<PAGE>
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
February 2, 2000
----------------
Date of Report (Date of earliest event reported)
ARMSTRONG WORLD INDUSTRIES, INC.
--------------------------------
(Exact Name of Registrant as Specified in its Charter)
PENNSYLVANIA 1-2116 23-0366390
- ------------ ------ ----------
(State of Organization) (Commission File Number) (IRS Employer
Identification No.)
P.O. BOX 3001
LANCASTER, PENNSYLVANIA 17604
------------------------------
(Address of Registrant's Principal Executive Office) (Zip Code)
(717) 397-0611
--------------
(Registrant's telephone number, including area code)
<PAGE>
Item 5. Other Events
------------
Attached and incorporated herein by reference as Exhibit 99 is a copy of a press
release of the Company dated February 2, 2000, plus supplemental information,
reporting its sales and profits for the fourth quarter and full year of 1999.
Among other things, the materials included in the release report the Company is
taking an additional pre-tax net charge of $335.4 million (after expected
insurance recoveries) to increase its reserves for estimated liability related
to pending and future claims. The total estimable and probable liability as of
December 31, 1999 is $681.4 million, which is the low end of the Company's range
of potential liability for such claims. The range of such liability through the
year 2005 extends from $681.4 million to $1,337.9 million. As of the end of
1999, Armstrong had 176,000 pending claims filed against the company.
The Company settled approximately 41-percent of its current asbestos claims in
1999, as a result of its participation in the Strategic Settlement Program of
the Center for Claims Resolution (CCR). The CCR, formed in 1988 to provide an
efficient, economical alternative to traditional tort defense, represents 16
corporations in asbestos litigation. The settlements provide for the resolution
of those claims and establish a mechanism for resolving future claims.
The settlements typically resolve claims as of a certain date, at a
pre-determined cost per claim and medical condition. Payment of these
settlements is usually for a period of up to five years. Another key element of
the settlements is that any future claims brought through a law firm already in
the settlement plan will be subject to the claimant meeting medical criteria.
The number of future claims from each firm that has agreed to this settlement
program will also be subject to annual limits. Future settlements also have pay
out periods of up to four years.
Item 7(c). Exhibits
99. Press release of the Company dated February 2, 2000, plus supplemental
information, reporting its sales and profits for the fourth quarter and full
year of 1999.
Item 7. Financial Statements, Pro Forma Financial Information and
----------------------------------------------------------
Exhibits.
--------
Financial Statements.
None
Pro Forma Financial Information.
None
Exhibits.
99 Press Release, dated February 2, 2000
<PAGE>
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 hereunto duly authorized.
ARMSTRONG WORLD INDUSTRIES, INC.
By: /s/ Deborah K. Owen
--------------------------------
Senior Vice President,
Secretary and General Counsel
Date: February 4, 2000
----------------
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
99 Press Release, dated February 2, 2000
<PAGE>
Exhibit 99
FOR IMMEDIATE RELEASE Contacts: Stan Steinreich
--------
February 2, 2000 V.P. Corporate Relations
(717) 396-2169
Karen Wallace
Director of Investor Relations
(717) 396-2216
ARMSTRONG'S WEAK 1999 FOURTH-QUARTER PERFORMANCE DOESN'T DAMPEN RECORD YEAR-END
- -------------------------------------------------------------------------------
SALES AND PROFITS
- -----------------
ACQUISITIONS, SUCCESSFUL NEW PRODUCT INTRODUCTIONS AND FURTHER COST AND DEBT
- ----------------------------------------------------------------------------
REDUCTION CHIEF FACTORS FOR 1999 GROWTH
- ---------------------------------------
LANCASTER, PA -- Despite fourth quarter results impacted by weakness in
European sales and rising raw material costs in its hardwood flooring division,
Armstrong World Industries, Inc. (NYSE:ACK) today reported record sales and
profits for all of 1999. The successful introduction of several new products,
the full-year impact of the Triangle Pacific and DLW acquisitions, and further
cost and debt reduction were cited as the chief factors leading to a 25.4
percent sales increase, a 7.5 percent rise in net income and an 18.8 percent
hike in operating income for all of 1999, excluding unusual items.
