<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, 20549

                                    FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
    of 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

[ ] Transition Report to Section 13 or 15(d) of the Securities Exchange Act of
    1934 For the transition period from ______________ to_______________ .

                         Commission File Number 1-11415

                        AMERICAN STANDARD COMPANIES INC.
             (Exact name of registrant as specified in its charter)

           DELAWARE                                             13-3465896
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                              Identification No.)

One Centennial Avenue, P.O. Box 6820,
Piscataway,  New Jersey                                         08855-6820
(Address of principal executive office)                         (Zip Code)

Registrant's telephone number, including area code:           (732) 980-6000

Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
   Title of each class                Name of each exchange on which registered
   -------------------                -----------------------------------------
<S>                                   <C>
Common Stock, $.01 par value                     New York Stock Exchange, Inc.
(and associated Common Stock Rights)
</TABLE>

Securities registered pursuant to Section 12 (g) of the Act: None.

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. Yes |X| No |_|

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge in definitive proxy or information statements
incorporated by reference in part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of the voting stock (Common Stock) held by
non-affiliates of the Registrant as of the close of business on March 10, 2000
was approximately $2.5 billion based on the closing sale price of the common
stock on the New York Stock Exchange consolidated tape on that date.

Number of shares outstanding of each of the Registrant's classes of Common
Stock, as of the close of business on March 10, 2000:

Common Stock, $.01 par value                          70,775,276 Shares

Documents incorporated by reference:

<TABLE>
<CAPTION>
                                                  Part of the Form 10-K into
Document (Portions only)                        which document is incorporated.
------------------------                        -------------------------------
<S>                                             <C>
Annual Report to Stockholders for the year                   Parts I, II and IV
ended December 31, 1999

Definitive Proxy Statement dated
March 27, 2000 for use in connection with
the Annual Meeting of Stockholders to be
held on May 4, 2000                                                    Part III
</TABLE>


<PAGE>   2


                                TABLE OF CONTENTS

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<CAPTION>
                                                                 PAGE
                                                                 ----
<S>                 <C>                                         <C>
                                     PART I
      Item 1.       Business.                                      3
      Item 2.       Properties.                                   16
      Item 3.       Legal Proceedings.                            17
      Item 4.       Submission of Matters to a Vote of            18
                    Security Holders.
                    Executive Officers of the Registrant.         19

                                      PART II

      Item 5.       Market for the Registrant's Common Equity
                    and Related Stockholder Matters.              22
      Item 6.       Selected Financial Data.                      23
      Item 7.       Management's Discussion and Analysis of
                    Financial Condition and Results of
                    Operations.                                   24
      Item 7A.      Quantitative and Qualitative Disclosures
                    about Market Risk
      Item 8.       Financial Statements and Supplementary
                    Data.                                         24
      Item 9.       Changes in and Disagreements with
                    Accountants on Accounting and Financial
                    Disclosure.                                   24


                                     PART III

      Item 10.      Directors and Executive Officers of the
                    Registrant.                                   25
      Item 11.      Executive Compensation.                       25
      Item 12.      Security Ownership of Certain Beneficial
                    Owners and Management.                        25
      Item 13.      Certain Relationships and Related
                    Transactions.                                 25


                                      PART IV

      Item 14.      Exhibits, Financial Statement Schedules
                    and Reports on Form 8-K.                      26


      Signatures                                                  32
</TABLE>


                                       2
<PAGE>   3


                                     PART I

ITEM 1. BUSINESS

      American Standard Companies Inc. (the "Company") is a Delaware corporation
that has as its only significant assets all the outstanding common stock of
American Standard Inc., a Delaware corporation ("American Standard Inc.") and
all the outstanding common stock of American Standard International Inc., a
Delaware corporation ("ASII"). Hereinafter, "American Standard" or "the Company"
will refer to the Company, or to the Company and American Standard Inc. or ASII,
including their subsidiaries, as the context requires.

      American Standard is a global, diversified manufacturer of high quality,
brand-name products in three major product groups: air conditioning systems and
services (60% of 1999 sales); bathroom and kitchen fixtures and fittings (25% of
1999 sales); and vehicle control systems for medium-sized and heavy trucks,
buses, trailers and utility vehicles (15% of 1999 sales). American Standard is
among the three largest providers of products it manufactures in each of its
three major business segments in the principal geographic areas where it
competes. The Company's brand names include TRANE(R) and AMERICAN STANDARD(R)
for air conditioning systems, AMERICAN STANDARD(R), IDEAL STANDARD(R) ,
STANDARD(R), PORCHER(R), ARMITAGE SHANKS(R) and DOLOMITE(R), for plumbing
products, WABCO(R) for vehicle control systems.

      One of the ways the Company makes it products more competitive is by
emphasizing technological advancements such as:

         - air conditioning systems that utilize energy-efficient compressors
         and refrigerants meeting current environmental standards;

         - water-saving plumbing products;

         - commercial vehicle antilock braking systems ("ABS") and electronic
         controls systems.


      As of December 31, 1999 American Standard had 102 manufacturing facilities
in 29 countries.


OVERVIEW OF BUSINESS SEGMENTS

      American Standard has three business segments: Air Conditioning Systems
and Services, Plumbing Products and Vehicle Control Systems.

      AIR CONDITIONING SYSTEMS AND SERVICES. 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 Systems and Services ("Trane") are sold primarily under the
TRANE(R) and AMERICAN STANDARD(R) names. Sales to the commercial and residential
markets accounted for approximately 75% and 25%, respectively, of Trane's total
sales in 1999. Approximately 65% of Trane's sales in 1999 were in the
replacement, renovation and repair markets, which have been less cyclical than
the new residential and commercial construction markets. Trane derived 76% of
its 1999 sales in the U.S. and 24% outside. Management believes that Trane 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;
conversion to products utilizing environmentally-preferable refrigerants; and
expansion of operations in developing market areas throughout the world,
principally the Asia-Pacific area (although expansion in the Asia-Pacific region
outside China slowed due to the unfavorable economic conditions existing in the
region since 1997) and Latin America.


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<PAGE>   4


      PLUMBING PRODUCTS. American Standard is a leading manufacturer in Europe,
the U.S. 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), STANDARD(R) and PORCHER(R)
names, and also under the ARMITAGE SHANKS(R) and DOLOMITE(R) names since the
February 1999 acquisition of the Bathrooms Division of Blue Circle Industries
PLC, described below. Of Plumbing Products' 1999 sales, 69% was derived from
operations outside the United States and 31% from within. Management believes
that Plumbing Products is well positioned for growth due to the high quality
associated with its brand-name products, significant existing market shares in a
number of countries, supplying its markets with lower-cost products manufactured
in Mexico, Eastern Europe and the Far East, and the expansion of existing
operations in developing market areas throughout the world, principally the Far
East, Latin America and Eastern Europe, although Far East growth has slowed
because of weak economic conditions existing in the region.

      VEHICLE CONTROL SYSTEMS. Vehicle Control Systems ("WABCO") is a leading
manufacturer of braking and control systems for the worldwide commercial vehicle
industry. Its biggest selling products are pneumatic braking control systems and
related electronic and other control systems, including antilock and electronic
braking systems ("ABS" and "EBS", respectively), marketed under the WABCO(R)
name for medium-size and heavy trucks, tractors, buses, trailers and utility
vehicles. WABCO supplies vehicle manufacturers such as DaimlerChrysler (Mercedes
and Freightliner), Volvo, Iveco (Fiat), Scania, RVI (Renault), PACCAR, Hino,
Nissan and Rover. Management believes that WABCO is well positioned to benefit
from its strong market positions in Europe and Brazil and from increasing demand
for ABS, EBS and other sophisticated electronic control systems in a number of
markets (including the commercial vehicle market in the United States, where the
mandated two-year phase-in of ABS began in March 1997), as well as from the
technological advances embodied in the Company's products and its close
relationships with a number of vehicle manufacturers.

DISCONTINUED OPERATIONS

      In the fourth quarter of 1999, the Board of Directors of the Company
approved a plan for the sale of the Medical Systems segment. The Company expects
to complete the sale in the second quarter of 2000. The 1999 loss from
discontinued operations of $126 million consists of a loss from operations of
$14 million, net of tax benefit of $9 million, and an estimated loss on
disposition of $112 million, net of tax benefit of $8 million. The loss on
disposition includes a provision for estimated operating losses in 2000
projected through the expected date of sale. The estimated loss on sale is based
upon certain assumptions about the timing of the sale and expected proceeds.
Therefore, actual amounts may differ. Operating results, net assets and cash
flows of the discontinued Medical Systems segment have been reported separately
from continuing operations in the Consolidated Financial Statements which appear
in the Company's Annual Report to Stockholders and are incorporated herein by
reference in Item 8 of Part II of this report.


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<PAGE>   5


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 has frequently structured 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 Systems and Services continues to expand its operations
in the Far East, the Middle East, Latin America, Brazil and Europe. It also
continues to expand its sales forces in these regions. Since the end of 1995 the
Company has been developing and expanding its air conditioning business in the
People's Republic of China ("China"), to become an integrated manufacturer,
marketer and distributor of a broad range of air conditioning systems and
related products for residential and commercial applications. The Company and a
minority investor established ASI China Holdings Limited ("ASI China"), in which
the Company has an ownership interest of 67.5%, and formed A-S Air Conditioning
Products Limited ("ASAP"), owned 53.7% by ASI China, to establish or acquire
majority ownership in up to five manufacturing joint ventures as well as sales
and service businesses in China. As of December 31, 1999, ASAP had acquired
majority ownership in three manufacturing joint ventures. The Company's
ownership interest in ASAP is expected to increase over time through
reinvestment of royalties and management fees and through additional stock
purchases.

      Plumbing Products has entered new markets through joint ventures in
Eastern Europe and the Far East, and is continuing to expand using this
approach. In 1997, 1998 and 1999 the Company expanded its production capacity in
Bulgaria and in Mexico. Plumbing Products continues to expand its operations in
China through its affiliate, A-S China Plumbing Products Limited ("ASPPL"), in
which American Standard increased its ownership position to approximately 55%
through the purchase of additional shares from other investors in 1997. ASPPL
has entered into 6 joint ventures with local business concerns which, together
with one wholly-owned operation, have received business licenses from Chinese
government authorities. These include three chinaware manufacturing facilities,
two fittings plants and two steel tub factories. The Company's ownership
interest in ASPPL is expected to increase over time through reinvestment of
royalties and management fees and through additional stock purchases.

