Large Cap Watch List (Track at Marketocracy) member American Standard (ASD) announced second-quarter net income per diluted share of 84 cents in accordance with Generally Accepted Accounting Principles (GAAP), down from 93 cents a year ago. The decrease was driven by restructuring costs. Adjusted net income per diluted share was $1.05, up 14.1 percent from second quarter a year ago. The company had provided second- quarter net income per diluted share guidance of 98 cents-$1.04 on a GAAP basis and $1.03-$1.09 on an adjusted basis and analysts were expecting the company to earn $1.08.

When I previewed the earnings report, I noted that “they are on the move. They’re picking up momentum and I suspect they will top estimates.” Clearly my suspicions were wrong, and I probably should have known better than to take a stand on a company doing so much reorganizing. While I think the restructuring will be beneficial in the long term, the report illustrates how much volatility can result in the short term.

The company also updated its full-year guidance:

“If we were staying together as one company, we would expect full-year GAAP net income per diluted share of $3.21-$3.31 (including $85-$88 million for separation costs, net of tax, and separation-related tax costs) and net income per diluted share of $3.30-$3.40 on an adjusted basis (an increase of 24-27 percent over adjusted 2006 net income per diluted share).”

This compares with a consensus estimate of $3.37, and considering the $0.03 miss in Q2 the midpoint for the rest of the year is actually slightly higher than the previous consensus estimate. I think the market is taking a more cautious approach to the remainder of the year in light of today’s surprise.

Large Cap Watch List (Track at Marketocracy) member American Standard Companies Inc. (ASD) approved the tax-free spinoff of its Vehicle Control Systems business into a new publicly traded company to be called WABCO (WBC). WABCO is a leading global producer of electronic braking, stability, suspension and transmission control systems for commercial vehicles and was originally part of the Westinghouse Air Brake Company founded in 1869.

As part of its approval, the board authorized a dividend on its common stock of one WABCO share for every three shares of American Standard and established the close of business on July 19, 2007 as the record date. The distribution will be made as set forth in the information statement, which will be mailed prior to the distribution to shareholders of record on the record date. The distribution is expected to take place after close of business on July 31, 2007. American Standard will distribute cash to shareholders in lieu of fractional shares of WABCO stock.

So now the Watch List will have an extra security in it.  I’ll probably end up taking it off the next time it I rebalance the list, because typically I require more than a few months of data before putting something in.