Sales in the fourth quarter were $827.9 million, a 3.5-percent increase
over the same period last year, excluding the impact of 1999 divestitures.
Significant sales achievements in the quarter include Triangle Pacific's 15.7-
percent increase and a 7.3-percent jump for the North American vinyl flooring
business following several quarters of lackluster growth.
Net earnings for the fourth quarter were $37.8 million, or $0.94 per
diluted share, excluding unusual items. The unusual items are: a $1.4 million
pre-tax gain from reversing a portion of the 1998 reorganization charge, a net
pre-tax gain of $2.2 million from the divestitures of Armstrong Industrial
Specialties, the company's Textile Products operations and the settlement of
various legal actions, and a non-cash pre-tax charge of $335.4 million from an
increase in the company's estimated liability related to pending and future
asbestos personal injury claims, net of $90.0 million from an increase in
probable insurance recoveries.
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<PAGE>
Excluding unusual items last year, fourth quarter net earnings were $47.1
million or $1.17 per diluted share. The unusual items in 1998 were: a pre-tax
charge of $74.6 million related to reorganization activities, a non-cash pre-tax
charge of $274.2 million resulting from an increase to the company's estimated
asbestos liability and a $6.3 million gain on the disposition of Armstrong's
remaining equity interest in Dal-Tile Inc.
Fourth-quarter operating income in 1999 was $82.4 million, representing a
13.1-percent decline over the $94.8 million recorded for the same period last
year, excluding unusual items from both years. 1999 operating income as reported
was a loss of $251.6 million.
"While we are disappointed with our fourth quarter results, it is important
to remember the problems we encountered were the result of rising raw material
costs and European softness - challenges affecting the entire building materials
industry. We believe that the record sales and profits for the entire year are
more reflective of the success of our operating plan," said Chairman and CEO
George Lorch.
"We are responding to rising raw material costs by continuing to raise
prices across several business lines and to successfully introduce higher-margin
new products, such as Natural Inspirations, Timberline and ToughGuard in our
flooring division, Optima Vector and Design Solutions Corridors in our building
products group and Natural Reflections at Triangle Pacific," added Lorch. "And
while the European economy remains soft, our North American sales are still
experiencing continued growth."
Lorch added that Armstrong would also continue its divestitures of non-core
businesses and its aggressive cost and debt reduction program in 2000. Armstrong
said that even with these steps, earnings for 2000 are expected to be about even
with 1999 earnings of $5.63, excluding unusual items.
"The external factors that affected our businesses in the closing months of
last year will not materially change in 2000. Furthermore, we believe it is
highly likely that we will see rising interest rates in 2000 that could further
impact our business," Lorch said. "Despite these factors we see opportunities to
make several strategic investments, particularly in E.Business and branding,
that will assure our competitiveness, market leadership and enhanced shareholder
value for many years to come."
- more -
<PAGE>
For the 12-month period ending December 31, 1999, Armstrong sales were $3.4
billion, an increase of 25.4-percent from the $2.7 billion reported last year.
Net earnings were $226.7 million, or $5.63 a diluted share, excluding unusual
items. Reported earnings for the year of $0.36 per diluted share include the
previously discussed asbestos net charge, the reorganization charge reversal,
and income from the settlement of various legal actions. Also included is a
pre-tax gain for the year of $6.0 million on the sale of Armstrong Industrial
Specialties, Inc, and the pre-tax loss of $5.0 million on the sale of the
company's Textile Products operations.
Operating income of $461.8 million was 18.8-percent ahead of the $388.7
million reported for 1998, excluding unusual items from both years.
This news release contains forward-looking statements related to future
sales growth and earnings. Actual results could differ materially as a result
of known and unknown risks and uncertainties and other factors, including the
strength of domestic and foreign end-use markets, levels of raw material and
energy costs, product and price competition caused by factors such as worldwide
excess industry capacity, the economic and political climate in emerging
markets, interest, foreign exchange and effective tax rates, successful
integration of 1998 acquisitions and the outcome of asbestos-related and other
litigation. Additional information on matters which could affect the company's
financial results is included its 1998 annual report, and forms 10-K, 10-Q and
8-K filed with the SEC.