      Vehicle Control Systems, headquartered in Europe, has a manufacturing
subsidiary in Brazil, a joint venture in China and is in the process of
constructing a manufacturing facility in Poland. In the United States the
Meritor WABCO joint venture is growing rapidly as federal regulations mandating
ABS were fully phased in as of March 1999. The Company is also expanding the
volume of business done through its other existing joint venture in the United
States with Cummins Engine Co. (WABCO Compressor Manufacturing Co., a
manufacturing joint venture formed in 1997 to produce air compressors designed
by WABCO), and through another joint venture in Japan. In March 1999, WABCO
acquired the heavy vehicle business of Mando Machinery Corporation in South
Korea, to be operated under a wholly-owned subsidiary, WABCO Korea Inc.


                                       5
<PAGE>   6


DEMAND FLOW(R) TECHNOLOGY*

      To build on its position as a leader in each of its industries and to
increase sales and segment income, American Standard began in 1990 to apply
Demand Flow to all its businesses. Applying Demand Flow principles, products are
produced as and when required by customers, 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, American Standard has trained most of its approximately
58,000 employees worldwide in Demand Flow and has implemented Demand Flow in
substantially all of its production facilities. American Standard has also
applied Demand Flow to administrative functions and has re-engineered 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 tripled since 1990 to 9 turns.
Principally as a result of the implementation of Demand Flow, American Standard
has reduced inventories (from amounts that would otherwise have been carried) by
approximately 65% from December 31, 1989 through December 31, 1999. 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.

SIX SIGMA

      Six Sigma is a structured analytical methodology applied to achieve
significant improvement in the quality of work processes and to measure process
performance. The analysis is focused to better understand and ultimately satisfy
customer requirements through optimized process design. Time-tested statistical
and qualitative tools are used to diagnose performance deficiencies, identify
and measure improvement opportunities, implement improved work methods and
institutionalize related performance gains.

      Management has begun to implement Six Sigma methodologies across the
Company's operations, extending into both manufacturing and administrative
processes. The primary objectives of the program will be to compliment and
leverage the efficiencies driven by Demand Flow and significantly reduce
defects. Technical experts (called Six Sigma Black Belts and Green Belts) will
be developed and deployed through robust training and project deployment
programs. Expected benefits include enhanced customer satisfaction, improved
process cycle times and increased productivity.


---------------------

* Demand Flow is a registered trademark of J-I-T Institute of Technology,
Inc.


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<PAGE>   7


AIR CONDITIONING SYSTEMS AND SERVICES SEGMENT

      Air Conditioning Systems and Services began with the 1984 acquisition by
the Company of the Trane Company, a manufacturer and distributor of Air
Conditioning Systems and Services since 1913. Air Conditioning Systems and
Services are sold primarily under the TRANE(R) and AMERICAN STANDARD(R) names.
In 1999 Trane, with revenues of $4,337 million, accounted for 60% of the
Company's sales and 60% of its segment income. Trane derived 24% of its 1999
sales from outside the United States. Approximately 65% of Trane's sales in 1999
were in the replacement, renovation and repair markets, which in general are
less cyclical than the new residential and commercial construction markets.

      Trane manufactures three general types of air conditioning systems. The
first, called "unitary," is sold for residential and commercial applications,
and is a factory-assembled central air conditioning system which generally
encloses in one or two units all the components to cool or heat, clean, humidify
or dehumidify, and move air. The second, called "applied," is typically
custom-engineered for commercial use and involves on-site installation of
several different components of the air conditioning system. Trane is one of the
three largest global manufacturers of both unitary and applied Air Conditioning
Systems and Services. The third type, called "mini-split," is a small unitary
air conditioning system which operates without air ducts. Within the mini-split
category there are two primary products; room air conditioners, primarily for
residential applications, and packaged air conditioners, intended primarily for
light commercial applications. Trane manufactures and distributes mini-split
units in the Far East, Europe, the Middle East and Latin America.

      Trane competes in all of its markets on the basis of service to customers,
product quality and reliability, technological leadership and price/value.

      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 generally higher than for sales of original
equipment. Much of the equipment sold in the fast-growing air conditioning
markets of the 1960's and 1970's has been 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 new
refrigerants which meet current and future environmental standards.

      Many of the air conditioning systems manufactured by Trane 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 refrigerants 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 Company products will be compatible with the substitute refrigerants, Trane
has been working closely with the manufacturers that are developing substitute
refrigerants. Trane has also been active in supporting industry-wide efforts to
transition to these new fluids in an orderly and sensible fashion while
balancing key environmental issues such as ozone depletion on one hand and
global warming (greenhouse gas effects) on the other. 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 Systems and Services.
Although the Company has been able to meet or exceed such standards to date,
stricter standards in the future will require additional research and
development expense and capital expenditures to both maintain compliance and
continue to offer customers choices.

      In December 1993 the Company formed a partnership, Alliance Compressors,
with Heatcraft Technologies Inc., a subsidiary of Lennox International Inc., for
the manufacture of compressors for use


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in air conditioning and refrigeration equipment. On December 31, 1996, the
partnership was restructured to admit a new partner, Copesub, Inc., a subsidiary
of Emerson Electric Co. Following the restructuring, the Company and Heatcraft
Technologies Inc. each own a 24.5% partnership interest and Copesub, Inc. owns
the balance. Alliance develops, manufactures, markets and sells, primarily to
Trane and Lennox, scroll compressors utilized mainly in residential central air
conditioning applications. Alliance operates principally from a facility in
Natchitoches, Louisiana.

      At December 31, 1999, Air Conditioning Systems and Services had 31
manufacturing plants in 9 countries, employing approximately 26,100 people.

      Air Conditioning Systems and Services is composed of two operating
groups: Worldwide Unitary Systems Group and Worldwide Applied Systems Group.

WORLDWIDE APPLIED SYSTEMS GROUP

      The Worldwide Applied Systems Group ("Applied Systems"), which accounted
for 53% of Air Conditioning Systems and Services' 1999 sales, manufactures and
distributes applied Air Conditioning Systems and Services throughout the world,
including the exporting of many products manufactured in the U.S. These products
are for air conditioning applications in larger commercial, industrial and
institutional buildings. Approximately 68% of Applied Systems sales are in the
U.S. and 32% in international markets. Other major suppliers of commercial
systems are Carrier, York and McQuay.

      In the U.S., Applied Systems distributes its products through 87 sales
offices, 46 of which are Company-owned and 41 of which are franchised. Applied
Systems is continuing the process of acquiring certain commercial sales and
service offices, having acquired five offices in 1999, six offices in 1998,
seven in 1997 and three in 1996. Outside the U.S., Applied Systems also has an
extensive network of sales and service agencies, both Company owned and
franchised, to sell products and provide maintenance and service.

      Over the last few years Applied Systems has expanded its aftermarket
business activities to include services such as emergency rentals of air
conditioning equipment. The group has also expanded its line to include
components to convert installed centrifugal chiller products to use refrigerants
meeting current environmental standards.

      During 1997, 1998 and 1999 Applied Systems continued to introduce new
products, broadening its line of high-efficiency centrifugal chillers,
introducing new water cooled series R chillers, expanding the air cooled series
R chiller line and introducing a new absorption chiller, a new water source heat
pump and a new line of low pressure air handlers. Sales of systems that
automatically control a building's performance, including energy consumption and
air quality, continue to grow as a percentage of total sales with new product
introductions such as Tracer Summit and wireless thermostats. Indoor air quality
is emerging as a significant application to be served by the Company's products
and services. Systems capabilities, coupled with equipment, service and parts
have allowed Trane to be active in the performance contracting business as a
comfort systems solution provider.

WORLDWIDE UNITARY SYSTEMS GROUP

      The Worldwide Unitary Systems Group ("Unitary Systems"), which accounted
for 47% of Air Conditioning Systems and Services' 1999 sales, manufactures and
distributes products for commercial and residential unitary applications
throughout the world. Unitary Systems exports many products manufactured in the
United States and also distributes mini-splits manufactured in facilities
operated by subsidiaries and joint ventures outside the U.S. Approximately 83%
of Unitary Systems' sales originated in the U.S. and 17% in international
markets. This group benefits significantly from the growth of the replacement
market for residential and commercial unitary air conditioning systems,
particularly in the U.S. Other major suppliers in the unitary market are
Carrier, York, Rheem, Lennox and Goodman Industries.

      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


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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. In the U.S. these products are sold
through commercial sales offices, independent wholesale distributors and
company-owned dealer sales offices in over 375 locations. Residential central
Air Conditioning Systems and Services range from 1 to 5 tons and include air
conditioners, heat pumps, air handlers, furnaces, and coils. In the U.S. 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. Outside the U.S., Unitary Systems also has an extensive
network of sales and service agencies, both Company-owned and franchised, to
provide maintenance and warranty service for its equipment.

      During the past few years, the Unitary Systems Group successfully
introduced several new products including: a line of multi-stage cooling and
heat pump units offering the industry's highest efficiencies; a unique line of
outdoor condensing units for the AMERICAN STANDARD(R) brand; an ultra-high
efficiency gas furnace with variable speed airflow and gas combustion
components; an ultra-high efficiency packaged air conditioner; modulating gas
and variable frequency drive 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 commercial unitary business also concentrated on indoor air
quality enhancements and new capabilities for existing products.

      Unitary Systems also markets light commercial and residential products
under an AMERICAN STANDARD(R) brand name to serve distributors who typically
carry other products in addition to Air Conditioning Systems and Services.

INTERNATIONAL EXPANSION

      Trane continues the expansion of its presence outside the U.S. in both
applied and unitary systems. In the Asia-Pacific region Trane established three
manufacturing joint ventures in China in 1995 (see "Globalization") and has had
operations in Malaysia since the mid-1980's. Since the early 1990's it has
operated an air conditioning manufacturing and distribution firm in Taiwan, and
a sales and manufacturing joint venture in Thailand. A Brazilian manufacturing
plant and distribution operations were acquired in 1994. In Europe, the group
operates plants in Epinal and Charmes, France, and in Colchester, U.K. A joint
venture in Egypt commenced operations in 1992 to serve markets in the Middle
East. Trane is also continuing to expand its international distribution network.


e-BUSINESS

      In 1999 Trane launched a segment-wide e-business initiative aimed at
providing contractors, engineers, national accounts and other key customers
access to Trane product and systems data necessary for them to select, purchase
and service Trane products. Initially this "extranet" initiative, called the
"Trane ComfortSite", will allow contractors in North America to access all
pertinent information on residential and light commercial products and service
parts so that they will be able to select, check availability, price, purchase
and track delivery of these goods on-line, 24 hours a day, 7 days a week.

