ITEM 1. BUSINESS
American Standard Companies Inc. (the "Company") is a Delaware corporation that has as its only significant asset all the outstanding common stock of American Standard Inc., a Delaware corporation ("American Standard Inc."). Hereinafter, "American Standard" or "the Company" will refer to the Company, or to the Company and American Standard Inc., including its subsidiaries, as the context requires. The Company was formed in 1988 by Kelso & Company, L.P. ("Kelso") to effect the acquisition (the "Acquisition") of American Standard Inc. The Company changed its name from ASI Holding Corporation to American Standard Companies Inc. in November 1994. In the first quarter of 1995 the Company sold 15,112,300 shares of its common stock at $20 per share in an initial public offering (the "Offering"), which yielded net proceeds of approximately $282 million which were used to reduce indebtedness.
American Standard is a globally-oriented manufacturer of high quality, brand-name products in three major product groups: air conditioning systems (56% of 1994 sales); bathroom and kitchen fixtures and fittings (27% of 1994 sales); and braking control systems for medium-sized and heavy trucks, buses, trailers and utility vehicles (17% of 1994 sales). American Standard is a market leader in each of these business segments in the principal geographic areas in which it competes. The Company's brand names include TRANE(R) and AMERICAN-STANDARD(R) for air conditioning systems, AMERICAN-STANDARD(R), IDEAL-STANDARD(R) and STANDARD(R) for plumbing products and WABCO(R) for braking and related systems. The Company emphasizes technologically advanced products such as air conditioning systems that utilize energy-efficient compressors and environmentally-preferred refrigerants, water-saving plumbing products and commercial vehicle braking and related systems (including antilock braking systems, "ABS") that utilize electronic controls. At December 31, 1994, American Standard had 94 manufacturing facilities in 32 countries.
Overview of Business Segments
American Standard operates three business segments: Air Conditioning Products, Plumbing Products and Automotive Products (formerly named Transportation Products).
Air Conditioning Products. American Standard is a leading U.S. manufacturer of air conditioning systems for both domestic and export sales, and also manufactures air conditioning systems outside the United States. Air Conditioning Products manufactures "applied" (custom engineered, site-assembled) and "unitary" (self-contained, factory-assembled) air conditioning systems that are sold primarily under the TRANE(R) and AMERICAN STANDARD(R) names. Over one-half of Air Conditioning Products' sales in 1994 was in the replacement, renovation and repair markets which have been less cyclical than the new residential and commercial construction markets. Air Conditioning Products' sales in these periods to the commercial and residential markets represented approximately 75% and 25%, respectively, of Air Conditioning Products' total sales. Management believes that Air Conditioning Products is well positioned for growth because of its high quality, brand-name products, significant existing market shares, the introduction of new product features such as electronic controls, the expansion of its broad distribution network and conversion to environmentally-preferred refrigerants.
Plumbing Products. American Standard is a leading manufacturer in Europe and a number of other countries of bathroom and kitchen fixtures and fittings for the residential and commercial construction markets and retail sales channels. Plumbing Products manufactures and distributes its products under the AMERICAN-STANDARD(R), IDEAL-STANDARD(R) and STANDARD(R) names. Management believes that Plumbing Products is well positioned for growth due to the high quality of its brand-name products, significant existing market shares in a number of countries and the expansion of existing operations in developing market areas throughout the world (principally the Far East, Latin America and Eastern Europe).
Automotive Products. Automotive Products is a leading manufacturer, primarily in Europe and Brazil, of brake and related systems for the commercial and utility vehicle industry. Its most important products are pneumatic braking systems and related electronic and other control systems (including antilock braking systems) marketed under the WABCO(R) name for medium-size and heavy trucks, tractors, buses, trailers and utility vehicles. American Standard supplies vehicle manufacturers such as Mercedes-Benz, Volvo, Iveco (Fiat), RVI (Renault) and Rover. Management believes that Automotive Products is well positioned to benefit from improved market conditions in Europe and Brazil and increasing demand in a number of markets (including the U.S. commercial and utility vehicle markets) for ABS and other sophisticated electronic control systems, as well as from the technological advances embodied in the Company's products and its close relationships with a number of vehicle manufacturers.
Strategy
Globalization
American Standard has historically had a significant global presence. One of its major strategic objectives is to continue to expand that presence through the growth of existing operations and the establishment of new operations in developing market areas in the Far East, Latin America and Eastern Europe. The Company often uses joint ventures with local manufacturing and distribution partners to facilitate risk sharing and to allow the Company to benefit from the additional expertise of local market participants.
Air Conditioning Products plans to continue to expand its operations in the Far East, Latin America and Europe. It has recently established a joint venture in Australia and is establishing joint ventures in the Peoples Republic of China ("PRC"). Air Conditioning Products also recently expanded its sales forces in the Far East and Latin America.
Plumbing Products entered new markets through joint ventures in Eastern Europe, Spain and Portugal and is continuing to expand using this approach. Plumbing Products is significantly expanding its operations in the PRC through its affiliate, A-S China Plumbing Products Limited ("ASPPL"), to which American Standard is obligated to contribute $10 million and has contributed an operation valued at $20 million for an initial ownership position of 27% with effective control over day-to-day operations. In April 1994, ASPPL received other capital commitments of $82.5 million. As of December 31, 1994, ASPPL had drawn down approximately $6.7 million of American Standard's $10 million capital commitment and approximately $55 million of the capital commitments of its other investors. ASPPL is expanding its operations to Beijing, Tianjin, Shanghai and Guangzhou in order to provide a full product line of fixtures, fittings, and bathtubs throughout the PRC market. ASPPL has entered into six joint ventures with local business concerns which, together with one wholly-owned operation, have received business licenses from Chinese government authorities. These include two chinaware manufacturing facilities currently under construction, an existing chinaware manufacturing facility being expanded and two operating fittings plants and two operating steel tub factories. The Company's ownership interest in ASPPL is expected to increase over time to up to 51% of the equity of ASPPL through reinvestment of royalties and management fees and may increase above that level through additional stock purchases.
Automotive Products, headquartered in Europe, has recently acquired a business in Spain, is in the process of establishing joint ventures in the PRC and Eastern Europe and plans to expand its existing joint ventures in Japan and the United States.
Demand Flow Technology
To build on its position as a leader in each of its industries and to increase sales and operating income, American Standard began in 1990 to apply Demand Flow methods to all its businesses. Under Demand Flow, products are produced as and when required by the customer, the production process is streamlined, and quality control is integrated into each step of the manufacturing process. The benefits of Demand Flow include better customer service, quicker response to changing market needs, improved quality control, higher productivity, increased inventory turnover rates and reduced requirements for working capital and manufacturing and warehouse space.
As part of American Standard's strategy to integrate Demand Flow into all of its operations, over 75% of American Standard's approximately 38,000 employees worldwide had been trained in Demand Flow as of December 31, 1994. Demand Flow has been implemented in substantially all of American Standard's production facilities. In addition, American Standard is implementing Demand Flow methods in its acquired operations such as Perrot, a German brake manufacturer acquired in January 1994. American Standard is also applying Demand Flow to administrative functions and is re-engineering its organizational structure to manage its businesses based on processes instead of functions.
American Standard believes that its implementation of Demand Flow methods has achieved significant benefits. Product cycle time (the time from the beginning of the manufacturing of a product to its completion) has been reduced and, on average, inventory turnover rates have almost tripled. Principally as a result of the implementation of Demand Flow, American Standard has achieved an aggregate $264 million reduction in inventories from December 31, 1989 while sales have grown 34% for the same period. American Standard further believes that as a result of the introduction of Demand Flow, employee productivity has risen significantly, customer service has improved and, without reducing production capacity, the Company has been able to free more than three million square feet of manufacturing and warehouse space, allowing for expansion, plant consolidation or other uses.
Air Conditioning Products Segment
Air Conditioning Products began with the 1984 acquisition by the Company of The Trane Company, a manufacturer and distributor of air conditioning products since 1913. Air conditioning products are sold primarily under the TRANE(R) and AMERICAN-STANDARD(R) names. In 1994 Air Conditioning Products, with revenues of $2,480 million, accounted for approximately 56% of the Company's sales and 51% of its operating income. Air Conditioning Products derived approximately 16% of its sales in 1994 from operations outside the United States and over half from the replacement, renovation and repair markets, which in general are less cyclical than the new residential and commercial construction markets.
Air Conditioning Products manufactures three general types of air conditioning systems. The first, called "unitary," which is sold for residential and commercial applications, is a factory-assembled central air conditioning system which generally encloses in one or two units all the components to cool or heat, clean, dehumidify or humidify, and move air. The second, called "applied," is typically custom-engineered for commercial use and involves field installation of several different components of the air conditioning system. Trane is a world leader in both unitary and applied air conditioning products. The third type, called "mini-split," is a small unitary air conditioning system, generally for residential use, which operates without air ducts. Air Conditioning Products manufactures and distributes mini-split units principally in the Far East and Europe.
Product and marketing programs have been, and are being, developed to increase penetration in the growing replacement, repair, and servicing businesses, in which margins are higher than on sales of original equipment. Much of the equipment sold in the fast-growing air conditioning markets of the 1960's and 1970's is reaching the end of its useful life. Also, equipment sold in the 1980's is likely to be replaced earlier than originally expected with higher-efficiency products recently developed to meet required efficiency standards and to capitalize on the availability of environmentally-preferred refrigerants.
