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
July 6, 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)
ARMSTRONG HOLDINGS, INC.
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(Exact Name of Registrant as Specified in its Charter)
Pennsylvania 23-3033414
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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 June 27, 2000, Armstrong World Industries, Inc., a wholly owned
subsidiary of Armstrong Holdings, Inc., entered into an agreement to sell its
Installation Products Group ("IPG") to subsidiaries of the German company Ardex
GmbH, for $86 million in cash, subject to closing adjustments. The Agreement was
subject to the successful determination of the scope of certain environmental
investigations to be conducted prior to closing. Such determination was made on
July 6, 2000. Under the Agreement, Ardex will purchase substantially all of the
assets and liabilities of IPG including its shares of W.W. Henry Company. The
transaction is expected to close in the third quarter and result in an after tax
gain of approximately $44 million, or $1.09 per share in Armstrong's third
quarter. Completion of the transaction is subject to certain environmental due
diligence investigations and required regulatory approval which remains pending.
Under the terms of the Agreement and a related supply agreement, Armstrong
will purchase some of its installation products needs from Ardex for an initial
term of eight years, subject to certain minimums for the first five years after
the sale. The Agreement also calls for price adjustments based upon changing
market prices for raw materials, labor and energy costs.
IPG is a leading floor installation products manufacturer and has
approximately 170 employees. Ardex intends to continue to operate the 3
manufacturing facilities and research and development group in the United
States. IPG recorded sales of approximately $83 million in 1999, including $48
million of sales of products which Armstrong will continue to purchase from
Ardex after the closing pursuant to the provisions of the supply agreement.
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 World Industries, Inc. has prepared the unaudited pro forma
balance sheet as of March 31, 2000, as if the disposition had occurred on March
31, 2000.
Armstrong World Industries, Inc. has prepared the unaudited pro forma
statements of operations for the year ended December 31, 1999 and three-month
period ended March 31, 2000 as if the disposition had occurred on January 1,
1999 and January 1, 2000, respectively.
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 World Industries, Inc. in the future.
(C) EXHIBITS
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Acquisition agreement dated as of June 27, 2000 by and among Armstrong
World Industries, Inc. and Armstrong Enterprises, Inc. and Ardex Acquisition
Corporation and Ardex, Inc.
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Armstrong World Industries, Inc., and Subsidiaries
Unaudited Pro Forma Consolidated Balance Sheet
As of March 31, 2000
Actual Pro Forma
March 31, Pro Forma March 31,
(in millions) 2000 Adjustments 2000
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Assets
Current assets:
Cash and cash equivalents $19.2 $86.0 (1) $105.2
Accounts and notes receivable, net 429.3 - 429.3
Inventories 425.2 (6.5)(2) 418.7
Deferred income taxes 40.6 (0.1)(2) 40.5
Net assets of discontinued operations 103.9 - 103.9
Other current assets 79.7 (0.3)(2) 79.4
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Total current assets 1,097.9 79.1 1,177.0
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Property, plant and equipment, net 1,337.3 (12.7)(2) 1,324.6
Insurance for asbestos-related liabilities, noncurrent 270.0 - 270.0
Investment in affiliates 32.3 - 32.3
Goodwill, net 922.0 (9.5)(2) 912.5
Other intangibles, net 54.0 - 54.0
Other noncurrent assets 390.2 - 390.2
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Total assets $4,103.7 $56.9 $4,160.6
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Liabilities and Shareholders' Equity
Current liabilities:
Short-term debt $229.9 - $229.9
Current installments of long-term debt 31.2 - 31.2
Accounts payable and accrued expenses 575.8 (2.5)(2)(3) 573.3
Income taxes 3.3 15.5 (5) 18.8
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Total current liabilities 840.2 13.0 853.2
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Long-term debt, less current installments 1,359.7 - 1,359.7
Employee Stock Ownership Plan (ESOP) loan guarantee 155.3 - 155.3
Deferred income taxes 65.0 (0.4)(2) 64.6
Postretirement and postemployment benefit liabilities 245.4 (0.2)(2) 245.2
Pension benefit liabilities 161.6 - 161.6
