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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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47-4303305
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. employer Identification number)
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2500 Columbia Avenue, PO Box 3025, Lancaster, Pennsylvania 17604
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(Address of principal executive offices)
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(717) 672-9611
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(Registrant’s telephone number, including area code).
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Large accelerated filer
¨
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Accelerated filer
¨
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Non-accelerated filer
þ
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Smaller reporting company
¨
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Page Number
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Part I
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Financial Information
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Item 1.
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Condensed Consolidated Financial Statements (Unaudited)
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|
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||
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Condensed Consolidated Balance Sheets
(Unaudited)
|
|
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||
|
||
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||
Item 2.
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||
Item 3.
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||
Item 4.
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||
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Part II
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Other Information
|
|
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Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
Item 5
|
||
Item 6.
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||
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Signature
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||
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Exhibit Index
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Three Months Ended June 30,
|
|
Six Months Ended
June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net sales
|
$
|
323.7
|
|
|
$
|
326.6
|
|
|
$
|
608.1
|
|
|
$
|
586.0
|
|
Cost of goods sold
|
260.5
|
|
|
260.2
|
|
|
497.7
|
|
|
478.1
|
|
||||
Gross profit
|
63.2
|
|
|
66.4
|
|
|
110.4
|
|
|
107.9
|
|
||||
Selling, general and administrative expenses
|
51.4
|
|
|
51.8
|
|
|
103.2
|
|
|
96.7
|
|
||||
Operating income
|
11.8
|
|
|
14.6
|
|
|
7.2
|
|
|
11.2
|
|
||||
Interest expense
|
0.7
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
||||
Other non-operating expense
|
1.9
|
|
|
0.1
|
|
|
2.2
|
|
|
0.1
|
|
||||
Other non-operating income
|
0.2
|
|
|
—
|
|
|
0.4
|
|
|
0.2
|
|
||||
Income from continuing operations before income taxes
|
9.4
|
|
|
14.5
|
|
|
4.7
|
|
|
11.3
|
|
||||
Income tax expense
|
3.7
|
|
|
5.7
|
|
|
3.3
|
|
|
6.4
|
|
||||
Income from continuing operations
|
5.7
|
|
|
8.8
|
|
|
1.4
|
|
|
4.9
|
|
||||
Net (loss) gain on disposal of discontinued business, net of tax benefit (expense) of $-, $(0.1), $1.8 and $43.6
|
—
|
|
|
(0.2
|
)
|
|
1.7
|
|
|
42.3
|
|
||||
Net (loss) income from discontinued operations
|
—
|
|
|
(0.2
|
)
|
|
1.7
|
|
|
42.3
|
|
||||
Net income
|
5.7
|
|
|
8.6
|
|
|
3.1
|
|
|
47.2
|
|
||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
(2.6
|
)
|
|
1.4
|
|
|
(6.7
|
)
|
|
(3.5
|
)
|
||||
Derivative loss
|
(0.1
|
)
|
|
(1.2
|
)
|
|
(1.9
|
)
|
|
(0.3
|
)
|
||||
Postretirement adjustments
|
0.8
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
||||
Total other comprehensive (loss) income
|
(1.9
|
)
|
|
0.2
|
|
|
(7.7
|
)
|
|
(3.8
|
)
|
||||
Total comprehensive income (loss)
|
$
|
3.8
|
|
|
$
|
8.8
|
|
|
$
|
(4.6
|
)
|
|
$
|
43.4
|
|
|
|
|
|
|
|
|
|
||||||||
Per share data:
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share of common stock:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share of common stock from continuing operations
|
$
|
0.21
|
|
|
$
|
0.32
|
|