SERVICE PARTS INITIATIVES

      Trane recognizes the value of providing a convenient and reliable source
of repair parts to service all products and systems it manufactures. In support
of current and future Trane customers, a significant investment is being made to
expand the numbers of locations and provide easy access to parts needed to
maintain and repair all products that Trane manufactures and sells on a
world-wide basis.


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<PAGE>   10


PLUMBING PRODUCTS SEGMENT

      Plumbing Products manufactures and distributes bathroom and kitchen
fixtures and fittings primarily under the IDEAL STANDARD(R), AMERICAN
STANDARD(R), STANDARD(R) and PORCHER(R) names, and also under the ARMITAGE
SHANKS(R) and DOLOMITE(R) names since the February 1999 acquisition of the
Bathrooms Division of Blue Circle Industries PLC, described below. In 1999
Plumbing Products, with revenues of $1,755 million, accounted for 25% of the
Company's sales and 22% of its segment income. Plumbing Products derived 69% of
its total 1999 sales from operations outside the United States.

      Plumbing Products' sales were 55%% from chinaware fixtures, 24%% from
fittings (typically brass) and 11% from bathtubs, with the remainder consisting
of related plumbing products. Throughout the world these products are generally
sold through wholesalers and distributors and installed by plumbers and
contractors. In the U.S., a significant and growing number of products are sold
through home improvement centers. In total the residential market accounts for
approximately 75% of Plumbing Products' sales, with the commercial and
industrial markets providing the remainder.

      Plumbing Products operates through three primary geographic groups:
Americas, Europe, and the Far East. Plumbing Products' fittings operations are
organized as the Worldwide Fittings Group, with manufacturing facilities in
Germany, the U.K., Bulgaria, the U.S., Mexico, Thailand, South Korea and China.
Worldwide Fittings' sales and operating results are reported in the three
primary geographic groups within which it operates.

      The Company sells products in Europe primarily under the brand names IDEAL
STANDARD(R), ARMITAGE SHANKS(R), DOLOMITE(R) and PORCHER(R), manufactures and
distributes bathroom and kitchen fixtures and fittings through subsidiaries or
joint ventures in Germany, Italy, France, the United Kingdom, Greece, the Czech
Republic, Bulgaria and Egypt and distributes products in other European
countries. In November 1995 the Company acquired Porcher S.A. ("Porcher"), a
French manufacturer and distributor of plumbing products in which the Company
previously had a minority ownership interest. The unprofitable distribution
portion of Porcher was sold to a major French plumbing distributor in October
1998. This sale was part of a major restructuring program involving the closure
of five plants in Europe and the shift of manufacturing capacity to lower-cost
facilities in Bulgaria.

      On February 2, 1999, the Company acquired for approximately $427 million
the Bathrooms Division of Blue Circle Industries PLC, a manufacturer of ceramic
sanitaryware, brassware and integrated plumbing systems. The acquired business,
which operates principally under the names ARMITAGE SHANKS(R) and CERAMICA
DOLOMITE(R) ("Armitage/Dolomite"), had 1999 sales of $279 million (for 11 months
from the acquisition date). Armitage Dolomite has 3 major manufacturing
facilities and 5 smaller facilities located in England and Italy, and employs
approximately 2,300 people. The primary markets for its products are in England,
Italy, Ireland and Germany. Management believes that Armitage Dolomite products
complement the Company's current product lines and strengthen its competitive
position in Europe. The acquisition has been accounted for as a purchase. After
allocating the purchase price to the value of the assets acquired and
liabilities assumed, goodwill of $300 million was recorded.

      In the Far East the Company 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 and Indonesia,
and its majority-owned operations in Thailand, the Philippines and Vietnam. The
group also has operations in China, in which American Standard increased its
ownership position to approximately 55% through the purchase of additional
shares from other investors in the fourth quarter of 1997. See -"Globalization".

      Plumbing Products' Americas Group manufactures bathroom and kitchen
fixtures and fittings selling under the brand names AMERICAN STANDARD(R) and
STANDARD(R) in the U.S. and under the


                                       10
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brand names AMERICAN STANDARD(R), IDEAL STANDARD(R), and STANDARD(R) through its
wholly owned operations in Mexico, Canada and Brazil and its joint ventures in
Central America and the Dominican Republic.

      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 Company's
European and U.S. sales but only about 40% of the sales in the Far East, where
new construction is more important. In the U.S. 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. With the
exception of the U.K., the new construction market in Europe has been weak since
1994. In the U.S. the new construction market hit its recent low in 1992 but has
evidenced strong recovery through 1999. The new construction market, in which
builders or contractors make product selection, is more price-competitive and
volume-oriented than the replacement and remodeling market. In the replacement
and remodeling market, consumers make model selections and, therefore, this
market is more responsive to quality and design than price, making it the
principal market for higher-margin luxury products. Through expansion of
manufacturing in low-cost locations, Plumbing Products has become more
competitive, enabling it to increase sales of products in the lower and middle
segments of both the remodeling and new construction markets.

      Plumbing Products is also continuing 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 U.S., Plumbing Products is focusing on the unique needs of the
growing retail home center industry, using products obtained from several of the
Company's lower-cost manufacturing locations throughout the world. This market
channel has become a significant part of U.S. sales and is expected to continue
to grow.

      In an effort to capture a larger share of the replacement and remodeling
market, 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 water shortages
experienced in a number of areas of the U.S. The Company produces an extensive
line of water-saving fixtures throughout its operations. Manufacture of
water-saving toilets was mandated for residential use by federal law commencing
in January 1994 and for commercial use in January 1996.

      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 with AMERICAST(R) have the durability of cast
iron with only one-half the weight and are characterized by greater 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 the early 1990's.

      As of December 31, 1999, Plumbing Products employed approximately 25,900
people and, including affiliated companies, had 56 manufacturing plants in 22
countries.

      In the U.S., Plumbing Products has several important competitors,
including Kohler and, in selected product lines, Masco. There are also important
competitors in foreign markets, for the most part operating nationally.
Friederich Grohe, the major manufacturer of fittings in Europe, is a
pan-European competitor. In Europe, Sanitec and Roca are the major fixtures
competitors and, in the Far East, Toto is


                                       11
<PAGE>   12


the major competitor. Plumbing Products competes in most of its markets on the
basis of service to customers, product quality and design, reliability and
price.

VEHICLE CONTROL SYSTEMS SEGMENT

      Operating under the WABCO(R) name, Vehicle Control Systems designs,
manufactures and sells brake and control systems primarily for the worldwide
commercial vehicle industry. WABCO's largest selling products are pneumatic
braking control systems and related electronic controls (ABS and EBS) and
conventional components for tractors, buses, trailers and utility vehicles. In
1999 WABCO, with sales of $1,098 million, accounted for 15% of the Company's
sales and 18% of its total segment income. The Company believes that WABCO is
the worldwide technology leader for braking, suspension and transmission control
of commercial vehicles. Electronic controls, first introduced in ABS in the
early 1980's, are increasingly applied in other control systems sold to the
commercial vehicle industry.

      WABCO's 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 largest
customers are DaimlerChrysler (Mercedes and Freightliner), Volvo, Iveco (Fiat),
Scania, RVI (Renault), Paccar, Hino, Nissan and Rover. Principal competitors are
Knorr, Robert Bosch, and Honeywell. WABCO competes primarily on the basis of
customer service, quality and reliability of products, technological leadership
and price.

      The European market for new trucks, buses, trailers, and replacement parts
declined slightly in 1999 after improvements in 1998 and 1997 from a lower level
in 1996. The Brazilian market declined in 1999 and 1998 after having recovered
strongly in 1997 from a significant decline in 1996. The North American market
increased significantly from 1998.

      Since 1981, the WABCO(R) ABS system, which the Company believes leads the
market, has been installed in approximately 3.6 million heavy trucks, buses, and
trailers worldwide. WABCO has developed an advanced electronic braking system,
electronically controlled pneumatic gear and hydraulic 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 WABCO. During 1997 a major European
truck manufacturer introduced its new heavy-duty truck line which incorporated a
significant number of WABCO products, including EBS. In 1998 WABCO entered the
passenger car market with an advanced, electronically controlled air suspension
system now featured by the two leading German luxury car manufacturers. New
products under development include further advancements in electronic braking,
stability and safety controls, as well as driveline control and suspension
control systems.

      At December 31, 1999, WABCO and affiliated companies employed
approximately 6,300 people and had 15 manufacturing facilities and 11 sales
organizations operating in 20 countries. Principal manufacturing operations are
in Germany, France, the United Kingdom, the Netherlands and Brazil. WABCO has
joint ventures in the United States (Meritor WABCO and WABCO Compressor
Manufacturing Co.), in Japan with Sanwa Seiki (WABCO Japan), in India with TVS
Group (Sundaram Clayton Ltd.) and in China.



BUSINESS SEGMENT DATA

      Information concerning revenues and segment profit attributable to each of
the Company's business segments and geographic areas is set forth in the
Company's 1999 Annual Report to Stockholders on page 16, "Five-Year Financial
Summary", under the caption "Segment Data", on pages 18 through 29 under the
caption entitled "Management's Discussion and Analysis", and on page 57 in Note
15 of Notes to Consolidated Financial Statements which are incorporated herein
by reference.


                                       12
<PAGE>   13


Information concerning identifiable assets of each of the Company's business
segments is set forth on page 57 of the Company's 1999 Annual Report to
Stockholders in Note 15 of notes to Consolidated Financial Statements, 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 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:


<TABLE>
<CAPTION>
                  BUSINESS SEGMENT         TRADEMARK
                  ----------------         ---------
<S>                                        <C>
           Air Conditioning Systems and    TRANE(R)
           Services                        AMERICAN STANDARD(R)

           Plumbing Products               AMERICAN STANDARD(R)
                                           IDEAL STANDARD(R)
                                           STANDARD(R)
                                           PORCHER(R)
                                           ARMITAGE SHANKS(R)
                                           DOLOMITE(R)

           Vehicle Control Systems         WABCO(R)
</TABLE>

      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 $156 million in 1999, $143 million in
1998 and $149 million in 1997 for research and product development and for
product engineering in its four business segments. The expenditures for research
and product development alone were $103 million in 1999, $97 million in 1998 and
$99 million in 1997 and were incurred primarily by Vehicle Control Systems and
Air Conditioning Systems and Services. Vehicle Control Systems, 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
Systems and Services' research and development expenditures were primarily
related to


                                       13
<PAGE>   14


alternative refrigerants with less impact on the environment, 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.