In May 1994 a subsidiary of the Company, Standard Compressors Inc., concluded the final arrangements for a partnership formed in December 1993 with Heatcraft Technologies Inc., a subsidiary of Lennox International Inc., for the manufacture of compressors for use in air conditioning and refrigeration equipment. Each partner has a 50% interest in the partnership, called Alliance Compressors, which initially will manufacture reciprocating compressors in a section of the Company's existing facility in Tyler, Texas. Construction of a new facility in Natchitoches, Louisiana, for the manufacture of a new scroll compressor being developed for use primarily in residential air conditioners is expected to begin in 1995, with startup scheduled for 1996. In connection with this arrangement, American Standard received $22.5 million, of which $8 million was for assets transferred and $14.5 million for an initial preferred distribution. American Standard will receive two additional payments of $10 million each, dependent upon achieving technological and manufacturing milestones in the development of the new scroll compressor.
Many of the products manufactured by Air Conditioning Products utilize HCFCs and in the past utilized CFCs as refrigerants. Various federal and state laws and regulations, principally the 1990 Clean Air Act Amendments, require the eventual phase-out of the production and use of these chemicals because of their possible deleterious effect on the earth's ozone layer if released into the atmosphere. Phase-in of substitute refrigerants will require replacement or modification of much of the air conditioning equipment already installed, which management believes has created a new market opportunity. In order to ensure that the Company's products will be compatible with the substitute refrigerants, Air Conditioning Products has been working closely with the manufacturers that are developing substitutes for those refrigerants being phased out. Air Conditioning Products has incurred and will continue to incur research and development costs in this effort. These costs and the substitution of alternative refrigerants are not expected to have a material adverse impact on Air Conditioning Products. See "General-Regulations and Environmental Matters."
Various federal and state statutes, including the National Appliance Energy Conservation Act of 1987, as amended, impose energy efficiency standards for certain of the Company's unitary air conditioning products. Although the Company has been able to meet or exceed such standards to date, stricter standards in the future could require substantial research and development expense and capital expenditures to maintain compliance.
At December 31, 1994 Air Conditioning Products had 28 manufacturing plants in 8 countries, employing approximately 16,000 people.
Air Conditioning Products comprises three operating groups: Unitary Products, North American Commercial, and International.
Unitary Products Group
Unitary Products, which accounted for approximately 42% of Air Conditioning Products' 1994 sales, manufactures and distributes products for commercial and residential unitary applications in the United States. This group benefits the most from the growth of the replacement market for residential and commercial air conditioning systems. Other major suppliers in the unitary market are Carrier, Intercity Products, Rheem, and Lennox.
Commercial unitary products range from 2 to 120 tons and include combinations of air conditioners, heat pumps, and gas furnaces, along with variable-air-volume equipment and integrated control systems. Typical applications are in retail stores, small-to-medium-size office buildings, manufacturing plants, restaurants, and commercial buildings located in office parks and strip malls. These products are sold through 81 commercial sales offices in 121 locations. Residential central air conditioning products range from 1 to 5 tons and include air conditioners, heat pumps, air handlers, furnaces, and coils. These products are sold through independent wholesale distributors and Company-owned sales offices in over 250 locations to dealers and contractors who sell and install the equipment.
During 1994 the Unitary Products Group successfully introduced several new products, including a new line of outdoor condensing units for the AMERICAN-STANDARD(R) brand; a new furnace line; micro-electronic controlled large rooftop units; rooftop units with special features that appeal to national accounts; and a large rooftop line (27.5 tons to 50 tons).
The Company also markets an AMERICAN-STANDARD(R) brand name product to serve distributors who typically carry other products in addition to air conditioning products.
North American Commercial Group
North American Commercial Group (formerly named Commercial Systems Group), which accounted for approximately 37% of Air Conditioning Products' 1994 sales, manufactures and distributes products in the United States for sale in the U.S. and Canada for air conditioning applications in larger commercial, industrial, and institutional buildings. Other major suppliers of commercial systems are Carrier, York, and McQuay.
North American Commercial Group distributes its products through 100 sales offices. Thirty of these offices are Company-owned and 70 are franchised. In 1993 the Company acquired the franchises in New York City; Birmingham, Alabama; and Columbia, South Carolina. In 1994 the Company acquired the Toronto, Canada, and St. Louis, Missouri offices. In 1995 the Company acquired the Albany, New York office and expects to continue to acquire major sales offices from its franchisees.
Over the last few years the North American Commercial Group has added additional aftermarket business activities, such as emergency rentals of air conditioning equipment. Also, the group has expanded its line to include components for converting installed centrifugal chiller products to use more environmentally-preferred refrigerants.
During 1993 and 1994 the Company successfully introduced a number of new products such as the high-efficiency centrifugal chiller, expanded air cooled series R chiller line, and the new fan coil line. Integrated Comfort Systems continue to grow as a percentage of total sales. Indoor air quality is emerging as a significant new application to be served by the Company's products and services.
International Group
The International Group, which accounted for approximately 21% of Air Conditioning Products' 1994 sales, manufactures applied and unitary products in foreign facilities operated by subsidiaries and joint ventures and exports many of the products manufactured in the United States by the Unitary Products and North American Commercial Groups.
Air Conditioning Products expects to continue the expansion of its presence outside the U.S. In France, in addition to its plants in Epinal and Charmes, the group opened a plant in late 1991 in Mirecourt to build mini-splits and air moving products known as fan coils utilizing Demand Flow technology. The fan coil line is tailored to the European market, and the mini-split products are being sold in Europe, the Middle East and the Far East. An operation was opened in 1992 in Colchester, U.K., to provide large air handling products to the U.K. Like the North American Commercial Group, the International Group has an extensive network of sales and service agencies, both Company-owned and franchised, to provide maintenance and warranty service for its equipment installed around the world. In 1992 a joint venture in Egypt commenced operations.
The Company has increased its presence in Asia by expanding its operations in Malaysia, purchasing an air conditioning manufacturing and distribution firm in Taiwan in 1990, and entering into a sales and manufacturing joint venture in Thailand in 1991. The Company has recently established a joint venture in Australia and is establishing joint ventures in the PRC. An important new product for the Far East markets, which went into production in 1992 in Malaysia, is a double-walled air handler designed for ease of manufacture and compatibility with the Demand Flow process.
Plumbing Products Segment
Plumbing Products manufactures and distributes bathroom and kitchen fixtures and fittings primarily under the IDEAL-STANDARD(R), AMERICAN-STANDARD(R), and STANDARD(R) names. In 1994 Plumbing Products, with revenues of $1,218 million, accounted for 27 % of the Company's sales and 31 % of its operating income. Plumbing Products derived approximately 73 % of its total 1994 sales from operations outside the United States.
Approximately 53% of Plumbing Products' sales consists of vitreous china fixtures, 26% consists of fittings (typically brass), 7% consists of bathtubs, and the remainder consists of related plumbing products. Throughout the world these products are generally sold through wholesalers and distributors and installed by plumbers and contractors. In the United States sales through the retail channel have continued to grow and accounted for approximately 24% of U.S. Plumbing Products' sales in 1994. In total the residential market accounts for approximately 75% of Plumbing Products' sales, with the commercial and industrial markets providing the remaining 25%.
Plumbing Products operates through three primary geographic groups: European Plumbing Products, the Americas Group (comprising U.S. Plumbing Products and Americas International), and the Far East Group. Plumbing Products' fittings operations are organized as the Worldwide Fittings Group, which has primary responsibility for faucet technology, product development and manufacturing, with manufacturing facilities in Europe, the U.S., and Mexico. Worldwide Fittings sales and operating results are reported in the three primary geographic groups within which it operates.
European Plumbing Products, which sells products primarily under the brand name IDEAL-STANDARD(R), manufactures and distributes bathroom and kitchen fixtures and fittings through subsidiaries or joint ventures in Germany, Italy, France, England, Greece, the Czech Republic, Bulgaria, Spain, Portugal, and Egypt. In 1991 the Company purchased 32% of Etablissements Porcher ("Porcher"), a leading French manufacturer and distributor of plumbing products with manufacturing facilities for ceramic fixtures, cast iron and acrylic bathtubs, brass fittings, and plastic components in seven locations and with company-owned distribution outlets throughout France.
U.S. Plumbing manufactures bathroom and kitchen fixtures and fittings, selling under the brand names AMERICAN-STANDARD(R) and STANDARD(R) in the United States. Americas International manufactures bathroom and kitchen fixtures and fittings, selling under the names AMERICAN-STANDARD(R), IDEAL-STANDARD(R), and STANDARD(R), through its wholly owned operations in Mexico, Canada, and Brazil and its majority-owned subsidiaries in Central America.
The Far East Group manufactures bathroom and kitchen fixtures and fittings, selling under the names AMERICAN-STANDARD(R), IDEAL-STANDARD(R), and STANDARD(R) through its wholly owned operations in South Korea, its majority-owned operations in Thailand and the Philippines, and its manufacturing joint venture in Indonesia and is developing a new joint venture in Vietnam. The Company is also significantly expanding its operations in the PRC. See - "Globalization".
The market for the Company's plumbing products is divided into the replacement and remodeling market and the new construction market. The replacement and remodeling market accounts for about 60% of the European and U.S. groups' sales but only about 40% of the sales of the Far East group, for which new construction is more important. In the United States and Europe the replacement and remodeling market has historically been more stable than the new construction market and has shown moderate growth over the past several years. In 1994 the new construction market in Europe continued a recovery which began in some countries in 1993 after declining generally for several years. In the U.S. the new construction market hit its recent low in early 1991 but had some recovery through 1994. The new construction market, in which the product selection is made by builders or contractors, is more price-competitive and volume-oriented than the replacement and remodeling market. In the replacement and remodeling market consumers make the model selection and, therefore, this market is more responsive to quality and design than price, making it the principal market for higher-margin luxury products. Although management believes it must continue to offer a full line of fixtures and fittings in order to support its distribution system, Plumbing Products' current strategy is to focus on increasing its sales of higher-margin products in the middle and upper segments of both the remodeling and new construction markets.
