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
Date of Report (date of earliest event reported): December 29, 1995
Armstrong World Industries, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 1-2116 23-0366390
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification Number)
313 West Liberty Street, P.O. Box 3001, Lancaster, Pennsylvania 17604
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code:(717) 397-0611
Item 2. Acquisition or Disposition of Assets.
On December 29, 1995, pursuant to a Stock Purchase Agreement by and
among Armstrong World Industries, Inc. (the "Registrant") and one of its wholly
owned subsidiaries, on the one hand, and INTERCO INCORPORATED ("INTERCO"), on
the other hand, dated as of November 18, 1995 (the "INTERCO Agreement"), the
Registrant sold one hundred percent of its stock in its furniture subsidiary,
Thomasville Furniture Industries, Inc. ("Thomasville") to INTERCO in exchange
for approximately $331 million in cash (subject to post-closing adjustments) and
the assumption by INTERCO of approximately $8 million of Thomasville debt. The
consideration received by the Registrant for the Thomasville shares was
determined in arms-length negotiations with INTERCO.
The Registrant is not aware of any material relationship between it or any
of its directors or officers, or between any affiliate or the directors or
officers of any affiliate, and INTERCO that existed at the date of the
disposition.
The foregoing is a summary description of the disposition of Thomasville
and related transactions and is qualified in its entirety by reference to the
INTERCO Agreement and other exhibits filed with this Form 8-K.
Item 5. Other Events.
On January 2, 1996, the Registrant issued a press release announcing the
completion of the sale of Thomasville, a copy of which is attached hereto as
Exhibit 99.01.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Not Applicable.
(b) Pro forma financial information.
Armstrong World Industries, Inc. and Subsidiaries
Unaudited Pro Forma Financial Statements
The following unaudited pro forma financial statements are presented for
informational purposes only and do not purport to be indicative of the financial
position which would actually have existed or the results of operations which
would actually have been obtained if the transactions had occurred in the
periods indicated below or which may exist or be obtained in the future. The
ultimate use of the proceeds may differ from the assumptions used herein.
The following unaudited pro forma statements of operations for the year ended
December 31, 1994 and the nine months ended September 30, 1995 give effect to
i. the elimination of the results of operations of Thomasville, an
indirectly wholly owned subsidiary of the Registrant, which was sold
as described in the accompanying notes, and
ii. the related pro forma adjustments described in the accompanying notes.
The pro forma results of operations are presented as though the disposal
occurred on January 1, 1994.
The following unaudited pro forma balance sheet as of September 30, 1995 gives
effect to the disposal of Thomasville and the related pro forma adjustments
described in the accompanying notes. The balance sheet is presented as though
the disposal occurred on September 30, 1995.
These statements should be read in conjunction with the historical financial
statements and accompanying notes of the Registrant.
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Armstrong World Industries, Inc. and Subsidiaries
Pro Forma Balance Sheet (Unaudited)
as of September 30, 1995
(amounts in millions)
Armstrong Pro-Forma Armstrong
Consolidated Thomasville Adjustments Pro-Forma
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Assets
Cash and cash equivalents $18.4 $267.5 (a) $285.9
Accounts and notes receivable, net 359.0 ($73.4) 0.0 285.6
Inventories
Finished goods 219.6 (22.4) 0.0 197.2
Work in process 36.7 (8.3) 0.0 28.4
Raw materials and supplies 79.6 (33.9) 0.0 45.7
Inventories 335.9 (64.6) 0.0 271.3
Income tax benefits 43.9 (2.6) 8.4 (b) 49.7
Other current assets 29.5 0.0 (5.2)(b) 24.3
Total current assets 786.7 (140.6) 270.7 916.8
