##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

|           |  |                                                                                          |  | 
|---------- |  | ---------------------------------------------------------------------------------------- |  | 
|(Mark One) |  |                                                                                          |  | 
|          
|          
|          
|          
|          
|          
|          
|          
|(XBOX)     |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934  |  | 
|          
|          
|          
|          
|           |  |                                                                                          |  | 
|          
|          
|          
|          
|           |  | For the quarterly period ended March 31, 2002                                            |  | 
|          
|          
|          
|          
|           |  | OR                                                                                       |  | 
|          
|          
|          
|          
|           |  |                                                                                          |  | 
|          
|          
|          
|          
|(BOX)      |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |  | 

For the transition period from                        to                        .

Commission file number 1-11415

AMERICAN STANDARD COMPANIES INC.


(Exact name of Registrant as specified in its charter)


|                                                                                              |  |                                                
|--------------------------------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization)                       |  | 13-3465896
(I.R.S. Employer
Identification No.)
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |  |                                                
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|One Centennial Avenue, P.O. Box 6820, Piscataway, NJ
(Address of principal executive offices) |  | 08855-6820
(Zip Code)                          
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              |  |                                                
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Registrants telephone number, including area code                                            |  | (732) 980-6000                                 

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

(X BOX)  Yes      (BOX)  No

Indicate the number of shares outstanding of each of the issuers classes
of common stock, as of the latest practicable date.

Common stock, $.01 par value, outstanding at

|               |  |                  
|-------------- |  | -----------------
|April 30, 2002 |  | 72,577,214 shares





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TABLE OF CONTENTS



|                                                                                            |                                                                                               |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART 1. FINANCIAL INFORMATION                                                              
|                                                                                            | Item 1. Financial Statements                                                                 
|AMERICAN STANDARD COMPANIES INC. AND SUBSIDIARIES UNAUDITED SUMMARY STATEMENT OF INCOME    
|AMERICAN STANDARD COMPANIES INC. AND SUBSIDIARIES UNAUDITED SUMMARY BALANCE SHEET          
|AMERICAN STANDARD COMPANIES INC. AND SUBSIDIARIES UNAUDITED SUMMARY STATEMENT OF CASH FLOWS
|AMERICAN STANDARD COMPANIES INC. NOTES TO FINANCIAL STATEMENTS                             
|                                                                                            | Note 1. Basis of Financial Statement Presentation                                            
|                                                                                            | Note 2. Restructuring and Asset Impairment Charges                                           
|                                                                                            | Note 3. Comprehensive Income                                                                 
|                                                                                            | Note 4. Tax Matters                                                                          
|                                                                                            | Note 5. Earnings Per Share                                                                   
|                                                                                            | Note 6. Adoption of New Accounting Standard for Goodwill and Other Intangible Assets         
|                                                                                            | Note 7. Debt                                                                                 
|                                                                                            | Note 8. Supplemental Consolidating Condensed Financial Information                           
|                                                                                            | Note 9. Segment Data                                                                         
|Summary Segment and Income Data                                                            
|                                                                                            | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                                                            | Item 3. Quantitative and Qualitative Disclosures About market Risk                           
|PART II. OTHER INFORMATION                                                                 
|                                                                                            | Item 1. Legal Proceedings                                                                    
|                                                                                            | Item 5. Other Information                                                                    
|                                                                                            | Item 6. Exhibits and Reports on Form 8-K.                                                    
|SIGNATURE                                                                                  
|INDEX TO EXHIBITS                                                                          
|EXHIBIT 10/2002 OMNIBUS INCENTIVE PLAN                                                     
|EXHIBIT 12/RATIO OF EARNINGS TO FIXED CHARGES                                              



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##### Table of Contents






PART 1. FINANCIAL INFORMATION




Item 1. Financial Statements

American Standard Companies Inc. (the Company) is a Delaware corporation
that owns all the outstanding common stock of American Standard Inc. and
American Standard International Inc. (ASII), both Delaware corporations.
American Standard or the Company will refer to the Company, or to the
Company and American Standard Inc. and ASII including their subsidiaries, as
the context requires.




AMERICAN STANDARD COMPANIES INC. AND SUBSIDIARIES
UNAUDITED SUMMARY STATEMENT OF INCOME
(Dollars in millions except
per share amounts)

|                                  |                                     |         |         |                    |            |      |         |         |            | 
|--------------------------------- | ----------------------------------- | ------- | ------- | ------------------ | ---------- | ---- | ------- | ------- | ---------- | 
|                                  |                                     |         |         | Three months ended
|                                  |                                     |         |         | March 31,         
|                                  |                                     |         |         |                   
|                                  |                                     |         |         | 2002               |            | 2001
|                                  |                                     |         |         |                    |            |     
|Sales                             |                                     | $       | 1,761.9 |                    |            | $    | 1,790.8 |        
|                                  |                                     |         |         |                    |            |      |         |        
|Costs and expenses:               |                                     |         |         |                    |            |      |         |        
|                                 
|                                 
|                                 
|                                 
|                                  | Cost of sales                       |         |         | 1,352.7            |            |      |         | 1,356.8 |           
|                                 
|                                 
|                                 
|                                 
|                                  | Selling and administrative expenses |         |         | 282.3              |            |      |         | 282.1   |           
|                                 
|                                 
|                                 
|                                 
|                                  | Other expense (income)              |         |         | 8.0                |            |      |         | .8      |           
|                                 
|                                 
|                                 
|                                 
|                                  | Interest expense                    |         |         | 33.4               |            |      |         | 46.9    |           
|                                  |                                     |         |         |                    |            |      |         |        
|                                  |                                     |         | 1,676.4 |                    |            |      | 1,686.6 |        
|                                  |                                     |         |         |                    |            |      |         |        
|Income before income taxes        |                                     |         | 85.5    |                    |            |      | 104.2   |        
|                                 
|                                 
|                                 
|                                 
|Income taxes                      |                                     |         | 28.5    |                    |            |      | 39.1    |        
|                                  |                                     |         |         |                    |            |      |         |        
|Net income                        |                                     | $       | 57.0    |                    |            | $    | 65.1    |        
|                                  |                                     |         |         |                    |            |      |         |        
|Net income per share:             |                                     |         |         |                    |            |      |         |        
|                                 
|                                 
|                                 
|                                 
|                                  |                                     | Basic   |         | $                  | .79        |      |         | $       | .92        | 
|                                  |                                     |         |         |                    |            |      |         |        
|                                  |                                     | Diluted |         | $                  | .78        |      |         | $       | .90        | 
|                                  |                                     |         |         |                    |            |      |         |        
|Average common shares outstanding |                                     |         |         |                    |            |      |         |        
|                                 
|                                 
|                                 
|                                 
|                                  |                                     | Basic   |         |                    | 72,232,638 |      |         |         | 70,600,212 | 
|                                 
|                                 
|                                 
|                                 
|                                  |                                     | Diluted |         |                    | 73,476,055 |      |         |         | 72,640,292 | 

See accompanying notes

2



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##### Table of Contents






AMERICAN STANDARD COMPANIES INC. AND SUBSIDIARIES
UNAUDITED SUMMARY BALANCE SHEET
(Dollars in millions, except share data)

|                                           |                                                                                            |                                                     |         |           |        |              |         |         |        |  
|------------------------------------------ | ------------------------------------------------------------------------------------------ | --------------------------------------------------- | ------- | --------- | ------ | ------------ | ------- | ------- | ------ | -
|                                           |                                                                                            |                                                     |         | March 31, |        | December 31,
|                                           |                                                                                            |                                                     |         | 2002      |        | 2001        
|                                           |                                                                                            |                                                     |         |           |        |             
|Current assets:                            |                                                                                            |                                                     |         |           |        |              |         |        
|                                          
|                                          
|                                          
|                                          
|                                           | Cash and cash equivalents                                                                  |                                                     | $       | 76.4      |        |              | $       | 82.1    |       
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts receivable                                                                        |                                                     |         | 1,125.3   |        |              |         | 998.3   |       
|                                          
|                                          
|                                          
|                                          
|                                           | Inventories:                                                                               |                                                     |         |           |        |              |         |         |       
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                            | Finished products                                   |         |           | 434.6  |              |         |         | 406.1  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                            | Products in process                                 |         |           | 141.5  |              |         |         | 135.4  |  
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                            | Raw materials                                       |         |           | 129.4  |              |         |         | 115.6  |  
|                                           |                                                                                            |                                                     |         |           |        |              |         |        
|                                           |                                                                                            |                                                     | 705.5   |           |        |              | 657.1   |        
|                                          
|                                          
|                                          
|                                          
|                                           | Other current assets                                                                       |                                                     |         | 162.6     |        |              |         | 158.9   |       
|                                           |                                                                                            |                                                     |         |           |        |              |         |        
|Total current assets                       |                                                                                            |                                                     | 2,069.8 |           |        |              | 1,896.4 |        
|                                          
|                                          
|                                          
|                                          
|Facilities, less accumulated depreciation: |                                                                                            |                                                     |         |           |        |              |         |        
|                                          
|                                          
|                                          
|                                          
|                                           | March 2002 - $673.9; Dec. 2001 - $657.8                                                    |                                                     |         | 1,343.8   |        |              |         | 1,362.8 |       
|                                          
|                                          
|                                          
|                                          
|Goodwill                                   |                                                                                            |                                                     | 912.7   |           |        |              | 929.0   |        
|                                          
|                                          
|                                          
|                                          
|Other assets                               |                                                                                            |                                                     | 689.4   |           |        |              | 643.2   |        
|                                           |                                                                                            |                                                     |         |           |        |              |         |        
|Total assets                               |                                                                                            | $                                                   | 5,015.7 |           |        | $            | 4,831.4 |        
|                                           |                                                                                            |                                                     |         |           |        |              |         |        
|Current liabilities:                       |                                                                                            |                                                     |         |           |        |              |         |        
|                                          
|                                          
|                                          
|                                          
|                                           | Loans payable to banks                                                                     |                                                     | $       | 59.9      |        |              | $       | 58.7    |       
|                                          
|                                          
|                                          
|                                          
|                                           | Current maturities of long-term debt                                                       |                                                     |         | 4.9       |        |              |         | 11.4    |       
|                                          
|                                          
|                                          
|                                          
|                                           | Accounts payable                                                                           |                                                     |         | 644.4     |        |              |         | 604.1   |       
|                                          
|                                          
|                                          
|                                          
|                                           | Accrued payrolls                                                                           |                                                     |         | 243.4     |        |              |         | 265.2   |       
|                                          
|                                          
|                                          
|                                          
|                                           | Other accrued liabilities                                                                  |                                                     |         | 787.1     |        |              |         | 748.9   |       
|                                           |                                                                                            |                                                     |         |           |        |              |         |        
|Total current liabilities                  |                                                                                            |                                                     | 1,739.7 |           |        |              | 1,688.3 |        
|                                          
|                                          
|                                          
|                                          
|Long-term debt                             |                                                                                            |                                                     | 2,221.9 |           |        |              | 2,142.0 |        
|                                          
|                                          
|                                          
|                                          
|Reserve for post-retirement benefits       |                                                                                            |                                                     | 497.6   |           |        |              | 489.5   |        
|                                          
|                                          
|                                          
|                                          
|Other liabilities                          |                                                                                            |                                                     | 616.8   |           |        |              | 601.7   |        
|                                           |                                                                                            |                                                     |         |           |        |              |         |        
|Total liabilities                          |                                                                                            |                                                     | 5,076.0 |           |        |              | 4,921.5 |        
|                                          
|                                          
|                                          
|                                          
|Stockholders deficit:                     |                                                                                            |                                                     |         |           |        |              |         |        
|                                          
|                                          
|                                          
|                                          
|                                           | Preferred stock, 2,000,000 shares authorized,
none issued and outstanding                  |                                                     |         |          |        |              |         |        |       
|                                          
|                                          
|                                          
|                                          
|                                           | Common stock $.01 par value, 200,000,000 shares
authorized; shares issued and outstanding: |                                                     |         |           |        |              |         |         |       
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                            | 72,372,252 in 2002; 72,071,944 in 2001              |         |           | .7     |              |         |         | .7     |  
|                                          
|                                          
|                                          
|                                          
|                                           | Capital surplus                                                                            |                                                     |         | 705.3     |        |              |         | 707.2   |       
|                                          
|                                          
|                                          
|                                          
|                                           | Unearned compensation                                                                      |                                                     |         | (4.5      | )      |              |         | (5.2    | )     
|                                          
|                                          
|                                          
|                                          
|                                           | Treasury stock                                                                             |                                                     |         | (521.3    | )      |              |         | (505.3  | )     
|                                          
|                                          
|                                          
|                                          
|                                           | Retained earnings                                                                          |                                                     |         | 114.0     |        |              |         | 57.0    |       
|                                          
|                                          
|                                          
|                                          
|                                           | Accumulated other comprehensive income:                                                    |                                                     |         |           |        |              |         |         |       
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                            | Foreign currency translation effects                |         |           | (347.0 | )            |         |         | (331.8 | )
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                            | Deferred gain (loss) on hedge contracts, net of tax |         |           | 4.2    |              |         |         | (1.0   | )
|                                          
|                                          
|                                          
|                                          
|                                           |                                                                                            | Minimum pension liability adjustment, net of tax    |         |           | (11.7  | )            |         |         | (11.7  | )
|                                           |                                                                                            |                                                     |         |           |        |              |         |        
|Total stockholders deficit                |                                                                                            |                                                     | (60.3   | )         |        |              | (90.1   | )      
|                                           |                                                                                            |                                                     |         |           |        |              |         |        
|                                           |                                                                                            | $                                                   | 5,015.7 |           |        | $            | 4,831.4 |        
|                                           |                                                                                            |                                                     |         |           |        |              |         |        

