SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
April 27, 2000
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Date of Report (Date of earliest event reported)
ARMSTRONG WORLD INDUSTRIES, INC.
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(Exact Name of Registrant as Specified in its Charter)
Pennsylvania 1-2116 23-0366390
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(State of Organization) (Commission File Number) (I.R.S. Employer
Identification No.)
2500 Columbia Avenue Lancaster, Pennsylvania 17603
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(Address of Registrant's Principal Executive Office)(Zip Code)
(717) 397-0611
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(Registrant's telephone number, including area code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
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On April 27, 2000, Armstrong World Industries, Inc. ("Armstrong") entered
into an agreement to sell all of the entities, assets and certain liabilities
comprising its Armstrong Insulation Products business ("AIP") to Orion
Einundvierzigste Beteiligungsgesellschaft Mbh ("Orion"), a subsidiary of the
Dutch investment firm Gilde Investment Management N.V. for $280 million, subject
to closing adjustments. The consideration includes approximately $250 million
cash and $30 million in notes receivable. The notes receivable will be
discounted to their fair market value of approximately $15.6 million. The
consideration is primarily denominated in Euros and is subject to currency
translation adjustments until closing. The transaction is expected to close by
late May and result in an after tax gain of approximately $100 million, or $2.48
per share in Armstrong's second quarter.
AIP manufactures and markets technical pipe and sheet insulation, primarily
under the Armaflex brand name, thermoplastic technical pipe insulation, as well
as metal and PVC insulation claddings.
Under terms of the transaction, Orion will purchase all of the shares and
worldwide assets and certain liabilities of AIP. AIP's current management team
will continue to run the business along with its approximately 1,400 worldwide
employees. AIP operates 12 manufacturing facilities in nine countries, including
United States, United Kingdom, Germany, Poland, Switzerland, Italy, Spain,
Australia and China. AIP reported sales of approximately $225 million in 1999.
Armstrong plans to use the cash proceeds from the sale to reduce its
outstanding debt.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
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(A) FINANCIAL STATEMENTS
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NONE.
(B) PRO FORMA FINANCIAL INFORMATION
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Armstrong has prepared the unaudited pro forma balance sheet as of December
31, 1999, as if the disposition had occurred on December 31, 1999.
Armstrong has prepared the unaudited pro forma statement of operations for
the year ended December 31, 1999 as if the disposition had occurred on January
1, 1999.
The pro forma financial information does not purport to be indicative of
the results that would have been obtained had the disposition been completed as
of the date and for the period presented or the results that may be obtained by
Armstrong in the future.
(C) EXHIBITS
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Agreement for the sale and purchase of the Armstrong Insulation Business,
dated as of April 27, 2000 by and among Armstrong World Industries, Inc. and
Orion Einundvierzigste Beteiligungsgesellschaft Mbh
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Armstrong World Industries, Inc., and Subsidiaries
Unaudited Pro Forma Consolidated Balance Sheet
As of December 31, 1999
Actual Pro Forma
December 31, Pro Forma December 31,
(in millions) 1999 Adjustments 1999
------------ ----------- ------------
Assets
Current assets:
Cash and cash equivalents $35.6 $240.5 (1) $276.1
Accounts and notes receivable, net 436.0 (31.8) (3)(4) 404.2
Inventories 429.7 (22.7) (3) 407.0
Deferred income taxes 40.6 - 40.6
Net assets of businesses held for sale 2.2 - 2.2
Other current assets 85.8 (1.9) (3) 83.9
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Total current assets 1,029.9 184.1 1,214.0
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Property, plant and equipment, net 1,439.1 (80.2) (3) 1,358.9
Insurance for asbestos-related liabilities, noncurrent 270.0 - 270.0
Investment in affiliates 34.2 - 34.2
Goodwill, net 935.1 - 935.1
Other intangibles, net 56.6 (2.2) (3)(4) 54.4
Other noncurrent assets 399.6 (18.4) (2)(3)(4) 381.2
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Total assets $4,164.5 $83.3 $4,247.8
========== ======== =========
Liabilities and Shareholders Equity
Current liabilities:
Short-term debt $70.9 - $70.9