Armstrong World Industries is a global leader in the design, innovation and
manufacture of interior finishing solutions, most notably floors and ceilings.
It is also a world leader in the innovation and manufacture of pipe insulation.
Based in Lancaster, PA, Armstrong has approximately 18,000 employees worldwide.
In 1999, Armstrong's net sales totaled more than $3.4 billion. Additional
information about the company can be found on the Internet at www.armstrong.com.
-------------
- more -
<PAGE>
Notes to editors and analysts: The details which follow elaborate on
- ------------------------------
Armstrong's fourth-quarter and calendar-year 1999 results.
. Fourth Quarter 1999
-------------------
Sales. Sales of $827.9 million were 0.2% greater than in the fourth quarter
-----
of 1998. The limited growth was partially due to the absence of textile
products and gasket and floor felt businesses, which were sold earlier in
the year. Excluding the impact of the divestitures, sales increased 3.5%.
Wood products sales increased 15.7%. Floor coverings sales increased 2.1%
as strong growth in sales in the Americas was offset by slower sales to
emerging markets and competitive price pressures in Western Europe.
Building products sales decreased 2.3% due to weaker unit volume in all
major channels and lower pricing due to competitive pressures.
Cost of goods sold. For the fourth quarter, the cost of goods sold was
------------------
69.1% of sales compared to 68.3% in 1998. Excluding the acquisitions,
Armstrong's cost of goods sold was 65.0% of sales, or 2.8 percentage points
better than 1998, driven primarily by significant cost reductions in Floor
coverings and Building products primarily arising from 1998's cost
reduction activities.
Other items. A $335.4 million non-cash pre-tax net charge for an increase
-----------
in the estimated liability and corresponding insurance asset for asbestos-
related claims resulted in an after-tax earnings impact of $218.0 million
or $5.45 per share. The increase in the estimated liability reflects higher
than anticipated claims, higher average settlement costs for claims and the
impact of the CCR's Strategic Settlement Program (SSP) which to date has
settled approximately 41% of our current cases. Reorganization accrual
reversals of $1.4 million pre-tax produced an after-tax gain of $0.9
million or $0.02 per share, reflecting the substantial completion of
reorganization activities related to the 1998 reorganization actions. Other
income includes a $1.5 million pre-tax loss adjustment on the second
quarter sale of Armstrong Industrial Specialties, Inc. (AISI) and a $0.7
million pre-tax gain adjustment on the third quarter sale of Textile
Products. Other income also reflects the settlement of various legal
actions totaling $3 million, net of other items. Goodwill amortization was
$6.9 million for the fourth quarter and was principally related to Triangle
Pacific ($5.8 million). Interest expense of $26.3 million increased
slightly from $25.9 million in 1998 due to higher interest rates partially
offset by lower debt balances. Equity earnings from affiliates of $3.7
million improved $0.2 million reflecting the inclusion of AISI for the post
sale period in 1999. Armstrong retained a 35% interest in the former AISI
and our pro-rata share of net income is included on an equity accounting
basis.
Industry segment results:
------------------------
Floor Coverings. Sales in the quarter of $388.0 million included sales
---------------
of $131.2 million from DLW. Excluding DLW, sales were $256.8 million,
or 2.4% above last year. Sales in the Americas increased 7.3% over
prior year as sales of all products, excluding residential sheet (down
0.7%), increased. Residential sales improvements resulted principally
from tile and laminate volume growth in the home center channel.
Commercial sales increases were driven by volume as well as price and
mix increases. European sales of $21.6 million were 16.6% below prior
year as a result of continued weakness across most markets and pricing
and mix pressures. Pacific area sales were 9.9% ahead of last year.
- more -
<PAGE>
Operating income of $37.2 million included a $0.1 million operating
loss for DLW. Excluding DLW, operating income of $37.3 million was
14.5% of sales compared to $34.4 million or 13.7% of sales in 1998.
The operating margin improvement was primarily due to the impact of
actions related to 1998's cost reduction activities and lower
manufacturing costs, partially offset by higher raw material costs.