See accompanying notes

3



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##### Table of Contents






AMERICAN STANDARD COMPANIES INC. AND SUBSIDIARIES
UNAUDITED SUMMARY STATEMENT OF CASH FLOWS
(Dollars in millions)

|                                                             |                                                                                          |   |                                                          |                                     |   |                    |       |       |   |       |       |  
|------------------------------------------------------------ | ---------------------------------------------------------------------------------------- | - | -------------------------------------------------------- | ----------------------------------- | - | ------------------ | ----- | ----- | - | ----- | ----- | -
|                                                             |                                                                                          |   |                                                          |                                     |   | Three months ended
|                                                             |                                                                                          |   |                                                          |                                     |   | March 31,         
|                                                             |                                                                                          |   |                                                          |                                     |   |                   
|                                                             |                                                                                          |   |                                                          |                                     |   | 2002               |       | 2001 
|                                                             |                                                                                          |   |                                                          |                                     |   |                    |       |      
|Cash provided (used) by:                                     |                                                                                          |   |                                                          |                                     |   |                    |       |      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Operating Activities:                                                                    |   |                                                          |                                     |   |                    |       |       |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Net income                                                                               |   | $                                                        | 57.0                                |   |                    | $     | 65.1  |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Adjustments to reconcile net income to net cash
provided (used) by operating activities: |   |                                                          |                                     |   |                    |       |       |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   |                                                          | Depreciation and amortization       |   |                    | 48.7  |       |   |       | 56.7  |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   |                                                          | Non-cash stock compensation         |   |                    | 14.3  |       |   |       | 17.1  |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   |                                                          | German tax settlement paid          |   |                    | (55.0 | )     |   |       |      |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   |                                                          | Job elimination expenses paid       |   |                    | (7.6  | )     |   |       |      |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   |                                                          | Changes in assets and liabilities:  |   |                    |       |       |   |       |       |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   |                                                          | Accounts receivable                 |   |                    | (71.3 | )     |   |       | (19.3 | )
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   |                                                          | Inventories                         |   |                    | (53.0 | )     |   |       | (89.5 | )
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   |                                                          | Accounts payable                    |   |                    | 39.3  |       |   |       | 34.2  |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   |                                                          | Other accrued liabilities and taxes |   |                    | 22.9  |       |   |       | 3.1   |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   |                                                          | Other assets                        |   |                    | (28.9 | )     |   |       | (13.7 | )
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   |                                                          | Other long-term liabilities         |   |                    | 29.0  |       |   |       | 3.8   |  
|                                                             |                                                                                          |   |                                                          |                                     |   |                    |       |      
|                                                             | Net cash provided (used) by operating activities                                         |   |                                                          | (4.6                                | ) |                    |       | 57.5  |  
|                                                             |                                                                                          |   |                                                          |                                     |   |                    |       |      
|                                                             | Investing activities:                                                                    |   |                                                          |                                     |   |                    |       |       |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   | Purchase of property, plant and equipment                |                                     |   | (22.2              | )     |       |   | (28.6 | )    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   | Investments in affiliated companies and other businesses |                                     |   | (22.0              | )     |       |   | (16.5 | )    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   | Investment in computer software                          |                                     |   | (10.1              | )     |       |   | (13.6 | )    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   | Proceeds from sale and leaseback                         |                                     |   |                   |       |       |   | 21.6  |      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   | Other                                                    |                                     |   | 4.8                |       |       |   | 2.7   |      
|                                                             |                                                                                          |   |                                                          |                                     |   |                    |       |      
|                                                             | Net cash used by investing activities                                                    |   |                                                          | (49.5                               | ) |                    |       | (34.4 | )
|                                                             |                                                                                          |   |                                                          |                                     |   |                    |       |      
|                                                             | Financing activities:                                                                    |   |                                                          |                                     |   |                    |       |       |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   | Repayments of long-term debt                             |                                     |   | (38.6              | )     |       |   | (1.4  | )    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   | Net change in revolving credit facilities                |                                     |   | 119.1              |       |       |   | (53.9 | )    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   | Net change in other short-term debt                      |                                     |   | 1.6                |       |       |   | 4.0   |      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   | Purchases of treasury stock                              |                                     |   | (68.4              | )     |       |   | (26.8 | )    
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   | Proceeds from exercise of stock options                  |                                     |   | 34.0               |       |       |   | 46.7  |      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             |                                                                                          |   | Other                                                    |                                     |   | 1.5                |       |       |   | 1.4   |      
|                                                             |                                                                                          |   |                                                          |                                     |   |                    |       |      
|                                                             | Net cash provided (used) by financing activities                                         |   |                                                          | 49.2                                |   |                    |       | (30.0 | )
|                                                             |                                                                                          |   |                                                          |                                     |   |                    |       |      
|Effect of exchange rate changes on cash and
cash equivalents |                                                                                          |   | (.8                                                      | )                                   |   |                    | (.8   | )    
|                                                             |                                                                                          |   |                                                          |                                     |   |                    |       |      
|Net decrease in cash and cash equivalents                    |                                                                                          |   | (5.7                                                     | )                                   |   |                    | (7.7  | )    
|                                                            
|                                                            
|                                                            
|                                                            
|Cash and cash equivalents at beginning of period             |                                                                                          |   | 82.1                                                     |                                     |   |                    | 85.4  |      
|                                                             |                                                                                          |   |                                                          |                                     |   |                    |       |      
|Cash and cash equivalents at end of period                   |                                                                                          | $ | 76.4                                                     |                                     |   | $                  | 77.7  |      
|                                                             |                                                                                          |   |                                                          |                                     |   |                    |       |      

See accompanying notes

4



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##### Table of Contents






AMERICAN STANDARD COMPANIES INC.
NOTES TO FINANCIAL STATEMENTS




Note 1. Basis of Financial Statement Presentation

The accompanying condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions for Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation of financial data have
been included. The results of operations for interim periods are not
necessarily indicative of the results that may be expected for the entire year.
The condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements and accompanying notes included in
the Companys Annual Report on Form 10-K for the year ended December 31, 2001.




Note 2. Restructuring and Asset Impairment Charges

2000 Restructuring Program

As described in Note 5 of Notes to Financial Statements included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2001, in
2000, the Company announced a worldwide restructuring program that included
improving efficiency through the transfer of production to locations with lower
product costs, the closure of manufacturing and administrative facilities,
outsourcing production of certain products, capitalizing on synergistic
opportunities in several businesses and termination costs related to upgrading
the effectiveness of the organization. In connection with this program, in the
fourth quarter of 2000 the Company recorded a net restructuring and asset
impairment charge of $70 million ($51 million net of tax benefits, or $.71 per
diluted share). This charge was comprised of $26 million for Air Conditioning
Systems and Services, $34 million for Plumbing Products and $15 million for
Vehicle Control Systems, offset by a $5 million reversal of restructuring
charges recorded previously for a 1998-1999 restructuring program as the
Company was able to complete the activities at lower cost than originally
estimated. The Air Conditioning Systems and Services charge included costs
related to a workforce reduction of 700 people to integrate international
operations, costs of lease obligations on properties no longer to be used, and
asset impairment charges. The Plumbing Products charge included an asset
impairment write-down related to the closure of one plant in the U.S. and a
related workforce reduction of 250 people related to the transfer of production
to other facilities in the U.S. and Mexico. The Plumbing Products charge also
included termination costs for a workforce reduction of 350 people related to
the centralization and realignment of certain functions in Western Europe, the
Americas and Asia to eliminate redundancies. The Vehicle Control Systems charge
primarily reflects the transfer of production to the lower-labor cost facility
in Poland and consolidation of certain operations and administrative functions
in Western Europe to eliminate redundancies, resulting in a net workforce
reduction of 450 people.

In 2001 the majority of the actions described above were completed for
substantially the same amounts as originally accrued. With respect to the
other actions, the Company was able to settle certain items on more favorable
terms than expected and others on less favorable terms. Additionally, the
scope of certain activities was expanded and of others reduced. For Air
Conditioning Systems and Services, the Company was able to terminate certain
employees on more favorable terms than originally contemplated and terminate
lease obligations more favorably than expected, resulting in a $5 million
reversal of the accrual. However, the Company incurred additional costs of $4
million, principally related to discontinuing certain product lines in Europe.

5



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##### Table of Contents



This additional cost was charged to restructuring expense in 2001. For Vehicle
Control Systems, the Company did not undertake all of the planned consolidation
activities with respect to administrative functions in Western Europe and
therefore reversed $4 million of the 2000 accrual. However, the planned
transfer of production to Poland was expanded and accelerated, resulting in
additional costs of $11 million, primarily for severance, which was charged to
restructuring expense in 2001. Plumbing Products terminated fewer people than
planned, resulting in a $3 million reversal of the 2000 accrual. However, in
2001 Plumbing Products incurred additional restructuring costs, principally
severance of $2 million in North America.