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. The Company
believes that it is in substantial compliance with such laws and regulations. A
number of the Company's plants are undertaking responsive actions to address
soil and groundwater issues. In addition, 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 24 proceedings under the Comprehensive Environmental
Response, Compensation and Liability Act (Superfund) 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 1997, 1998 and 1999 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.

      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.

      The Company derived significant revenues in past years from sales of Air
Conditioning Systems and Services using chlorofluorocarbons ("CFCs"), and in
1999 and prior years from sales of products using hydrochloroflurocarbons
("HCFCs"). Use of CFCs, HCFCs and other ozone-depleting chemicals is to be
phased out over various periods of time under regulations that will require use
of substitute permitted refrigerants. Also, utilization of new refrigerants will
require replacement or modification of much existing air conditioning equipment.
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 utilizing CFCs is converted to operate on environmentally
preferred refrigerants or replaced, although such conversion or replacement is
expected to occur only over a period of years, and the Company is unable to
estimate the magnitude or timing of such additional conversion or replacements.
The Company has been working closely with refrigerant manufacturers that are
developing refrigerant substitutes for CFCs and HCFCs, so that the Company's
products will be compatible with those 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 refrigerant substitutes. The costs of introducing alternative refrigerants
are expected to be reflected in product pricing and accordingly are not expected
to have a material adverse impact on the Company.

      Certain 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 Systems and Services.
Although the Company has been able to meet or exceed such


                                       14
<PAGE>   15


standards to date, stricter standards in the future could require additional
research and development expense and capital expenditures to maintain
compliance.


EMPLOYEES

      The Company employed approximately 58,000 people as of December 31, 1999
(excluding employees of unconsolidated joint venture companies). The Company has
a total of 14 labor union contracts in North America (covering approximately
9,200 employees), two of which expire in 2000 (covering approximately 650
employees), two of which expire in 2001 (covering approximately 2,600 employees)
and eight of which expire in 2002 (covering 6,000 employees). There can be no
assurance that the Company will successfully negotiate the remaining labor
contracts expiring during 2000 without a work stoppage. However, the Company
does not anticipate any problems in renegotiating these contracts that would
materially affect its results of operations.

      In January 1999, 1,900 Air Conditioning Systems and Services employees
went on strike for 22 days at the Clarksville, Tennessee, manufacturing plant.
In February 1998 1,100 Air Conditioning Systems and Services employees went on
strike for 30 days at the Lexington, Kentucky, manufacturing plant. In 1997, 150
employees went on strike for 77 days at the Rushville, Indiana, air conditioning
plant. Other than these strikes, the Company has not experienced any significant
work stoppages in North America in the last five years.

      The Company also has a total of 40 labor contracts outside North America
(covering approximately 18,000 employees). In early 1996 there was a 5-week work
stoppage at the two chinaware manufacturing plants of the Philippines plumbing
products subsidiary, involving 700 employees, where the Company combined the two
facilities. Other than the Philippines work stoppage, the Company has not
experienced any significant work stoppage in the last five years outside North
America.

      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, the Czech Republic, Bulgaria,
Canada, Brazil, Mexico, Central American countries, China, Malaysia, the
Philippines, Indonesia, South Korea, Thailand, Taiwan, Vietnam 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 equity interest in the venture.

      Because the Company has manufacturing operations in 29 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 asset exposure of
foreign operations to the effects of exchange volatility has been partly offset
by the denomination in foreign currencies of a portion of the Company's
borrowings.


                                       15
<PAGE>   16


ITEM 2.   PROPERTIES

      As of December 31, 1999, the Company conducts its manufacturing activities
through 102 plants in 29 countries of which the principal facilities are:

<TABLE>
<CAPTION>
    Business Segment          Location.Location           Major Products Manufactured at Location
    ----------------          -----------------           ---------------------------------------
<S>                           <C>                         <C>
    Air Conditioning          Clarksville, TN             Commercial unitary air conditioning
      Systems and Services    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 handlers
                              Charmes, France             Applied air conditioning systems
                              Epinal, France              Unitary air conditioning systems and mini-splits
                              Ligang, China               Applied air conditioning systems
                              Taicang, China              Unitary air conditioning systems and mini-splits
                              Taipei, Taiwan              Unitary air conditioning systems
                              Sao Paulo, Brazil           Unitary air conditioning systems

    Plumbing Products         Salem, OH                   Enameled-steel fixtures and acrylic bathtubs
                              Tiffin, OH                  Vitreous china
                              Trenton, NJ                 Vitreous china
                              Toronto, Canada             Enameled-steel fixtures
                              Sevlievo, Bulgaria          Vitreous china and brass plumbing fittings
                              Teplice, Czech Republic     Vitreous china
                              Hull, England               Vitreous china and acrylic bathtubs
                              Middlewich, England         Vitreous china
                              Rugeley, England            Vitreous china and acrylic bathtubs
                              Wolverhampton, England      Brass plumbing fittings
                              Dole, France                Vitreous china
                              Revin, France               Vitreous china and bathtubs
                              Wittlich, Germany           Brass plumbing fittings
                              West Java, Indonesia        Vitreous china
                              Orcenico, Italy             Vitreous china
                              Brescia, Italy              Vitreous china
                              Trichiana, Italy            Vitreous china
                              Aguascalientes, Mexico      Vitreous china
                              Mexico City, Mexico         Vitreous china
                              Monterrey, Mexico           Brass plumbing fittings
                              Manila, Philippines         Vitreous china
                              Seoul, South Korea          Brass plumbing fittings
                              Bangkok, Thailand           Vitreous china
                              Tianjin, China              Vitreous china
                              Beijing, China              Enameled steel fixtures
                              Shanghai, China             Vitreous china and brass plumbing fittings
                              Guangdong Province, China   Vitreous china, plumbing fittings and bathtubs
                                                          enameled steel fixtures

    Braking and Control       Campinas, Brazil            Vehicle Control Systems
      Systems                 Leeds, England              Vehicle Control Systems
                              Claye-Souilly, France       Vehicle Control Systems
                              Hanover, Germany            Vehicle Control Systems
                              Mannheim, Germany           Foundation brakes
</TABLE>



                                       16
<PAGE>   17


      Except for the property located in Manila, Philippines which is leased,
all of the plants described above are owned by the Company or a subsidiary. 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 1999 several Air Conditioning Systems and Services' plants operated at
or near capacity and others operated moderately below capacity.

      In 1999 Plumbing Products' plants worldwide operated at levels of
utilization which varied from country to country, but overall were satisfactory.

      Vehicle Control Systems' plants generally operated at good utilization
levels in 1999.


ITEM 3.  LEGAL PROCEEDINGS

      In October 1999, in Haynes Trane Service Agency, Inc. and Frederick M.
Haynes v. American Standard, Inc., d/b/a The Trane Company, in the United States
District Court for the District of Colorado, verdicts were returned against the
Company for a total of $18 million in respect of claims of wrongful termination
of a distributorship agreement. The Company is currently seeking relief from the
verdicts at the trial court level and, if necessary, will appeal to the United
States Court of Appeals for the Tenth Circuit. The Company believes material
errors were made at the trial level and that the captioned matter was wrongly
decided.

      As a result of audits of the Company's German subsidiaries by The State
Finance Administration for the State of North Rhine-Westphalia, Germany for the
periods 1984 through 1990 and 1991 through 1994, the Company has previously
received two assessments for the 1984-1990 audit period which the Company has
been contesting. The Company believes, based on the opinion of our external
German legal counsel, that its German tax returns are substantially correct as
filed and that any adjustments would be inappropriate. Unless the Company is
otherwise able to reach a satisfactory resolution of these matters with the
German Tax Authority, the Company intends to contest vigorously the pending
assessments and any other amounts that may be assessed.

      The first assessment was issued in 1992 and was for approximately $16
million of combined corporation and trade taxes and claimed a disallowance of a
deduction of interest expense related to an intercompany finance instrument.
Later in 1992 the amount of the assessment was deposited with the German tax
authorities as security for the disputed tax and a suit to recover that amount
was promptly commenced and is currently pending before the Tax Court for the
State of North Rhine-Westphalia in Cologne, Germany. As a result of making the
deposit, no interest will accrue on the amount under dispute. The second
assessment, received in March 1996, was for approximately $56 million of
combined corporation and trade taxes. Were the Company not to prevail in its
dispute of this assessment, the Company could be required to pay interest on the
assessed amount of approximately $18 million as of December 31, 1999. Interest
on assessed and unpaid taxes accrues, on a non-compounding basis, at the rate of
six percent per annum commencing fifteen months after the end of the tax year
for which the tax is assessed. The second assessment claimed primarily that
earnings of a Dutch subsidiary should have been recognized as income taxable in
Germany. In early 1997, the German tax authority agreed to accept a partial
deposit of $16 million in respect of the second assessment and the Company
commenced an administrative appeal of the assessment with the German tax
authority. The amounts paid in 1992 and 1997 were recorded as assets on the
Company's consolidated balance sheets because the Company, expecting to prevail
in litigation of these matters, would recover such amounts and, therefore,
appropriately accounted for them as receivables. This position is based upon the
opinion of the Company's external German legal counsel, referred to above, that
the Company's German tax returns are substantially correct as filed and that
adjustments would be inappropriate.

      In 1998, in connection with the development of the Company's plan to
restructure its plumbing operations in Germany, the Company entered into
discussions with certain German regulatory authorities


                                       17
<PAGE>   18


which could have resulted in an offer to settle the primary issue under dispute
with respect to the second assessment, including all corporation and trade taxes
and accrued interest. On January 22, 1999 the Company's administrative appeal of
the second assessment and any offer of settlement was rejected.

      In February 1999, the Company filed notice of appeal with the German Tax
Court and moved to join its appeal of the first assessment with the appeal of
the second assessment. In addition, the Company requested an order from the
German tax authority staying its obligation to pay the amount of the second
assessment during the pendency of the appeal. The German Tax Authority is
obligated by law to grant an order staying payment of disputed tax until final
resolution of the matter if the assessment is subject to serious doubt. On March
15, 1999, the staying order was granted. The Company has agreed to leave the
amount already deposited with the German tax authority pending final resolution
of the dispute. In the ordinary course, it is anticipated that litigation of the
Company's appeal before the State Tax Court will require five to seven years and
that any appeal thereafter to the federal Supreme German Tax Court would require
an additional two or three years. Although the Company's 1998 proposal of
settlement was rejected, the Company has continued to pursue settlement on
appropriate terms.

