SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number 33-64450
AMERICAN STANDARD INC.
(Exact name of Registrant as specified in its charter)
Delaware 25-0900465
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Centennial Avenue, P.O. Box 6820, Piscataway, NJ 08855-6820
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (908) 980-6000
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
X Yes No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock, $.01 par value, outstanding at
July 31, 1995 1,000
(shares)
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
The following consolidated summary statement of operations of American
Standard Inc. (the "Company") and subsidiaries for the three months and six
months ended June 30, 1995 and 1994 has not been audited, but management
believes that all adjustments, consisting of normal recurring items, necessary
for a fair representation of financial data for those periods have been
included. Results for the first three- and six-month periods of 1995 are not
necessarily indicative of results for the entire year.
AMERICAN STANDARD INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED SUMMARY STATEMENT OF OPERATIONS
(Dollars in millions)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
SALES $1,370.8 $1,130.5 $2,594.0 $2,120.1
-------- -------- -------- --------
COST AND EXPENSES
Cost of sales 1,008.5 857.3 1,917.6 1,603.6
Selling and administrative expenses 215.1 196.9 415.7 366.5
Other expense 8.4 8.2 19.1 14.4
Interest expense 53.8 64.6 111.2 128.7
--------- -------- -------- --------
1,285.8 1,127.0 2,463.6 2,113.2
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM 85.0 3.5 130.4 6.9
Income taxes 35.5 14.9 54.4 31.6
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 49.5 (11.4) 76.0 (24.7)
Extraordinary loss on retirement of debt - - 30.1
-------- -------- -------- -----
NET INCOME (LOSS) $ 49.5 $ (11.4) $ 45.9 $ (24.7)
========== ========= ====== =======
See accompanying notes
Item 1. Financial Statements (continued)
AMERICAN STANDARD INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED SUMMARY BALANCE SHEET
(Dollars in millions)
June 30, December 31,
1995 1994
CURRENT ASSETS
Cash and cash equivalents $ 26.5 $ 92.7
Accounts receivable 758.4 595.2
Inventories
Finished products 235.6 160.2
Products in process 97.8 82.5
Raw materials 98.5 80.5
431.9 323.2
Other current assets 67.2 53.4
TOTAL CURRENT ASSETS 1,284.0 1,064.5
FACILITIES, less accumulated depreciation;
June 1995 - $501.4; Dec. 1994 - $430.2 833.4 812.7
GOODWILL 1,088.1 1,053.0
OTHER ASSETS 219.8 225.9
-------- --------
TOTAL ASSETS $3,425.3 $3,156.1
======== ========
CURRENT LIABILITIES
Loans payable to banks 296.1 70.3
Current maturities of long-term debt 66.4 141.6
Accounts payable 378.5 350.5
Accrued payrolls 169.4 140.3
Other accrued liabilities 425.4 366.0
-------- --------
TOTAL CURRENT LIABILITIES 1,335.8 1,068.7
LONG-TERM DEBT 1,757.3 2,152.3
RESERVE FOR POSTRETIREMENT BENEFITS 487.8 437.7
OTHER LIABILITIES 296.2 273.6
TOTAL LIABILITIES 3,877.1 3,932.3
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S DEFICIT
Preferred stock, Series A, 1,000 shares issued
and outstanding, par value $.01 -- --
Common stock, 1,000 shares issued and
outstanding, $.01 par value. -- --
Capital surplus 504.4 214.6
Accumulated deficit (790.5) (836.4)
Foreign currency translation effects (163.0) (151.7)
Minimum pension liability adjustment (2.7) (2.7)
-------- --------
TOTAL STOCKHOLDER'S DEFICIT (451.8) (776.2)
-------- --------
$3,425.3 $3,156.1
======== ========
See accompanying notes
Item 1. Financial Statements (continued)
AMERICAN STANDARD INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED SUMMARY STATEMENT OF CASH FLOWS
(Dollars in millions)
Six Months Ended
June 30,
1995 1994
-------- --------
Cash provided (used) by:
Operating activities:
Income (loss) before extraordinary item $ 76.0 $(24.7)
Depreciation (including asset loss provision in 1994) 55.8 68.7
Amortization of goodwill 16.6 15.4
Non-cash interest 28.5 26.0
Amortization of debt issuance costs 3.2 7.3
Non-cash stock compensation 15.2 14.6
Changes in assets and liabilities:
Accounts receivable (148.8) (92.5)
Inventories (96.7) (69.3)
Accounts payable and other accruals 109.7 77.9