Following is a summary of the 2000 restructuring program and asset
impairment charges through March 31, 2002 (dollars in millions):

|                                              |  |         |      |           |  |          |       |         |  |          |      |         |  |          |      |         |  |          |       |   |  |         |       |   |  |   |     |  |  |   |      |   |  |   |     | 
|--------------------------------------------- |  | ------- | ---- | --------- |  | -------- | ----- | ------- |  | -------- | ---- | ------- |  | -------- | ---- | ------- |  | -------- | ----- | - |  | ------- | ----- | - |  | - | --- |  |  | - | ---- | - |  | - | --- | 
|                                              |  | Initial |      | Non-Cash  |  | Balance  |       | Charges |  | Charges  |      |         |  |          |      | Balance |  |          |       |   |  | Balance
|                                              |  | Charge  |      | Write-off |  | Dec. 31, |       | Accrued |  | Reversed |      | Paid in |  | Dec. 31, |      | Paid in |  | Mar. 31,
|                                              |  | 2000    |      | in 2000   |  | 2000     |       | in 2001 |  | in 2001  |      | 2001    |  | 2001     |      | 2002    |  | 2002    
|                                              |  |         |      |           |  |          |       |         |  |          |      |         |  |          |      |         |  |         
|Termination payments and
other employee costs |  | $       | 47.4 |           |  | $        |      |         |  | $        | 47.4 |         |  | $        | 11.7 |         |  | $        | (9.4  | ) |  | $       | (44.8 | ) |  | $ | 4.9 |  |  | $ | (1.2 | ) |  | $ | 3.7 | 
|                                             
|                                             
|                                             
|                                             
|Asset impairments                             |  |         | 24.1 |           |  |          | (24.1 | )       |  |          |     |         |  |          |     |         |  |          |      |   |  |         |      |   |  |   |    |  |  |   |     |   |  |   |    | 
|                                             
|                                             
|                                             
|                                             
|Other                                         |  |         | 3.7  |           |  |          |      |         |  |          | 3.7  |         |  |          | 6.1  |         |  |          | (2.9  | ) |  |         | (5.5  | ) |  |   | 1.4 |  |  |   | (.4  | ) |  |   | 1.0 | 
|                                              |  |         |      |           |  |          |       |         |  |          |      |         |  |          |      |         |  |          |       |   |  |         |       |   |  |   |     |  |  |   |      |   |  |   |     | 
|                                              |  | $       | 75.2 |           |  | $        | (24.1 | )       |  | $        | 51.1 |         |  | $        | 17.8 |         |  | $        | (12.3 | ) |  | $       | (50.3 | ) |  | $ | 6.3 |  |  | $ | (1.6 | ) |  | $ | 4.7 | 
|                                              |  |         |      |           |  |          |       |         |  |          |      |         |  |          |      |         |  |          |       |   |  |         |       |   |  |   |     |  |  |   |      |   |  |   |     | 

The Company expects that essentially all of the $4.7 million balance as of
March 31, 2002 related to the 2000 restructuring program will be utilized in
2002. The remaining accrued termination payments and other employee costs are
for severance and other related payments due to terminated employees.




Note 3. Comprehensive Income

Total comprehensive income consisted of the following:

|                                                    |  |                    |       |      |  |   |      |  
|--------------------------------------------------- |  | ------------------ | ----- | ---- |  | - | ---- | -
|                                                    |  | Three months ended
|                                                    |  | March 31,         
|                                                    |  |                   
|                                                    |  | 2002               |       | 2001
|                                                    |  |                    |       |     
|Net income                                          |  | $                  | 57.0  |      |  | $ | 65.1 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Foreign currency translation effects                |  |                    | (15.2 | )    |  |   | (2.3 | )
|                                                   
|                                                   
|                                                   
|                                                   
|Deferred gain (loss) on hedge
contracts, net of tax |  |                    | 5.2   |      |  |   | (4.7 | )
|                                                    |  |                    |       |      |  |   |      |  
|Total comprehensive income                          |  | $                  | 47.0  |      |  | $ | 58.1 |  
|                                                    |  |                    |       |      |  |   |      |  




Note 4. Tax Matters

The Company had been in discussions and negotiations with The State
Finance Administration for North Rhine-Westphalia, Germany (the German Tax
Authority) concerning certain tax issues covering the years 1984  1994. For
the years 1984  1990, the Company received a tax assessment from the German
Tax Authority in the amount of $90 million. For years 1991  1994, the Company
anticipated a further assessment for an amount substantially greater than that
assessed for 1984  1990. On January 15, 2002, the Company settled all issues
for 1984 through 1994 for a current cash payment of approximately $55 million
plus $30 million previously deposited in escrow. Since the Company previously
had provided adequate reserves for all issues, the settlement had no impact on
results of operations.

6



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##### Table of Contents






Note 5. Earnings Per Share

The average number of outstanding shares of common stock used in computing
diluted earnings per share for the three months ended March 31, 2002 and 2001
included 1,243,417 and 2,040,080 average incremental shares, respectively, for
the assumed exercise of stock options.




Note 6. Adoption of New Accounting
Standard for Goodwill and Other Intangible Assets

In 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning
after December 15, 2001. Under the new rules, goodwill and intangible assets
deemed to have indefinite lives will no longer be amortized but will be subject
to annual impairment tests. Other intangible assets will continue to be
amortized over their useful lives. The Company began applying the new rules in
the first quarter of 2002. Application of the non-amortization provisions of
FAS 142 resulted in an increase in net income in the first quarter of 2002 of
$7.6 million, or $.10 per diluted share, and is expected to result in an
increase in net income of approximately $30 million, or $.40 per share
annually. During the first half of 2002, the Company will perform the first of
the required impairment tests of goodwill and indefinite-lived intangible
assets and has not yet determined what effect, if any, the results of these
tests will have on the results of operations or financial position of the
Company. However, based upon a preliminary evaluation, the Company believes
that no impairment will result.

Following is a summary of net income for the three months ended March 31,
2002 compared with net income for the three months ended March 31, 2001 as
reported and as adjusted to exclude goodwill amortization (dollars in
millions):

|                                                                  |                       |   |                    |     |      |   |      |      | 
|----------------------------------------------------------------- | --------------------- | - | ------------------ | --- | ---- | - | ---- | ---- | 
|                                                                  |                       |   | Three months ended
|                                                                  |                       |   | March 31,         
|                                                                  |                       |   |                   
|                                                                  |                       |   | 2002               |     | 2001
|                                                                  |                       |   |                    |     |     
|Reported net income                                               |                       | $ | 57.0               |     |      | $ | 65.1 |     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|Add goodwill amortization, net of
income taxes of $.4 in 2001 (a) |                       |   |                   |     |      |   | 7.6  |     
|                                                                  |                       |   |                    |     |      |   |      |     
|Adjusted net income                                               |                       | $ | 57.0               |     |      | $ | 72.7 |     
|                                                                  |                       |   |                    |     |      |   |      |     
|Basic earnings per share:                                         |                       |   |                    |     |      |   |      |     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Reported net income   |   | $                  | .79 |      |   | $    | .92  | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Goodwill amortization |   |                    |    |      |   |      | .11  | 
|                                                                  |                       |   |                    |     |      |   |      |     
|                                                                  | Adjusted net income   |   | $                  | .79 |      |   | $    | 1.03 | 
|                                                                  |                       |   |                    |     |      |   |      |     
|Diluted earnings per share:                                       |                       |   |                    |     |      |   |      |     
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Reported net income   |   | $                  | .78 |      |   | $    | .90  | 
|                                                                 
|                                                                 
|                                                                 
|                                                                 
|                                                                  | Goodwill amortization |   |                    |    |      |   |      | .10  | 
|                                                                  |                       |   |                    |     |      |   |      |     
|                                                                  | Adjusted net income   |   | $                  | .78 |      |   | $    | 1.00 | 
|                                                                  |                       |   |                    |     |      |   |      |     



---

|(a) |  | In certain foreign countries goodwill
amortization is deductible for tax purposes.
|--- |  | ----------------------------------------------------------------------------------

7



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##### Table of Contents






Note 7. Debt

On January 8, 2002, the company redeemed all of the 9 1/4% Sinking Fund
Debentures, at a redemption price 102.313% of the face amount of the bonds plus
unpaid interest up to the redemption date. The total redemption cost of $38.7
million, including accrued interest of $.4 million, was paid with lower-cost
borrowings under the Companys credit agreements.




Note 8. Supplemental Consolidating Condensed Financial Information

All of the Companys Senior Notes and the 9 1/4% Sinking Fund Debentures were
issued by its wholly owned subsidiary, American Standard Inc. (ASI). American
Standard Companies Inc. (the Parent Company) fully and unconditionally
guarantees the payment obligations under these securities (the ASI Public
Debt). In lieu of providing separate financial statements for ASI, included
is the accompanying consolidating condensed financial information. Management
believes that separate financial statements of ASI are not material to
investors. The following supplemental financial information sets forth, on an
unconsolidated basis, statements of income and statements of cash flows for the
three months ended March 31, 2002 and 2001, and balance sheets as of March 31,
2002 and December 31, 2001 for the Parent Company, ASI, and the subsidiaries of
the Parent Company which are not subsidiaries of ASI (the Other
Subsidiaries). None of the Other Subsidiaries guarantees the ASI Public Debt.
The equity method of accounting is used to reflect investments of the Parent
Company in ASI and Other Subsidiaries.

