discontinued operation, except for the absence of
depreciation and amortization following the decision to sell Bath
& Kitchen. American Standard Companies Inc. Reconciliation of
Statement of Operations (Unaudited) In millions Six Months Ended
June 30, except per share data Previously Reported BK Reported 2006
Adjustments 2006 Sales Air Conditioning Systems and Services
$3,321.9 $3,321.9 Bath & Kitchen - 1,229.7 1,229.7 Vehicle
Control Systems 991.1 991.1 Total $4,313.0 1,229.7 $5,542.7 Segment
income Air Conditioning Systems and Services $408.9 $408.9 Bath
& Kitchen - 4.2 4.2 Vehicle Control Systems 127.3 127.3 Total
536.2 4.2 540.4 Equity in net income of unconsolidated joint
ventures 21.9 - 21.9 Interest expense 60.9 1.0 61.9 Corporate and
other expenses 99.8 15.3 115.1 Income from continuing operations
before income taxes 397.4 (12.1) 385.3 Income taxes 116.2 (6.7)
$109.5 Income from continuing operations 281.2 (5.4) 275.8 Income
from discontinued operations, net of tax (5.4) 5.4 0.0 Net Income
$275.8 $275.8 Note: The presentation of the results of operations
before adjustments to reflect discontinued operations, previously
reported 2006 results of operations before adjustments to reflect
discontinued operations and total segment income is not in
conformity with generally accepted accounting principles (GAAP).
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) In millions Three Months Ended June 30, % Chg % Chg
2006 Reported Reported vs. Adjusted 2007 2006 2006 (1) Air
Conditioning Systems and Services Sales 2,037.7 1,858.5 9.6% 8.5%
Segment Income 288.8 278.1 3.8% 3.6% Segment Income as a Percentage
of Sales 14.2% 15.0% -0.8pts -0.7pts Vehicle Control Systems Sales
582.3 511.2 13.9% 6.8% Segment Income 67.1 59.5 12.8% 15.8% Segment
Income as a Percentage of Sales 11.5% 11.6% -0.1pts 1.0pts Total
Company - Continuing Operations Sales 2,620.0 2,369.7 10.6% 8.1%
Segment Income (2) 355.9 337.6 5.4% 5.8% Segment Income as a
Percentage of Sales 13.6% 14.2% -0.6pts -0.3pts Bath & Kitchen
- Discontinued Operations Sales 660.5 621.0 6.4% 1.8% Segment
Income 21.9 4.7 ++ 67.6% Segment Income as a Percentage of Sales
3.3% 0.8% 2.5pts 1.4pts Total Company Sales 3,280.5 2,990.7 9.7%
6.8% Segment Income 377.8 342.3 10.4% 8.2% Segment Income as a
Percentage of Sales 11.5% 11.4% 0.1pts 0.1pts Net Income Applicable
to Common Shareholders 176.0 191.7 -8.2% Net Income Applicable to
Common Shareholders as a Percentage of Sales 5.4% 6.4% -1.0pts
Presenting results of operations excluding the translation effects
of foreign exchange amounts, operational consolidation expenses,
asset dispositions and depreciation / amortization is not in
conformity with generally accepted accounting principles (GAAP).
Notwithstanding that the Bath & Kitchen business is a
discontinued operation, management continues to analyze Bath &
Kitchen sales, segment income and segment income as a percentage of
sales to assess the performance of the Company as a whole. In
addition, total company sales, total segment income and total
segment income as a percentage of sales that include the non-GAAP
Bath & Kitchen measures are also not in conformity with
generally accepted accounting principles (GAAP). These non-GAAP
measures may not be comparable to similar measures of other
companies as not all companies calculate these measures in the same
manner. (1) Excluding the impact of foreign exchange translational
effects, operational consolidation expenses, gain on sale of
assets, separation costs and an adjustment to include depreciation
and amortization of discontinued operations. 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. (2) 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.
