<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
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
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This Current Report on Form 8-K/A amends Items 7 (a) and 7 (b) of the
Current Report on Form 8-K filed on January 16, 1996.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
The following independent auditors report and the Audited
Financial Statements of Dal-Tile International Inc. as of December 31,
1994 and 1993, appearing in the Dal-Tile International Inc. Annual
Report on Form 10K filed on March 31, 1995, are incorporated by
reference in this Form 8-K.
Report of Ernst & Young L.L.P., dated February 21, 1995.
Consolidated Balance Sheets as of December 31, 1994 and 1993.
Consolidated Statements of Operations for the years ended
December 31, 1994, 1993 and 1992.
Consolidated Statements of Stockholders' Equity (Capital
Deficiency) at December 31, 1994, 1993, 1992 and 1991.
Consolidated Statements of Cashflows for the years ended December
31, 1994, 1993 and 1992.
Notes to Consolidated Financial Statements as of December 31,
1994.
The following financial statements for the three and nine month
periods ended September 30, 1995, appearing in the Dal-Tile
International Inc. Form 10Q for the quarter ended September 30, 1995
and filed on November 14, 1995, are incorporated by reference in this
Form 8-K.
Consolidated Statements of Operations for the three and nine
months ended September 30, 1995 and 1994.
Consolidated Balance Sheets as of September 30, 1995 and December
31, 1994.
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1995 and 1994.
Notes to Condensed Consolidated Financial Statements.
(b) Pro forma financial information.
The following unaudited pro forma financial statements of Armstrong
World Industries, Inc. (sometimes referred to herein as "Armstrong"
or the "Registrant"), 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
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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 Consolidated 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
Furniture Industries, Inc. ("Thomasville"), an indirectly
wholly owned subsidiary of the Registrant, which was sold as
described in the accompanying notes.
ii. the elimination of the results of Ceramic Tile Operations,
which comprises American Olean Tile Company, Inc. in its
entirety and portions of Armstrong World Industries Canada,
Ltd. and Armstrong Cork Finance Corporation specifically
related to the ceramic tile business. American Olean Tile
Company, Inc., Armstrong World Industries Canada, Ltd., and
Armstrong Cork Finance Corporation are indirectly wholly owned
subsidiaries of the Registrant. As described in the
accompanying notes, Ceramic Tile Operations was combined with
Dal-Tile International Inc.
iii. the inclusion of the Registrant's portion of the equity
earnings of the pro forma results of Dal-Tile International
Inc., a business combination comprising Dal-Tile
International Inc. and the Ceramic Tile Operations of the
Registrant as described in (ii).
iv. the related pro forma adjustments described in the
accompanying notes.
The Pro Forma Consolidated Statements of Operations for the periods
ending December 31, 1994 and September 30, 1995, are presented as
though the disposal of Thomasville and the formation of the business
combination with Dal-Tile occurred on January 1, 1994.
The following unaudited Pro Forma Balance Sheet as of September 30,
1995 gives effect to the disposal of Thomasville, the business
combination with Dal-Tile, and the related pro forma adjustments
described in the accompanying notes. The balance sheet is presented
as though the disposal of Thomasville and the formation of the
business combination occurred on September 30, 1995.
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Armstrong World Industries, Inc. and Subsidiaries
Pro Forma Balance Sheet (Unaudited)
as of September 30, 1995
(amounts in millions)
<TABLE>
<CAPTION>
Ceramic
Thomasville Ceramic Tile
Armstrong Pro-Forma Tile Pro-Forma Armstrong
Consolidated Thomasville Adjustments Operations Adjustments Pro-Forma
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets
Cash and cash equivalents $18.4 $0.0 $267.5(a) $ 0.0 ($27.6)(d) $258.3