Plumbing Products also has continued its programs to expand its presence in high-quality showrooms and showplaces featuring its higher-end products in certain major countries. These programs, along with expanded sales training activities, have enhanced the image of the Company's products with interior designers, decorators, consumers and plumbers.
In the United States a Retail Division has been established to focus on the unique needs of the growing mass retail home center industry, using products sourced from several of the Company's manufacturing locations throughout the Americas. This market channel accounted for about 24% of U.S. Plumbings' sales in 1994, and this proportion is expected to grow.
In an effort to capture a larger share of the replacement and remodeling market, over the last few years Plumbing Products has introduced a variety of new products designed to suit customer tastes in particular countries. New offerings include additional colors and ensembles, bathroom suites from internationally known designers, and electronically controlled products. Faucet technology is centered on anti-leak, anti-scald and other features to meet emerging consumer and legislative requirements.
Water-saving fixtures and fittings have been a major focus of Plumbing Products for the past several years, particularly in light of recent water shortages experienced in a number of areas of the U.S. The Company produces one of the most extensive lines of water-saving fixtures available in the United States. Manufacture of water-saving toilets was mandated for residential use by federal law commencing in January 1994 and for commercial use in January 1997.
Many of the Company's bathtubs are made from a proprietary porcelain on metal composite, AMERICAST(R), which has gained an increasing share of the worldwide market. Products made from the composite AMERICAST(R) have the durability of cast iron with only one-half the weight and are characterized by improved resistance to breaking and chipping. AMERICAST(R) products are easier to ship, handle and install and are less expensive to produce than cast iron products. Use of this advanced composite was extended to kitchen sinks, bathroom lavatories and acrylic surfaced products during 1991 and 1992.
At December 31, 1994, Plumbing Products employed approximately 16,200 people and, including affiliated companies, had 52 manufacturing plants in 22 countries.
In the U.S. Plumbing Products has several important competitors, including Kohler Company and Masco Corporation in selected product lines. There are also important competitors in foreign markets, for the most part operating nationally. Friederich Grohe GmbH, the major manufacturer of fittings in Europe, is a pan-European competitor. In Europe Villeroy Boch and Sanitec are the major fixtures competitors, and in the Far East Toto is the major competitor.
Automotive Products Segment
Automotive Products manufactures air brake and related systems for the commercial vehicle industry in Europe and Brazil and markets under the WABCO(R) name. Automotive Products' most important products are pneumatic braking systems and related electronic control and other systems and components (including ABS) for medium-size and heavy trucks, tractors, buses, trailers and utility vehicles. In 1994 Automotive Products, with sales of $759 million, accounted for 17 % of the Company's sales and 17% of its operating income. The Company believes that Automotive Products is a worldwide technological leader in the heavy truck and bus braking industry. Electronic controls, first introduced in ABS in the early 1980's, are increasingly applied in other systems sold to the commercial vehicle industry.
The Company's Automotive products are sold directly to vehicle and component manufacturers. Spare parts are sold through both original equipment manufacturers and an independent distribution network. Although the business is not dependent on a single or related group of customers, sales of truck braking systems are dependent on the demand for heavy trucks. Some of the Company's important customers are Mercedes-Benz, Volvo, Iveco (Fiat), RVI (Renault) and Rover. Principal competitors are Knorr, Robert Bosch, and Bendix.
The European market for new trucks, buses, trailers, and replacement parts recovered strongly in 1994 after significant declines in 1992 and 1993. European legislation mandating the phase-in of ABS beginning in 1991 has had a positive impact on sales and is expected to continue to do so. The Brazilian market continued its recovery which began in 1993 after declining in 1992.
The WABCO(R) ABS system, which the Company believes leads the market, has been installed in approximately 726,000 heavy trucks, buses, and trailers worldwide since 1981. Annual sales volume in Europe has significantly increased in recent years to approximately 132,000 units in 1994 and to 44,000 units annually in other markets, primarily the United States and Japan. In addition, Automotive Products has developed electronically controlled pneumatic gear shifting systems, electronically controlled air suspension systems, and automatic climate-control and door-control systems for the commercial vehicle industry. These systems have resulted in greater sales per vehicle for Automotive Products. Significant progress was made in recent years in market acceptance of electronically controlled systems. New products under development are an advanced electronic braking system and additional electronic drive line control systems. In addition, Automotive Products has developed and implemented an electronic data interchange system, which links certain customers directly to Automotive Products' information systems, providing timely, accurate information and just-in-time delivery to the customer.
Automotive Products and affiliated companies have 14 manufacturing facilities and 7 sales organizations operating in 17 countries. Principal manufacturing operations are in Germany, France, the United Kingdom, and Brazil. Automotive Products has joint ventures in the United States with Rockwell International (Rockwell WABCO), in Japan with Sanwa Seiki (SANWAB), and in India with TVS Group (Clayton Sundaram). There is also a licensee in the PRC.
In January 1994 the Company acquired Perrot, a German brake manufacturer. Through this acquisition the Company will be able to offer complete brake systems for trucks, buses and trailers, especially in the important and growing air-disc brake business.
Since 1991 ABS for commercial vehicles has been gaining acceptance in the United States and Japan, where Automotive Products participates through its joint venture operations. Rockwell WABCO is now a supplier of WABCO systems to Freightliner, Mack, Volvo-GM, Kenworth, Peterbilt and other vehicle manufacturers in North America. SANWAB supplies Hino, Nissan and trailer manufacturers in Japan. In most European countries, ABS has become mandatory for commercial vehicles. In March 1955, the U.S. Department of Transportation, National Highway Traffic Safety Administration adopted amended federal regulations which require that new medium and heavy vehicles be equipped with antilock brake systems (ABS). These amended regulations will be phased in over a two-year period beginning in March 1997. Automotive Products believes it is a good position to take advantage of this opportunity.
At December 31, 1994, Automotive Products employed approximately 5,600 people.
Information concerning revenues and operating profit and loss attributable to each of the Company's business segments and geographic areas is set forth in the Company's 1994 Annual Report to Stockholders on pages 10 though 14 under the caption entitled "Management's Discussion and Analysis" and on page 36 under the caption entitled "Segment Data" which are incorporated herein by reference, and information concerning identifiable assets of each of the Company's business segments is set forth on page 37 of the Company's 1994 Annual Report to Stockholders under the caption entitled "Segment Data", which is incorporated herein by reference.
General
Raw Materials
The Company purchases a broad range of materials and components throughout the world in connection with its manufacturing activities. Major items include steel, copper tubing, aluminum, ferrous and nonferrous castings, clays, motors, and electronics. The ability of the Company's suppliers to meet performance and quality specifications and delivery schedules is important to its operations. The Company is working closely with its suppliers to integrate them into the Demand Flow manufacturing process by developing with them just-in-time supply delivery schedules to coordinate with the Company's customer demand and delivery schedules. The Company expects this closer working relationship to result in better control of inventory quantities and quality and lower related overhead and working capital costs. The energy and materials required for its manufacturing operations have been readily available, and the Company does not foresee any significant shortages.
Patents, Licenses and Trademarks
The Company's operations are not dependent to any significant extent upon any single or related group of patents, licenses, franchises or concessions. The Company's operations also are not dependent upon any single trademark, although some trademarks are identified with a number of the Company's products and services and are of importance in the sale and marketing of such products and services. Some of the more important of the Company's trademarks are:
Business Segment Trademark
Air Conditioning Products TRANE(R) AMERICAN-STANDARD(R) Plumbing Products AMERICAN-STANDARD(R) IDEAL-STANDARD(R) STANDARD(R) Automotive Products WABCO(R) WABCO WESTINGHOUSE(R) CLAYTON DEWANDRE PERROT
The Company from time to time has granted patent licenses to, and has licensed technology from, other parties.
Research and Product Development
The Company made expenditures of $118 million in 1994, $110 million in 1993, and $110 million in 1992 for research and product development and for product engineering. The expenditures for research and product development only were $39 million in 1994, $43 million in 1993 and $40 million in 1992 and were incurred primarily by Automotive Products and Air Conditioning Products. Automotive Products, which expended the largest amount, has conducted research and development in recent years on advanced electronic braking systems, heavy-duty disc brake systems, and additional electronic control systems for commercial vehicles. Air Conditioning Products' research and development expenditures were primarily related to alternative, environmentally-preferred refrigerants, compressors, heat transfer surfaces, air flow technology, acoustics and micro-electronic controls. Any amount spent on customer sponsored research and development activities in these periods was insignificant. Computer software product development costs capitalized amounted to $2 million in each of 1994 and 1993.
Regulations and Environmental Matters
The Company's U.S. operations are subject to federal, state and local environmental laws and regulations that impose limitations on the discharge of pollutants into the air, water and soil and establish standards for the treatment, storage and disposal of solid and hazardous wastes. A number of the Company's plants are in the process of making changes or modifications to comply with such laws and regulations as well as undertaking response actions to address soil and groundwater issues at certain of its facilities. The Company is a party to a number of remedial actions under various federal and state environmental laws and regulations that impose liability on companies to clean up, or contribute to the cost of cleaning up, sites at which hazardous wastes or materials were disposed or released, including approximately 30 proceedings under the Comprehensive Environmental Response, Compensation and Liability Act and similar state statutes in which the Company has been named a potentially responsible party or a third party by a potentially responsible party. Expenditures in 1992, 1993 and 1994 to evaluate and remediate such sites were not material. On the basis of the Company's historical experience and information currently available, the Company believes that these environmental actions will not have a material adverse effect on its financial condition, results of operations or liquidity.