Segment Income Reconciliation Vehicle Air Conditioning Control Bath
& Total Systems & Services Systems Kitchen Company 2007
Reported 288.8 67.1 21.9 377.8 Operational Consolidation Expenses
0.8 7.7 25.8 34.3 Adjustment to Include Depreciation and
Amortization of Discontinued Operations - - (22.9) (22.9)
Adjustment to Exclude Separation Costs - 0.5 - 0.5 Subtotal 289.6
75.3 24.8 389.7 Foreign Exchange Translational Effects (2.4) (4.8)
(2.0) (9.2) Adjusted Segment Income 287.2 70.5 22.8 380.5 Vehicle
Air Conditioning Control Bath & Total Systems & Services
Systems Kitchen Company 2006 Reported 278.1 59.5 4.7 342.3
Operational Consolidation Expenses (0.9) 1.4 15.2 15.7 Gain on Sale
of Assets - - (6.3) (6.3) Adjusted Segment Income 277.2 60.9 13.6
351.7 American Standard Companies Inc. Data Supplement Sheet
(Unaudited) In millions Six Months Ended June 30, % Chg % Chg 2006
Reported Reported vs. Adjusted 2007 2006 2006 (1) Air Conditioning
Systems and Services Sales 3,645.2 3,321.9 9.7% 8.6% Segment Income
446.2 408.9 9.1% 8.7% Segment Income as a Percentage of Sales 12.2%
12.3% -0.1pts 0pts Backlog 976.1 909.9 7.3% 5.0% Vehicle Control
Systems Sales 1,141.1 991.1 15.1% 7.2% Segment Income 140.8 127.3
10.6% 7.1% Segment Income as a Percentage of Sales 12.3% 12.8%
-0.5pts 0pts Backlog 1,051.9 822.2 27.9% 22.0% Total Company -
Continuing Operations Sales 4,786.3 4,313.0 11.0% 8.3% Segment
Income (2) 587.0 536.2 9.5% 8.3% Segment Income as a Percentage of
Sales 12.3% 12.4% -0.1pts 0pts Bath & Kitchen - Discontinued
Operations Sales 1,318.4 1,229.7 7.2% 2.3% Segment Income 127.8 4.2
++ 95.3% Segment Income as a Percentage of Sales 9.7% 0.3% 9.4pts
1.4pts Total Company Sales 6,104.7 5,542.7 10.1% 7.0% Segment
Income 714.8 540.4 32.3% 11.3% Segment Income as a Percentage of
Sales 11.7% 9.8% 1.9pts 0.4pts Net Income Applicable to Common
Shareholders 349.3 275.8 26.7% Net Income Applicable to Common
Shareholders as a Percentage of Sales 5.7% 5.0% 0.7pts Presenting
results of operations excluding the translation effects of foreign
exchange amounts, operational consolidation expenses, asset
dispositions and depreciation / amortization is not in conformity
with generally accepted accounting principles (GAAP).
Notwithstanding that the Bath & Kitchen business is a
discontinued operation, management continues to analyze Bath &
Kitchen sales, segment income and segment income as a percentage of
sales to assess the performance of the Company as a whole. In
addition, total company sales, total segment income and total
segment income as a percentage of sales that include the non-GAAP
Bath & Kitchen measures are also not in conformity with
generally accepted accounting principles (GAAP). These non-GAAP
measures may not be comparable to similar measures of other
companies as not all companies calculate these measures in the same
manner. (1) Excluding the impact of foreign exchange translational
effects, operational consolidation expenses, gain on sale of
assets, separation costs and an adjustment to include depreciation
and amortization of discontinued operations. 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. (2) 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.
Segment Income Reconciliation Vehicle Air Conditioning Control Bath
& Total Systems & Services Systems Kitchen Company 2007
Reported 446.2 140.8 127.8 714.8 Operational Consolidation Expenses
1.0 8.6 33.5 43.1 Adjustment to Include Depreciation and
Amortization of Discontinued Operations - - (37.7) (37.7)
Adjustment to Exclude Separation Costs - 0.5 - 0.5 Gain on Sale of
Assets - - (80.8) (80.8) Subtotal 447.2 149.9 42.8 639.9 Foreign
Exchange Translational Effects (3.2) (10.5) (5.5) (19.2) Adjusted
Segment Income 444.0 139.4 37.3 620.7 Vehicle Air Conditioning
Control Bath & Total Systems & Services Systems Kitchen
Company 2006 Reported 408.9 127.3 4.2 540.4 Operational
Consolidation Expenses (0.4) 2.9 21.2 23.7 Gain on Sale of Assets -
- (6.3) (6.3) Adjusted Segment Income 408.5 130.2 19.1 557.8
American Standard Companies Inc. 2007 Earnings Per Share
Reconciliation (Unaudited) In millions except per share data FY
2007 Net Income Reported $662.4 - $684.3 Streamlining Expenses, net
of tax 67.2 Asset Sales, net of tax and Tax Items (67.2) Separation
Costs, net of tax and Separation Related Tax Costs 85.0 - 88.0
Adjustment to include Depreciation & Amortization from
Discontinued Operations, net of tax (66.6) Adjusted Net Income
$683.8 - $702.7 Reported EPS $3.21 - $3.31 Adjusted EPS $3.30 -
$3.40 Diluted Shares 206.9 2006 Earnings Per Share Reconciliation
(Unaudited) FY 2006 Net Income Reported $541.0 Streamlining
Expenses, net of tax 43.6 Gain on Sale of Assets, net of tax (14.3)
Tax Items (19.5) Adjusted Net Income $550.8 Reported EPS $2.62
Adjusted EPS $2.67 Diluted Shares 206.3 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). 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) June