CONSOLIDATING CONDENSED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2002
(Unaudited)

|                                                                                 |                                        |                |      |        |  |                    |         |              |       |       |       |       |       |   |       |       |       |              |         |         |         | 
|-------------------------------------------------------------------------------- | -------------------------------------- | -------------- | ---- | ------ |  | ------------------ | ------- | ------------ | ----- | ----- | ----- | ----- | ----- | - | ----- | ----- | ----- | ------------ | ------- | ------- | ------- | 
|                                                                                 |                                        |                |      | Parent |  |                    |         |              |       |       |       |       |       |   |       |       |       | Consolidated
|(Dollars in millions)                                                            |                                        | Company        |      | ASI    |  | Other Subsidiaries |         | Eliminations |       | Total
|                                                                                 |                                        |                |      |        |  |                    |         |              |       |      
|Sales                                                                            |                                        |                |      |        |  | $                  | 1,014.1 |              |       | $     | 819.2 |       |       | $ | (71.4 | )     |       | $            | 1,761.9 |        
|                                                                                 |                                        |                |      |        |  |                    |         |              |       |       |       |       |       |   |       |       |       |              |         |        
|Costs and expenses:                                                              |                                        |                |      |        |  |                    |         |              |       |       |       |       |       |   |       |       |       |              |         |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Cost of sales                          |                |      |        |  |                    |         | 788.6        |       |       |       | 635.5 |       |   |       | (71.4 | )     |              |         | 1,352.7 |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Selling and administrative expenses    |                |      |        |  |                    |         | 158.4        |       |       |       | 123.9 |       |   |       |       |       |              |         | 282.3   |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Other (income) expense                 |                |      |        |  |                    |         | (2.6         | )     |       |       | 10.6  |       |   |       |       |       |              |         | 8.0     |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Interest expense                       |                |      |        |  |                    |         | 31.0         |       |       |       | 2.4   |       |   |       |       |       |              |         | 33.4    |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Intercompany interest expense (income) |                |      |        |  |                    |         | .2           |       |       |       | (.2   | )     |   |       |       |       |              |         |        |        
|                                                                                 |                                        |                |      |        |  |                    |         |              |       |       |       |       |       |   |       |       |       |              |         |        
|                                                                                 |                                        | Total expenses |      |        |  |                    |         |              | 975.6 |       |       |       | 772.2 |   |       |       | (71.4 | )            |         |         | 1,676.4 | 
|                                                                                 |                                        |                |      |        |  |                    |         |              |       |       |       |       |       |   |       |       |       |              |         |        
|Income before income taxes and equity in
net income of consolidated subsidiaries |                                        |                |      |        |  |                    | 38.5    |              |       |       | 47.0  |       |       |   |      |       |       |              | 85.5    |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Income taxes                                                                     |                                        |                |      |        |  |                    | 13.1    |              |       |       | 15.4  |       |       |   |       |       |       |              | 28.5    |        
|                                                                                 |                                        |                |      |        |  |                    |         |              |       |       |       |       |       |   |       |       |       |              |         |        
|Income before equity in net income of
consolidated subsidiaries                  |                                        |                |      |        |  |                    | 25.4    |              |       |       | 31.6  |       |       |   |      |       |       |              | 57.0    |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Equity in net income of consolidated
subsidiaries                                |                                        | $              | 57.0 |        |  |                    |         |              |       |       |       |       |       |   | (57.0 | )     |       |              |        |        
|                                                                                 |                                        |                |      |        |  |                    |         |              |       |       |       |       |       |   |       |       |       |              |         |        
|Net income                                                                       |                                        | $              | 57.0 |        |  | $                  | 25.4    |              |       | $     | 31.6  |       |       | $ | (57.0 | )     |       | $            | 57.0    |        
|                                                                                 |                                        |                |      |        |  |                    |         |              |       |       |       |       |       |   |       |       |       |              |         |        

8



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##### Table of Contents



CONSOLIDATING CONDENSED BALANCE SHEETS
AS OF MARCH 31, 2002

|                                               |                                      |                                            |       |        |       |              |         |              |          |       |        |       |         |   |        |              |        |   |         |         |         |  
|---------------------------------------------- | ------------------------------------ | ------------------------------------------ | ----- | ------ | ----- | ------------ | ------- | ------------ | -------- | ----- | ------ | ----- | ------- | - | ------ | ------------ | ------ | - | ------- | ------- | ------- | -
|                                               |                                      |                                            |       | Parent |       |              |         |              |          | Other |        |       |         |   |        | Consolidated
|(Dollars in millions)                          |                                      | Company                                    |       | ASI    |       | Subsidiaries |         | Eliminations |          | Total
|                                               |                                      |                                            |       |        |       |              |         |              |          |      
|ASSETS                                         |                                      |                                            |       |        |       |              |         |              |          |       |        |       |         |   |        |              |        |   |         |        
|                                              
|                                              
|                                              
|                                              
|Current assets:                                |                                      |                                            |       |        |       |              |         |              |          |       |        |       |         |   |        |              |        |   |         |        
|                                              
|                                              
|                                              
|                                              
|                                               | Cash and cash equivalents            |                                            | $     | .3     |       |              | $       | (16.9        | )        |       | $      | 93.0  |         |   |        |              |        |   | $       | 76.4    |        
|                                              
|                                              
|                                              
|                                              
|                                               | Accounts receivable, net             |                                            |       | .1     |       |              |         | 476.6        |          |       |        | 648.6 |         |   |        |              |        |   |         | 1,125.3 |        
|                                              
|                                              
|                                              
|                                              
|                                               | Inventories                          |                                            |       |        |       |              |         | 345.4        |          |       |        | 360.1 |         |   |        |              |        |   |         | 705.5   |        
|                                              
|                                              
|                                              
|                                              
|                                               | Other current assets                 |                                            |       |        |       |              |         | 111.7        |          |       |        | 50.9  |         |   |        |              |        |   |         | 162.6   |        
|                                               |                                      |                                            |       |        |       |              |         |              |          |       |        |       |         |   |        |              |        |   |         |        
|                                               |                                      | Total current assets                       |       |        | .4    |              |         |              | 916.8    |       |        |       | 1,152.6 |   |        |              |        |   |         |         | 2,069.8 |  
|                                              
|                                              
|                                              
|                                              
|Facilities, net                                |                                      |                                            |       |        |       |              | 541.0   |              |          |       | 802.8  |       |         |   |        |              |        |   | 1,343.8 |        
|                                              
|                                              
|                                              
|                                              
|Goodwill, net                                  |                                      |                                            |       |        |       |              | 131.4   |              |          |       | 781.3  |       |         |   |        |              |        |   | 912.7   |        
|                                              
|                                              
|                                              
|                                              
|Investment in subsidiaries                     |                                      |                                            | 523.5 |        |       |              |         |              |          |       |        |       |         | $ | (523.5 | )            |        |   |        |        
|                                              
|                                              
|                                              
|                                              
|Other assets                                   |                                      |                                            |       |        |       |              | 509.3   |              |          |       | 180.1  |       |         |   |        |              |        |   | 689.4   |        
|                                               |                                      |                                            |       |        |       |              |         |              |          |       |        |       |         |   |        |              |        |   |         |        
|                                               |                                      | Total assets                               |       | $      | 523.9 |              |         | $            | 2,098.5  |       |        | $     | 2,916.8 |   |        | $            | (523.5 | ) |         | $       | 5,015.7 |  
|                                               |                                      |                                            |       |        |       |              |         |              |          |       |        |       |         |   |        |              |        |   |         |        
|LIABILITIES AND STOCKHOLDERS
(DEFICIT) EQUITY |                                      |                                            |       |        |       |              |         |              |          |       |        |       |         |   |        |              |        |   |         |        
|                                              
|                                              
|                                              
|                                              
|Current liabilities:                           |                                      |                                            |       |        |       |              |         |              |          |       |        |       |         |   |        |              |        |   |         |        
|                                              
|                                              
|                                              
|                                              
|                                               | Loans payable to banks               |                                            |       |        |       |              | $       | .1           |          |       | $      | 59.8  |         |   |        |              |        |   | $       | 59.9    |        
|                                              
|                                              
|                                              
|                                              
|                                               | Current maturities of long-term debt |                                            |       |        |       |              |         | 3.4          |          |       |        | 1.5   |         |   |        |              |        |   |         | 4.9     |        
|                                              
|                                              
|                                              
|                                              
|                                               | Other current liabilities            |                                            |       |        |       |              |         | 1,019.3      |          |       |        | 655.6 |         |   |        |              |        |   |         | 1,674.9 |        
|                                               |                                      |                                            |       |        |       |              |         |              |          |       |        |       |         |   |        |              |        |   |         |        
|                                               |                                      | Total current liabilities                  |       |        |       |              |         |              | 1,022.8  |       |        |       | 716.9   |   |        |              |        |   |         |         | 1,739.7 |  
|                                              
|                                              
|                                              
|                                              
|Long-term debt                                 |                                      |                                            |       |        |       |              | 2,156.1 |              |          |       | 65.8   |       |         |   |        |              |        |   | 2,221.9 |        
|                                              
|                                              
|                                              
|                                              
|Reserve for postretirement benefits            |                                      |                                            |       |        |       |              | 294.5   |              |          |       | 203.1  |       |         |   |        |              |        |   | 497.6   |        
|                                              
|                                              
|                                              
|                                              
|Intercompany accounts, net                     |                                      | $                                          | 584.2 |        |       |              | (41.7   | )            |          |       | (542.5 | )     |         |   |        |              |        |   |        |        
|                                              
|                                              
|                                              
|                                              
|Other long-term liabilities                    |                                      |                                            |       |        |       |              | 329.7   |              |          |       | 287.1  |       |         |   |        |              |        |   | 616.8   |        
|                                               |                                      |                                            |       |        |       |              |         |              |          |       |        |       |         |   |        |              |        |   |         |        
|                                               |                                      | Total liabilities                          |       |        | 584.2 |              |         |              | 3,761.4  |       |        |       | 730.4   |   |        | $            |       |   |         |         | 5,076.0 |  
|                                              
|                                              
|                                              
|                                              
|                                               |                                      | Total stockholders (deficit) equity       |       |        | (60.3 | )            |         |              | (1,662.9 | )     |        |       | 2,186.4 |   |        |              | (523.5 | ) |         |         | (60.3   | )
|                                               |                                      |                                            |       |        |       |              |         |              |          |       |        |       |         |   |        |              |        |   |         |        
|                                               |                                      | Total liabilities and stockholders
equity |       | $      | 523.9 |              |         | $            | 2,098.5  |       |        | $     | 2,916.8 |   |        | $            | (523.5 | ) |         | $       | 5,015.7 |  
|                                               |                                      |                                            |       |        |       |              |         |              |          |       |        |       |         |   |        |              |        |   |         |        

9



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##### Table of Contents



CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 2002
(Unaudited)