Additional sites may be identified for environmental remediation in the future, including properties previously transferred by the Company and with respect to which the Company may have contractual indemnification obligations. The Company cannot estimate at this time the ultimate aggregate costs of all remedial actions because of (a) uncertainties surrounding the nature and application of environmental regulations, (b) the Company's lack of information about additional sites at which it may be listed as a potentially responsible party, (c) the level of clean-up that may be required at specific sites and choices concerning the technologies to be applied in corrective actions, (d) the number of contributors and the financial capacity of others to contribute to the cost of remediation at specific sites and (e) the time periods over which remediation may occur.
On May 31, 1994, the Company's Salem, Ohio plant received a Request for Information Pursuant to the Clean Air Act from the U.S. Environmental Protection Agency (Region 5). This request was fully complied with by July 22, 1994. During the development of the response, American Standard noted several questions concerning the status of certain air sources. On August 2, 1994, American Standard Inc. proposed to enter a consensual "Findings and Orders" with the Ohio Environmental Protection Agency to resolve these questions. The potential for and amount of any penalties is uncertain. However, the Company does not expect that these matters will result in material liabilities.
The Company's international operations are also subject to various environmental statutes and regulations. Generally, these requirements tend to be no more restrictive than those in effect in the United States. The Company believes it is in substantial compliance with such existing domestic and foreign environmental statutes and regulations.
Although there is currently no federal standard for lead discharge into drinking water, the Federal Safe Drinking Water Act imposes a limit on the lead content of plumbing fittings of 8% by weight. In addition, the U.S. Environmental Protection Agency is considering proposing a maximum federal standard of approximately 11 to 15 parts per billion of lead leachate from faucets in drinking water.
On December 15, 1992 the Company, along with 15 other major manufacturers of plumbing fittings, was sued in the Superior Court of the State of California, County of San Francisco by the State of California. The same companies were sued in a companion case, filed the same day, by the Natural Resources Defense Council and a second environmental group. In each case plaintiffs sought injunctive relief, civil penalties and compensatory damages, alleging, inter alia, that faucets sold by the parties discharged lead into drinking water in excess of minimum standards allegedly established by Proposition 65. Pursuant to Proposition 65, a discharge of lead into a source of drinking water in excess of 0.5 micrograms per day is prohibited, although the State of California has not yet established any methodology for measuring this discharge. The Company believes that the lead limitations should not apply to faucets because faucets are not a "source" of drinking water as contemplated by the legislation (e.g., reservoirs, streams, etc.). The suits also claim that warnings provided with the fittings relating to such lead discharge are inadequate. Although most of the Company's fittings contain and discharge some amount of lead, the lead content of the Company's fittings is one of the lowest in the industry, and all of the Company's fittings will fall below the proposed federal discharge standard and fall below the current federal weight standards mentioned above. The Company believes its exposure in the California suits is minimal, if any. The Company also believes that its low-lead fittings and its continuing efforts to further reduce lead content will afford the Company a competitive edge. The discharge claim in the State's case has been dismissed and has been appealed.
In September 1987 the United States became a signatory to an international agreement known as the Montreal Protocol on Substances that Deplete the Ozone Layer (the "Montreal Protocol"). The Montreal Protocol requires its signatories to reduce production and consumption of CFCs. In November 1992 the Montreal Protocol was amended in Copenhagen, Denmark, to phase out all except critical uses of CFCs by January 1, 1996, and to limit consumption of HCFCs beginning in 1996 and phase them out completely by 2030. In 1988 the EPA issued regulations implementing the Montreal Protocol in the United States. Mexico, the Federal Republic of Germany, the United Kingdom, France and other countries have also become signatories to the Montreal Protocol. The manner in which these countries implement the Montreal Protocol and regulate CFCs could differ from the approach taken in the United States.
The 1990 Clean Air Act Amendments (the "CAAA") implement the Montreal Protocol by establishing a program for limiting the production and use of CFCs and other ozone-depleting chemicals. Under the CAAA the production and consumption of "Class I substances," including CFCs, are being phased out, and most are currently scheduled to be banned completely by 1996.
The EPA has taken final action to totally phase out production of CFCs by 1996 and phase out production of the long-lived HCFCs, such as HCFC-22, for use in new equipment by 2010 and totally by 2020, while adopting the current CAAA schedule for the short-lived HCFCs, such as HCFC-123, by phasing them out for use in new equipment by 2020 and completely out of production in 2030.
The Company derived significant revenues in 1993 and prior years from sales of air conditioning products utilizing Class I substances, particularly CFC-11. However, the more recent versions of these products are designed to operate with substitute short-lived Class II substances, such as HCFC-123, which, the Company believes, under current proposals is not likely to be subject to a phase-out accelerated from the 2020/2030 schedule of the CAAA, or with refrigerants that do not affect ozone and are not regulated at all. Beginning with orders accepted after January 1, 1993, Air Conditioning Products ceased selling CFC-11 with any of its products.
The Company continues to derive substantial revenues from servicing and repairing installed equipment that use Class I substances. The emissions from servicing and repairing of equipment that use Class I substances were regulated by the EPA beginning in mid-1993, although the Company does not expect these regulations to have a material adverse effect on its financial condition or results of operations. The Company believes that these regulations will have the effect of generating additional product sales and parts and service revenues, as existing air conditioning equipment operating on CFCs is converted to operate on environmentally-preferred refrigerants or replaced, although this is likely to happen only over a number of years and the Company is unable to estimate the magnitude or timing of such additional conversion or replacements. In addition, the Company currently offers a number of products that improve the operation of existing installed equipment using alternative refrigerants.
Prior to the effectiveness of any prohibition on use of Class I or Class II substances it will be necessary for the Company and its competitors to address the need to substitute permitted refrigerants for the Class I and Class II substances used in their products. Adoption of the new refrigerants will require replacement or modification of much of the air conditioning equipment already installed. The Company has been working closely with the manufacturers of refrigerants that are developing substitutes for the CFCs and HCFCs to be phased out in order to ensure that its products will be compatible with the substitutes. Although the Company believes that its commercial products currently in production will not require substantial modification to use substitutes, residential and light commercial products produced by the Company and its competitors may require modification for substitute refrigerants. The costs of the substitution of alternative refrigerants are expected to be reflected in product pricing and accordingly are not expected to have a material adverse impact on the Company.
Employees
The Company employed approximately 38,000 people (excluding employees of unconsolidated joint venture companies) at December 31, 1994. The Company has a total of 18 labor union contracts in North America (covering approximately 8,500 employees), two of which expire in 1995 (covering approximately 940 employees) and seven of which expire in 1996 (covering approximately 4,800 employees). Both of the contracts expiring in 1995 and a contract covering approximately 200 Canadian employees which expired in the last quarter of 1994 have been successfully renegotiated. There can be no assurance that the Company will successfully negotiate the labor contracts expiring during 1996 without work stoppages. However, the Company does not anticipate any problems in renegotiating those contracts that would materially affect its results of operations.
In 1994, 230 Plumbing Products employees went on strike for 64 days at the Landsdowne (Toronto), Canada chinaware manufacturing plant. In 1991, 1,200 Air Conditioning Products employees went on strike for 54 days at the LaCrosse, Wisconsin facility and, in 1989, 1,300 Air Conditioning Products workers went on strike for 40 days at the Clarksville, Tennessee facility. Other than these strikes, the Company has not experienced any other significant work stoppages since 1985. The Company also has a total of 40 labor contracts outside North America (covering approximately 18,000 employees), where the Company has not experienced any significant work stoppage in the last five years.
Although the Company believes relations with its employees are generally satisfactory, there can be no assurance that the Company will not experience significant work stoppages in the future or that its relations with employees will continue to be satisfactory.
Customers
The business of the Company taken as a whole is not dependent upon any single customer or a few customers.
International Operations
The Company conducts significant non-U.S. operations through subsidiaries in most of the major countries of Western Europe, Canada, Brazil, Mexico, Central American countries, Malaysia, the Philippines, South Korea, Thailand, Taiwan, Australia and Egypt. In addition, the Company conducts business in these and other countries through affiliated companies and partnerships in which the Company owns 50% or less of the stock or partnership interest.
Because the Company has manufacturing operations in 32 countries, fluctuations in currency exchange rates may have a significant impact on its financial statements. Such fluctuations have much less effect on local operating results, however, because the Company for the most part sells its products within the countries in which they are manufactured. The allocation of purchase costs which resulted from the Acquisition increased the asset exposure of foreign operations from an accounting perspective; however, since the Acquisition in 1988, the effects of exchange volatility have been ameliorated by the denomination in foreign currencies of a portion of the Company's borrowings.
ITEM 2.