Other assets and liabilities 24.6 17.5
Net cash provided by operating activities 84.1 40.9
Investing activities:
Purchases of property, plant and equipment (56.3) (32.4)
Investments in affiliated companies (17.1) (12.6)
Other 10.6 9.0
Net cash used by investing activities (62.8) (36.0)
--------- --------
Financing activities:
Capital contribution from parent 269.2 -
Loan from parent 4.8 -
Proceeds from issuance of long-term debt 450.5 6.1
Repayments of long-term debt (988.0) (65.1)
Net change in revolving credit facility 197.7 53.7
Net change in other short-term debt (5.4) (6.1)
Purchases of parent company common stock (3.4) (5.5)
Other (13.3) -
-------- -------
Net cash used by financing activities (87.9) (16.9)
-------- -------
Effect of exchange rate changes on cash and
cash equivalents .4 2.0
-------- --------
Net decrease in cash and cash equivalents (66.2) (10.0)
Cash and cash equivalents at beginning of period 92.7 53.2
------- -------
Cash and cash equivalents at end of period $ 26.5 $ 43.2
======= ======
See accompanying notes
AMERICAN STANDARD INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
Note 1. The 1995 Refinancing
As described in Notes 2 and 10 of Notes to Consolidated Financial
Statements in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, the Company completed a major refinancing (the "1995
Refinancing") in the first quarter of 1995, including the initial public
offering of common stock (the "IPO") by American Standard Companies Inc. (the
parent of American Standard Inc.) and an amended and restated credit agreement
(the "1995 Credit Agreement"). See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources."
Note 2. Tax Matters
As described in Note 7 of Notes to Consolidated Financial Statements in
the Company's Annual Report on Form 10-K for the year ended December 31, 1994,
there are pending German tax issues for the years 1984 through 1990. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources."
Note 3. Proposed Offering of Common Stock
On August 1, 1995, the Company's parent, American Standard Companies
Inc., announced its intention to file with the Securities and Exchange
Commission a registration statement relating to a secondary offering of 17.5
million shares (plus an underwriters' over-allotment option of up to 2.625
million shares), substantially all of which shares are owned by Kelso ASI
Partners, L.P., the Company's majority stockholder. All of the shares to be sold
in the offering are previously issued and outstanding shares, and the Company
will receive no proceeds from the offering.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview
Operating results improved significantly in the second quarter and
first six months of 1995 compared with the second quarter and first six months
of 1994, due principally to volume increases in the Air Conditioning Products
and Automotive Products segments. As a result of the Company's leveraged buyout
in 1988, the results of operations include the effects of purchase accounting
and reflect a highly leveraged capital structure.
SUMMARY SEGMENT AND INCOME DATA
(Dollars in millions except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30
-------- -------
1995 1994 1995 1994
---- ---- ---- ----
SALES:
Air Conditioning Products $ 782 $ 648 $1,425 $1,168
Plumbing Products 322 301 645 597
Automotive Products 267 181 524 355
-------- --- -------- -------
Total sales $1,371 $1,130 $2,594 $2,120
====== ====== ====== ======
OPERATING INCOME:
Air Conditioning Products $ 86 $ 66 $ 128 $ 98
Plumbing Products 32 21 73 59
Automotive Products 44 2 87 20
------ ------ ------- -------
Total operating income 162 89 288 177
Interest expense 54 65 111(a) 129
Corporate items 23 20 47 41
-------- ------- ----- -------
Income before income taxes and
extraordinary item 85 4 130 7
Income taxes 35 15 54 32
------- ---- ---- -------
Income (loss) before extraordinary item $ 50 $(11) $ 76 $ (25)
======= ==== ====== ======
(a) Had the initial public offering of the common stock of the Company's parent,
American Standard Companies, Inc., and related debt refinancing occurred on
January 1, 1995, interest expense for the first six months of 1995 would have
been reduced by $4 million.