|                         |                                                              |                                                  |                                                                                |                                                          |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |       |      |      |       |  
|------------------------ | ------------------------------------------------------------ | ------------------------------------------------ | ------------------------------------------------------------------------------ | -------------------------------------------------------- | -- | ------------ | ----- | ------------ | ---- | ----- | ----- | ----- | ----- | ---- | ----- | - | - | ------------ | ---- | ----- | ---- | ---- | ----- | -
|                         |                                                              |                                                  |                                                                                |                                                          |    | Parent       |       |              |      |       |       | Other |       |      |       |   |   | Consolidated
|(Dollars in millions)    |                                                              | Company                                          |                                                                                | ASI                                                      |    | Subsidiaries |       | Eliminations |      | Total
|                         |                                                              |                                                  |                                                                                |                                                          |    |              |       |              |      |      
|Cash provided (used) by: |                                                              |                                                  |                                                                                |                                                          |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |      
|                        
|                        
|                        
|                        
|                         |                                                              | Operating activities:                            |                                                                                |                                                          |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |       |      |     
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  | Net income                                                                     |                                                          | $  | 57.0         |       |              | $    | 25.4  |       |       | $     | 31.6 |       |   | $ | (57.0        | )    |       | $    | 57.0 |      
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  | Adjustments to reconcile net income to net
cash provided (used) by operations: |                                                          |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |       |      |      |      
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Depreciation and amortization                            |    |              |       |              |      |       | 20.6  |       |       |      | 28.1  |   |   |              |      |       |      |      | 48.7  |  
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | German tax settlement paid                               |    |              |       |              |      |       |       |       |       |      | (55.0 | ) |   |              |      |       |      |      | (55.0 | )
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Other non-cash items                                     |    |              |       |              |      |       | 9.2   |       |       |      | (2.5  | ) |   |              |      |       |      |      | 6.7   |  
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Equity in net income of subsidiaries                     |    |              | (57.0 | )            |      |       |       |       |       |      |       |   |   |              | 57.0 |       |      |      |      |  
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Changes in assets and liabilities:                       |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |       |      |      |       |  
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Accounts receivable                                      |    |              | .2    |              |      |       | (2.4  | )     |       |      | (69.1 | ) |   |              |      |       |      |      | (71.3 | )
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Inventories                                              |    |              |       |              |      |       | (35.0 | )     |       |      | (18.0 | ) |   |              |      |       |      |      | (53.0 | )
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Accounts payable                                         |    |              |       |              |      |       | 33.3  |       |       |      | 6.0   |   |   |              |      |       |      |      | 39.3  |  
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Other accrued liabilities and taxes                      |    |              |       |              |      |       | 68.1  |       |       |      | (45.2 | ) |   |              |      |       |      |      | 22.9  |  
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Other assets                                             |    |              |       |              |      |       | (78.0 | )     |       |      | 49.1  |   |   |              |      |       |      |      | (28.9 | )
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Other long-term liabilities                              |    |              |       |              |      |       | 26.3  |       |       |      | 2.7   |   |   |              |      |       |      |      | 29.0  |  
|                         |                                                              |                                                  |                                                                                |                                                          |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |      
|                         |                                                              | Net cash provided (used) by
operating activities |                                                                                |                                                          | .2 |              |       |              | 67.5 |       |       |       | (72.3 | )    |       |   |  |              |      |       | (4.6 | )   
|                         |                                                              |                                                  |                                                                                |                                                          |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |      
|                         | Investing activities:                                        |                                                  |                                                                                |                                                          |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |       |     
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Purchase of property, plant and equipment                |    |              |       |              |      |       | (10.6 | )     |       |      | (11.6 | ) |   |              |      |       |      |      | (22.2 | )
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Investments in affiliated companies and
other businesses |    |              |       |              |      |       | (22.0 | )     |       |      |       |   |   |              |      |       |      |      | (22.0 | )
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Investments in computer software                         |    |              |       |              |      |       | (4.2  | )     |       |      | (5.9  | ) |   |              |      |       |      |      | (10.1 | )
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Other                                                    |    |              |       |              |      |       | 2.5   |       |       |      | 2.3   |   |   |              |      |       |      |      | 4.8   |  
|                         |                                                              |                                                  |                                                                                |                                                          |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |      
|                         | Net cash used by investing activities                        |                                                  |                                                                                |                                                         |    |              |       | (34.3        | )    |       |       | (15.2 | )     |      |       |  |   |              |      | (49.5 | )   
|                         |                                                              |                                                  |                                                                                |                                                          |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |      
|                         | Financing activities:                                        |                                                  |                                                                                |                                                          |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |       |     
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Repayments of long-term debt                             |    |              |       |              |      |       | (37.8 | )     |       |      | (.8   | ) |   |              |      |       |      |      | (38.6 | )
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Net change in revolving credit facilities                |    |              |       |              |      |       | 57.5  |       |       |      | 61.6  |   |   |              |      |       |      |      | 119.1 |  
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Net change in other short-term debt                      |    |              |       |              |      |       |       |       |       |      | 1.6   |   |   |              |      |       |      |      | 1.6   |  
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Purchases of treasury stock                              |    |              | (68.4 | )            |      |       |       |       |       |      |       |   |   |              |      |       |      |      | (68.4 | )
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Net change in intercompany accounts                      |    |              | 33.0  |              |      |       | (72.9 | )     |       |      | 39.9  |   |   |              |      |       |      |      |      |  
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Proceeds from exercise of stock options                  |    |              | 34.0  |              |      |       |       |       |       |      |       |   |   |              |      |       |      |      | 34.0  |  
|                        
|                        
|                        
|                        
|                         |                                                              |                                                  |                                                                                | Other                                                    |    |              | 1.5   |              |      |       |       |       |       |      |       |   |   |              |      |       |      |      | 1.5   |  
|                         |                                                              |                                                  |                                                                                |                                                          |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |      
|                         | Net cash provided (used) by financing activities             |                                                  |                                                                                | .1                                                       |    |              |       | (53.2        | )    |       |       | 102.3 |       |      |       |  |   |              |      | 49.2  |     
|                         |                                                              |                                                  |                                                                                |                                                          |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |      
|                         | Effect of exchange rate changes on cash
and cash equivalents |                                                  |                                                                                |                                                          |    |              |       |              |      |       |       | (.8   | )     |      |       |   |   |              |      | (.8   | )   
|                         |                                                              |                                                  |                                                                                |                                                          |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |      
|                         | Net increase (decrease) in cash and
cash equivalents         |                                                  |                                                                                | .3                                                       |    |              |       | (20.0        | )    |       |       | 14.0  |       |      |       |  |   |              |      | (5.7  | )   
|                         |                                                              |                                                  |                                                                                |                                                          |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |      
|                         | Cash and cash equivalents a
beginning of period              |                                                  |                                                                                |                                                         |    |              |       | 3.1          |      |       |       | 79.0  |       |      |       |  |   |              |      | 82.1  |     
|                         |                                                              |                                                  |                                                                                |                                                          |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |      
|                         | Cash and cash equivalents at end of period                   |                                                  | $                                                                              | .3                                                       |    |              | $     | (16.9        | )    |       | $     | 93.0  |       |      | $     |  |   |              | $    | 76.4  |     
|                         |                                                              |                                                  |                                                                                |                                                          |    |              |       |              |      |       |       |       |       |      |       |   |   |              |      |      

10



---



##### Table of Contents



CONSOLIDATING CONDENSED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2001
(Unaudited)

|                                                                                 |                                        |                |      |        |  |                    |         |              |       |       |       |       |       |   |       |       |       |              |         |         |         | 
|-------------------------------------------------------------------------------- | -------------------------------------- | -------------- | ---- | ------ |  | ------------------ | ------- | ------------ | ----- | ----- | ----- | ----- | ----- | - | ----- | ----- | ----- | ------------ | ------- | ------- | ------- | 
|                                                                                 |                                        |                |      | Parent |  |                    |         |              |       |       |       |       |       |   |       |       |       | Consolidated
|(Dollars in millions)                                                            |                                        | Company        |      | ASI    |  | Other Subsidiaries |         | Eliminations |       | Total
|                                                                                 |                                        |                |      |        |  |                    |         |              |       |      
|Sales                                                                            |                                        |                |      |        |  | $                  | 1,004.6 |              |       | $     | 839.5 |       |       | $ | (53.3 | )     |       | $            | 1,790.8 |        
|                                                                                 |                                        |                |      |        |  |                    |         |              |       |       |       |       |       |   |       |       |       |              |         |        
|Costs and expenses:                                                              |                                        |                |      |        |  |                    |         |              |       |       |       |       |       |   |       |       |       |              |         |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Cost of sales                          |                |      |        |  |                    |         | 773.8        |       |       |       | 636.3 |       |   |       | (53.3 | )     |              |         | 1,356.8 |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Selling and administrative expenses    |                |      |        |  |                    |         | 148.0        |       |       |       | 134.1 |       |   |       |       |       |              |         | 282.1   |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Other (income) expense                 |                |      |        |  |                    |         | .2           |       |       |       | .6    |       |   |       |       |       |              |         | .8      |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Interest expense                       |                |      |        |  |                    |         | 37.1         |       |       |       | 9.8   |       |   |       |       |       |              |         | 46.9    |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|                                                                                 | Intercompany interest expense (income) |                |      |        |  |                    |         | 5.1          |       |       |       | (5.1  | )     |   |       |       |       |              |         |        |        
|                                                                                 |                                        |                |      |        |  |                    |         |              |       |       |       |       |       |   |       |       |       |              |         |        
|                                                                                 |                                        | Total expenses |      |        |  |                    |         |              | 964.2 |       |       |       | 775.7 |   |       |       | (53.3 | )            |         |         | 1,686.6 | 
|                                                                                 |                                        |                |      |        |  |                    |         |              |       |       |       |       |       |   |       |       |       |              |         |        
|Income before income taxes and equity in
net income of consolidated subsidiaries |                                        |                |      |        |  |                    | 40.4    |              |       |       | 63.8  |       |       |   |      |       |       |              | 104.2   |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Income taxes                                                                     |                                        |                |      |        |  |                    | 14.5    |              |       |       | 24.6  |       |       |   |       |       |       |              | 39.1    |        
|                                                                                 |                                        |                |      |        |  |                    |         |              |       |       |       |       |       |   |       |       |       |              |         |        
|Income before equity in net income of
consolidated subsidiaries                  |                                        |                |      |        |  |                    | 25.9    |              |       |       | 39.2  |       |       |   |      |       |       |              | 65.1    |        
|                                                                                
|                                                                                
|                                                                                
|                                                                                
|Equity in net income of consolidated
subsidiaries                                |                                        | $              | 65.1 |        |  |                    |         |              |       |       |       |       |       | $ | (65.1 | )     |       |              |        |        
|                                                                                 |                                        |                |      |        |  |                    |         |              |       |       |       |       |       |   |       |       |       |              |         |        
|Net income                                                                       |                                        | $              | 65.1 |        |  | $                  | 25.9    |              |       | $     | 39.2  |       |       | $ | (65.1 | )     |       | $            | 65.1    |        
|                                                                                 |                                        |                |      |        |  |                    |         |              |       |       |       |       |       |   |       |       |       |              |         |        

CONSOLIDATING CONDENSED BALANCE SHEETS
AS OF DECEMBER 31, 2001
(Unaudited)