Building Products. Building products sales of $180.3 million were 2.3%
-----------------
below last year. Americas sales were 0.6% lower than last year due
primarily to weaker sales in Latin America and Canada and continued
pricing pressure, partially offset by improved mix in the U.S. Sales
in Europe fell 5.8% primarily due to lower pricing and weaker mix for
the core mineral fiber business and lagging sales in the metal ceiling
and soft fiber businesses. Pacific area sales declined 3.5% primarily
due to slowing sales in China. Operating income of $24.6 million
declined $3.5 million as improved mix in North America was more than
offset by price declines in the U.S. and Europe and higher advertising
costs. Operating margin of 13.6% of sales compared unfavorably with
15.2% in 1998 primarily as a result of the lower pricing and higher
advertising costs.
Wood Products. Triangle Pacific contributed $206.7 million to sales in
-------------
the fourth quarter which was 15.7% ahead of 1998. Cabinet sales grew
14.6% and continued to benefit from improved sales mix and volume
growth. Wood flooring sales were 15.9% ahead of last year but continue
to reflect competitive pricing pressure. Operating margins of 7.0%
were down from 11.9% in 1998 due primarily to lower selling prices
partially offset by continuing cost reductions.
Insulation Products. Insulation products sales of $54.2 million
-------------------
declined 3.7% from the prior year. Declines in sales to Europe (6.9%)
and Asia (24.5%) were partially offset by increased sales to the
Americas (13.3%). Operating profit of $10.1 million and operating
margins of 18.6% were slightly below last year as purchasing savings
and other cost reductions partially offset the declining sales.
All Other. Sales and operating income in this segment were down $26.3
---------
million and $2.2 million respectively due to the absence of the gasket
and textiles businesses which were sold earlier this year.
Effective Tax Rate. Excluding the asbestos and reorganization impacts in
------------------
both 1999 and 1998, the gain/loss adjustment to the divestitures in 1999
and Dal-Tile unusual items in 1998, the effective tax rate was 32.5% versus
31.7% in 1998 principally due to increased taxes on foreign income.
. Calendar Year 1999
------------------
Sales. Sales of $3,443.8 million were 25.4% higher than 1998. The growth
-----
reflected the full year impact of the acquisitions of Triangle Pacific
(sales of $822.6 million in 1999 vs. $346.0 million in 1998) and DLW (sales
of $513.1 million vs. $193.0 million in 1998). Excluding the acquisitions,
Armstrong sales of $2,108.1 million were $99.1 million, or 4.5%, below
prior year of which $45.4 million related to the absence of gasket and
textile sales, following the sale of those units in 1999. Floor coverings
sales decreased 3.7%, Insulation products sales declined 1.9%, and Building
products sales were down 0.6%. Excluding the impact of the gaskets and
textiles divestitures, Americas sales growth of 1.1% was offset by the
European sales decline of 11.1% and the Pacific Area sales decline of 1.9%.
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<PAGE>
Cost of goods sold. For the year, the cost of goods sold was 66.5% of sales
------------------
compared to 67.0% in 1998. Excluding the acquisitions, Armstrong's cost of
goods sold was 63.5% of sales, or 2.4 percentage points better than 1998,
driven primarily by significant cost reductions in Floor coverings and
Building products arising from 1998's cost reduction activities and lower
raw material and other costs.
Other items. A $335.4 million non-cash pre-tax net charge for an increase
-----------
in the estimated liability for asbestos-related claims resulted in an
after-tax earnings impact of $218.0 million. The increase in the estimated
liability reflects higher than anticipated claims, higher average
settlement costs for claims and the impact of the CCR's Strategic
Settlement Program (SSP) which to date has settled approximately 41% of our
current cases. The net after-tax cash flow for the asbestos liability
totaled about $74.3 million in 1999 compared to $48.4 million in 1998.
Reorganization accrual reversals of $1.4 million pre-tax produced an after-
tax gain of $0.9 million or $0.02 per share. Other income includes a non-
recurring after-tax gain of $6.0 million on the divestiture of 65% of AISI
and a one-time pre-tax loss of $5.0 million on the divestiture of Textile
Products. Other income also reflects the settlement of various legal
actions totaling $3 million and a pre-tax gain of $2.6 million resulting
from the receipt of cash and stock in connection with the demutualization
of an insurance company with whom Armstrong has company-owned life
insurance policies and other items. Goodwill amortization was $25.5 million
for the year and was principally related to Triangle Pacific ($20.9
million) and DLW ($3.1 million). Interest expense of $105.2 million
increased $43.0 million from a year ago, primarily due to additional debt
incurred to finance the acquisitions. Equity earnings from affiliates of
$16.8 million improved $3.0 million reflecting primarily an improvement in
the WAVE grid joint venture and the inclusion of AISI for the post sale
period in 1999.