Operating income for the three months and six months ended June 30,
1994, included charges of $26 million related to employee severance, the
consolidation of production facilities and the implementation of other cost
reduction actions. In those same periods the Company also provided $14 million
of reserves for losses on operating assets expected to be disposed of prior to
the expiration of their originally estimated useful lives.
Results of Operations for the Second Quarter and First Six Months of 1995
Compared with the Second Quarter and First Six Months of 1994
Operating Review
Consolidated sales for the second quarter of 1995 were $1,371 million,
an increase of $241 million, or 21% (17% excluding the favorable effects of
foreign exchange), from $1,130 million in the second quarter of 1994. Sales
increased for all three segments with gains of 21% for Air Conditioning
Products, 7% for Plumbing Products and 48% for Automotive Products. Consolidated
operating income for the second quarter of 1995 was $162 million, an increase of
$73 million, or 82% (72% excluding the favorable effects of foreign exchange),
from $89 million in the second quarter of 1994. Excluding the $40 million of
special charges (described above) from the second quarter of 1994, operating
income improved 26% in the 1995 quarter from an adjusted operating income of
$129 million in the comparable 1994 period. Excluding such special charges
operating income increased 18% for Air Conditioning Products and 175% for
Automotive Products, but declined 20% for Plumbing Products.
Consolidated sales for the first half of 1995 were $2,594 million, an
increase of $474 million, or 22% (18% excluding the favorable effects of foreign
exchange), from $2,120 million in the first half of 1994. Sales increased for
all three segments with gains of 22% for Air Conditioning Products, 8% for
Plumbing Products and 48% for Automotive Products. Consolidated operating income
for the first half of 1995 was $288 million, an increase of $111 million, or 63%
(54% excluding the favorable effects of foreign exchange), from $177 million in
the first half of 1994. Excluding the $40 million of special charges from the
1994 period, operating income improved 33% in the first half of 1995 from an
adjusted operating income of $217 million in the comparable 1994 period.
Excluding such special charges operating income increased 22% for Air
Conditioning Products and 156% for Automotive Products, but declined 6% for
Plumbing Products.
Sales of Air Conditioning Products increased 21% (with little effect
from foreign exchange) to $782 million for the second quarter of 1995 from $648
million for the comparable quarter of 1994, as a result of strong gains in U.S.
and international sales of applied and unitary commercial systems. Markets in
the United States continued to improve in 1995 in both the commercial
new-construction and the commercial and residential replacement markets. Sales
of commercial products in the United States increased 15% because of improved
markets, demand for chiller replacement (accelerated because of the impending
ban on CFC refrigerant production), gains in market share and increased sales of
newer, higher-efficiency products. Residential sales were up 15% due to
increased purchases by distributors in anticipation of peak summer demand and
favorable product shifts (to heat pumps from cooling units and to outdoor from
indoor equipment). International sales of Air Conditioning Products for the
second quarter of 1995 increased principally because of volume increases in the
Far East, Europe and Latin America. Sales for Air Conditioning Products in the
first half of 1995 increased by 22% to $1,425 million from $1,168 million in the
first half of 1994, for the reasons cited for the second quarter.
Operating income of Air Conditioning Products increased 30% (with
little effect from foreign exchange) to $86 million in the second quarter of
1995 from $66 million in the second quarter of 1994. Excluding special charges
of $7 million from the second quarter of 1994, operating income increased 18%.
This improvement primarily reflected expanded commercial product sales in the
United States and improved results in international operations (principally
Europe), as well as a small gain in the Far East on the reorganization and sale
of certain Hong Kong operations in connection with establishing joint ventures
directly in the People's Republic of China. Operating income for residential
products declined because of lower prices (due to competitive pressures) and
increased raw material costs. First-half 1995 operating income, excluding the
special charges of 1994, was up 22% primarily for the reasons mentioned for the
second quarter.