      The Company recorded a loss contingency in 1998 in the amount of the
deposits related to the first and second assessments, related trade taxes and
accrued interest thereon, which amount represents the amount for which the
Company would have been willing in 1998 to settle the issue related to the
second assessment. Based on the opinion of the Company's external German legal
counsel referred to above, the Company intends to vigorously contest and to
litigate these disputed German tax matters, and no additional contingency with
respect to such matters has been recorded.

      With respect to the 1991-1994 audit period, the Company engaged in
significant transactions similar to those that gave rise to the assessments in
the prior audit period and, with respect to a matter related to the intercompany
instrument at issue in connection with the first assessment, the German tax
auditors have proposed an adjustment of approximately $40 million. In addition,
because the German tax authorities assessed additional taxes for the 1984-1990
audit period they might, after completing their audit of the later period,
propose further adjustments for the 1991-1994 audit period related to the
subject matter of the second assessment that might be as much as fifty percent
higher than the amount of the assessments in the first audit period. Although
the Company is unable to predict when the audit of its German tax returns for
the 1991-1994 period will be complete or the amount of any additional taxes that
may be assessed, the Company believes the audit may be completed prior to the
end of 2000.

      If all matters currently under review by the German tax authorities were
made the subject of assessments and either no orders staying the payment of such
amounts following assessment or during the pendency of our appeal were granted
or the Company was finally determined to owe the full amount of all such taxes,
the Company could be required to pay all assessed amounts plus accrued interest
thereon. The total amount of any payments made with respect to the tax matters
described above, and the timing thereof, could have a material adverse effect on
the Company's liquidity, cash flow and/or results of operation and,
consequently, impair the Company's competitive position. In addition, the
Company might need to raise additional capital and no assurance can be given as
to the availability of debt or equity financing if such need were to arise. See
Note 8 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.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of the Company's stockholders during the
fourth quarter of 1999.


                                       18
<PAGE>   19


EXECUTIVE OFFICERS OF THE REGISTRANT

      In reliance on General Instruction G to Form 10-K, information on
executive officers of the Registrant is included in this Part I. The following
table sets forth certain information as of March 1, 2000 with respect to each
person who is an executive officer of the Company:

<TABLE>
<CAPTION>
            NAME                  AGE                            POSITION WITH COMPANY
 ---------------                 ----   -----------------------------------------------
<S>                               <C>    <C>
 Frederic M. Poses                57     Chairman and Chief Executive Officer, and Director
 G. Peter D'Aloia                 55     Senior Vice President and Chief Financial Officer
 W.  Craig Kissel                 49     Senior Vice President, Vehicle Control Systems
 J. Paul McGrath                  59     Senior Vice President, General Counsel and Secretary
 Alexander A. Apostolopoulos      57     Vice President, Plumbing Products, Product and Business Development
 Thomas S. Battaglia              57     Vice President and Treasurer
 Gary A. Brogoch                  49     Vice President and Group Executive, Plumbing Products, Asia Pacific
 Michael C.R. Broughton           59     Vice President, Vehicle Control Systems, Leeds Operations
 Roberto Canizares M.             50     Vice President, Air Conditioning Systems and Services, Worldwide Applied
                                            Systems, Distribution
 Wilfried Delker                  59     Vice President and Group Executive, Plumbing Products, Worldwide Fittings
 George H. Kerckhove              62     Vice President and Director
 Alberto Loreti                   58     Vice President and Group Executive, Plumbing Products, Europe
 Jean-Claude Montauze             53     Vice President, Vehicle Control Systems, Claye-Souilly Operations
 G. Eric Nutter                   64     Vice President and Group Executive, Americas Plumbing Products Group
 David R. Pannier                 49     Vice President and Group Executive, Air Conditioning Systems and Services,
                                            North American Unitary Products
 Raymond D. Pipes                 50     Vice President, Investor Relations
 James H. Schultz                 51     Vice President and Group Executive, Air Conditioning Systems and
                                            Services, Worldwide Applied Systems
 G. Ronald Simon                  58     Vice President and Controller
 Wolfgang Voss                    53     Vice President, Vehicle Control Systems, Order Fulfillment
 Robert M. Wellbrock              53     Vice President, Taxes
</TABLE>

      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. Poses was elected Chief Executive Officer effective January 1, 2000.
Prior to that, beginning in 1998, he was President and Chief Operating Officer
of AlliedSignal, Inc., having spent his entire 30-year business career with that
corporation. He was also a Director and Vice Chairman of AlliedSignal from 1997
until October 22, 1999 following his election to the Board of American Standard
Companies Inc.

      Mr. D'Aloia was elected Senior Vice President and Chief Financial Officer
effective February 1, 2000. Prior to that he was employed by Honeywell
International, Inc., most recently serving as Vice President Business
Development. He spent 27 years with Honeywell's predecessor company,
AlliedSignal, Inc. in diverse management positions, including Vice President -
Taxes, Vice President and Treasurer, Vice President and Controller, and Vice
President and Chief Financial Officer for the Engineered Materials Sector.

      Mr. Kissel was elected Senior Vice President, Vehicle Control Systems
in January 1998. Prior thereto he was Vice President of Air Conditioning
Systems and Services' Unitary Products Group since January 1992, becoming
Group Executive in March 1994.

      Mr. McGrath joined the Company as Senior Vice President, General Counsel
and Secretary, effective January 17, 2000. From 1996 until that date, he served
as Senior Vice President, General


                                       19
<PAGE>   20


Counsel and Secretary of FMC Corporation and prior to that, was Vice President
and General Counsel of AlliedSignal's Engineered Materials business.

      Mr. Apostolopoulos was elected a Vice President in December 1990. In
December 1998 he became Vice President, Product and Business Development for
Plumbing Products. From December 1990 to September 1998 he served as Vice
President and Group Executive, Plumbing Products, Americas International.

      Mr. Battaglia was elected Vice President and Treasurer in September
1991.

      Mr. Brogoch was elected Vice President in December 1994, and has served as
Group Executive of the Asia Pacific Plumbing Group since the consolidation of
the Far East and China Plumbing Groups in February 1997. Prior thereto he was
Group executive of the China Plumbing Group from December 1994 until February
1997.

      Mr. Broughton was elected a Vice President in January 1997. In February
1999 he became Vice President, Vehicle Control Systems, Leeds, Operations. He
served as Vice President in charge of the United Kingdom operations of Vehicle
Control Systems from January 1997 until February 1999. Prior thereto he served
as Managing Director (Business Leader) of that Group from May 1995 to December
1996, and as Process Owner, Order Fulfillment from 1993 to May 1995.

      Mr. Canizares was elected Vice President in December 1990. In June 1998 he
became VP, Distribution, for the Worldwide Applied System Group, after having
responsibility for the Air Conditioning Systems and Services Sector's
International Applied Business from January 1998 until June. Prior thereto, from
December 1990, he was in charge of the Trane Asia Pacific Region.

      Mr. Delker was elected Vice President and Group Executive, Plumbing
Products, Worldwide Fittings, in April 1990.

      Mr. Kerckhove was elected Vice President in January 1998. Prior thereto
he was Senior Vice President, Plumbing Products, since June 1990.  Mr.
Kerckhove has served as a director of the Company since September 1990.

      Mr. Loreti was elected Vice President and Group Executive, Plumbing
Products, Europe, in March 1999. From November 1996 until March 1999 he was
Business Leader of the Company's Sanifrance operations in France and of the
Italian plumbing company. Prior thereto he was Managing Director and General
Manager of the Italian plumbing company since 1990.

      Mr. Montauze was elected a Vice President in October 1994. In February
1999 he became Vice President, Vehicle Control Systems, Claye-Souilly
Operations. He served as Vice President in charge of the French operations of
Vehicle Control Systems from October 1994 until February 1999.

      Mr. Nutter was elected Vice President and Group Executive, U.S.
Plumbing Products, in May 1995 and has been Vice President and Group
Executive, Plumbing Products, Americas, since January 1998. Prior thereto he
served as Vice President, Vehicle Control Systems, United Kingdom from
January 1992.

      Mr. Pannier was elected Vice President and Group Executive, North American
Unitary Products Group in January 1998. He served as Coach of Unitary Products
Group Marketing and Sales from July 1995 until December 1997, and prior thereto
as Vice President, Residential Marketing from November 1991 until July 1995.

      Mr. Pipes was elected as Vice President in May 1992, and has been Vice
President, Investor Relations since January 1998. Prior thereto he was
responsible for Corporate Development programs since February 1997 and served as
Group Executive for the Far East Region of Plumbing Products from May 1992 until
February 1997.


                                       20
<PAGE>   21


      Mr. Schultz was elected a Vice President in 1987 and has been Vice
President and Group Executive, Worldwide Applied Systems, Air Conditioning
Systems and Services since January 1998. Prior thereto he served as Group
Executive, North American Commercial Group of Air Conditioning Systems and
Services, since 1987.

      Mr. Simon was elected Vice President and Controller in January 1992.

      Mr. Voss was elected a Vice President in July 1995. In February 1999 he
became Vice President, Vehicle Control Systems, Order Fulfillment. He served as
Vice President and Group Executive, European Plumbing Products from July 1995
until February 1999. Prior thereto, he served as Process Owner, Order
Fulfillment of the WABCO Automotive company in Germany from January 1994 to June
1995.

      Mr. Wellbrock was elected Vice President, Taxes, effective January 1,
1994.


                                       21
<PAGE>   22


                                     PART II


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
(the "Exchange"). The common stock was first traded on the Exchange on February
3, 1995 concurrent with the underwritten initial public offering of shares of
the Company's common stock at an initial price to the public of $20.00 per share
(the "Offering"). Prior to the Offering there was no established public trading
market for the Company's shares.

      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, 2000, was 951.

      No dividends have been declared on the Company's common stock since the
Offering. The Company has no separate operations and its ability to pay
dividends or repurchase its common stock is dependent entirely upon the extent
to which it receives dividends or other funds from its wholly-owned
subsidiaries, American Standard Inc. and American Standard International Inc.
The terms of the Company's 1997 Credit Agreement restrict the payment of
dividends and other extensions of funds by American Standard Inc. and American
Standard International Inc. to the Company.