Property, plant and equipment, gross 2,315.0 (244.4) 0.0 2,070.6
Less accumulated depreciation and amortization 1,206.8 (139.2) 0.0 1,067.6
Property, plant and equipment, net 1,108.2 (105.2) 0.0 1,003.0
Insurance for asbestos-related liabilities 184.0 0.0 0.0 184.0
Other noncurrent assets 277.0 (5.2) 1.6 (c) 273.4
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Total assets $2,355.9 ($251.0) $272.3 $2,377.2
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Liabilities
Short-term debt 63.7 (63.7)(a) 0.0
Current installments of long-term debt 59.0 0.0 59.0
Accounts payable and accrued expenses 363.2 (49.4) 26.6 (b) 340.4
Income taxes 25.2 61.0 (c) 86.2
Total current liabilities 511.1 (49.4) 23.9 485.6
Long-term debt 197.4 (8.0) 0.0 189.4
ESOP loan guarantee 240.4 0.0 240.4
Deferred income taxes 25.8 4.3 (4.3)(b) 25.8
Postemployment and postretirement benefit liabilities 271.1 (29.1) 0.0 242.0
Asbestos-related liabilities 184.0 0.0 184.0
Other long-term liabilities 132.1 (137.4) 135.4 (b) 130.1
Minority interest in subsidiaries 10.5 0.0 10.5
Total noncurrent liabilities 1,061.3 (170.2) 131.1 1,022.2
Shareholders' equity
Convertible preferred stock at redemption value 258.9 0.0 0.0 258.9
Common stock 51.9 0.0 0.0 51.9
Capital in excess of par value 46.9 0.0 0.0 46.9
Reduction for ESOP loan guarantee (228.2) 0.0 0.0 (228.2)
Retained earnings 1,137.4 (31.4) 117.3 (c) 1,223.3
Foreign currency translation 20.2 0.0 0.0 20.2
Treasury stock (503.6) 0.0 0.0 (503.6)
Total shareholders' equity 783.5 (31.4) 117.3 869.4
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Total liabilities and shareholders' equity $2,355.9 ($251.0) $272.3 $2,377.2
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See page 5 for notes (a), (b), and (c).
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Armstrong World Industries, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
for the nine months ended September 30, 1995
(amounts in millions except for per-share data)
Armstrong Pro-Forma Armstrong
Consolidated Thomasville Adjustments Pro-Forma
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Net sales $2,175.8 ($408.3) $1,767.5
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Cost of goods sold 1,512.9 (326.8) 1,186.1
Gross profit 662.9 (81.5) 581.4
Selling, general and administrative expenses 402.1 (52.8) 349.3
Restructuring charges 72.4 (0.6) 71.8
Operating income 188.4 (28.1) 160.3
Interest expense 25.3 0.0 (1.9)(d) 23.4
Other expense/(income), net 2.2 0.0 2.2
Earnings before income taxes 160.9 (28.1) 1.9 134.7
Income taxes 54.4 (11.1) 0.7 (e) 44.0
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Net earnings $106.5 ($17.0) $1.2 $90.7
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Net earnings per share of common stock
Primary $2.55 $2.13
Fully diluted $2.33 $1.96
Average number of common shares and common
equivalent shares outstanding
Primary 37.6 37.6
Fully diluted 43.0 43.0
See page 5 for notes (d) and (e).
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Armstrong World Industries, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
for the year ended December 31, 1994
(amounts in millions except for per-share data)
Armstrong Pro-Forma Armstrong
Consolidated Thomasville Adjustments Pro-Forma
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Net sales $2,752.7 ($526.8) $2,225.9
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Cost of goods sold 1,904.7 (420.8) 1,483.9
Gross profit 848.0 (106.0) 742.0
Selling, general and administrative expenses 514.8 (67.4) 447.4
Operating income 333.2 (38.6) 294.6
Interest expense 28.3 0.0 (3.0)(d) 25.3
Other expense/(income), net 0.4 0.0 0.4
Earnings before income taxes 304.5 (38.6) 3.0 268.9
Income taxes 94.1 (15.6) 1.1 (e) 79.6
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Net earnings $210.4 ($23.0) $1.9 $189.3
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Net earnings per share of common stock
Primary $5.22 $4.66
Fully diluted $4.64 $4.15
Average number of common shares and common
equivalent shares outstanding
Primary 37.5 37.5
Fully diluted 43.4 43.4
See page 5 for notes (d) and (e).