ITEM 2. PROPERTIES
At December 31, 1994 the Company conducted its manufacturing activities through 94 plants in 32 countries, of which the principal facilities are as follows:
Business Segment Location Major Products Manufactured at Location
Air Conditioning Clarksville, TN Commercial unitary air conditioning Products Fort Smith, AK Commercial unitary air conditioning La Crosse, WI Applied air conditioning systems Lexington, KY Air handling products Macon, GA Commercial air conditioning systems Pueblo, CO Applied air conditioning systems Rushville, IN Air handling products Trenton, NJ Residential gas furnaces and air handlers Tyler, TX Residential air conditioning Waco, TX Water source heat pumps and air handling products Charmes, France Applied air conditioning systems Epinal, France Applied air conditioning systems Mirecourt, France Mini-splits and air handling products Plumbing Products Salem, OH Enameled-steel fixtures and acrylic bathtubs Tiffin, OH Vitreous china Trenton, NJ Vitreous china Toronto, Canada Vitreous china and enameled-steel fixtures Hull, England Vitreous china and acrylic bathtubs Middlewich, England Vitreous china Dole, France Vitreous china and acrylic bathtubs Neuss, Germany Vitreous china Wittlich, Germany Brass plumbing fittings Orcenico, Italy Vitreous china Brescia, Italy Vitreous china Mexico City, Mexico Vitreous china, water heaters Monterrey, Mexico Brass plumbing fittings Bangkok, Thailand Vitreous china Seoul, South Korea Brass plumbing fittings Manila, Philippines Vitreous china
Automotive Campinas, Brazil Braking equipment Products Leeds, England Braking equipment Claye-Souilly, France Braking equipment Hanover, Germany Braking equipment Mannheim, Germany Foundation brakes
Except for the properties located in Mirecourt, France and Manila, Philippines, all of the plants described above are owned by the Company or a subsidiary. The properties listed above located in the United States, Canada, and the U.K. are subject to mortgages securing the Company's obligations under its bank credit agreement which was amended and restated effective February 9, 1995 (the "1995 Credit Agreement"). The Company is obligated to mortgage the properties listed above located in France (other than the property located in Mirecourt) to secure certain obligations under the 1995 Credit Agreement and related documents. In addition, to the extent required by the respective indentures pursuant to which certain debt securities of American Standard Inc. were issued, the obligations
of American Standard Inc. under such debt instruments are secured by mortgages on principal U.S. properties equally and ratably with indebtedness under the 1995 Credit Agreement. Through joint ventures, the Company participates in the operation (or is in the process of constructing) up to seven plants in the PRC, and operates one plant in each of Indonesia and India. The Company considers that its properties are generally in good condition, are well maintained, and are generally suitable and adequate to carry on the Company's business.
In 1994 several Air Conditioning Products' plants operated near capacity and others operated moderately below capacity.
In 1994 Plumbing Products' plants outside the United States operated at levels of utilization which varied from country to country but overall were satisfactory. Potteries (plants which produce vitreous china goods) located in the United States also operated at levels which management believes to be satisfactory.
Automotive Products' plants generally operated moderately below capacity in 1994.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
American Standard Inc. is the defendant in a lawsuit brought by Entech Sales & Service, Inc., on behalf of an alleged class of contractors engaged in the service and repair of commercial air conditioning equipment. The suit, which was filed on March 5, 1993, in the United States District Court for the Northern District of Texas, alleges principally that the manner in which Air Conditioning Products distributes repair service parts for its equipment violates the Federal antitrust laws. It demands $680 million in damages (which would be subject to trebling under the antitrust laws) and injunctive relief. American Standard Inc. has filed an answer denying all claims of violation and is defending itself vigorously. The district court recently denied class certification with respect to two of the three violations alleged in the suit. These alleged violations may now only be asserted by Entech on its own behalf. With respect to the one claim which was certified as a class action, alleging a price fixing conspiracy, management believes that, on the basis of the facts now known to it, the claim is without merit. In management's opinion the litigation will not have any material adverse effect on the financial position, cash flows, or results of operations of the Company.
For a discussion of German tax issues see Note 7 of Notes to Consolidated Financial Statements incorporated by reference herein (see Item 14(a) of Part IV hereof). For a discussion of environmental issues see "Item 1. Business - General- Regulations and Environmental Matters."
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
By the written consent dated as of November 2, 1994 of the holder of 45,000,000 shares (adjusted for the 2.5 to 1 stock split effected in December 1994) of the common stock of the Company, constituting a majority of the common stock outstanding (the "Majority Stockholder"), an amendment to the Company's Certificate of Incorporation was adopted (i) effecting a change in the Company's name to "American Standard Companies Inc." and (ii) providing for indemnification of directors and officers of the Company and certain other parties, and allowing for indemnification of employees and agents of the Company and certain other parties to the fullest extent now or hereafter permitted by the General Corporation Law of the State of Delaware.
By the written consent of the Majority Stockholder dated as of December 1, 1994, an amendment to the Company's Certificate of Incorporation was adopted increasing the authorized number of shares of the Company's common stock from 28,000,000 to 200,000,000 and providing for the issuance of up to 2,000,000 shares of preferred stock, having such terms as the Board of Directors may determine, and providing for other matters relating to such common stock and preferred stock.
By the written consent of the Majority Stockholder dated as of December 28, 1994, the following individuals were elected as directors of the Company, each to serve in office until the next annual meeting of the stockholders of the Company or until such individual's respective successor shall have been elected and shall qualify, or until such individual's earlier death, resignation or removal as provided in the By-Laws of the Company:
Steven E. Anderson Roger W. Parsons Horst Hinrichs J. Danforth Quayle Emmanuel A. Kampouris David M. Roderick George H. Kerckhove John Rutledge Shigeru Mizushima Joseph S. Schuchert Frank T. Nickell
Each officer of the Company is elected by the Board of Directors to hold office until the first Board meeting after the Annual Meeting of Stockholders next succeeding his election.
None of the Company's officers has any family relationship with any director or other officer. "Family relationship" for this purpose means any relationship by blood, marriage or adoption, not more remote than first cousin.
Set forth below is the principal occupation of each of the executive officers named above during the past five years (except as noted, all positions are with the Company and American Standard Inc.).
Mr. Kampouris was elected Chairman in December 1993 and President and Chief Executive Officer in February 1989. He is also a director of Daido Hoxan Inc. Mr. Kampouris has served as a director of the Company since July 1988.
Mr. Hinrichs was elected Senior Vice President, Automotive Products, in December 1990. Prior thereto he served as Vice President and Group Executive, Automotive Products, from 1987 to 1990. Mr. Hinrichs has served as a director of the Company since March 1991.
Mr. Kerckhove was elected Senior Vice President, Plumbing Products, in June 1990. Prior thereto he was Vice President and Group Executive of European Plumbing Products from 1988 until June 1990. Mr. Kerckhove has served as a director of the Company since September 1990.
Mr. Allardyce was elected Vice President and Chief Financial Officer in January 1992. Prior thereto he served as Vice President and Controller from February 1983 until December 1991.
Mr. Apostolopoulos was elected Vice President and Group Executive, Americas International Plumbing Products, in December 1990. Prior thereto he served as the executive in charge of Plumbing Products' joint ventures from September 1989 to November 1990.
Mr. Battaglia was elected Vice President and Treasurer in September 1991. Prior thereto he was Assistant Treasurer from June 1977.
Mr. Brogoch was elected Vice President and Group Executive, Plumbing Products in the PRC, in December 1994. Prior thereto he served as Vice President of Plumbing Products' operations in the PRC from August 1993 until December 1994. Previously he served as Vice President of Finance and Planning, European Plumbing Products from August 1991 until August 1993 and as Managing Director of the Company's Indonesian joint venture from November 1986 to August 1991.
Mr. Canizares was elected Vice President, Air Conditioning Products' Asia Pacific Zone, in December 1990. Prior thereto he served as the executive in charge of this zone and Manager of Planning and Distribution from November 1986 to November 1990.
Mr. Delker was elected Vice President and Group Executive, Worldwide Fittings, Plumbing Products, in April 1990. Prior thereto he served as executive in charge of the Company's brass fittings manufacturing operations from June 1982 until March 1990.
Mr. Deshotel was elected Vice President, Human Resources, in January 1992. Prior thereto he served as Group Vice President, Human Resources, for U.S. Plumbing Products from January 1980 until December 1991.
Mr. Gallimore was elected Vice President, Systems and Technology, in December 1990. Prior thereto he served as the executive in charge of Manufacturing and Technology from 1984 to November 1990.
Mr. Gandini was elected Vice President and Group Executive, European Plumbing Products, in July 1990. Prior thereto he served as General Manager of Ideal Standard S.p.A., the Italian subsidiary of the Company, from January 1978 until June 1990.
Mr. Hilger was elected Vice President and Group Executive, Air Conditioning Products, in Europe, Middle East and Africa, in June 1988.
Mr. Huwendiek was elected Vice President, Automotive Products in Germany, in January 1992. Prior thereto he served as Managing Director of WABCO Germany since June 1987.
Mr. Jaqua was elected Vice President, Special Counsel and Assistant Secretary in March 1995. Prior to that he was Vice President, General Counsel and Secretary since April 1989.
Mr. Kalaher was elected Vice President, General Counsel and Secretary in March 1995, having served as Acting General Counsel and Acting Secretary since June 1994. Prior thereto, he was Vice President and General Counsel of AMAX Inc. from 1991 to 1994 and Vice President and Associate General Counsel from 1985 to 1991.
Mr. Kissel was elected Vice President in charge of Air Conditioning Products' Unitary Products Group in January 1992, becoming Group Executive in March 1994. He served as Vice President, Sales and Distribution, for Air Conditioning Products, from December 1990 until January 1992 and served as divisional Senior Vice President in charge of U.S. Sales from January to November 1990.
Mr. Klug was elected Vice President in 1985 and has been Group Executive in charge of Air Conditioning Products' Trane International since December 1993. He served as Group Executive, Unitary Products Group, from April 1990 until December 1993. He was Group Executive, North American Sales and Distribution, Air Conditioning Products, from October 1987 to March 1990.
Mr. Montauze was elected Vice President, Automotive Products in France, in October 1994. He served as Vice President of Finance and Controller of Automotive Products at the Brussels headquarters from September 1989 until September 1994.
Mr. Nutter was elected Vice President, Automotive Products in the United Kingdom, in January 1992. Prior thereto he served as Vice President and General Manager of WABCO Automotive U.K. Limited, the United Kingdom automotive subsidiary of the Company from March 1991 until December 1991 and Group Managing Director of the United Kingdom automotive subsidiary from June 1987 until February 1991.