Industry segment results:
------------------------
Floor Coverings. Sales for the year of $1,595.7 million included sales
---------------
of $513.1 million from DLW. Excluding DLW, sales were $1,082.6
million, or 3.7% below last year. Sales in the Americas were
essentially flat year-over-year as increased sales of commercial tile,
installation products, and laminate were almost offset by declines of
residential tile and residential and commercial sheet. The residential
sheet decline was primarily due to lower sales in the manufactured
homes channel and Canada. Sales in the traditional retail channel
increased on higher unit volumes and improved product mix resulting
from the success of new product introductions. Both residential and
commercial channels experienced competitive pricing pressures during
the year. European sales were 24.3% below prior year reflecting weak
economic conditions and residential pricing pressure resulting from
excess capacity and the lack of business in Russia. Pacific area sales
were 2.0% ahead of last year.
Operating income of $217.4 million included $22.7 million of income
from DLW. Excluding DLW, Armstrong's base business operating income of
$194.7 million was 18.0% of sales compared to $177.2 million or 15.8%
of sales in 1998. The operating margin improvement was primarily due
to implementation of actions related to 1998's cost reduction
activities, lower raw material and other costs, an improved mix of
residential sheet products and $3.6 million for an insurance
settlement for a past product claim.
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<PAGE>
Building Products. Building products sales of $752.1 million were 0.6%
-----------------
below 1998 as strong performance from the U.S. commercial business was
offset by lower European sales and price pressure across most markets.
Americas sales were 2.1% higher than in 1998 and reflected favorable
mix gains as well as volume improvements. Sales in Europe fell 5.6%
due to weaker volumes and lower pricing across most of the region, as
well as the negative effect of exchange rates. Sales to the Pacific
area were 2.0% higher than last year. Operating income of $119.7
million was 15.9% of sales and compared favorably to 1998's operating
profit of $116.6 million or 15.4% of sales. The 0.5 percentage points
improvement in operating margin was primarily a result of cost
reduction activities announced in the fourth quarter of 1998 and lower
raw material and other costs.
Wood Products. Triangle Pacific contributed $822.6 million to sales in
-------------
1999 and was 14.5% ahead of the pro-forma comparable period in 1998.
Cabinet sales grew 17.2% and benefited from improved sales mix and
unit volume growth. Wood flooring sales were 13.7% ahead of last year
but reflected competitive pricing pressure throughout the year.
Operating margin of 10.3% was above prior year despite the
amortization of acquisition goodwill. Excluding the impact of
goodwill, the operating margin would have been 12.9% versus 12.6% in
1998 on a comparable pro-forma basis.
Insulation Products. Insulation product sales of $225.7 million
-------------------
declined 1.9% from prior year. Sales in Europe declined 5.5% while the
Americas increased 11.6%. Operating profit of $45.7 million reflected
a 1.3% decrease from 1998. Operating margins improved from 20.1% to
20.3% of sales, primarily due to purchasing savings and other cost
reductions.
All Other. Sales and operating income were down $45.4 million and $3.1
---------
million respectively from prior year due to the 1999 gasket and
textile divestitures.
Effective Tax Rate. Excluding the asbestos and reorganization impacts in
------------------
both 1999 and 1998, the AISI gain and the Textiles loss in 1999 and Dal-
Tile unusual items in 1998, the 1999 effective tax rate was 36.9% versus
35.1% for 1998. The increase was primarily due to the increase in non-
deductible goodwill and higher taxes on foreign income.
Dividend declaration. Armstrong's announcement of its quarterly dividend
--------------------
will be on February 2, 2000.