      Set forth below are the high and low sales prices for shares of the
Company's common stock for each quarterly period in 1998 and 1999.


<TABLE>
<CAPTION>
                             1998:         High        Low
                             -----         ----        ---
<S>                                       <C>        <C>
                        First quarter     $48-1/4    $37-3/8
                        Second quarter    $49-1/4    $39-7/8
                        Third quarter     $48-7/16   $24-5/16
                        Fourth quarter    $37-7/8    $21-5/8

                             1999:
                        First quarter     $35-3/4    $31-3/8
                        Second quarter    $49-7/16   $34-5/8
                        Third quarter     $49-1/4    $38-3/8
                        Fourth quarter    $46        $33-3/8
</TABLE>


                                       22
<PAGE>   23


ITEM 6. SELECTED FINANCIAL DATA


                             SELECTED FINANCIAL DATA
                  (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                             YEAR ENDED DECEMBER 31
                                                                             ----------------------
                                                    1999             1998             1997             1996             1995
                                                ------------     ------------     ------------     ------------     ------------
<S>                                             <C>              <C>              <C>              <C>              <C>
STATEMENT OF OPERATIONS DATA:
----------------------------
Sales                                           $      7,190     $      6,556     $      5,958     $      5,805     $      5,221
                                                ============     ============     ============     ============     ============

Segment income                                  $        751     $        658     $        632     $        605     $        551
Equity in net income of
   unconsolidated joint
   ventures                                               37               27               12                3                7
Restructuring and asset
   impairment charges (a)                                (15)            (197)              --             (235)              --
Interest expense                                        (188)            (188)            (192)            (198)            (213)
Corporate expenses                                      (134)            (110)            (105)            (104)            (111)
                                                ------------     ------------     ------------     ------------     ------------
Income from continuing
   operations before income taxes
   and extraordinary item                                451              190              347               71              234
Income taxes                                            (187)            (141)            (124)            (105)             (85)
                                                ------------     ------------     ------------     ------------     ------------
Income (loss) from continuing
   operations before extraordinary
   item (b)                                     $        264     $         49     $        223     $        (34)    $        149
                                                ============     ============     ============     ============     ============
Per Common Share:
   Income (loss) from continuing
   operations before extraordinary
   item:
         Basic                                  $       3.74     $        .68     $       3.03     $       (.44)    $       2.00
                                                ============     ============     ============     ============     ============

         Diluted                                $       3.63     $        .66     $       2.93     $       (.44)    $       1.97
                                                ============     ============     ============     ============     ============

Average number of outstanding Common shares:
         Basic                                    70,524,145       71,729,541       73,801,220       77,986,511       74,671,830
         Diluted                                  72,666,406       73,672,018       76,167,486       77,986,511       75,823,854

BALANCE SHEET DATA (at end of
------------------
   period):
   Total assets                                 $      4,686     $      4,107     $      3,718     $      3,520     $      3,520
   Total debt                                          2,643            2,428            2,300            1,923            2,083
   Stockholders' deficit                                (497)            (701)            (610)            (380)            (390)
</TABLE>


(a)   In 1999 the Company recorded restructuring and asset impairment charges of
      $15 million ($9 million, net of tax benefits, or $.13 per diluted share).
      These consist of restructuring charges of $30 million principally for
      Vehicle Control Systems and a $13 million impairment charge relating to a
      minority equity interest in a non-core business, partly offset by a
      reduction of charges taken in 1998 to restructure North American Plumbing
      Products Operations. In 1998 the Company recorded restructuring and asset
      impairment charges of $197 million ($183 million, net of tax, or $2.49 per
      diluted share.) Effective January 1, 1996, the Company adopted Statement
      of Financial Accounting Standards No. 121, Accounting for the Impairment
      of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,
      resulting in a non-cash charge of $235 million, or $2.95 per diluted
      share.

(b)   Retirements of debt in connection with debt refinancing in 1998 and 1997
      and the initial public offering in 1995 resulted in extraordinary charges
      of $50 million (net of taxes of $7 million) in 1998, $24 million (net of
      taxes of $6 million) in 1997, and $30 million in 1995 on which there was
      no tax benefit. These charges included call premiums and the write-off of
      deferred debt issuance costs (see


                                       23
<PAGE>   24


      Note 11 of Notes to Consolidated Financial Statements included in the
      Company's 1999 Annual Report to Stockholders and incorporated herein by
      reference).


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

   Management's discussion and analysis of the financial condition and results
of operations of the Company is set forth on pages 18 through 29 of the
Company's Annual report to Stockholders and is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   Quantitative and qualitative disclosures about market risk are set forth in
the Company's Annual Report to Stockholders on pages 28 and 29 under the caption
"Market Risk" and on page 55 in Note 13 to the financial statements and are
incorporated herein by reference.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

   Incorporated herein by reference from the Company's Annual Report to
Stockholders are the financial statements and related information listed in the
Index to Financial Statements and Financial Statement Schedules on page 27
hereof.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not Applicable.


                                       24
<PAGE>   25


                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      Except for information regarding the Company's executive officers, the
information called for by this Item is incorporated in this report by reference
to the Company's definitive Proxy Statement dated March 27, 2000: under the
headings: "Stock Ownership" and "1. Election of Directors", except for
information not deemed to be "soliciting material" or "filed" with the SEC,
information subject to Regulations 14A or 14C under the Exchange Act or
information subject to the liabilities of Section 18 of the Exchange Act.

      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. EXECUTIVE COMPENSATION

      Information concerning executive compensation and related matters is set
forth in the Company's definitive Proxy Statement dated March 27, 2000 as
follows: under the section entitled "Directors' Fees and Other Arrangements" on
page 7 thereof, under the heading entitled "Executive Compensation" on pages 10
through 14 thereof, under the heading entitled "Compensation Committee
Interlocks and Insider Participation" on page 18 and under the heading entitled
"Certain Relationships and Related Party Transactions" on page 18 thereof, and
is incorporated herein by reference except for the sections entitled "Management
Development and Nominating Committee Report on Compensation of Executive
Officers of the Company" and "Performance Graph" appearing on pages 15 through
18 except for information not deemed to be "soliciting material" or "filed" with
the SEC, information subject to Regulations 14A or 14C under the Exchange Act or
information subject to the liabilities of Section 18 of the Exchange Act.


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 heading entitled "Stock
Ownership" on pages 4 and 5 in the Company's definitive Proxy Statement dated
March 27, 2000 and is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      The information required by this item is incorporated in this report by
reference to the Company's definitive Proxy Statement dated March 27, 2000 under
the section entitled "Certain Relationships and Related Party Transactions",
except for information not deemed to be "soliciting material" or "filed" with
the SEC, information subject to Regulations 14A or 14C under the Exchange Act or
information subject to the liabilities of Section 18 of the Exchange Act.



                                       25
<PAGE>   26


                                     PART IV

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 listed in
          the Index to Financial Statements and Financial Statement Schedules on
          page 27 hereof incorporated herein by reference.

     3.   Exhibits

          The exhibits to this Report 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

          During the quarter ended December 31, 1999, the company filed a
          Current Report on Form 8-K which included the text of a press release
          announcing the election on October 7, 1999, of Frederic M. Poses as
          Chairman and Chief Executive Officer of the Company effective January
          1, 2000, and as a Director of the Company effective immediately. Also
          included were the texts of separate press releases announcing the
          Company's decision to sell its Medical Systems Group and the election
          of Jared L. Cohon as a Director.


                                       26
<PAGE>   27


                          INDEX TO FINANCIAL STATEMENTS
                        AND FINANCIAL STATEMENT SCHEDULES
                                   COVERED BY
                     REPORT OF CERTIFIED PUBLIC ACCOUNTANTS

<TABLE>
<CAPTION>
                                                                    ------------
                                                                       1999
                                                                       ANNUAL
                                                                       REPORT
                                                                         TO
                                                                    STOCKHOLDERS
                                                                       (PAGES)
                                                                    ------------
<S>                                                                      <C>
1.  Financial Statements (incorporated by reference from
      the Company's 1999 Annual Report to Stockholders)

    Consolidated Balance Sheet at
          December 31, 1999, and 1998                                     34
    Years ended December 31, 1999, 1998, and 1997:
          Consolidated Statement of Operations                            32
          Consolidated Statement of Cash Flows                            33
          Consolidated Statement of Stockholders' Deficit                 36
    Notes to Financial Statements                                        37-65
    Segment Data                                                         16,57
    Quarterly Data (Unaudited)                                           66,67
    Report of Independent Auditors                                         31
</TABLE>

<TABLE>
<CAPTION>
                                                                    ------------
                                                                     FORM 10-K
                                                                       (PAGES)
                                                                    ------------
<S>                                                                 <C>
2.  Report of Independent Auditors                                        34
    Financial statement schedules, years ended
      December 31, 1999, 1998, and 1997
    I    Condensed Financial Information of Registrant                  35-38
   II    Valuation and Qualifying Accounts                                39
</TABLE>

   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.


                                       27
<PAGE>   28


                        AMERICAN 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 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") the Commission File Number of which is 33-64450. 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 Holding's Form 10-Q for the quarter ended September 30, 1998 and
herein incorporated by reference.

      (ii)  Amended and Restated By-laws of Holding, filed herewith.

(4)   (i)   Form of Common Stock Certificate; previously filed as Exhibit 4(i)
            in Amendment No. 3 to Registration Statement No. 33-56409 of
            Holding, 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) to 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) to Registration Statement No. 33-64450 of the
            Company, filed June 16, 1993, and herein incorporated by reference.

      (iv)  First Supplemental Indenture, dated as of February 1, 2000 among the
            Company, Holding and Wilmington Trust Company, as Trustee, filed
            herewith.

      (v)   Form of Senior Debt Indenture dated as of January 15, 1998 among the
            Company, Holding and The Bank of New York; filed as Exhibit (4) (i)
            to Amendment No. 1 to Registration Statement No. 333-32627 filed
            September 19, 1997, and herein incorporated by reference.

      (vi)  Indenture dated as of January 15, 1998 among the Company, Holding
            and The Bank of New York, Trustee; previously filed as Exhibit 4.1
            in Holding's Form 10- Q for the quarter ended September 30, 1998,
            and herein incorporated by reference.