Accounts and notes receivable, net 359.0 (73.4) 0.0 (33.2) 0.0 252.4
Inventories
Finished goods 219.6 (22.4) 0.0 (65.1) 0.0 132.1
Work in process 36.7 (8.3) 0.0 (2.0) 0.0 26.4
Raw materials and supplies 79.6 (33.9) 0.0 (4.6) (0.2)(e) 40.9
Inventories 335.9 (64.6) 0.0 (71.7) (0.2) 199.4
Income tax benefits 43.9 (2.6) 8.4(b) (19.9) 19.7(e) 49.5
Other current assets 29.5 0.0 (5.2)(b) (2.0) 0.2(e) 22.5
Total current assets 786.7 (140.6) 270.7 (126.8) (7.9) 782.1
Property, plant and equipment, gross 2,315.0 (244.4) 0.0 (225.2) 0.0 1,845.4
Less accumulated depreciation
and amortization 1,206.8 (139.2) 0.0 (71.1) 0.0 996.5
Property, plant and equipment, net 1,108.2 (105.2) 0.0 (154.1) 0.0 848.9
Insurance for asbestos-related liabilities 184.0 0.0 0.0 0.0 0.0 184.0
Investment in affiliates 0.0 0.0 0.0 0.0 132.3(d) 132.3
Other noncurrent assets 277.0 (5.2) 1.6(c) (32.7) (0.7)(e) 240.0
- -------------------------------------------------------------------------------------------------------------------------
Total assets $2,355.9 ($251.0) $272.3 ($313.6) $123.7 $2,187.3
- -------------------------------------------------------------------------------------------------------------------------
Liabilities
Short-term debt $63.7 0.0 (63.7)(a) 0.0 0.0 0.0
Current installments of long-term debt 59.0 0.0 0.0 0.0 0.0 59.0
Accounts payable and accrued expenses 363.2 (49.4) 26.6(b) (28.2) 18.9(e) 331.1
Income taxes 25.2 0.0 61.0(c) 0.0 (56.2)(e) 30.0
Total current liabilities 511.1 (49.4) 23.9 (28.2) (37.3) 420.1
Long-term debt 197.4 (8.0) 0.0 (1.0) 1.0(e) 189.4
ESOP loan guarantee 240.4 0.0 0.0 0.0 0.0 240.4
Deferred income taxes 25.8 4.3 (4.3)(b) (21.2) 19.4(e) 24.0
Postemployment and postretirement
benefit liabilities 271.1 (29.1) 0.0 0.0 0.0 242.0
Asbestos-related liabilities 184.0 0.0 0.0 0.0 0.0 184.0
Other long-term liabilities 132.1 (137.4) 135.4(b) (78.2) 73.9(e) 125.8
Minority interest in subsidiaries 10.5 0.0 0.0 0.0 0.0 10.5
Total noncurrent liabilities 1,061.3 (170.2) 131.1 (100.4) 94.3 1,016.1
Shareholders' equity 783.5 (31.4) 117.3(c) (185.0) 66.7(d) 751.1
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $2,355.9 ($251.0) $272.3 ($313.6) $123.7 $2,187.3
- -------------------------------------------------------------------------------------------------------------------------
See Pages 7-8 for notes for (a), (b), (c), (d), and (e).
</TABLE>
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Armstrong World Industries, Inc. and Subsidiaries
Pro Forma Consolidated Statements of Operations (Unaudited)
for the nine months ended September 30, 1995
(amounts in millions except for per-share data)
<TABLE>
<CAPTION>
Ceramic
Thomasville Ceramic Tile
Armstrong Pro-Forma Tile Pro-Forma Armstrong
Consolidated Thomasville Adjustments Operations Adjustments Pro-Forma
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $2,175.8 ($408.3) $0.0 ($180.2) $0.0 $1,587.3
- -------------------------------------------------------------------------------------------------------------------------
Cost of goods sold 1,512.9 (326.8) 0.0 (127.9) 0.1(i) 1,058.3
Gross profit 662.9 (81.5) 0.0 (52.3) (0.1) 529.0
Selling, general and administrative expenses 402.1 (52.8) 0.0 (47.0) 0.1(i) 302.4
Equity (earnings) loss from affiliates 0.0 0.0 0.0 0.0 (4.4)(h) (4.4)
Restructuring charges 72.4 (0.6) 0.0 0.0 0.0 71.8
Operating income 188.4 (28.1) 0.0 (5.3) 4.2 159.2
Interest expense 25.3 0.0 (1.9)(f) (5.8) 5.8(i) 23.4
Other expense (income), net 2.2 0.0 0.0 0.8 (0.8)(i) 2.2
Earnings before income taxes 160.9 (28.1) 1.9 (0.3) (0.8) 133.6
Income taxes 54.4 (11.1) 0.7(g) (0.7) (2.5)(i) 40.8
- -------------------------------------------------------------------------------------------------------------------------
Net earnings $106.5 ($17.0) $1.2 $0.4 $1.7 $92.8
- -------------------------------------------------------------------------------------------------------------------------
Net earnings per share of common stock
Primary $2.55 $2.19
Fully diluted $2.33 $2.01
Average number of common shares and common
equivalent shares outstanding
Primary 37.6 37.6
Fully diluted 43.0 43.0
- -------------------------------------------------------------------------------------------------------------------------
See pages 9-10 for notes (f), (g), (h), and (i).