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<PAGE>
FINANCIAL HIGHLIGHTS -- estimated and unaudited
-----------------------------------------------
Armstrong World Industries, Inc., and subsidiaries
--------------------------------------------------
(amounts in millions except for per-share data)
-----------------------------------------------
<TABLE>
<CAPTION>
Three months Twelve months
Ended December 31 Ended December 31
-------------------------------- ----------------------------
As Reported 1999 1998 1999 1998
- ----------- --------------- --------------- ------------ --------------
<S> <C> <C> <C> <C>
NET SALES $ 827.9 $ 825.9 $3,443.8 $2,746.2
Cost of goods sold 572.4 564.4 2,290.3 1,838.6
Selling, general and administrative expense 169.9 164.7 683.0 522.0
Goodwill Amortization 6.9 5.5 25.5 10.7
Reorganization and restructuring charge (benefit) (1.4) 74.6 (1.4) 74.6
Net charge for asbestos liability 335.4 274.2 335.4 274.2
Equity (earnings) from affiliates (3.7) (3.5) (16.8) (13.8)
-------- -------- -------- --------
Operating income (loss) ($251.6) ($254.0) $ 127.8 $ 39.9
Interest expense 26.3 25.9 105.2 62.2
Other (income), net (2.1) (6.4) (6.6) (1.7)
-------- -------- -------- --------
Earnings (loss) before income taxes (275.8) (273.5) 29.2 (20.6)
Income tax expense (benefit) (97.3) (100.1) 14.9 (11.3)
-------- -------- -------- --------
NET EARNINGS (LOSS) ($178.5) ($173.4) $ 14.3 ($9.3)
======== ======== ======== ========
Net earnings (loss) per share of common stock:
Basic ($4.46) ($4.36) $ 0.36 ($0.23)
Diluted* ($4.46) ($4.36) $ 0.36 ($0.23)
Average number of common shares outstanding:
Basic 40.0 39.8 39.9 39.8
Diluted* 40.0 39.8 40.2 39.8
- ------------------------------------------------------------------------------------------------------------------------------------
Including Acquisitions (excluding Unusual Items)
- ------------------------------------------------
NET SALES $ 827.9 $ 825.9 $3,443.8 $2,746.2
Cost of goods sold 572.4 564.4 2,290.3 1,838.6
Selling, general and administrative expense 169.9 164.7 683.0 522.0
Goodwill Amortization 6.9 5.5 25.5 10.7
Equity (earnings) from affiliates (3.7) (3.5) (16.8) (13.8)
-------- -------- -------- --------
Operating income $ 82.4 $ 94.8 $ 461.8 $ 388.7
Interest expense 26.3 25.9 105.2 62.2
Other expense (income), net 0.1 (0.1) (2.6) (1.2)
-------- -------- -------- --------
Earnings before income taxes 56.0 69.0 359.2 327.7
Income taxes 18.2 21.9 132.5 115.0
-------- -------- -------- --------
NET EARNINGS $ 37.8 $ 47.1 $ 226.7 $ 212.7
======== ======== ======== ========
Net earnings per share of common stock:
Basic $ 0.95 $ 1.18 $ 5.70 $ 5.34
Diluted* $ 0.94 $ 1.17 $ 5.63 $ 5.26
- ------------------------------------------------------------------------------------------------------------------------------------
Excluding Acquisitions (excluding Unusual Items)
- ------------------------------------------------
NET SALES $ 490.0 $ 518.1 $2,108.1 $2,207.2
Cost of goods sold 318.3 351.0 1,337.7 1,454.0
Selling, general and administrative expense 106.7 95.7 431.4 414.3
Goodwill Amortization 0.5 0.5 1.5 1.9
Equity (earnings) from affiliates (3.6) (3.5) (16.6) (13.8)
-------- -------- -------- --------
Operating income $ 68.1 $ 74.4 $ 354.1 $ 350.8
Interest expense 6.5 6.0 25.0 25.6
Other expense (income), net 0.8 (0.1) (1.2) (1.2)
-------- -------- -------- --------
Earnings before income taxes 60.8 68.5 330.3 326.4
Income taxes 17.7 20.0 111.9 109.7
-------- -------- -------- --------
NET EARNINGS $ 43.1 $ 48.5 $ 218.4 $ 216.7