|                                               |                                      |                                            |   |        |       |        |   |         |          |         |   |         |         |       |   |        |        |          |   |         |         |  
|---------------------------------------------- | ------------------------------------ | ------------------------------------------ | - | ------ | ----- | ------ | - | ------- | -------- | ------- | - | ------- | ------- | ----- | - | ------ | ------ | -------- | - | ------- | ------- | -
|                                               |                                      |                                            |   |        |       |        |   |         |          |         |   | Other   |         |       |   |        |        | Consoli-
|                                               |                                      |                                            |   | Parent |       |        |   |         |          | Subsid- |   | Elimin- |         | dated
|(Dollars in millions)                          |                                      | Company                                    |   | ASI    |       | iaries |   | ations  |          | Total  
|                                               |                                      |                                            |   |        |       |        |   |         |          |        
|ASSETS                                         |                                      |                                            |   |        |       |        |   |         |          |         |   |         |         |       |   |        |        |          |   |        
|                                              
|                                              
|                                              
|                                              
|Current assets:                                |                                      |                                            |   |        |       |        |   |         |          |         |   |         |         |       |   |        |        |          |   |        
|                                              
|                                              
|                                              
|                                              
|                                               | Cash and cash equivalents            |                                            |   |        |       |        | $ | 3.1     |          |         | $ | 79.0    |         |       |   |        |        |          | $ | 82.1    |        
|                                              
|                                              
|                                              
|                                              
|                                               | Accounts receivable, net             |                                            | $ | .5     |       |        |   | 464.6   |          |         |   | 533.2   |         |       |   |        |        |          |   | 998.3   |        
|                                              
|                                              
|                                              
|                                              
|                                               | Inventories                          |                                            |   |        |       |        |   | 310.0   |          |         |   | 347.1   |         |       |   |        |        |          |   | 657.1   |        
|                                              
|                                              
|                                              
|                                              
|                                               | Other current assets                 |                                            |   |        |       |        |   | 108.3   |          |         |   | 50.6    |         |       |   |        |        |          |   | 158.9   |        
|                                               |                                      |                                            |   |        |       |        |   |         |          |         |   |         |         |       |   |        |        |          |   |         |        
|                                               |                                      | Total current assets                       |   |        | .5    |        |   |         | 886.0    |         |   |         | 1,009.9 |       |   |        |        |          |   |         | 1,896.4 |  
|                                              
|                                              
|                                              
|                                              
|                                               | Facilities, net                      |                                            |   |        |       |        |   | 544.8   |          |         |   | 818.0   |         |       |   |        |        |          |   | 1,362.8 |        
|                                              
|                                              
|                                              
|                                              
|                                               | Goodwill, net                        |                                            |   |        |       |        |   | 134.2   |          |         |   | 794.8   |         |       |   |        |        |          |   | 929.0   |        
|                                              
|                                              
|                                              
|                                              
|                                               | Investment in subsidiaries           |                                            |   | 454.7  |       |        |   |         |          |         |   |         |         |       | $ | (454.7 | )      |          |   |        |        
|                                              
|                                              
|                                              
|                                              
|                                               | Other assets                         |                                            |   |        |       |        |   | 438.3   |          |         |   | 204.9   |         |       |   |        |        |          |   | 643.2   |        
|                                               |                                      |                                            |   |        |       |        |   |         |          |         |   |         |         |       |   |        |        |          |   |         |        
|                                               |                                      | Total assets                               |   | $      | 455.2 |        |   | $       | 2,003.3  |         |   | $       | 2,827.6 |       |   | $      | (454.7 | )        |   | $       | 4,831.4 |  
|                                               |                                      |                                            |   |        |       |        |   |         |          |         |   |         |         |       |   |        |        |          |   |         |        
|LIABILITIES AND SHAREHOLDERS
(DEFICIT) EQUITY |                                      |                                            |   |        |       |        |   |         |          |         |   |         |         |       |   |        |        |          |   |        
|                                              
|                                              
|                                              
|                                              
|Current liabilities:                           |                                      |                                            |   |        |       |        |   |         |          |         |   |         |         |       |   |        |        |          |   |        
|                                              
|                                              
|                                              
|                                              
|                                               | Loans payable to banks               |                                            |   |        |       |        | $ | .1      |          |         | $ | 58.6    |         |       |   |        |        |          | $ | 58.7    |        
|                                              
|                                              
|                                              
|                                              
|                                               | Current maturities of long-term debt |                                            |   |        |       |        |   | 10.0    |          |         |   | 1.4     |         |       |   |        |        |          |   | 11.4    |        
|                                              
|                                              
|                                              
|                                              
|                                               | Other current liabilities            |                                            |   |        |       |        |   | 865.6   |          |         |   | 752.6   |         |       |   |        |        |          |   | 1,618.2 |        
|                                               |                                      |                                            |   |        |       |        |   |         |          |         |   |         |         |       |   |        |        |          |   |         |        
|                                               |                                      | Total current liabilities                  |   |        |       |        |   |         | 875.7    |         |   |         | 812.6   |       |   |        |        |          |   |         | 1,688.3 |  
|                                              
|                                              
|                                              
|                                              
|                                               | Long-term debt                       |                                            |   |        |       |        |   | 2,137.8 |          |         |   | 4.2     |         |       |   |        |        |          |   | 2,142.0 |        
|                                              
|                                              
|                                              
|                                              
|                                               | Reserve for post-retirement benefits |                                            |   |        |       |        |   | 282.2   |          |         |   | 207.3   |         |       |   |        |        |          |   | 489.5   |        
|                                              
|                                              
|                                              
|                                              
|                                               | Intercompany accounts, net           |                                            | $ | 545.3  |       |        |   | 20.7    |          |         |   | (566.0  | )       |       |   |        |        |          |   |        |        
|                                              
|                                              
|                                              
|                                              
|                                               | Other long-term liabilities          |                                            |   |        |       |        |   | 315.7   |          |         |   | 286.0   |         |       |   |        |        |          |   | 601.7   |        
|                                               |                                      |                                            |   |        |       |        |   |         |          |         |   |         |         |       |   |        |        |          |   |         |        
|                                               |                                      | Total liabilities                          |   |        | 545.3 |        |   |         | 3,632.1  |         |   |         | 744.1   |       |   | $      |       |          |   |         | 4,921.5 |  
|                                               |                                      |                                            |   |        |       |        |   |         |          |         |   |         |         |       |   |        |        |          |   |         |        
|                                               |                                      | Total shareholders (deficit) equity       |   |        | (90.1 | )      |   |         | (1,628.8 | )       |   |         | 2,083.5 |       |   |        | (454.7 | )        |   |         | (90.1   | )
|                                               |                                      |                                            |   |        |       |        |   |         |          |         |   |         |         |       |   |        |        |          |   |         |        
|                                               |                                      | Total liabilities and shareholders equity |   | $      | 455.2 |        |   | $       | 2,003.3  |         |   | $       | 2,827.6 |       |   | $      | (454.7 | )        |   | $       | 4,831.4 |  
|                                               |                                      |                                            |   |        |       |        |   |         |          |         |   |         |         |       |   |        |        |          |   |         |        

11



---



##### Table of Contents



CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED MARCH 31, 2001
(Unaudited)

|                         |                                                              |         |                                                                                |                                                          |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |       |   |      |       |  
|------------------------ | ------------------------------------------------------------ | ------- | ------------------------------------------------------------------------------ | -------------------------------------------------------- | - | ------------ | ----- | ------------ | - | ----- | ----- | ----- | - | ---- | ----- | - | - | ------------ | ---- | ----- | - | ---- | ----- | -
|                         |                                                              |         |                                                                                |                                                          |   | Parent       |       |              |   |       |       | Other |   |      |       |   |   | Consolidated
|(Dollars in millions)    |                                                              | Company |                                                                                | ASI                                                      |   | Subsidiaries |       | Eliminations |   | Total
|                         |                                                              |         |                                                                                |                                                          |   |              |       |              |   |      
|Cash provided (used) by: |                                                              |         |                                                                                |                                                          |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |      
|                        
|                        
|                        
|                        
|                         | Operating activities:                                        |         |                                                                                |                                                          |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |       |  
|                        
|                        
|                        
|                        
|                         |                                                              |         | Net income                                                                     |                                                          | $ | 65.1         |       |              | $ | 25.9  |       |       | $ | 39.2 |       |   | $ | (65.1        | )    |       | $ | 65.1 |      
|                        
|                        
|                        
|                        
|                         |                                                              |         | Adjustments to reconcile net income to net
cash provided (used) by operations: |                                                          |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |       |   |      |      
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Depreciation and amortization                            |   |              |       |              |   |       | 24.9  |       |   |      | 31.8  |   |   |              |      |       |   |      | 56.7  |  
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Other non-cash items                                     |   |              |       |              |   |       | 17.1  |       |   |      |       |   |   |              |      |       |   |      | 17.1  |  
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Equity in net income of subsidiary                       |   |              | (65.1 | )            |   |       |       |       |   |      |       |   |   |              | 65.1 |       |   |      |      |  
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Changes in assets and liabilities:                       |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |       |   |      |       |  
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Accounts receivable                                      |   |              | (.5   | )            |   |       | 28.6  |       |   |      | (47.4 | ) |   |              |      |       |   |      | (19.3 | )
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Inventories                                              |   |              |       |              |   |       | (15.0 | )     |   |      | (74.5 | ) |   |              |      |       |   |      | (89.5 | )
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Accounts payable                                         |   |              |       |              |   |       | 19.8  |       |   |      | 14.4  |   |   |              |      |       |   |      | 34.2  |  
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Other accrued liabilities and taxes                      |   |              |       |              |   |       | 38.7  |       |   |      | (35.6 | ) |   |              |      |       |   |      | 3.1   |  
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Other assets                                             |   |              |       |              |   |       | (55.0 | )     |   |      | 41.3  |   |   |              |      |       |   |      | (13.7 | )
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Other long-term liabilities                              |   |              |       |              |   |       | 13.5  |       |   |      | (9.7  | ) |   |              |      |       |   |      | 3.8   |  
|                         |                                                              |         |                                                                                |                                                          |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |      
|                         | Net cash provided (used) by operating
activities             |         |                                                                                | (.5                                                      | ) |              |       | 98.5         |   |       |       | (40.5 | ) |      |       |  |   |              |      | 57.5  |  
|                         |                                                              |         |                                                                                |                                                          |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |      
|                         | Investing activities:                                        |         |                                                                                |                                                          |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |       |  
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Purchase of property, plant and equipment                |   |              |       |              |   |       | (10.0 | )     |   |      | (18.6 | ) |   |              |      |       |   |      | (28.6 | )
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Investments in affiliated companies and
other businesses |   |              |       |              |   |       | (.4   | )     |   |      | (16.1 | ) |   |              |      |       |   |      | (16.5 | )
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Investments in computer software                         |   |              |       |              |   |       | (7.4  | )     |   |      | (6.2  | ) |   |              |      |       |   |      | (13.6 | )
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Proceeds from sale and leaseback                         |   |              |       |              |   |       | 21.6  |       |   |      |       |   |   |              |      |       |   |      | 21.6  |  
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Other                                                    |   |              |       |              |   |       | 1.3   |       |   |      | 1.4   |   |   |              |      |       |   |      | 2.7   |  
|                         |                                                              |         |                                                                                |                                                          |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |      
|                         | Net cash provided (used) by investing activities             |         |                                                                                |                                                         |   |              |       | 5.1          |   |       |       | (39.5 | ) |      |       |  |   |              |      | (34.4 | )
|                         |                                                              |         |                                                                                |                                                          |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |      
|                         | Financing activities:                                        |         |                                                                                |                                                          |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |       |  
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Repayments of long-term debt                             |   |              |       |              |   |       | (.3   | )     |   |      | (1.1  | ) |   |              |      |       |   |      | (1.4  | )
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Net change in revolving credit facilities                |   |              |       |              |   |       | (78.3 | )     |   |      | 24.4  |   |   |              |      |       |   |      | (53.9 | )
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Net change in other short-term debt                      |   |              |       |              |   |       |       |       |   |      | 4.0   |   |   |              |      |       |   |      | 4.0   |  
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Purchases of treasury stock                              |   |              | (26.8 | )            |   |       |       |       |   |      |      |   |   |              |      |       |   |      | (26.8 | )
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Net change in inter-company accounts                     |   |              | (20.2 | )            |   |       | (30.2 | )     |   |      | 50.4  |   |   |              |      |       |   |      |      |  
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Proceeds from exercise of stock options                  |   |              | 46.7  |              |   |       |       |       |   |      |       |   |   |              |      |       |   |      | 46.7  |  
|                        
|                        
|                        
|                        
|                         |                                                              |         |                                                                                | Other                                                    |   |              | 1.4   |              |   |       |       |       |   |      |       |   |   |              |      |       |   |      | 1.4   |  
|                         |                                                              |         |                                                                                |                                                          |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |      
|                         | Net cash provided (used) by financing activities             |         |                                                                                | 1.1                                                      |   |              |       | (108.8       | ) |       |       | 77.7  |   |      |       |  |   |              |      | (30.0 | )
|                         |                                                              |         |                                                                                |                                                          |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |      
|                         | Effect of exchange rate changes on cash and
cash equivalents |         |                                                                                |                                                          |   |              |       |              |   |       |       | (.8   | ) |      |       |   |   |              |      | (.8   | )
|                         |                                                              |         |                                                                                |                                                          |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |      
|                         | Net increase (decrease) in cash and cash
equivalents         |         |                                                                                | .6                                                       |   |              |       | (5.2         | ) |       |       | (3.1  | ) |      |       |  |   |              |      | (7.7  | )
|                         |                                                              |         |                                                                                |                                                          |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |      
|                         | Cash and cash equivalents at beginning of
period             |         |                                                                                | .1                                                       |   |              |       | 18.9         |   |       |       | 66.4  |   |      |       |  |   |              |      | 85.4  |  
|                         |                                                              |         |                                                                                |                                                          |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |      
|                         | Cash and cash equivalents at end of period                   |         | $                                                                              | .7                                                       |   |              | $     | 13.7         |   |       | $     | 63.3  |   |      | $     |  |   |              | $    | 77.7  |  
|                         |                                                              |         |                                                                                |                                                          |   |              |       |              |   |       |       |       |   |      |       |   |   |              |      |      