</TABLE>
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Armstrong World Industries, Inc. and Subsidiaries
Pro Forma Consolidated Statements of Operations (Unaudited)
for the year ended December 31, 1994
(amounts in millions except for per-share data)
<TABLE>
<CAPTION>
Ceramic
Thomasville Ceramic Tile
Armstrong Pro-Forma Tile Pro-Forma Armstrong
Consolidated Thomasville Adjustments Operations Adjustments Pro-Forma
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales $2,752.7 ($526.8) $0.0 ($220.2) $0.0 $2,005.7
- ------------------------------------------------------------------------------------------------------------------------
Cost of goods sold 1,904.7 (420.8) 0.0 (159.4) 0.2(i) 1,324.7
Gross profit 848.0 (106.0) 0.0 (60.8) (0.2) 681.0
Selling, general and administrative expenses 514.8 (67.4) 0.0 (60.1) 0.1(i) 387.4
Equity earnings from affiliates 0.0 0.0 0.0 0.0 (2.9)(h) (2.9)
0.0 0.0
Operating income 333.2 (38.6) 0.0 (0.7) 2.6 296.5
Interest expense 28.3 0.0 (3.0)(f) (4.3) 4.3(i) 25.3
Other expense (income), net 0.4 0.0 0.0 0.2 (0.2)(i) 0.4
Earnings before income taxes 304.5 (38.6) 3.0 3.4 (1.5) 270.8
Income taxes 94.1 (15.6) 1.1(g) 0.8 (2.4)(i) 78.0
- ------------------------------------------------------------------------------------------------------------------------
Net earnings $210.4 ($23.0) $1.9 $2.6 $0.9 $192.8
- ------------------------------------------------------------------------------------------------------------------------
Net earnings per share of common stock
Primary $5.22 $4.75
Fully diluted $4.64 $4.23
Average number of common shares and common
equivalent shares outstanding
Primary 37.5 37.5
Fully diluted 43.4 43.4
- ------------------------------------------------------------------------------------------------------------------------
See pages 9-10 for notes (f), (g), (h), and (i).
</TABLE>
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
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 and
Ceramic Tile Operation's results for the full periods.
On December 29, 1995, the Registrant caused the sale of all shares of
Thomasville to INTERCO Incorporated for $331.2 million of cash. This sale is
reflected in the Pro Forma Balance Sheet Thomasville 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 Thomasville pro forma
adjustments column as follows:
<TABLE>
<CAPTION>
Balance sheet category Amounts in millions
<S> <C>
Income tax benefits $ 8.4
Other current assets-pension liability 5.2
Accounts payable and accrued expenses 26.6
Deferred income taxes retained from 4.3
Thomasville
Other long-term liabilities 135.4
(principally inter-company debt)
</TABLE>
(c) Retained earnings reflects an estimated after-tax gain of $85.9 million (net
of estimated accrued expenses of $7.5 million, pension curtailment gain of
$1.6 million, and tax expenses of $61.0 million and tax benefits of $5.8
million) on the sale as though the sale had occurred on September 30, 1995.
The estimated gain of $85.9 million was computed as follows:
<TABLE>
<CAPTION>
(amounts in millions)
<S> <C>
Cash proceeds $331.2
Less net assets sold, fees incurred, and taxes 213.9
------
117.3
Less Thomasville historical retained earnings 31.4
------
Estimated after-tax gain $ 85.9
======
</TABLE>
The actual after-tax gain of $83.8 million recorded as of December 29, 1995
differs from the estimated pro forma gain assumed in the September 30, 1995
Pro Forma Balance Sheet.
On December 29, 1995, the Registrant caused the sale of all shares of
American Olean, along with assets held by Armstrong Cork Finance
Corporation, to be sold to Dal-Tile in exchange for a 37% ownership in the
new business combination. Armstrong's investment in Dal-Tile exceeds the
underlying equity in net assets by $123.9 million which will be amortized
over a period of 30 years. Armstrong also wrote off assets held
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by Armstrong World Industries, Canada, Ltd. associated with Ceramic Tile
Operations. These transactions are reflected in the Pro Forma Balance
Sheet Ceramic Tile pro forma adjustments column as follows:
(d) Retained earnings reflects an estimated after-tax loss of $118.3 million
(net of estimated accrued expenses of $9.2 million, pension curtailment loss
of $.4 million, and tax benefits of $59.6 million) on the formation of the
business combination as though the formation had occurred on September 30,
1995.