30, December 31, 2007 2006 Current Assets: Cash and cash
equivalents $356.0 $267.8 Accounts receivable, less allowance for
doubtful accounts: 1,542.1 1,116.8 June 2007 - $44.6; Dec. 2006 -
$44.8 Inventories 926.6 829.9 Other current assets 540.5 439.8
Assets held for sale 2,218.9 2,151.4 Total Current Assets 5,584.1
4,805.7 Facilities, less accumulated depreciation: 1,059.0 1,058.4
June 2007 - $620.1; Dec. 2006 - $546.2 Goodwill 666.4 649.0
Capitalized software, less accumulated amortization: 123.3 127.9
June 2007 - $316.3; Dec. 2006 - $290.9 Long-term asbestos
receivable 336.9 336.6 Other assets 470.5 435.5 Total Assets
$8,240.2 $7,413.1 Current Liabilities: Loans payable to banks $30.8
$91.6 Current maturities of long-term debt 27.7 23.1 Accounts
payable 891.3 697.0 Taxes on income 117.4 114.3 Other accrued
liabilities 1,169.3 1,105.8 Liabilities related to assets held for
sale 940.5 861.0 Total Current Liabilities 3,177.0 2,892.8
Long-Term Debt 1,606.8 1,600.7 Other Long-Term Liabilities Reserve
for post-retirement benefits 711.2 691.7 Long-term portion of
asbestos liability 642.6 652.8 Other liabilities 735.6 651.6 Total
Liabilities 6,873.2 6,489.6 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:
251,776,110 in 2007; 251,773,228 in 2006; and shares outstanding:
203,908,577 in 2007; 199,891,689 in 2006 2.5 2.5 Capital surplus
940.7 897.0 Treasury stock (1,405.6) (1,523.3) Retained earnings
(1) 2,229.8 1,972.4 Foreign currency translation effects (106.5)
(138.9) Deferred gain on hedge contracts, net of tax 1.4 3.3
Unrealized losses on benefit plans, net of tax (295.3) (289.5)
Total Shareholders' Equity 1,367.0 923.5 Total Liabilities &
Shareholders' Equity $8,240.2 $7,413.1 (1) Includes impact of
adopting FASB Interpretation No.48, Accounting for Uncertainty in
Income Taxes, an Interpretation of FASB Statement No.109 American
Standard Companies Inc. Reconciliation of Net Cash Provided By
Operating Activities to Free Cash Flow (Unaudited) In millions
Three Months Ended June 30, 2007 2006 Cash provided by operating
activities: (1) Net Income $176.0 $191.7 Adjustments to reconcile
net income to net cash provided by operating activities 49.9 (26.9)
Net cash provided by operating activities (2) 225.9 164.8 Other
deductions or additions to reconcile to Free Cash Flow: Purchases
of property, plant, equipment and computer software (67.9) (56.9)
Proceeds from disposals of property - 15.2 Free cash flow (2)
$158.0 $123.1 (1) Includes continuing and discontinued operations
(2) Excludes separation activities related to terminating accounts
receivable securitization program and separation costs as well as
an accelerated pension contribution and proceeds from the
disposition of a business. 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 Six Months Ended June 30, 2007 2006 Cash
provided by operating activities: (1) Net Income $349.3 $275.8
Adjustments to reconcile net income to net cash provided by
operating activities (16.6) (122.6) Net cash provided by operating
activities (2) 332.7 153.2 Other deductions or additions to
reconcile to Free Cash Flow: Purchases of property, plant,
equipment and computer software (120.7) (106.3) Proceeds from
disposals of property - 15.2 Free cash flow (2) $212.0 $62.1 (1)
Includes continuing and discontinued operations (2) Excludes
$165.0M proceeds from the sale of the Venesta Washroom Systems
business, separation activities related to terminating accounts
receivable securitization program and separation costs as well as
an accelerated pension contribution and proceeds from the
disposition of a business. Includes $64.9M receipt of cash from a
trust related to an insurance settlement. 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, 2007 Estimate 2006 Net cash provided by operating activities
(1) $ Approx. 1,015.0 $706.3 Other deductions or additions to
reconcile to Free Cash Flow: Purchases of property, plant,
equipment and computer software Approx. (325.0) (285.1) Proceeds
from disposals of property Approx. 25.0 20.6 Free cash flow (2) $
Approx. 715.0 $441.8 (1) Includes continuing and discontinued
operations (2) Excludes separation activities related to
terminating accounts receivable securitization program and
separation costs as well as an accelerated pension contribution and
proceeds from the disposition of a business. 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 one of several measures used to determine incentive
compensation for certain employees. DATASOURCE: American Standard
Companies Inc. CONTACT: Media, Skip Colcord, +1-732-980-3065, , or
Shelly London, +1-732-980-6175, , or investors and financial
analysts, Bruce Fisher, +1-732-980-6095, , all of American Standard
Companies Inc., or Mike Thompson, +32 2 663 9854, or , for American
Standard Companies Inc. Web site: http://www.americanstandard.com/
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