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Note 9. Segment Data




Summary Segment and Income Data
Dollars in millions
(Unaudited)

|                                                      |                                       |                      |     |                    |       |      |     |       |       | 
|----------------------------------------------------- | ------------------------------------- | -------------------- | --- | ------------------ | ----- | ---- | --- | ----- | ----- | 
|                                                      |                                       |                      |     | Three Months Ended
|                                                      |                                       |                      |     | March 31,         
|                                                      |                                       |                      |     |                   
|                                                      |                                       |                      |     | 2002               |       | 2001
|                                                      |                                       |                      |     |                    |       |     
|Sales:                                                |                                       |                      |     |                    |       |      |     |      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Air Conditioning Systems and Services |                      | $   | 1,048              |       |      | $   | 1,071 |      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Plumbing Products                     |                      |     | 469                |       |      |     | 455   |      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Vehicle Control Systems               |                      |     | 245                |       |      |     | 265   |      
|                                                      |                                       |                      |     |                    |       |      |     |      
|                                                      |                                       | Total sales          |     | $                  | 1,762 |      |     | $     | 1,791 | 
|                                                      |                                       |                      |     |                    |       |      |     |      
|Segment income:                                       |                                       |                      |     |                    |       |      |     |      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Air Conditioning Systems and Services |                      | $   | 82                 |       |      | $   | 101   |      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Plumbing Products                     |                      |     | 39                 |       |      |     | 36    |      
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Vehicle Control Systems               |                      |     | 34                 |       |      |     | 46    |      
|                                                      |                                       |                      |     |                    |       |      |     |      
|                                                      |                                       | Total segment income |     |                    | 155   |      |     |       | 183   | 
|                                                     
|                                                     
|                                                     
|                                                     
|Equity in net income of unconsolidated
joint ventures |                                       |                      | 5   |                    |       |      | 6   |      
|                                                      |                                       |                      |     |                    |       |      |     |      
|                                                      |                                       |                      | 160 |                    |       |      | 189 |      
|                                                     
|                                                     
|                                                     
|                                                     
|Interest expense                                      |                                       |                      | (34 | )                  |       |      | (47 | )    
|                                                     
|                                                     
|                                                     
|                                                     
|Corporate and other expenses                          |                                       |                      | (41 | )                  |       |      | (38 | )    
|                                                      |                                       |                      |     |                    |       |      |     |      
|Income before income taxes                            |                                       | $                    | 85  |                    |       | $    | 104 |      
|                                                      |                                       |                      |     |                    |       |      |     |      

For a comparative analysis of this Summary Segment and Income Data, see
Managements Discussion and Analysis of Financial Position and Results of
Operations.

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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations for the First Quarter of 2002 Compared with the First
Quarter of 2001

Sales in the first quarter of 2002 were $1,762 million, a decrease of 2%
(flat excluding unfavorable foreign exchange effects) from $1,791 million in
the first quarter of 2001. Sales increased 3% for Plumbing Products, but
decreased 2% for Air Conditioning Systems and Services and 8% for Vehicle
Control Systems.

Segment income was $155 million for the first quarter of 2002, a
decrease of 15% (14% excluding unfavorable foreign exchange effects) from
$183 million in the first quarter of 2001. Segment income increased 8% for
Plumbing Products, but declined 19% for Air Conditioning Systems and
Services and 26% for Vehicle Control Systems. Effective January 2002, the
Company adopted the new goodwill accounting standard that eliminated the
amortization of goodwill. This change increased segment income in the first
quarter of 2002 by $8 million  $2 million for Air Conditioning Systems and
Services, $3 million for Plumbing Products and $3 million for Vehicle
Control Systems. Segment income for the first quarter of 2002 would have
decreased by 19% if reported segment income for the first quarter of 2001
were similarly adjusted to eliminate goodwill amortization. See footnote 6
to financial statements for a comparative summary of the effects of this
accounting change on net income and net income per share for the first
quarter of 2002 and 2001.

Sales of Air Conditioning Systems and Services decreased $23 million, or
2% (1% excluding foreign exchange effects) to $1,048 million for the first
quarter of 2002 from $1,071 million for the first quarter of 2001, primarily
because of a decline in commercial equipment sales, offset partly by gains in
residential systems and the commercial parts, service and solutions business.
The sales decline was significantly less than the markets as a whole.
Worldwide commercial applied and commercial unitary equipment sales decreased
8%, whereas we believe the corresponding markets were down in the estimated
range of 10 to 15%. The sales decrease reflected lower volume as a result of
continued deferrals of both new construction and replacement activity, and
lower prices. That decline was partly offset by growth in the U.S. parts,
service and solutions business, which grew 6%. Sales outside the U.S., which
are substantially commercial, improved in Europe by 3% (in local currencies)
and over 20% in China, substantially offset by a decline in other Far East
countries. Residential sales in the U.S. increased 7%, benefiting from the
Companys strong position in the premium, high-efficiency market, expanding
distribution (including Sears and Home Depot in the retail channel), and
continuing share gains in both cooling systems and furnaces. Residential air
conditioning sales increased 7%, despite an estimated 5% market decline.
Residential furnace sales increased 8% in a market that declined an estimated
2%.

Segment income of Air Conditioning Systems and Services decreased 19%
(with little effect from foreign exchange) to $82 million in the first quarter
of 2002 from $101 million in the first quarter of 2001. Margins decreased
from 9.4% in the first quarter of 2001 to 7.8% in the first quarter of 2002.
Segment income and margins declined primarily because of an unfavorable sales
mix  lower volumes of high-margin commercial equipment sales and higher
volumes of lower-margin residential systems and commercial parts, services and
solutions. Lower prices for commercial products as a result of competitive
pressures also reduced margins. The residential business improved because of
share gains and a favorable shift in customer demand to higher-capacity,
higher-efficiency products with higher margins. The positive impact

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of productivity initiatives and the lack of goodwill amortization in the 2002
quarter essentially offset cost escalations. If goodwill amortization were
also excluded from the first quarter of 2001, segment income would have
decreased by 20% (21% in local currencies).

Sales of Plumbing Products increased 3% (6% excluding foreign exchange
effects) to $469 million in the first quarter of 2002, from $455 million in
the first quarter of 2001 primarily the result of gains in the Americas.
Sales in the Americas increased 11% led by strong growth in the U.S., as
residential markets continued to be solid. Sales benefited from the rollout
of an expanded Whirlpool tub program and faucet sales growth, which helped
gain market share in both fixtures and fittings. In Europe, sales were flat
in local currencies while we believe that markets were down 3 to 4%, as sales
benefited from three small fittings businesses acquired in 2001. In Asia,
sales increased 15%, primarily reflecting an economic turnaround in China.

Segment income of Plumbing Products increased 8% (12% excluding foreign
exchange) to $39 million for the first quarter of 2002 from $36 million for
the 2001 first quarter. The increase was principally attributable to higher
volumes and savings derived from materials management and Six Sigma
initiatives and the lack of goodwill amortization in the 2002 quarter, partly
offset by cost escalations, the unfavorable mix effect from lower-margin U.S.
products and start-up costs associated with new product introductions.
Segment income was up in the U.S., Europe and Asia and down slightly in Latin
America. Margins increased from 7.9% in the first quarter of 2001 to 8.3% in
the first quarter of 2002. If goodwill amortization were excluded from the
first quarter of 2001, segment income would have been flat (but up 3% in local
currencies).

Sales of Vehicle Control Systems for the first quarter of 2002 were $245
million, a decrease of 8% (2% excluding the unfavorable effects of foreign
exchange) from $265 million in the first quarter of 2001, primarily because of
significant declines in European and North American commercial vehicle
markets. Unit volumes of truck and bus production decreased 22% in Western
Europe and 13% in North America compared with the first quarter of 2001.
Vehicle Control Systems sales generally declined less than the markets,
because of increased market penetration, expanding product platforms with
existing customers and higher after-market sales. Sales in Western Europe
(excluding export sales to the Companys U.S. marketing joint venture) were
down 5% from 2001 in contrast to a much greater market decline. Similarly,
sales of anti-lock braking systems to the U. S. marketing joint venture
increased 5% in a market that declined. Sales in Asia increased 18% excluding
foreign exchange effects.

Segment income for Vehicle Control Systems for the first quarter of 2002
decreased 26% (23% excluding foreign exchange effects) to $34 million from $46
million in the first quarter of 2001. Margins decreased from 17.4% in the
first quarter of 2001 to 13.9% in the first quarter of 2002. This primarily
reflected lower sales in Western Europe, lower prices, a less favorable margin
mix and additional product and program development costs. Savings from
materials management and Six Sigma initiatives and the lack of goodwill
amortization in the 2002 quarter offset cost escalations. If goodwill
amortization were excluded from the first quarter of 2001, segment income
would have decreased 31% (26% in local currencies).

Other Summary Segment and Income Data Items

Equity in net income of unconsolidated joint ventures decreased to $5
million in the first quarter of 2002 from $6 million in the first quarter of
2001, reflecting a decline in the North American truck manufacturing market
and its effect on Vehicle Control Systems U.S. braking systems marketing
joint venture.

15



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##### Table of Contents



Interest expense decreased $13 million in the first quarter of 2002
compared with the first quarter of 2001 due to lower average interest rates
and debt balances. Corporate and other expenses in the first quarter of 2002
increased $3 million from the first quarter of 2001 primarily because of
increases associated with pensions, retiree medical costs and life insurance.

The income tax provision for the first quarter of 2002 was $28 million,
or 33.3% of pre-tax income, compared with a provision of $39 million, or 37.5%
of pre-tax income in the first quarter of 2001. The effective income tax rate
is lower in 2002 primarily because of a more efficient tax structure and the
absence of a charge for goodwill amortization.