The estimated loss of $118.3 million was computed as follows:
<TABLE>
<CAPTION>
(amounts in millions)
<S> <C>
Adjusted book basis of Ceramic Tile Operations $ 273.0
Cash contribution 27.6
Fees and expenses 9.6
--------
Total cost basis 310.2
Fair value of acquired investment in Dal-Tile 132.3
--------
Cost basis in excess of fair value (177.9)
Tax benefit 59.6
--------
Estimated after-tax loss $118.3
========
Historical equity of ceramic tile operations $185.0
Less estimated after-tax loss 118.3
--------
Net equity retained by Armstrong $ 66.7
========
</TABLE>
The actual after-tax loss of $116.8 million recorded as of December 29, 1995
differs from the estimated pro forma gain assumed in the September 30, 1995
Pro Forma Balance Sheet
(e) Additional adjustments are also reflected in the Ceramic Tile pro forma
adjustments column as follows:
<TABLE>
<CAPTION>
Balance sheet category Amounts in millions
<S> <C>
Inventories ($.2)
Income tax benefits 19.7
Other current assets .2
Other noncurrent assets (.7)
Accounts payable and accrued expenses 18.9
Income taxes (56.2)
Long-term debt 1.0
Deferred income taxes 19.4
Other long-term liabilities 73.9
(principally inter-company debt)
</TABLE>
The Pro Forma Statements of Operations Thomasville 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:
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<TABLE>
<CAPTION>
Year ended Nine months ended
(amounts in millions) December 31, 1994 September 30, 1995
<S> <C> <C>
(f) Reduction in interest
expense at an assumed $3.0 $1.9
average interest rate of 6.0%
(g) Increase in income taxes
related to the reduction in
interest expense 1.1 0.7
</TABLE>
(h) The Pro Forma Statements of Operations Ceramic Tile pro forma adjustments
column for the year ended December 31, 1994 and the nine months ended
September 30, 1995 reflects the following:
<TABLE>
<CAPTION>
Year ended Nine months ended
(amounts in millions) December 31, 1994 September 30, 1995
<S> <C> <C>
Armstrong's (37%) portion of ceramic
tile business combination's pro forma
earnings $7.0 $7.5
Less amortization of the excess of
Armstrong's investment in Dal-Tile
over its underlying equity in net assets
as described above (4.1) (3.1)
Equity earnings from affiliates $2.9 $4.4
</TABLE>
(i) Additional adjustments also reflected in the Ceramic Tile pro forma
adjustments column are as follows:
<TABLE>
<CAPTION>
Statement of operations category Year ended Nine months ended
(amounts in millions) December 31, 1994 September 30, 1995
<S> <C> <C>
Cost of goods sold $ 0.2 $ 0.1
Selling, general and administrative 0.1 0.1
expenses
Interest expense (inter-company
elimination) 4.3 5.8
Other expense (income), net (0.2) (0.8)
Income taxes (2.4) (2.5)
</TABLE>
Interest income from investment of cash proceeds in excess of those used to
reduce short-term debt and contributed to the ceramic tile business combination
is not reflected in the Pro Forma Statements of Operations 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:
<TABLE>
<CAPTION>
Year ended Nine months ended
(amounts in millions) December 31, 1994 September 30, 1995
<S> <C> <C>
Increase in interest income
at an assumed average $12.7 $9.8
interest rate of 5.0%
Increase in income taxes
related to the increase in 4.4 3.4
interest income
Increase to net earnings 8.3 6.4
Increase to earnings per share
Primary $ 0.22 $0.17
Fully diluted 0.19 0.15
</TABLE>
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The pro forma statements of income do not reflect the estimated gain on the sale
of Thomasville, the estimated loss on formation of the ceramic tile business
combination, or any earnings from the investment of the proceeds in excess of
the amounts used to reduce short-term debt.
Item 7. Financial Statements and Exhibits - Continued.
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description Reference
- ------------- -------------------------------- --------------
<S> <C> <C>
23 Independent Accountants' Consent Filed herewith
</TABLE>
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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.
Dated: March 13, 1996 By: /s/ L.A. Pulkrabek
-----------------------------
L.A. PULKRABEK
Senior Vice President, Secretary
and General Counsel
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Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit No. Description Sequential Page No.
- ------------- -------------------------------- ----------------------------
<S> <C> <C>
23 Independent Accountants' Consent Filed herewith at page 13.
</TABLE>
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Exhibit 23
Consent of Independent Auditors
-------------------------------
Armstrong World Industries, Inc.:
We consent to incorporation by reference in Registration Statement
Nos. -33-20821 and 33-38837 on Form S-3 and in Registration Statement Nos.
2-77936, 2-91890, 33-18996, 33-18997, 33-18998, 33-29768, 33-60070, and 33-65768
on Form S-8 of Armstrong World Industries, Inc. of our report dated February 21,
1995, with respect to the consolidated financial statements and schedules of
Dal-Tile International Inc. included in its Annual Report (Form 10-K) for the
year ended December 31, 1994.
/s/ Ernst & Young LLP
Ernst & Young LLP
Dallas, Texas
March 13, 1996