Mr. Pipes was elected Vice President and Group Executive for the Far East Region of Plumbing Products in May 1992. Prior thereto he served as Managing Director of American Standard Inc.'s Philippine subsidiary from May 1990 until April 1992 and was Vice President, Control & Finance, of U.S. Plumbing Products Group from March 1985 until April 1990.
Mr. Schiller was elected Vice President, Compressor Business (Air Conditioning Products) in March 1994. Prior thereto he served as General Manager, Compressor Business Group, from May 1993 to February 1994 and Manager and then General Manager of the Company's Tyler, Texas, facility from March 1986 to April 1993.
Mr. Schultz was elected Vice President and Group Executive, North American Commercial Group of Air Conditioning Products, in 1987.
Mr. Simon was elected Vice President and Controller in January 1992. Prior thereto he served as Vice President and Controller of the Air Conditioning Products' North American Commercial Group from December 1984 to December 1991.
Mr. Wade W. Smith was elected Vice President, U.S. Plumbing Products, in May 1992. Prior thereto he served as Vice President in charge of the Chinaware Business Unit of U.S. Plumbing Products from February 1992 until April 1992 and from April 1987 to February 1992 he was Vice President and General Manager of the Building Automation Systems Division of the North American Commercial Group of Air Conditioning Products.
Mr. Stein was elected Vice President, General Auditor, in March 1994; from December 1986 to February 1994 he was the Company's General Auditor.
Mr. Wellbrock was elected Vice President, Taxes, effective January 1, 1994. Prior thereto he served as Director of Taxes from 1988 through 1993.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The common stock of the Company is listed on the New York Stock Exchange, Inc. (the "Exchange"). The common stock was first traded on the Exchange on February 3, 1995 concurrently with an underwritten initial public offering of shares of the Company's common stock with an initial price to the public of $20.00 per share (the "Offering"). Prior to that time there was no established public trading market for these shares. All share data herein reflect the 2.5 to 1 stock split effected in December 1994.
An Amended and Restated Stockholders Agreement among the Company, Kelso and management investors was adopted in December 1994. In January 1995 the Company adopted a Restated Certificate of Incorporation, Amended Bylaws and a Stockholder Rights Agreement. The Restated Certificate of Incorporation authorizes the Company to issue up to 200,000,000 shares of common stock, par value $.01 per share and 2,000,000 shares of preferred stock, par value $.01 per share of which the Board of Directors designated 900,000 shares as a new series of Junior Participating Cumulative Preferred Stock. Each outstanding share of common stock has associated with it one right to purchase a specified amount of Junior Participating Cumulative Preferred Stock at a stipulated price in certain circumstances relating to changes in ownership of the common stock of the Company.
The number of holders of record of the common stock of the Company as of March 10, 1995, was 474.
There were no dividends declared on the Company's common stock in 1993 or 1994. The Company has no separate operations and its ability to pay dividends or repurchase its common stock will be totally dependent upon the extent to which it receives dividends or other funds from American Standard Inc. The terms of the Company's 1995 Credit Agreement and certain publicly-traded debt securities of American Standard Inc. prohibit or restrict the payment of dividends and other extensions of funds by American Standard Inc. to the Company.
Footnotes to Selected Financial Data:
(a) The retirements of debt in connection with a 1993 refinancing and a 1994 October borrowing resulted in extraordinary charges of $92 million in 1993 and $9 million in 1994 (including call premiums, the write-off of deferred debt issuance costs, and in 1993 the loss on cancellation of foreign currency swap contracts) on which there were no tax benefits (see Notes 7 and 10 of Notes to Consolidated Financial Statements included in the Company's 1994 Annual Report to Stockholders and incorporated herein by reference).
(b) Represents the cumulative effect of the accounting changes related to postretirement benefits other than pensions and warranty contract revenues at January 1, 1991. The cumulative effect of these accounting changes increased the postretirement benefit and warranty accruals at January 1, 1991 by $52 million and increased the net loss in the year by a total of $32 million (net of the tax effect).
(c) In June 1993 the exchangeable preferred stock was exchanged for 12 3/4% Junior Subordinated Debentures which were redeemed on November 21, 1994.
(d) Per share data and average number of outstanding common shares and equivalents data reflect the 2.5 to 1 stock split effected in December 1994.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Management's discussion and analysis of the financial condition and results of operations of the Company is set forth on pages 10 through 17 of the Company's 1994 Annual Report to Stockholders and is incorporated herein by reference.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated herein by reference from the Company's 1994 Annual Report to Stockholders are the financial statements and related information listed under the heading "1. Financial Statements" in the Index to Financial Statements and Financial Statement Schedules on page 28 hereof.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the directors of the Company is set forth in the Company's definitive Proxy Statement dated March 27, 1995: in the first and fourth paragraphs under the section entitled "1. Election of Directors" on page 4 thereof and under the section entitled "Directors" on pages 5 and 6 thereof; and is incorporated herein by reference.
For information concerning the executive officers of the Company, see "Executive Officers of the Registrant" under Part I of this report.
None of the Company's directors or officers has any family relationship with any other director or officer. ("Family relationship" for this purpose means any relationship by blood, marriage or adoption, not more remote than first cousin.)
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning executive compensation and related matters is set forth in the Company's definitive Proxy Statement dated March 27, 1995 as follows: under the section entitled "Directors' Fees and Other Arrangements" on page 7 thereof, under the section entitled "Executive Compensation" on pages 9 through 13 thereof, under the section entitled "Compensation Committee Interlocks and Insider Participation" on page 15 and in the second through seventh paragraphs of the section entitled "Certain Relationships and Related Party Transactions" on pages 15 through 17 thereof, and is incorporated herein by reference except for the section entitled "Management Development and Nominating Committee Report on Compensation of Executive Officers of the Company" appearing on pages 13 through 15.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning shares of common stock of the Company beneficially owned by management and others is set forth under the section entitled "Stock Ownership" on pages 3 and 4 in the Company's definitive Proxy Statement dated March 27, 1995 and is incorporated herein by reference.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is set forth in the Company's definitive Proxy Statement dated March 27, 1995 under the section entitled "Certain Relationships and Related Party Transactions" on pages 15 through 17 thereof and is incorporated herein by reference.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1 and 2. Financial statements and financial statement schedules
The financial statements and financial statement schedules are listed in the accompanying index to financial statements on page 27 of this annual report on Form 10-K. The financial statements indicated on the index appearing on page 27 hereof are incorporated herein by reference.
3. Exhibits
The exhibits are listed on the accompanying index to exhibits and are incorporated herein by reference or are filed as part of this annual report on Form 10-K.
(b) Reports on Form 8-K for the quarter ended December 31, 1994.
During the fourth quarter ended December 31, 1994, the Registrant filed a Current Report on Form 8-K dated November 10, 1994 reporting an Amendment to its Certificate of Incorporation to (a) change the name of the Registrant from ASI Holding Corporation to American Standard Companies Inc. and (b) add indemnification provisions to the Registrant's Certificate of Incorporation.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. AMERICAN STANDARD COMPANIES INC. By: /s/ EMMANUEL A. KAMPOURIS (Emmanuel A. Kampouris) Chairman, President and Chief Executive Officer March 31 , 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 31, 1995:
/s/ Emmanuel A. Kampouris (Emmanuel A. Kampouris) Chairman, President and Chief Executive (Principal Officer; Director Executive Officer)
/s/ FRED A. ALLARDYCE (Fred A. Allardyce) Vice President and Chief Financial Officer (Principal Financial Officer)
/s/ G. RONALD SIMON (G. Ronald Simon) Vice President and Controller (Principal Accounting Officer)
/s/ STEVEN E. ANDERSON (Steven E. Anderson) Director
/s/ HORST HINRICHS (Horst Hinrichs) Director
/s/ GEORGE H. KERCKHOVE George H. Kerckhove) Director
/s/ SHIGERU MIZUSHIMA (Shigeru Mizushima) Director
/s/ FRANK T. NICKELL (Frank T. Nickell) Director
/s/ ROGER W. PARSONS (Roger W. Parsons) Director
/s/ J. DANFORTH QUAYLE (J. Danforth Quayle) Director
/s/ DAVID M. RODERICK (David M. Roderick) Director
/s/ JOHN RUTLEDGE (John Rutledge) Director
/s/ JOSEPH S. SCHUCHERT (Joseph S. Schuchert) Director
AND FINANCIAL STATEMENT SCHEDULES COVERED BY REPORT OF CERTIFIED PUBLIC ACCOUNTANTS
Annual Report to Stockholders (Pages)
1. Financial Statements (incorporated by reference from the Company's 1994 Annual Report 1994 Annual Report to Stockholders
Consolidated Balance Sheet at December 31, 1994, and 1993 22 Years ended December 31, 1994, 1993, and 1992: Consolidated Statement of Operations 21 Consolidated Statement of Cash Flows 23 Consolidated Statement of Stockholders'Deficit 24 Notes to Financial Statements 25-35 Segment Data 36-37 Quarterly Data (Unaudited) 38 Report of Independent Auditors 20
Form 10-K (Pages)
2. Financial statement schedules,years ended December 31, 1994, 1993, and 1992
III Condensed Financial Information of Registrant 29-32 VIII Valuation and Qualifying Accounts 34
All other schedules have been omitted because the information is not applicable or is not material or because the information required is included in the financial statements or the notes thereto.
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K) of American Standard Companies Inc. of our report dated February 16, 1995 included in the 1994 Annual Report to Stockholders of American Standard Companies Inc.