      (vii) First Supplemental Indenture dated as of January 15, 1998 between
            the Company, Holding and The Bank of New York, relating to the
            Company's 7.375% Senior Notes due 2008, guaranteed by Holding;
            previously filed as Exhibit (4)(xi) in Holding's Form 10-K for the
            fiscal year ended December 31, 1997, and herein incorporated by
            reference.


                                       28
<PAGE>   29


      (viii)Second Supplemental Indenture dated as of February 13, 1998 between
            the Company, Holding and The Bank of New York relating to the
            Company's 7-1/8% Senior Notes due 2003 and 7-5/8% Senior Notes due
            2010, guaranteed by Holding; previously filed as Exhibit (4)(xii) in
            Holding's Form 10-K for the fiscal year ended December 31, 1997, and
            herein incorporated by reference.

      (ix)  Third Supplemental Indenture dated as of April 13, 1998 to the
            Indenture dated as of January 15, 1998 among the Company, Holding
            and The Bank of New York relating to the 7-3/8% Senior Notes due
            2005; previously filed as Exhibit 4.2 in Holding's Form 10-Q for the
            quarter ended September 30, 1998 and herein incorporated by
            reference.

      (x)   Fourth Supplemental Indenture dated as of May 28, 1999 to the
            Indenture dated as of January 15, 1998 among the Company, Holding
            and The Bank of New York relating to the 8.25% Senior Notes due;
            filed herewith.

      (xi)  Fifth Supplemental Indenture dated as of May 28, 1999 to the
            Indenture dated as of May 28, 1999 among the Company, Holding and
            The Bank of New York relating to the 8.25% Senior Notes due 2009;
            filed herewith.

      (xii) Sixth Supplemental Indenture dated as of May 28, 1999 to the
            Indenture dated as of May 28, 1999 among the Company, Holding and
            The Bank of New York relating to the 7.125% Senior Notes due 2006,
            filed herewith.

      (xiii)Amended and Restated Credit Agreement, dated as of January 31,
            1997, among Holding, the Company, certain subsidiaries of the
            Company and the financial institutions listed therein, The Chase
            Manhattan Bank, as Administrative Agent; Citibank, N. A., as
            Documentation Agent; The Bank of Nova Scotia and NationsBank, N. A.,
            as Co-Syndication Agents; Bankers Trust Company, Deutsche Bank AG,
            The Industrial Bank of Japan Trust Company, The Sanwa Bank Limited,
            New York Branch and The Sumitomo Bank, Ltd., as Senior Managing
            Agents; and The Bank of New York, Banque Paribas, CIBC Inc., CIBC
            Wood Gundy plc, Compagnie Financiere de CIC et de L'Union
            Europeenne, Credit Lyonnais, New York Branch, Fleet National Bank,
            The Long Tem Credit Bank of Japan, Limited and The Toronto-Dominion
            Bank, as Managing Agents; previously filed as Exhibit (4) (xviii) to
            Amendment No. 2 to Registration Statement No. 333-18015, filed
            February 5, 1997, and herein incorporated by reference.

      (xiv) First Amendment dated as of May 22, 1997 to the Amended and Restated
            Credit Agreement dated as of January 31, 1997 among Holding, the
            Company, certain subsidiaries of the Company, the financial
            institutions party thereto and The Chase Manhattan Bank, as
            administrative agent; previously filed as Exhibit 4 (a) to Holding's
            Report on Form 8-K dated October 24, 1997, and herein incorporated
            by reference.

      (xv)  Second Amendment dated as of August 20, 1997 to the Amended and
            Restated Credit Agreement dated as of January 31, 1997 among
            Holding, the Company, certain subsidiaries of the Company, the
            financial institutions party thereto and The Chase Manhattan Bank,
            as administrative agent; previously filed as Exhibit 4 (b) to
            Holding's Report on Form 8-K dated October 24, 1997, and herein
            incorporated by reference.

      (xvi) Third Amendment dated as of August 7, 1998 to the Amended and
            Restated Credit Agreement dated as of January 31, 1997 among
            Holding, the Company, certain subsidiaries of the Company, the
            financial institutions party thereto and The Chase Manhattan Bank,
            as Administrative Agent; previously filed as Exhibit 4.3 in
            Holding's Form 10-Q for the quarter ended September 30, 1998, and
            herein incorporated by reference.

      (xvii)Fourth Amendment dated as of December 22, 1998 to the Amended and
            Restated Credit Agreement dated as of January 31, 1997 among
            Holding, the Company, certain


                                       29
<PAGE>   30


              subsidiaries of the Company, the financial institutions party
              thereto and The Chase Manhattan Bank, as Administrative Agent;
              previously filed as Exhibit 4 in Holding's Form 8-K dated December
              22, 1998, filed February 12, 1999, and herein incorporated by
              reference.

      (xviii) Fifth Amendment dated as of November 30, 1999 to the Amended and
              Restated Credit Agreement dated as of January 31, 1997 among
              Holding, the Company, certain subsidiaries of the Company, the
              financial institutions party thereto and The Chase Manhattan Bank,
              as Administrative Agent; filed herewith.

      (xix)   Rights Agreement, dated as of January 5, 1995, between Holding and
              Citibank N.A. as Rights Agent; previously filed as Exhibit (4)
              (xxv) to Holding's Form 10-K for the fiscal year ended December
              31, 1994, and herein incorporated by reference.

(10)* (i)     Employment Agreement of Frederic M. Poses, previously filed as
              Exhibit (10) to Holding's Form 10-Q for the third quarter ended
              September 30, 1999, and herein incorporated by reference.

      (ii)    The American Standard Companies Inc. Employee Stock Purchase Plan;
              previously filed as Exhibit (10)(i) in Holding's Form 10-K for the
              fiscal year ended December 31, 1997, and herein incorporated by
              reference.

      (iii)   American Standard Inc. Long-Term Incentive Compensation Plan, as
              amended and restated on December 5, 1996; incorporated herein by
              reference to Exhibit (10) (i) of Company's Form 10-K for the
              fiscal year ended December 31, 1996.

      (iv)    Trust Agreement for American Standard Inc. Long-Term Incentive
              Compensation Plan and American Standard Companies Inc.
              Supplemental Incentive Compensation Plan, as amended and restated
              on December 5, 1996; incorporated herein by reference to Exhibit
              (10) (ii) of Company's Form 10-K for the fiscal year ended
              December 31, 1996.

      (v)     American Standard Inc. Annual Incentive Plan, as amended and
              restated on December 5, 1996; incorporated herein by reference to
              Exhibit (10) (iii) of Company's Form 10-K for the fiscal year
              ended December 31, 1996.

      (vi)    American Standard Inc. Executive Supplemental Retirement Benefit
              Program, as restated to include all amendments through July 6,
              1995; incorporated herein by reference to Exhibit (10) (iv) of
              Company's Form 10-K for the fiscal year ended December 31, 1995.

      (vii)   American Standard Inc. Supplemental Compensation Plan for Outside
              Directors, as amended through December 4, 1997; incorporated
              herein by reference to Exhibit (10) (v) to the Company's Form 10-K
              for the fiscal year ended December 31, 1997.

      (viii)  Trust Agreement for the American Standard Inc. Supplemental
              Compensation Plan for Outside Directors, dated March 7, 1996;
              incorporated herein by reference to Exhibit (10) (vi) to the
              Company's Form 10-K for the fiscal year ended December 31, 1997.

      (ix)    American Standard Companies Inc. Corporate Officer Severance Plan,
              as amended and restated as of December 2, 1999; filed herewith.

      (x)     Summary of terms of Unfunded Deferred Compensation Plan adopted
              December 2, 1993; previously filed as Exhibit (10) (xviii) to the
              Company's Form 10-K for the fiscal year ended December 31, 1993
              and herein incorporated by reference.

*Items in this section 10 constitute management contracts or compensatory plans
 or arrangements with the exception of (10) (xvi), (xvii) and (xviii).


                                       30
<PAGE>   31


      (xi)    American Standard Companies Inc. Stock Incentive Plan, as amended
              and restated on December 2, 1999, filed herewith.

      (xii)   Addendum to Stock Incentive Plan referred to in Exhibit (10) (xi)
              above to comply with local regulations in the United Kingdom with
              respect to options granted in that country, filed herewith.

      (xiii)  Addendum to Stock Incentive Plan referred to in Exhibit (10) (xi)
              above to comply with local regulations in France with respect to
              options granted in that country, filed herewith.

      (xiv)   American Standard Companies Inc. and Subsidiaries 1997-1999
              Supplemental Incentive Plan as described in the American Standard
              Companies Inc. Notice of Annual Meeting of Stockholders and Proxy
              Statement, May 7, 1998, on pages 11 and 18 and herein incorporated
              by reference. The plan was amended on March 4, 1999 to extend the
              performance period through the year 2000 and modify the target
              conditions for the achievement of awards under the Plan and is now
              called the American Standard Companies Inc. and Subsidiaries
              1997-2000 Supplemental Incentive Plan.

      (xv)    Form of Indemnification Agreement; previously filed as Exhibit
              (10) (xxi) in Amendment No. 3 to Registration Statement No.
              33-56409, filed January 5, 1995, and herein incorporated by
              reference.

      (xvi)   Stock Disposition Agreement, dated as of December 16, 1996, among
              Holding, Kelso & Company, L.P. and Kelso ASI Partners, L.P.;
              previously filed as Exhibit (10) (i) to Registration Statement No.
              333-18015, filed December 17, 1996, and herein incorporated by
              reference.

      (xvii)  Form of Warrant Agreement between Holding and Citibank, N. A. as
              Warrant Agent, included as Annex A to the Stock Disposition
              Agreement described in (10) (xvi) above; previously filed as
              Exhibit (10) (ii) to Registration Statement No. 333-18015, filed
              December 17, 1996, and herein incorporated by reference.

      (xviii) Share Purchase Agreement dated February 2,1999 among Blue Circle
              Industries PLC; Blue Circle Bathrooms Limited; Blue Circle Home
              Products BV; Blue Circle Home Products Beteiligungs-GmbH and Ideal
              Standard Limited; Ideal Standard S.r.l.; WABCO Standard GmbH and
              U.S. Plumbing Products Inc.; Ideal Standard IBV Limited; WABCO
              Standard Export Inc.; previously filed as Exhibit 2 in Holding's
              Form 8-K, dated December 22, 1998, filed February 12, 1999, and
              herein incorporated by reference.