Sales of Plumbing Products increased 7% (4% excluding the favorable
effects of foreign exchange) to $322 million in the second quarter of 1995 from
$301 million in the second quarter of 1994. The exchange-adjusted improvement
resulted from a sales increase of 19% for U.S. operations, while international
operations were flat compared with the second quarter of the prior year. Sales
in the United States increased as a result of higher volumes in both wholesale
and retail market channels offset partly by an unfavorable shift in sales mix to
lower-priced products. For international operations, sales increases in Italy,
the United Kingdom ("U.K."), the Philippines and Thailand (primarily from higher
volumes) were offset by sales decreases in Germany and France (as markets
softened unexpectedly during the quarter), in Mexico and Canada (because of poor
economic conditions) and in South Korea (due to lower exports). Sales of
Plumbing Products for the six months ended June 30, 1995, increased 8% (5%
excluding foreign exchange effects) to $645 million from $597 million in the
first half of 1994, primarily for the reasons described for the second quarter.
Operating income of Plumbing Products for the second quarter of 1995
was $32 million, an increase of 52% (34% excluding the positive effects of
foreign exchange) compared with $21 million for the second quarter of 1994.
Excluding both foreign exchange effects and the special charges of $19 million
from the second quarter of 1994, operating income declined 26%, principally due
to a 29% decline for international operations which was partly offset by a small
improvement for U.S. operations. For international operations, operating income,
as so adjusted for such special charges, declined primarily because of the
market weakness in Germany and France, lower results in Canada and Mexico, costs
associated with implementation of manufacturing process improvements as well as
start-up expenses of new Far East operations. In addition, because Italian and
U.K. operations purchase products from Germany, the strength of the Deutschemark
against Italian and U.K. currencies resulted in Italian and U.K. product cost
increases not being fully recovered through pricing. In the United States,
adjusted second quarter results improved modestly due to the higher volumes,
partly offset by the effect of an unfavorable product mix, the inability to
fully recover material and labor cost increases due to competitive pressures,
and the ongoing costs of implementation of process improvements. Operating
income for Plumbing Products for the first half of 1995 was $73 million, an
increase of 24% from $59 million in the first half of 1994. Excluding both
foreign exchange effects and special charges, operating income in the first half
of 1995 decreased 13%, primarily for the reasons cited for the second quarter.
Sales of Automotive Products for the second quarter of 1995 were $267
million, an increase of 48% (30% excluding the favorable effects of foreign
exchange) from $181 million in the second quarter of 1994. Unit volume of truck
and bus production in Western Europe improved 26% and aftermarket sales grew
approximately 22%. The foreign exchange-adjusted sales increase was the result
of significantly higher volumes, led by Germany and France reflecting the
increased commercial vehicle production in Western Europe, the U.K. as a result
of the growing utility vehicle business in that country and in Brazil as a
result of a 29% increase in truck production. Sales also increased in all other
major markets in which the Company has operations. Sales for the first six
months of 1995 were $524 million, an increase of 48% (30% excluding the
favorable effects of foreign exchange) from $355 million in the first half of
1994, for the reasons described for the second quarter.
Operating income for Automotive Products increased to $44 million in
the 1995 quarter, an increase of 138% excluding both the favorable effects of
foreign exchange and special charges of $14 million from the second quarter of
1994. This significant increase was primarily attributable to the substantially
higher sales volume in improved markets in nearly all European countries and
Brazil, as well as higher margins due to increasing benefits of the
implementation of manufacturing process improvements, a reduced salaried work
force and other cost reductions. Operating income for the first six months of
1995 was $87 million, an increase of 122% excluding both the favorable effects
of foreign exchange and special charges from the 1994 period, for the reasons
cited for the second quarter.
Financial Review
Interest expense decreased by $11 million in the second quarter and by
$18 million in the first half of 1995 compared to the year-earlier periods
primarily as a result of reduced debt balances due to application of the net
proceeds from the IPO and lower overall interest costs (see "Liquidity and
Capital Resources"). Corporate items increased moderately both in the second
quarter and the first half of 1995 primarily because of higher accretion expense
related to postretirement benefits as well as expenses of a corporate
advertising campaign initiated in 1995.