Our audits also included the financial statement schedules of American Standard Companies Inc. listed in Item 14(a). These schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
Ernst & Young LLP
New York, New York March 29, 1995
SCHEDULE III -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT STATEMENTS OF OPERATIONS (Parent Company Separately) (Dollars in thousands) Year Ended December 31 1994 1993 1992
---- ---- ---- Interest income $ 219 $ 188 $ 273 Interest expense 219 188 273 Equity in net loss of subsidiary (86,421) (208,567) (57,238) --------- --------- --------- Net loss $(86,421) $(208,567) $(57,238) ========= ========== =========
See notes to financial statements
SCHEDULE III -- CONDENSED FINANCIAL INFORMATION ON REGISTRANT -- (Continued)
NOTES TO FINANCIAL STATEMENTS (Parent Company Separately)
(A) The notes to the consolidated financial statements of American Standard Companies Inc., formerly ASI Holding Corporation (the "Parent Company"), are an integral part of these condensed financial statements.
(B) The Parent Company was organized by Kelso & Company, L.P., a private merchant banking firm, to participate in the acquisition of American Standard Inc. (the "Acquisition") in 1988. American Standard Inc.'s common stock is owned solely by the Parent Company. The Parent Company has no other investments or operations.
(C) The Parent Company has sold its common stock to management employees in connection with the Acquisition and issued common stock under various employee benefit and incentive plans including the ESOP. As no public market existed for the stock prior to the initial public offering in the first quarter of 1995 (see Note D), the Parent Company, to provide liquidity to employees who have terminated employment, has made purchases of such employees' stock. Subsequent to December 2, 1994 the Parent Company is no longer obligated to make such purchases. Purchases through December 31, 1994, were based upon fair market value appraisals obtained in connection with the ESOP. The amount paid on such stock purchases is subject to an annual limitation contained in American Standard Inc.'s lending arrangements and debt instruments (the "Annual Limitation"). As the amount owed to terminated employees has exceeded the Annual Limitation, a liability for the unpaid balance has been recorded on the financial statements of the Parent Company with a concomitant reduction in common stock and capital surplus accounts.
(D) In the first quarter of 1995 the Parent Company sold 15,112,300 shares of its common stock in an initial public offering at an initial price to the public of $20 per share. This offering yielded net proceeds of approximately $282 million (including proceeds from the exercised portion of the underwriters' over-allotment option and after deducting underwriting discounts and expenses), which were transferred to American Standard Inc. and used to reduce its indebtedness . Of the total net proceeds transferred, $270 million was contributed to the capital of American Standard Inc. and $12 million was advanced under an intercompany demand note.
MERICAN STANDARD COMPANIES INC.
INDEX TO EXHIBITS
(Item 14(a)3 - Exhibits Required by Item 601 of Regulation S-K and Additional Exhibits)
(The Commission File Number of American Standard Companies Inc. (formerly named ASI Holding Corporation), the Registrant (sometimes hereinafter referred to as "Holding"), and for all Exhibits incorporated by reference, is 1-11415, except those Exhibits incorporated by reference in filings made by American Standard Inc. (the "Company") whose Commission File Number is 1-470. Prior to filing its Registration Statement on Form S-2 on November 10, 1994, Holding's Commission File Number was 33-23070.)
(3) (i) Restated Certificate of Incorporation of Holding; previously filed as Exhibit 3(i) in Amendment No. 4 to Registration Statement No. 33-56409 under the Securities Act of 1933, as amended, filed January 31, 1995, and herein incorporated by reference.
(ii) Amended By-Laws of Holding; previously filed as Exhibit 3(ii) in Amendment No. 4 to Registration Statement No. 33-56409 under the Securities Act of 1933, as amended, filed January 31, 1995, and herein incorporated by reference.
(4) (i) Form of Common Stock Certificate previously filed as Exhibit 4(i) in Amendment No. 3 to Registration Statement No. 33-56409 under the Securities Act of 1933, as amended, filed January 5, 1995, and herein incorporated by reference.
(ii) Indenture, dated as of November 1, 1986, between the Company and Manufacturers Hanover Trust Company, Trustee, including the form of 9-1/4% Sinking Fund Debenture Due 2016 issued pursuant thereto on December 9, 1986, in the aggregate principal amount of $150,000,000; previously filed as Exhibit 4 (iii) in the Company's Form 10-K for the fiscal year ended December 31, 1986, and herein incorporated by reference.
(iii) Instrument of Resignation, Appointment and Acceptance, dated as of April 25, 1988 among the Company, Manufacturers Hanover Trust Company (the "Resigning Trustee") and Wilmington Trust Company
(the "Successor Trustee"), relating to resignation of the Resigning Trustee and appointment of the Successor Trustee, under the Indenture referred to in Exhibit (4) (ii) above; previously filed as Exhibit (4) (ii) in Registration Statement No. 33-64450 of the Company under the Securities Act of 1933, as amended, and herein incorporated by reference.
(iv) Indenture, dated as of May 15, 1992, between the Company and First Trust National Association, Trustee, relating to the Company's 10-7/8% Senior Notes due 1999, in the aggregate principal amount of $150,000,000; copy of Indenture previously filed as Exhibit (4) (i) by the Company in its Form 10-Q for the quarter ended June 30, 1992, and herein incorporated by reference.
(v) Form of 10-7/8% Senior Notes due 1999 included as Exhibit A to the Indenture described in (4) (iv) above.
(vi) Indenture dated as of May 15, 1992, between the Company and First Trust National Association, Trustee, relating to the Company's 11-3/8% Senior Debentures due 2004, in the aggregate principal amount of $250,000,000; copy of Indenture previously filed as Exhibit (4) (iii) by the Company in its Form 10-Q for the quarter ended June 30, 1992, and herein incorporated by reference.
(vii) Form of 11-3/8% Senior Debentures due 2004 included as Exhibit A to the Indenture described in (4) (vi) above.
(viii) Form of Indenture, dated as of June 1, 1993, between the Company and United States Trust Company of New York, as Trustee, relating to the Company's 9-7/8% Senior Subordinated Notes Due 2001; previously filed as Exhibit (4) (xxxi) in Amendment No. 1 to Registration Statement No. 33-61130 of the Company under the Securities Act of 1933, as amended, and herein incorporated by reference.
(ix) Form of Note evidencing the 9-7/8% Senior Subordinated Notes Due 2001 included as Exhibit A to the Form of Indenture referred to in (4) (viii) above.
(x) Form of Indenture, dated as of June 1, 1993, between the Company and
United States Trust Company of New York, as Trustee, relating to the Company's 10-1/2% Senior Subordinated Discount Debentures Due 2005; previously filed as Exhibit (4) (xxxiii) in Amendment No. 1 to Registration statement No. 33-61130 of the Company under the Securities Act of 1933, as amended, and herein incorporated by reference.
(xi) Form of Debenture evidencing the 10-1/2% Senior Subordinated Discount Debentures Due 2005 included as Exhibit A to the Form of Indenture referred to in (4) (x) above.
(xii) Assignment and Amendment Agreement, dated as of June 1, 1993, among the Company, Holding, certain subsidiaries of the Company, Bankers Trust Company, as agent under the 1988 Credit Agreement, the financial institutions named as Lenders in the 1988 Credit Agreement and certain additional Lenders and Chemical Bank, as Administrative Agent and Arranger; previously filed as Exhibit (4)(xiii) in Amendment No. 1 to Registration Statement No. 33-64450 of the Company under the Securities Act of 1933, as amended, and herein incorporated by reference.
(xiii) Credit Agreement, dated as of June 1, 1993, among the Company, Holding, certain subsidiaries of the Company and the lending institutions listed therein, Chemical Bank, as Administrative Agent and Arranger; Bankers Trust Company, The Bank of Nova Scotia, The Chase Manhattan Bank, N.A., Deutsche Bank AG, The Long-Term Credit Bank of Japan, Ltd., New York Branch, and NationsBank of North Carolina, N.A., as Managing Agents, and Banque Paribas, Citibank, N.A., and Compagnie Financiere de CIC et de l'Union Europeenne, New York Branch, as Co-Agents; previously filed as Exhibit (4) (xiv) in Amendment No. I to Registration Statement No. 33-64450 of the Company under the Securities Act of 1933, as amended, and herein incorporated by reference.
(xiv) First Amendment, Consent and Waiver, dated as of February 10, 1994, to the Credit Agreement referred to in (4) (xiii) above; previously filed as Exhibit (4) (xvii) by the Company in its Form 10-K for the fiscal year ended December 31, 1993, and herein incorporated by reference.
(xv) Second Amendment, dated as of October 21, 1994, to the Credit Agreement referred to in paragraph (4) (xiii) above; previously filed as Exhibit (4) (xviii) in Registration Statement No. 33-56409 under the Securities Act of 1933, as amended, filed November 10, 1994, and herein incorporated by reference.
(xvi) Assignment and Amendment Agreement dated as of February 9, 1995, among Holding, the Company, certain subsidiaries of the Company, and the financial institutions listed in Schedule I thereto (the Original Lenders); the financial institutions listed in Schedule II thereto (the Continuing Lenders), including Chemical Bank as Administrative Agent for the Original Lenders and Continuing Lenders and as Collateral Agent for the Original Lenders and Continuing Lenders.