      (xix)   Amendment of Employment Agreement of Frederic M. Poses referred
              to in Exhibit (10)(i) above, filed herewith.

(12)          Ratio of Earnings to Fixed Charges.

(13)          1999 Annual Report to Stockholders. Only those portions
              specifically incorporated by reference are filed; no other
              portions of the 1999 Annual Report to Stockholders are to be
              deemed filed.

(21)          Listing of Holding's subsidiaries.

(23)          Consent of Ernst & Young LLP.

(27)          Financial Data Schedule.


                                       31
<PAGE>   32


                                   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/  Frederic M. Poses
                                              --------------------------
                                                     (Frederic M. Poses)
                                    Chairman and Chief Executive Officer


March 29, 2000

      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:

      /s/  FREDERIC M. POSES
      ----------------------
      (Frederic M. Poses)                  Chairman, President and Chief
                                           Executive
                                           Officer; Director
                                           (Principal Executive Officer)

      /s/ G. PETER D'ALOIA
      --------------------
      (G.  Peter D'Aloia)                  Senior 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/  JARED L. COHON
      -------------------
      (Jared L. Cohon)                     Director

      /s/  JAMES F. HARDYMON
      ----------------------
      (James F. Hardymon)                  Director

      /s/  GEORGE H. KERCKHOVE
      ------------------------
      (George H. Kerckhove)                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



                                       32
<PAGE>   33


INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

Certain of the statements contained in this report (other than the historical
financial data and other statements of historical fact), including, without
limitation, statements as to management's expectations and belief, are
forward-looking statements. Forward-looking statements are made based upon
management's good faith expectations and belief concerning future developments
and their potential effect upon the Company. There can be no assurance that
future developments will be in accordance with such expectations or that the
effect of future developments on the Company will be those anticipated by
management. Many important factors could cause actual results to differ
materially from management's expectations, including the level of construction
activity in the Company's Air Conditioning Systems and Services' and Plumbing
Products' markets; the timing of completion and success in the start-up of new
production facilities; changes in U.S. or international economic conditions,
such as inflation or interest rate fluctuations or recessions in the Company's
markets; pricing changes to the Company's supplies or products or those of its
competitors, and other competitive pressures on pricing and sales; labor
relations; integration of acquired businesses; risks generally relating to the
Company's international operations, including governmental, regulatory or
political changes; changes in environmental, health or other regulations that
may affect one or more of the Company's products or potential products and the
inability to obtain regulatory approvals for one or more of the Company's
potential products; changes in laws or different interpretations of laws
including the risk that German judicial authorities will disagree with the
opinions of the Company's German legal counsel; the planned redemption of debt;
the impact of the Far East economic situation; and transactions or other events
affecting the need for, timing and extent of the Company's capital expenditures.


                                       33
<PAGE>   34


REPORT OF INDEPENDENT AUDITORS

We have audited the consolidated financial statements of American Standard
Companies Inc. as of December 31, 1999 and 1998, and for each of the three years
in the period ended December 31, 1999, and have issued our report thereon dated
February 11, 2000. Our audits also included the financial statement schedules
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.


                                                         /S/ ERNST & YOUNG LLP


New York, New York
February 11, 2000



                                       34
<PAGE>   35


           SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT
              STATEMENTS OF OPERATIONS (PARENT COMPANY SEPARATELY)
                              (DOLLARS IN MILLIONS)


<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31,
                                                    1999           1998            1997
                                                  --------       --------        --------
<S>                                               <C>            <C>             <C>
Interest income                                   $     --       $     --        $    1.4
Interest expense                                        --             --            (1.4)
Equity in net income (loss) of subsidiary           138.3           (16.3)           96.2
                                                  --------       --------        --------
Net income (loss)                                 $  138.3       $  (16.3)       $   96.2
                                                  ========       ========        ========
</TABLE>

                      SEE NOTES TO FINANCIAL STATEMENTS.


                                       35
<PAGE>   36


                 SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF
                            REGISTRANT - (CONTINUED)


                    BALANCE SHEET (PARENT COMPANY SEPARATELY)
                              (DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
                                                      DECEMBER 31,
                                                      ------------
                          ASSETS                  1999            1998
                                                 -------         -------
<S>                                              <C>             <C>


Investment in subsidiaries                       $(145.2)        $(344.8)


                       LIABILITIES

Loan payable to subsidiary                         351.3           356.2

                   STOCKHOLDERS' DEFICIT

Common stock, $.01 par value, 200,000,000
shares authorized: issued and
   outstanding, 70,742,538 shares in 1999;
   69,924,615 shares in 1998                          .7              .7
Capital surplus                                    595.1           594.0
Treasury stock                                    (363.3)         (379.6)
Accumulated deficit                               (553.3)         (691.6)
Foreign currency translation effects              (175.7)         (224.5)
                                                 -------         -------

Total stockholders' deficit                       (496.5)         (701.0)
                                                 -------         -------
                                                 $(145.2)        $(344.8)
                                                 =======         =======
</TABLE>


                       SEE NOTES TO FINANCIAL STATEMENTS.


                                       36
<PAGE>   37


           SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT
               STATEMENT OF CASH FLOWS (PARENT COMPANY SEPARATELY)
                              (DOLLARS IN MILLIONS)


<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                           1999            1998            1997
                                                         -------         -------         -------
<S>                                                      <C>             <C>             <C>
Cash flows from operating activities:
    Net income (loss)                                    $ 138.3         $ (16.3)        $  96.2
    Adjustments to reconcile net income (loss)
       to net cash provided by operating
      activities

        Equity in net loss (income) of subsidiary         (138.3)           16.3           (96.2)
                                                         -------         -------         -------
Net cash flow from operating activities                       --              --              --
                                                         -------         -------         -------
Cash provided (used) by investing
      activities:
    Investment in subsidiary                                (8.1)           (4.9)           (1.2)
    Purchase of common stock by subsidiary                    --              --            16.9
                                                         -------         -------         -------
Net cash provided (used) by investing
    activities                                              (8.1)           (4.9)           15.7
                                                         -------         -------         -------
Cash provided (used) by financing activities:
    Purchases of treasury stock                             (4.2)          (83.7)         (310.7)
    Issuance of common stock                                17.2            14.8            20.0
    Loan from subsidiary                                    (4.9)           73.8           291.9
    Other                                                     --              --           (16.9)
                                                         -------         -------         -------
Net cash provided (used) by financing
    activities                                               8.1             4.9           (15.7)
                                                         -------         -------         -------

Net change in cash and cash equivalents                  $     0         $     0         $     0
                                                         =======         =======         =======
</TABLE>


                       SEE NOTES TO FINANCIAL STATEMENTS.


                                       37
<PAGE>   38


                  SCHEDULE I -- 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. (the "Parent Company"), are an integral part of these
      condensed financial statements.

(B)   The Parent Company was organized in 1988 to acquire American Standard Inc.
      (the "Acquisition"). American Standard Inc.'s common stock is owned solely
      by the Parent Company. On December 31, 1999, the Parent Company became the
      sole owner of all the common stock of American Standard International Inc.
      as a result of a reorganization of subsidiary ownership within the
      Company.

(C)   In the first quarter of 1997, the Parent Company completed a secondary
      offering of 12,429,548 shares of its common stock owned by Kelso ASI
      Partners, L.P., ("ASI Partners") and the Parent Company's largest
      shareholder as of December 31, 1996. In conjunction with the secondary
      offering, the Parent Company purchased 4,628,755 shares of its common
      stock from ASI Partners for $208 million, plus fees and expenses. In
      addition, in October 1997 the company completed its open-market share
      repurchase program commenced in May 1997 pursuant to which 2,320,900
      shares of its common stock were purchased for $100 million. Both of these
      purchases were funded with borrowings by American Standard Inc. under
      American Standard Inc.'s 1997 Credit Agreement which were loaned to the
      Parent Company under a non-interest-bearing intercompany demand note.

(D)   In 1998, the Parent Company's Board of Directors approved the purchase of
      up to $300 million of the Parent Company's common stock, not to exceed
      $100 million per year, during the three-year period ending July 2001.
      During 1999 the Parent Company purchased .1 million shares of its common
      stock for $4 million and during 1998 purchased 2.7 million shares for
      $83.7 million, 2.5 million of which shares were purchased for $75 million
      pursuant to this plan. These purchases were funded with borrowings by
      American Standard Inc.'s 1997 Credit Agreement which were loaned to the
      Parent Company under a non-interest-bearing intercompany demand note.


                                       38
<PAGE>   39


               SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
                            (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
            Description                                                                              Foreign
                                    Balance       Additions                                          Currency          Balance
                                   Beginning      Charged to                        Other           Translation         End of
                                   of Period       Income       Deductions          Changes            Effects          Period
                                   ---------       ------       ----------          -------            -------          ------
<S>                                <C>            <C>           <C>                <C>              <C>                <C>
1999:
Reserve deducted from assets:
Allowance for doubtful
  accounts receivable               $ 33,264       $23,520       $(10,468)(A)       $  1,412           $( 1,825)       $ 45,903
                                    ========       =======       ========           ========           ========        ========
Reserve for post-retirement
  benefits                          $468,197       $71,562       $(56,107)(B)       $ (4,866)(C)       $(42,680)       $436,106
                                    ========       =======       ========           ========           ========        ========
1998:
Reserve deducted from assets:
Allowance for doubtful
  accounts receivable               $ 28,885       $15,236       $ (8,289)(A)       $ (1,660)          $   (908)       $ 33,264
                                    ========       =======       ========           ========           ========        ========
Reserve for post-retirement
  benefits                          $428,385       $60,219       $(44,514)(B)       $  2,716(D)        $ 21,391        $468,197
                                    ========       =======       ========           ========           ========        ========

1997:
Reserve deducted from assets:
Allowance for doubtful
  accounts receivable               $ 28,294       $14,212       $ (9,581)(A)       $   (841)          $ (3,199)       $ 28,885
                                    ========       =======       ========           ========           ========        ========
Reserve for post-retirement
  benefits                          $473,229       $57,751       $(44,808)(B)       $(15,641)(C)       $(42,146)       $428,385
                                    ========       =======       ========           ========           ========        ========
</TABLE>

The reserve for postretirement benefits excludes the activity for currently
funded U.S. pension plans.

(A) Accounts charged off.

(B) Payments made during the year.

(C) Includes reclassifications to current liabilities, offset by effect of
acquisition of new businesses.

(D) Primarily includes reclassification from current liabilities.



                                       39