The income tax provisions for the three months and six months ended
June 30, 1995, were $35 million and $54 million, respectively, on income before
income taxes and extraordinary item of $85 million for the quarter and $130
million for the six months. The income tax provisions for the three months and
six months ended June 30, 1994, were $15 million and $32 million, respectively,
on income before income taxes and extraordinary item of $4 million and $7
million, in the respective periods. These provisions reflected the taxes payable
on profitable foreign operations, offset partly in the 1995 periods by tax
benefits from U.S. and certain foreign net operating losses. The unusual
relationship between the pre-tax results and the tax provision for both 1994
periods is explained by tax rate differences and withholding taxes on foreign
earnings as well as by the nondeductibility for tax purposes of the amortization
of goodwill and other purchase accounting adjustments and of the share
allocations made by the Company's Employee Stock Ownership Plan ("ESOP").
Through 1994 the ESOP allocations were made from a plan established in 1988
through a reversion of excess pension plan assets. In 1995 and future years,
Company contributions to fund ESOP allocations should be tax deductible.
As a result of the repayment of debt in the first quarter of 1995 upon
completion of the 1995 Refinancing (see "Liquidity and Capital Resources"), the
six month period ended June 30, 1995, included an extraordinary charge of $30
million attributable to the write-off of unamortized debt issuance costs, for
which no tax benefit was available.
Cash Flows
Net cash provided by operating activities, after cash interest paid of
$85 million, was $84 million for the first half of 1995 compared with $41
million for the first half of 1994. The $43 million increase resulted primarily
from improved operating results. The Company made capital expenditures of $73
million for the first half of 1995, including $17 million of investments in
affiliated companies (compared with capital expenditures of $45 million for the
first half of 1994, including $13 million of investments in affiliated
companies). Inventories and receivables increased during the first half of 1995
reflecting the increased sales volume and the seasonal pattern typical of the
first six months. The principal financing activities during the first six months
of 1995 were related to the 1995 Refinancing described in "Liquidity and Capital
Resources".
Liquidity and Capital Resources
In the first quarter of 1995 the Company completed the 1995 Refinancing
which reduced the amount of debt outstanding, will significantly lower future
interest costs and provides less restrictive covenants. The net proceeds from
the IPO, totaling approximately $281 million, were used to repay indebtedness
and the proceeds of the 1995 Credit Agreement, which provided a secured
multi-currency, multi-borrower credit facility aggregating $1.0 billion,
replaced outstanding borrowings under the Company's previous bank credit
agreement. Had the IPO and the 1995 Credit Agreement been completed as of
January 1, 1995, interest expense would have been reduced by $4 million and
income before extraordinary item would have been $80 million ($1.06 per share)
for the first half of 1995.
The 1995 Credit Agreement provides reduced borrowing rates, increased
borrowing capacity, less restrictive covenants and lower annual scheduled debt
maturities through 2001. The Company believes that the amounts available from
operating cash flows and funds available under revolving facilities (the
"Revolving Facilities") will be sufficient to meet its expected cash needs and
planned capital expenditures for the foreseeable future.
As of June 30, 1995, the Company had outstanding borrowings of $261
million under the Revolving Facilities. There was $237 million available under
the Revolving Facilities
after reduction for borrowings and for $52 million of letters of credit usage.
In addition the Company's foreign subsidiaries had approximately $62 million
available (after reduction for borrowings of $35 million) under overdraft
facilities which can be withdrawn by the banks at any time. The Revolving
Facilities are short-term borrowings by their terms under the 1995 Credit
Agreement, and since a portion of the long-term debt under the Company's
previous bank credit agreement was replaced with borrowings under the Revolving
Facilities, a significantly larger portion of debt is classified as short-term.
The 1995 Credit Agreement contains various covenants that limit certain
activities and transactions and require the Company to meet certain financial
tests as described in Note 10 of Notes to Consolidated Financial Statements in
the Company's Annual Report on Form 10-K for the year ended December 31, 1994.
Certain American Standard Inc. debt instruments also contain financial tests and
other covenants. In order to maintain compliance with the covenants and
restrictions contained in its previous credit agreements, it was necessary from
time to time for the Company to obtain waivers and amendments. The Company
believes it is currently in compliance with the covenants contained in the 1995
Credit Agreement, but may have to obtain similar waivers or amendments in the
future.