Current installments of long-term debt 36.1 - 36.1
Accounts payable and accrued expenses 670.7 (24.8) (3)(4) 645.9
Income taxes 7.3 39.7 (3)(7) 47.0
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Total current liabilities 785.0 14.9 799.9
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Long-term debt, less current installments 1,412.9 - 1,412.9
Employee Stock Ownership Plan (ESOP) loan guarantee 155.3 - 155.3
Deferred income taxes 62.0 - 62.0
Postretirement and postemployment benefit liabilities 245.2 (0.7) (3) 244.5
Pension benefit liabilities 200.2 (40.1) (3) 160.1
Asbestos-related long-term liabilities 506.5 - 506.5
Other long-term liabilities 106.4 (0.8) (3) 105.6
Minority interest in subsidiaries 11.8 - 11.8
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Total noncurrent liabilities 2,700.3 (41.6) 2,658.7
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Shareholders equity:
Common stock 51.9 - 51.9
Capital in excess of par value 176.4 - 176.4
Reduction for ESOP loan guarantee (190.3) - (190.3)
Retained earnings 1,196.2 113.1 (5) 1,309.3
Accumulated other comprehensive loss (16.5) (3.1)(6) (19.6)
Treasury stock (538.5) - (538.5)
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Total shareholders equity 679.2 110.0 789.2
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Total liabilities and shareholders equity $4,164.5 $83.3 $4,247.8
========== ======== =========
See accompanying notes to the unaudited pro forma consolidated financial
statements.
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Armstrong World Industries, Inc., and Subsidiaries
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 1999
Actual Pro Forma
December 31, Pro Forma December 31,
(in millions) 1999 Adjustments 1999
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Net sales $3,443.8 ($225.7) (1) $3,218.1
Cost of goods sold 2,290.3 (136.9) (1) 2,153.4
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1,153.5 (88.8) 1,064.7
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Selling, general and administrative expense 683.0 (43.1) (1) 639.9
Goodwill amortization 25.5 - 25.5
Reorganization reversals (1.4) - (1.4)
Charge for asbestos liability 335.4 - 335.4
Equity (earnings) from affiliates (16.8) - (16.8)
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Operating income 127.8 (45.7) 82.1
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Interest expense 105.2 (15.8) (1)(2) 89.4
Other (income), net (6.6) (2.6) (1)(3) (9.2)
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Earnings before income taxes 29.2 (27.3) 1.9
Income tax expense 14.9 (7.7) 7.2
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Net earnings (loss) $14.3 ($19.6) ($5.3)
========= ======== =========
Net loss per share of common stock:
Basic $0.36 ($0.13)
Diluted $0.36 ($0.13)
Average number of common shares outstanding:
Basic 39.9 39.9
Diluted 40.2 40.2
See accompanying notes to the unaudited pro forma consolidated financial
statements.
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NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1999
(1) Reflects cash consideration received of $250 million less cash of AIP as of
December 31, 1999.
(2) Reflects the notes receivable consideration received of $30 million less
discount to estimated fair market value of $15.6 million.
(3) Reflects removal of assets and liabilities of AIP as of December 31, 1999
(4) Reflects anticipated direct transaction costs.
(5) Reflects the pro forma effect on retained earnings of the transaction as if
it occurred on December 31, 1999.
(6) Reflects the removal of cumulative translation adjustment related to AIP as
of December 31, 1999.
(7) Reflects the estimated income taxes payable from the sale.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(1) Reflects the removal of the operating results of AIP.
(2) Reflects Armstrong's reduced interest expense due to the cash proceeds from
the disposition used to pay outstanding debt at an interest rate of 6.0%.
(3) Reflects interest income and amortization of discount from the notes
receivable issued as part of the total consideration.
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(C) EXHIBITS
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EXHIBIT NO. DESCRIPTION OF DOCUMENT
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2 Agreement for the sale and purchase of the Armstrong
Insulation Business, dated as of April 27, 2000 by and among
Armstrong World Industries, Inc. and Orion Einundvierzigste
Beteiligungsgesellschaft Mbh
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ARMSTRONG WORLD INDUSTRIES, INC.
(registrant)
Date: May 12, 2000 By: \s\ William C. Rodruan
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William C. Rodruan
Vice President and Controller
(Principal Accounting Officer)
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