======== ======== ======== ========
Net earnings per share of common stock:
Basic $ 1.08 $ 1.22 $ 5.49 $ 5.44
Diluted* $ 1.07 $ 1.20 $ 5.42 $ 5.36
</TABLE>
* 1999 As Reported diluted earnings per share uses 40.0 million average
outstanding shares for the quarter as required by FAS128, other 1999 diluted
earnings per share calculations use 40.2 million shares for the quarter and 40.2
million for the year
<PAGE>
INDUSTRY SEGMENTS - estimated and unaudited
Armstrong World Industries, Inc., and subsidiaries
(amounts in millions)
<TABLE>
<CAPTION>
Three months Twelve months
Ended December 31 Ended December 31
---------------------------------- ----------------------------------
As Reported 1999 1998 1999 1998
- ----------- ---------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C>
Net trade sales:
Floor coverings $ 388.0 $ 380.0 $1,595.7 $1,317.6
Building products 180.3 184.6 752.1 756.8
Wood products 206.7 178.7 822.6 346.0
Insulation 54.2 56.3 225.7 230.0
All Other 0.0 26.3 50.4 95.8
Intercompany Eliminations (1.3) 0.0 (2.7) 0.0
-------- -------- -------- --------
Total net sales $ 827.9 $ 825.9 $3,443.8 $2,746.2
======== ======== ======== ========
Operating income (loss):
Floor coverings $ 37.2 ($20.0) $ 217.4 $ 123.0
Building products 24.6 18.0 119.7 106.5
Wood products 14.4 21.3 85.0 38.6
Insulation products 10.1 10.4 45.7 46.1
All other 0.1 0.4 6.0 7.2
Unallocated corporate income (expense) (338.0) (284.1) (346.0) (281.5)
-------- -------- -------- --------
Total operating income (loss) ($251.6) ($254.0) $ 127.8 $ 39.9
======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings Including Acquisitions (excluding Unusual Items)
- ---------------------------------------------------------
Net trade sales:
Floor coverings $ 388.0 $ 380.0 $1,595.7 $1,317.6
Building products 180.3 184.6 752.1 756.8
Wood products 206.7 178.7 822.6 346.0
Insulation 54.2 56.3 225.7 230.0
All Other 0.0 26.3 50.4 95.8
Intercompany Eliminations (1.3) 0.0 (2.7) 0.0
-------- -------- -------- --------
Total net sales $ 827.9 $ 825.9 $3,443.8 $2,746.2
======== ======== ======== ========
Operating income (loss):
Floor coverings $ 37.2 $ 33.5 $ 217.4 $ 176.5
Building products 24.6 28.1 119.7 116.6
Wood products 14.4 21.3 85.0 38.6
Insulation products 10.1 10.6 45.7 46.3
All other 0.1 2.3 6.0 9.1
Unallocated corporate income (expense) (4.0) (1.0) (12.0) 1.6
-------- -------- -------- --------
Total operating income $ 82.4 $ 94.8 $ 461.8 $ 388.7
======== ======== ======== ========
- ------------------------------------------------------------------------------------------------------------------------------------
Earnings Excluding Acquisitions (excluding Unusual Items)
- ---------------------------------------------------------
Net trade sales:
Floor coverings $ 256.8 $ 250.9 $1,082.6 $1,124.6
Building products 180.3 184.6 752.1 756.8
Wood products 0.0 0.0 0.0 0.0
Insulation 54.2 56.3 225.7 230.0
All Other 0.0 26.3 50.4 95.8
Intercompany Eliminations (1.3) 0.0 (2.7) 0.0
-------- -------- -------- --------
Total net sales $ 490.0 $ 518.1 $2,108.1 $2,207.2
======== ======== ======== ========
Operating income (loss):
Floor coverings $ 37.3 $ 34.4 $ 194.7 $ 177.2
Building products 24.6 28.1 119.7 116.6
Wood products 0.0 0.0 0.0 0.0
Insulation products 10.1 10.6 45.7 46.3
All other 0.1 2.3 6.0 9.1
Unallocated corporate income (expense) (4.0) (1.0 ) (12.0) 1.6
-------- -------- -------- --------
Total operating income $ 68.1 $ 74.4 $ 354.1 $ 350.8
======== ======== ======== ========
</TABLE>