Asbestos-related long-term liabilities 470.0 - 470.0
Other long-term liabilities 101.2 - 101.2
Minority interest in subsidiaries 9.9 - 9.9
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Total noncurrent liabilities 2,568.1 (0.6) 2,567.5
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Shareholders' equity:
Common stock 51.9 - 51.9
Capital in excess of par value 180.6 - 180.6
Reduction for ESOP loan guarantee (185.4) - (185.4)
Retained earnings 1,207.9 44.5 (4) 1,252.4
Accumulated other comprehensive loss (21.7) - (21.7)
Treasury stock (537.9) - (537.9)
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Total shareholders' equity 695.4 44.5 739.9
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Total liabilities and shareholders' equity $4,103.7 $56.9 $4,160.6
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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 Three Month Period Ended March 31, 2000
Actual Pro Forma
March 31, Pro Forma March 31,
(in millions) 2000 Adjustments 2000
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Net sales $773.3 ($8.5)(1) $764.8
Cost of goods sold 537.0 (4.5)(1) 532.5
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236.3 (4.0) 232.3
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Selling, general and administrative expense 165.7 (1.5)(1) 164.2
Goodwill amortization 6.1 - 6.1
Equity (earnings) from affiliates (4.7) - (4.7)
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Operating income 69.2 (2.5) 66.7
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Interest expense, net 25.9 (1.3)(2) 24.6
Other expense, net 0.6 - 0.6
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Earnings from continuing operations before income taxes 42.7 (1.2) 41.5
Income tax expense 16.7 (0.4) 16.3
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Earnings from continuing operations $26.0 ($0.8) $25.2
Earnings per share of common stock, continuing operations:
Basic $0.65 $0.63
Diluted $0.65 $0.63
Average number of common shares outstanding:
Basic 40.1 40.1
Diluted 40.3 40.3
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 $3,218.1 ($35.4)(1) $3,182.7
Cost of goods sold 2,153.4 (20.3)(1) 2,133.1
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1,064.7 (15.1) 1,049.6
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Selling, general and administrative expense 639.9 (6.7)(1) 633.2
Goodwill amortization 25.5 (0.2)(1) 25.3
Reorganization charges/(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 82.1 (8.2) 73.9
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Interest expense, net 105.2 (5.2)(2) 100.0
Other (income), net (6.6) - (6.6)
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Loss from continuing operations before income taxes (16.5) (3.0) (19.5)
Income tax expense 0.9 (1.1) (0.2)
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Net loss from continuing operations ($17.4) ($1.9) ($19.3)
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Net loss per share of common stock:
Basic ($0.44) ($0.48)
Diluted ($0.43) ($0.48)
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 MARCH 31, 2000
(1) Reflects cash consideration to be received of $86 million.
(2) Reflects elimination of assets and liabilities of IPG as of March 31, 2000.
(3) Reflects anticipated accrued direct transaction costs.
(4) Reflects the pro forma effect on retained earnings of the transaction as
if it had occurred on March 31, 2000.
(5) Reflects the estimated income taxes payable from the sale.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND
THE YEAR ENDED DECEMBER 31, 1999
(1) Reflects the elimination of the operating results of IPG.
(2) Reflects Armstrong's reduced net interest expense due to the cash
proceeds from the disposition used to pay outstanding debt at an interest
rate of 6.0%.
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(C) EXHIBITS
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EXHIBIT NO. DESCRIPTION OF DOCUMENT
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2 Acquisition agreement dated as of June 27, 2000 by
and among Armstrong World Industries, Inc. and
Armstrong Enterprises, Inc. and Ardex Acquisition
Corporation and Ardex, Inc.
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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: July 21, 2000 By: \s\ William C. Rodruan
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William C. Rodruan
Vice President and Controller
(Principal Accounting Officer)
ARMSTRONG HOLDINGS, INC.
(registrant)
Date: July 21, 2000 By: \s\ William C. Rodruan
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William C. Rodruan
Vice President and Controller
(Principal Accounting Officer)
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