As described in Note 7 of Notes to Consolidated Financial Statements in
the Company's Annual Report to Stockholders for the year ended December 31,
1994, there are pending German Tax issues for the years 1984 through 1990.
During the first quarter of 1995, the Company received the first of two expected
reports of the German tax authorities on audit findings for tax years 1984
through 1990. This first report was silent on one of the major issues under
audit which had represented over one-third of the potential total adjustments
that the Company earlier anticipated the German tax authorities might propose
for the years 1984 through 1990. While there can be no assurance, the Company
believes it is now unlikely that this issue will be pursued further by the
German tax authorities.
During the second quarter of 1995, the Company received the second
report on audit findings for tax years 1988 through 1990. On the basis of the
second report, and assuming that the matter is not first resolved by
administrative appeals procedures, the remaining proposed adjustments could
ultimately lead to litigation regarding disputed taxes (principally for the 1988
through 1990 period) of up to approximately $80 million (using June 30, 1995
exchange rates), plus interest. In addition, significant transactions similar to
those which gave rise to the possible adjustments referred to above occurred in
years subsequent to 1990. If the German tax authorities should continue to
propose adjustments for the 1988-1990 period, they might, after future tax
audits, also propose tax adjustments for years 1991-1993, that could be as much
as 50% higher than the comparable adjustments for the years 1988 through 1990.
American Standard, on the basis of the opinion of German legal counsel, Meilicke
& Partner, believes the tax returns are substantially correct as filed and any
such adjustments would be inappropriate and intends to contest vigorously any
adjustments which have been or may be assessed. Accordingly, the Company has not
recorded any loss contingency at June 30, 1995 with respect to such matters.
Under German tax law, if an assessment is made for the years under
audit, the authorities may demand immediate payment of the amount assessed prior
to final resolution of the issues. (The same principles would apply as to any
assessment in connection with possible audits for subsequent years.) American
Standard believes, however, on the basis of the opinion of German legal counsel,
that it is highly likely that a suspension of payment pending final resolution
would be obtained. If immediate payment were required, the Company expects that
it would be able to meet such payment from available sources of liquidity or
credit support but that future cash flows and capital expenditures, and
subsequent results of operations for any particular quarterly or annual period,
could be adversely affected.
As a result of recent changes in German tax legislation, the Company's
tax provisions in 1994 and the first six months of 1995 were higher in Germany
and will be higher thereafter. As a result of this German tax legislation and
the related additional tax provisions, the Company believes its exposure to the
issues under the audit referred to above will be reduced for 1994, 1995 and
future years.
American Standard Inc. makes substantial interest payments to its
indirect wholly-owned Netherlands subsidiary. These interest payments had been
exempt from U.S. withholding tax under an income tax treaty between the United
States and the Netherlands. Under a provision in a new treaty such payments
would have become subject to a 15% U.S. withholding tax, except that the Company
received a ruling from the Internal Revenue Service ("IRS") making a
determination that no U.S. withholding tax will be imposed for 1995. The Company
believes, based on the ruling exempting 1995 interest payments from U.S.
withholding tax, that its request for a subsequent ruling covering 1996 (and
later years) should also receive favorable IRS action. If the subsequent IRS
ruling request is not resolved favorably, additional withholding taxes of
approximately $11 million per year could be imposed on the Company commencing in
1996. In such case, the Company would consider alternatives designed to mitigate
the increased withholding taxes; however, there is no assurance that such
alternatives could be found.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
For a discussion of German tax issues see "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources" in Part I which is incorporated herein by reference..
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
The exhibits listed on the accompanying Index to Exhibits are filed
as part of this quarterly report on Form 10-Q.
(b) Reports on Form 8-K for the quarter ended June 30, 1995.
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN STANDARD INC.
By: G. Ronald Simon
(Vice President and Controller)
(also signing as Principal
Accounting Officer)
August 11, 1995
AMERICAN STANDARD INC.
INDEX TO EXHIBITS
(3) (i) Restated Certificate of Incorporation of American Standard Inc.
(ii) Amended By-Laws of American Standard Inc., as adopted May 4, 1995
(27) Financial Data Schedule