(xvii) Amended and Restated Credit Agreement, dated as of February 9, 1995, among Holding, the Company, certain subsidiaries of the Company and the lending institutions listed therein, Chemical Bank, as Administrative Agent; Citibank, N.A. and NationsBank, N.A. (Carolinas), as Senior Managing Agents; Bank of America Illinois, The Bank of Nova Scotia, Bankers Trust Company, The Chase Manhattan Bank, N.A., Compagnie Financiere de CIC et de L' Union Europeenne, Credit Suisse, Deutsche Bank AG, The Industrial Bank of Japan Trust Company, The Long Term Credit Bank of Japan, Limited and The Sumitomo Bank, Ltd., as Managing Agents; and The Bank of New York, Canadian Imperial Bank of Commerce, The Fuji Bank, Limited and The Sanwa Bank Limited, as Co-Agents, with exhibits but without schedules. (This Amended and Restated Credit Agreement replaces the Credit Agreement dated as of June 1, 1993 (the " 1993 Credit Agreement") referred to in Exhibit (4) (xiii) above, but the Security Documents and the Guarantee Documents entered into pursuant to the 1993 Credit Agreement continue in force and effect as amended by the Credit Documents Amendment Agreement dated as of February 9, 1995 described in Exhibit (4) (xviii) below.
(xviii) Credit Documents Amendment Agreement dated as of February 9, 1995, among Holding, the Company, certain domestic and foreign subsidiaries of the Company, and Chemical Bank, as Administrative Agent and as Collateral Agent for the Lenders under the Amended and Restated Credit Agreement dated as of February 9, 1995, described in Exhibit (4) (xvii) above.
(xix) Stockholders Agreement, dated as of July 7, 1988, as amended as of August 1, 1988, among Holding, Kelso ASI Partners, L.P., and the Management Stockholders named therein; previously filed as Exhibit 4.19 in Amendment No. 2 to the Registration Statement No. 33-23070 of Holding under the Securities Act of 1933, as amended, and herein incorporated by reference.
(xx) Amendment to Section 2.1 of the Stockholders Agreement referred to in paragraph (4) (xix) above, effective as of January 1, 1991; previously filed as Exhibit (4) (xxvii) by Holding in its Form 10-K for the fiscal year ended December 31, 1992, and herein incorporated by reference.
(xxi) Supplement and Amendment dated as of September 4, 1991 to the Stockholders Agreement dated as of July 7, 1988, as amended, referred to in paragraph (4) (xix) above; previously filed as Exhibit (4) (ii) in Holding's Form 10-Q for the quarter ended September 30, 1991, and herein incorporated by reference.
(xxii) Amended Paragraph 6. 1 of the Stockholders Agreement referred to in paragraph (4) (xix) above, effective as of September 2, 1993; previously filed as Exhibit (4) (xxi) in Holding's Form 10-K for the fiscal year ended December 31, 1993, and herein incorporated by reference.
(xxiii) Revised Schedule of Priorities, effective as of November 21, 1994, as adopted by the Board of Directors of Holding pursuant to the Stockholders Agreement dated as of July 7, 1988, as amended, referred to in paragraph (4) (xix) above.
(xxiv) Amended and Restated Stockholders Agreement, dated as of December 2, 1994, among Holding, Kelso ASI Partners, L.P. and the Management Stockholders named therein; previously filed as Exhibit 4 (xxi) in Amendment No. 1 to Registration Statement No. 33-56409 under the Securities Act of 1933, as amended, filed December 20, 1994, and herein incorporated by reference.
(xxv) Form of Rights Agreement, dated as of January 5, 1995 between Holding and Citibank, N.A. as Rights Agent.
(10)1 (i) American Standard Inc. Long-Term Incentive Compensation Plan, as amended and restated as of February 3, 1995; copy of plan is being filed as Exhibit (10) (i) by the Company in its Form 10-K for the fiscal year ended December 31, 1994, concurrently with the filing of Holding's Form 10-K for the same year, and herein incorporated by reference.
(ii) Trust Agreement for American Standard Inc. Long-Term Incentive Compensation Plan and Supplemental Incentive Plan, as amended and restated as of February 3, 1995; copy of Trust Agreement is being filed as Exhibit (10) (ii) by the Company in its Form 10-K for the fiscal year ended December 31, 1994, concurrently with the filing of Holding's Form 10-K for the same year, and herein incorporated by reference.
(iii) American Standard Inc. Annual Incentive Plan; previously filed as Exhibit (10) (vii) by the Company in its Form 10-K for the fiscal year ended December 31, 1988, and herein incorporated by reference.
(iv) American Standard Inc. Management Partners' Bonus Plan effective as of July 7, 1988; previously filed as Exhibit (10) (i) in the Company's Form 10-Q for the quarter ended September 30, 1988, and herein incorporated by reference; amendments to Plan adopted on June 7, 1990, previously filed as Exhibit (4) (ii) in the Company's Form 10-Q for the quarter ended June 30, 1990, and herein incorporated by reference.
(v) American Standard Inc. Executive Supplemental Retirement Benefit Program, as restated to include all amendments through December 31, 1993; previously filed as Exhibit (10) (vii) by the Company in its Form 10-K for the fiscal year ended December 31, 1993, and herein incorporated by reference.
(vi) American-Standard Employee Stock Ownership Plan, as amended and restated as of January 1, 1994; copy of Amendment is being filed as Exhibit (10) (vi) by the Company in its Form 10-K for the fiscal year ended December 31, 1994, concurrently with the filing of Holding's Form 10-K for the same year, and herein incorporated by reference.
(vii) Amendment No. 1 to American Standard Employee Stock Ownership Plan described in Exhibit (10) (vi) above, authorized December 1, 1994; copy of Amendment is being filed as Exhibit (10) (vii) by the Company in its Form 10-K for the fiscal year ended December 31, 1994, concurrently with the filing of Holdings Form 10-K for the same year, and herein incorporated by reference.
(viii) Amendment No. 2 to American Standard Employee Stock Ownership Plan described in Exhibit (10) (vi) above, authorized March 2, 1995; copy of Amendment is being filed as Exhibit (10) (viii) by the Company in its Form 10-K for the fiscal year ended December 31, 1994, concurrently with the filing of Holding's Form 10-K for the same year, and herein incorporated by reference..
(ix) American-Standard Employee Stock Ownership Trust Agreement, dated as of December 1, 1991, between ASI Holding Corporation and Fidelity Management Trust Company (as successor to Citizens & Southern Trust Company (Georgia), N.A.), as trustee; previously filed as Exhibit (10) (xiv) by the Company in its Form 10-K for the fiscal year ended December 31, 1991, and herein incorporated by reference.
(x) Consulting Agreement made July 1, 1988, with Kelso & Company, L.P. concerning general management and financial consulting services to the Company; previously filed as Exhibit (10) (xviii) in the Company's Form 10-K for the fiscal year ended December 31, 1988, and herein incorporated by reference.
(xi) Agreement, dated as of December 2, 1994, among Holding, the Company and Kelso & Company, L.P., amending the Consulting Agreement referred to in paragraph (10) (x) above; previously filed as Exhibit (10) (xi) in Amendment No. 1 to Registration Statement No. 33-56409 under the Securities Act of 1933, as amended, filed December 20, 1994, and herein incorporated by reference.
(xii) American Standard Inc. Supplemental Compensation Plan for Outside Directors, as amended through February 3, 1995; a copy of the Plan is being filed as Exhibit (10) (xii) by the Company in its Form 10-K for the fiscal year ended December 31, 1994, concurrently with the filing of Holding's Form 10-K for the same year, and herein incorporated by reference.
(xiii) ASI Holding Corporation 1989 Stock Purchase Loan Program; previously filed as Exhibit (10) (i) in Holdings Form 10-Q for the quarter ended September 30, 1989, and herein incorporated by reference.
(xiv) Corporate Officers Severance Plan adopted by the Company in December, 1990, effective April 27, 1991; previously filed as Exhibit (10) (xix) by the Company in its Form 10-K for the fiscal year ended December 31, 1990, and herein incorporated by reference.
(xv) Estate Preservation Plan, adopted by the Company in December, 1990; previously filed as Exhibit (10) (xx) by the Company in its Form 10-K for the fiscal year ended December 31, 1990, and herein incorporated by reference.
(xvi) Amendment adopted in March 1993 to Estate Preservation Plan referred to in (10) (xv) above; previously filed as Exhibit (10)(xvii) by the Company in its Form 10-K for the fiscal year ended December 31, 1993 and herein incorporated by reference.
(xvii) Summary of terms of Unfunded Deferred Compensation Plan adopted December 2, 1993; previously filed as Exhibit (10) (xviii) by the Company in its Form 10-K for the fiscal year ended December 31, 1993 and herein incorporated by reference.
(xviii) American Standard Companies Inc. Stock Incentive Plan; previously filed as Exhibit (10) (xx) in Amendment No. 3 to Registration Statement No. 33-56409 under the Securities Act, as amended, filed January 5, 1995, and herein incorporated by reference.
(xix) American Standard Inc. and Subsidiaries 1994-1995 Supplemental Incentive Compensation Plan (formerly named TNE Incentive Plan), as amended through February 3, 1995; copy of Plan is being filed as Exhibit (10) (xviii) by the Company in its Form 10-K for the fiscal year ended December 31, 1994, concurrently with the filing of Holding's Form 10-K for the same year, and herein incorporated by reference.
(xx) Form of Indemnification Agreement; previously filed as Exhibit (10) (xxi) in Amendment No. 3 to Registration Statement No. 33-56409 under the Securities Act of 1933, as amended, filed January 5, 1995, and herein incorporated by reference.
(13) 1994 Annual Report to Stockholders. (Only those portions specifically incorporated by reference are filed; no other portions of the Annual Report are to be deemed filed.)
(21) Listing of Holding's subsidiaries.
(27) Financial Data Schedule.
1Items in this series 10 consist of management contracts or compensatory plans or arragnements with the exception of (10)(x) and (xi).