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Armstrong World Industries, Inc. and Subsidiaries
Notes to Unaudited Pro Forma Financial Statements
The Armstrong Consolidated column in the pro forma balance sheet as of September
30, 1995 and the pro forma statements of operations for the year ended December
31, 1994 and the nine months ended September 30, 1995 include Thomasville's
results for the full periods.
The statements do not include the effects of the ceramic tile business
combination with Dal-Tile International completed on December 29, 1995. The
effects of the ceramic tile business combination will be filed under a separate
8-K.
On December 29, 1995, the Registrant caused the sale of all shares of
Thomasville to INTERCO for $331.2 million of cash. This sale is reflected in the
pro forma balance sheet pro forma adjustments column as follows:
(a) The cash proceeds reduce short-term debt by $63.7 million and the remaining
$267.5 million is retained as cash.
(b) Additional adjustments are also reflected in the pro forma adjustments
column as follows:
Balance sheet category Amounts in millions
Income tax benefits $ 8.4
Other current assets-pension liability 5.2
Accounts payable and accrued expenses 26.6
Deferred income taxes retained from Thomasville 4.3
Other long-term liabilities 135.4
(c) Retained earnings reflects an estimated gain of $85.9 million (net of
estimated accrued expenses of $7.5 million, pension curtailment gain of $1.6
million, tax expenses of $61.0 million and tax benefits of $5.8 million)
on the sale as though the disposal had occurred on September 30, 1995.
The estimated gain of $85.9 million was computed as follows:
(amounts in millions)
Cash proceeds $331.2
Less net assets sold, fees incurred, and taxes 213.9
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117.3
Less Thomasville historical retained earnings 31.4
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Estimated gain $ 85.9
======
The actual gain to be recorded as of December 29, 1995 will differ from the
estimated pro forma gain assumed in the September 30, 1995 pro forma balance
sheet.
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The pro forma statements of operations pro forma adjustments column for the year
ended December 31, 1994 and the nine months ended September 30, 1995 reflect
interest expense adjustments related to short-term debt reduction as follows:
Year ended Nine months ended
(amounts in millions) December 31, 1994 September 30, 1995
(d) Reduction in interest expense at an assumed
average interest rate of 6.0% $3.0 $1.9
(e) Increase in income taxes related to the
reduction in interest expense 1.1 0.7
Interest income from investment of cash proceeds in excess of those used to
reduce short-term debt is not reflected in the pro forma statements of
operations pro forma adjustments column for the year ended December 31, 1994 and
the nine months ended September 30, 1995. If these proceeds had been invested
the effect on the statements of operations would have been as follows:
Year ended Nine months ended
(amounts in millions) December 31, 1994 September 30, 1995
Increase in interest income at an assumed
average interest rate of 5.0% $14.1 $10.8
Increase in income taxes related to the
increase in interest income 5.0 3.8
Increase to net earnings 9.1 7.0
Increase to earnings per share
Primary $ .24 $ .19
Fully diluted .21 .16
The pro forma statements of income do not reflect the estimated gain on the sale
or any earnings from the investment of the proceeds in excess of the amounts
used to reduce short-term debt.
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Exhibit Index
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Exhibit No. Description Sequential Page No.
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2.01 Stock Purchase Agreement by Filed herewith at page 10.
and among INTERCO, on the one
hand, and the Registrant and
Armstrong Enterprises, Inc., on
the other hand, dated as of
November 18, 1995.
99.01 Press Release dated January 2, 1996. Filed herewith at page 105.
99.02 Press Release dated November 20, 1995. Incorporated herein by
reference to Exhibit 99
to the Form 8-K filed
by the Registrant on
November 19, 1995.
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SIGNATURES
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.
(A Pennsylvania corporation)
Dated: January 16, 1996 By: /s/ L.A. Pulkrabek
---------------------------
L.A. PULKRABEK
Senior Vice President, Secretary and
General Counsel
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