Liquidity and Capital Resources

Operating activities used net cash of $5 million for the first quarter of
2002, after cash interest paid of $33 million, compared with net cash provided
of $58 million after cash interest paid of $46 million for the same period of
2001. The $63 million decrease resulted primarily from payment of the German
tax settlement of $55 million. Other factors contributing to the decrease
were lower net income, lower depreciation and amortization (because of the new
accounting standard for goodwill) and payments of job elimination costs
accrued in the fourth quarter of 2001, partly offset by lower net working
capital usage (accounts receivable, inventories, accounts payable and accrued
liabilities excluding the German tax payment). Accounts receivable increased
more in the first quarter of 2002 than in the first quarter of 2001, primarily
reflecting slightly slower payments by customers, as the average number of
days sales outstanding increased by 2.9 days. Inventories increased in the
first quarter of both years, reflecting the normal seasonal pattern, but the
increase in 2002 was lower than in 2001, primarily reflecting weaker markets.
Accounts payable and accruals increased more in 2002, primarily reflecting
timing differences in payments.

In investing activities, the Company made capital expenditures of $44
million for the first quarter of 2002, including $22 million of investments in
affiliated companies and other businesses. This compared with capital
expenditures of $45 million in the 2001 first quarter, including $16 million
of investments in affiliated companies and other businesses. The Company also
invested $10 million in computer software in the first quarter of 2002,
compared with $14 million in the 2001 period. Investing activities in 2001
were partly offset by proceeds of $22 million from a sale and leaseback
transaction.

Cash used by investing activities and operating activities in 2002
totaling $54 million was funded by net cash provided by financing activities
in 2002 of $49 million and the use of cash on hand. Financing activities
consisted of net borrowings of $82 million and proceeds realized from the
exercise of stock options of $34 million, partly offset by purchases of
approximately 1.1 million shares of the Companys common stock for $68 million
pursuant to the Companys share repurchase program. This compares with a $23
million excess of cash provided by operating activities in 2001 over cash used
for investing activities which, together with cash on hand, was used to fund
net cash used by financing activities of $30 million. Financing activities in
2001 consisted of net debt repayments of $51 million and purchases of .5 million shares of treasury stock for $27 million, partly offset by proceeds
realized from the exercise of stock options of $47 million.

On January 8, 2002, the company redeemed all of the 9 1/4% Sinking Fund
Debentures, at a redemption price 102.313% of the face amount of the bonds
plus unpaid interest up to the redemption date. The total redemption cost of
$38.7 million was funded with lower-cost

16



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##### Table of Contents



borrowings under the Companys bank credit agreements

On November 6, 2001, the Company entered into two new bank credit
agreements. The new agreements provide the Company with senior unsecured
revolving credit facilities aggregating $1.3 billion as follows: (a) a
five-year, $1 billion multi-currency facility which expires in 2006 and (b) a
364-day, $300 million U.S. dollar facility which expires November 5, 2002,
with an option to renew for an additional 364 days.

The new credit agreements contain various covenants that limit, among
other things, indebtedness, liens, sale and leaseback transactions, subsidiary
indebtedness including preferred stock, mergers, consolidations, dissolutions
and asset sales, investments or acquisitions, dividends and redemptions of
capital stock, loans and advances, and certain other business activities. The
covenants also require the Company to meet certain financial tests: ratio of
consolidated debt to EBITDA (Earnings before Interest, Taxes, Depreciation and
Amortization), and consolidated free cash flow to interest expense. The
Company is currently in compliance with the covenants contained in the new
credit agreements.

At March 31, 2002, the Company had borrowings of $908 million outstanding
under its bank credit agreements. There was $269 million available under
those agreements after reduction for borrowings and for $123 million of
letters of credit usage. The Companys foreign subsidiaries had $121 million
available at March 31, 2002, under overdraft facilities that can be withdrawn
by the banks at any time. In addition, the Companys operations in China have
$35 million available under bank credit facilities after reduction for
borrowings of $15 million and letters of credit usage of $5 million.

The Company believes that the amounts available from operating cash
flows, funds available under its new credit agreements and future borrowings
under the remaining $540 million of a $1 billion shelf registration statement
filed with the Securities and Exchange Commission in 1998 will be sufficient
to meet its expected operating needs and planned capital expenditures for the
foreseeable future.

As described in Note 4 of Notes to Financial Statements in Part I of this
Form 10-Q, in January 2002 the Company settled all issues of its proceedings
with German tax authorities for the years 1984 through 1994 for a current cash
payment of approximately $55 million plus $30 million previously deposited in
escrow. Since the Company previously had provided adequate reserves for all
issues, the settlement had no impact on results of operations.

The Company employs several means to manage its liquidity and is not
dependent upon any one source of funding. In addition to funds available from
operating cash flows, bank credit agreements and the public debt and equity
markets, the Company uses two principal off-balance sheet techniques:
operating leases and receivables financing. Operating leases are employed as
an alternative to purchasing certain property, plant and equipment. Future
rental commitments under all non-cancelable leases have not changed
significantly from the amounts disclosed in the Companys Annual Report on
Form 10-K for the year ended December 31, 2001. The Company is a partner in
American Standard Financial Services, a financial services partnership with
Transamerica Commercial Finance Corporation (Transamerica). Under this
arrangement, the Company sells certain receivables to the joint venture on a
non-recourse basis for a fee and finances certain purchases of inventory by
customers, thus accelerating the cash flow from realization of the
receivables. The uncollected balance of receivables sold or financed
typically fluctuates between approximately $170 million and $250 million
during the year and was

17



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$230 million as of March 31, 2002. To achieve lower borrowing rates, the
Company plans to terminate the partnership with Transamerica in 2002 and
establish new arrangements for the sale of receivables in the U.S. On May 6,
2002, the Company completed a European accounts receivable securitization
agreement, subject to annual renewals, with a major international bank for the
sale of receivables on a non-recourse basis for a fee. Under the agreement
the Company sells eligible receivables to an entity that was formed for the
sole purpose of entering into these transactions which in turn sells the
receivables to a subsidiary of the bank. The Company retains a 10% interest
in the receivables sold. The sale of receivables (other than the retained
interest) is funded through the sale of commercial paper issued by the
subsidiary of the bank. The receivables transaction is treated as a sale
since it meets the applicable criteria of Statement of Financial Accounting
Standards No. 140 and, accordingly, the receivables are removed from the
balance sheet except for the retained interest. Receivables subject to this
agreement may ultimately reach $225 million, at current exchange rates. The
initial transaction under this agreement included receivables totaling
approximately $190 million from which the Company received approximately $171
million. In order to fix the U.S. dollar value of these transactions, the
Company has agreed to enter into foreign currency forward contracts with a
notional value equal to the amount of receivables sold to the bank. Proceeds
from the sale were used to repay debt under the Companys bank credit
agreements.

Disclosure Regarding 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. Forward-looking statements can be identified by the use of words
such as believe, expect, plans, strategy, prospects, estimate,
project, anticipate intends and other words of similar meaning in
connection with a discussion of future operating or financial performance.
This Report on Form 10-Q includes important information as to risk factors in
the Notes to Financial Statements under the headings Restructuring and
Asset Impairment Charges, and in the section titled Managements Discussion
and Analysis of Financial Condition and Results of Operations. 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 and
the level of truck and bus production in the Companys Vehicle Control
Systems markets;

     the ability of the Company to implement its restructuring programs
as planned;

     the extent to which the Company will be able to realize the
estimated savings from the salaried workforce reduction, and from
Materials Management and Six Sigma initiatives;

     the timing of completion and success in the start-up of new production facilities;

     unpredictable difficulties or delays in the development of new product technology;

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     changes in U.S. or international economic conditions, such as
inflation, interest rate fluctuations, foreign exchange 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;

     increased difficulties in obtaining a consistent supply of basic
materials like steel, aluminum, copper, clays, electronics and natural
gas at stable pricing levels;

     labor relations; integration of acquired businesses;

     difficulties in obtaining or retaining the management and other
human resource competencies that the Company needs to achieve its
business objectives;

     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;

     changes in laws or different interpretations of laws that may
affect the Companys expected effective tax rate for 2002;

     transactions or other events affecting the need for, timing and
extent of the Companys capital expenditures;

     the extent of and the costs at which the Company effects
repurchases of its common stock; and

     the extent to which the Company reduces outstanding debt.




Item 3. Quantitative and Qualitative Disclosures About market Risk

There were no material changes to the disclosure on this matter made in
the Companys Annual Report on Form 10-K for the year ended December 31, 2001.

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PART II. OTHER INFORMATION




Item 1. Legal Proceedings

For a discussion of the settlement of German tax issues, see Note 4 to
Financial Statements in Part I of this report which is incorporated herein
by reference.




Item 5. Other Information

At its annual meeting on May 2, 2002, the Board of Directors of American
Standard Companies Inc. elected the following persons to the offices of the
Company set forth below opposite their names:

|                     |  |                                                          
|-------------------- |  | ---------------------------------------------------------
|Frederic M. Poses    |  | Chairman and Chief Executive Officer                     
|                    
|                    
|                    
|                    
|Lawrence B. Costello |  | Senior Vice President, Human Resources                   
|                    
|                    
|                    
|                    
|G. Peter DAloia     |  | Senior Vice President and      Chief
Financial Officer   
|                    
|                    
|                    
|                    
|W. Craig Kissel      |  | Senior Vice President                                    
|                    
|                    
|                    
|                    
|J. Paul McGrath      |  | Senior Vice President,      General
Counsel and Secretary
|                    
|                    
|                    
|                    
|Marc Olivié          |  | Senior Vice President                                    
|                    
|                    
|                    
|                    
|Wilfried Delker      |  | Vice President                                           
|                    
|                    
|                    
|                    
|R. Scott Massengill  |  | Vice President and Treasurer                             
|                    
|                    
|                    
|                    
|David R. Pannier     |  | Vice President                                           




Item 6. Exhibits and Reports on Form 8-K.



| |  | (a) Exhibits. The exhibits listed on the accompanying Index to Exhibits
are filed as part of this quarterly report on Form 10-Q.
| |  | --------------------------------------------------------------------------------------------------------------------------------
|
| |  | (b) Reports on Form 8-K. During the quarter ended March 31, 2002, the
Company filed the following Current Reports on Form 8-K:  



| | 1. |  | On January 17, 2002 the Company filed a Current
Report on Form 8-K which described the settlement of the
Companys tax proceedings with German tax authorities.
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

| |  |                                                                                                                       
| |  | ----------------------------------------------------------------------------------------------------------------------
| |  | AMERICAN STANDARD COMPANIES INC                                                                                       
|
|
|
|
| |  |                                                                                                                       
|
|
|
|
| |  | /s/ G. Peter DAloia
Senior Vice President and 
Chief Financial Officer
(Also signing as Principal
Accounting Officer)

May 14, 2002

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AMERICAN STANDARD COMPANIES INC.




INDEX TO EXHIBITS

(The File Number of the Registrant, American Standard Companies Inc. is 1-11415)

|            |  |                                                             
|----------- |  | ------------------------------------------------------------
|Exhibit No. |  | Description                                                 
|            |  |                                                             
|(10)        |  | American Standard Companies Inc. 2002 Omnibus Incentive Plan
|           
|           
|           
|           
|            |  |                                                             
|           
|           
|           
|           
|(12)        |  | Ratio of Earnings to Fixed Charges                          

22