|
$
|
0.05
|
|
|
$
|
0.18
|
|
Basic (loss) earnings per share of common stock from discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
0.06
|
|
|
1.52
|
|
||||
Basic earnings per share of common stock
|
$
|
0.21
|
|
|
$
|
0.31
|
|
|
$
|
0.11
|
|
|
$
|
1.70
|
|
Diluted earnings (loss) per share of common stock:
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share of common stock from continuing operations
|
$
|
0.20
|
|
|
$
|
0.32
|
|
|
$
|
0.05
|
|
|
$
|
0.18
|
|
Diluted (loss) earnings per share of common stock from discontinued operations
|
—
|
|
|
(0.01
|
)
|
|
0.06
|
|
|
1.52
|
|
||||
Diluted earnings per share of common stock
|
$
|
0.20
|
|
|
$
|
0.31
|
|
|
$
|
0.11
|
|
|
$
|
1.70
|
|
|
June 30, 2016
|
|
|
||||
|
(Unaudited)
|
|
December 31, 2015
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash
|
$
|
101.6
|
|
|
$
|
—
|
|
Accounts and notes receivable, net
|
111.8
|
|
|
72.2
|
|
||
Inventories, net
|
243.9
|
|
|
242.8
|
|
||
Deferred income taxes
|
—
|
|
|
3.0
|
|
||
Prepaid expenses and other current assets
|
27.6
|
|
|
31.7
|
|
||
Total current assets
|
484.9
|
|
|
349.7
|
|
||
Property, plant, and equipment, less accumulated depreciation and amortization of $321.2 and $311.1, respectively
|
441.9
|
|
|
434.5
|
|
||
Intangible assets, net
|
42.7
|
|
|
42.6
|
|
||
Deferred income taxes
|
14.0
|
|
|
23.5
|
|
||
Other non-current assets
|
2.6
|
|
|
13.1
|
|
||
Total assets
|
$
|
986.1
|
|
|
$
|
863.4
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
168.0
|
|
|
$
|
161.0
|
|
Income tax payable
|
4.7
|
|
|
—
|
|
||
Deferred income taxes
|
—
|
|
|
0.3
|
|
||
Total current liabilities
|
172.7
|
|
|
161.3
|
|
||
Long-term debt
|
100.0
|
|
|
10.0
|
|
||
Postretirement benefit liabilities
|
79.4
|
|
|
3.3
|
|
||
Pension benefit liabilities
|
28.5
|
|
|
—
|
|
||
Other long-term liabilities
|
8.5
|
|
|
12.4
|
|
||
Noncurrent income taxes payable
|
0.7
|
|
|
56.4
|
|
||
Deferred income taxes
|
—
|
|
|
2.1
|
|
||
Total noncurrent liabilities
|
217.1
|
|
|
84.2
|
|
||
Stockholders' equity:
|
|
|
|
||||
Common stock with par value $.0001 per share: 100,000,000 shares authorized; 27,746,939 issued and outstanding
|
—
|
|
|
—
|
|
||
Preferred stock with par value $.0001 per share: 15,000,000 shares authorized; none issued
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
650.5
|
|
|
—
|
|
||
Net Armstrong World Industries ("AWI") investment, prior to Separation
|
—
|
|
|
615.9
|
|
||
Retained earnings
|
5.7
|
|
|
—
|
|
||
Accumulated other comprehensive (loss) income
|
(59.9
|
)
|
|
2.0
|
|
||
Total stockholders' equity
|
596.3
|
|
|
617.9
|
|
||
Total liabilities and stockholders' equity
|
$
|
986.1
|
|
|
$
|
863.4
|
|
|
|
|
|
|
Net AWI Investment
|
|
Additional Paid-in Capital
|
|
Accumulated Other Comprehensive (Loss) Income
|
|
Retained Earnings
|
|
Total
Equity |
|||||||||||||
|
Common Stock
|
|
|
|
|
|
||||||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||||||
December 31, 2015
|
—
|
|
|
$
|
—
|
|
|
$
|
615.9
|
|
|
$
|
—
|
|
|
$
|
2.0
|
|
|
$
|
—
|
|
|
$
|
617.9
|
|
Net (loss) income
|
|
|
|
|
(2.6
|
)
|
|
|
|
—
|
|
|
5.7
|
|
|
3.1
|
|
|||||||||
Net transfers from (to) AWI
|
—
|
|
|
—
|
|
|
85.1
|
|
|
—
|
|
|
(54.2
|
)
|
|
—
|
|
|
30.9
|
|
||||||
Cash distribution paid to AWI
|
—
|
|
|
—
|
|
|
(50.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50.0
|
)
|
||||||
Reclassification of net parent investment to additional paid-in capital
|
—
|
|
|
—
|
|
|
(648.4
|
)
|
|
648.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of common stock at separation
|
27,738,779
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Stock-based employee compensation, net
|
8,160
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.7
|
)
|
|
—
|
|
|
(7.7
|
)
|
||||||
June 30, 2016
|
27,746,939
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
650.5
|
|
|
$
|
(59.9
|
)
|
|
$
|
5.7
|
|
|
$
|
596.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
December 31, 2014
|
—
|
|
|
$
|
—
|
|
|
$
|
561.7
|
|
|
$
|
—
|
|
|
$
|
13.7
|
|
|
$
|
—
|
|
|
$
|
575.4
|
|
Net income
|
—
|
|
|
—
|
|
|
47.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
47.2
|
|
||||||
Net transfers from AWI
|
—
|
|
|
—
|
|
|
8.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.8
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.8
|
)
|
|
—
|
|
|
(3.8
|
)
|
||||||
June 30, 2015
|
—
|
|
|
$
|
—
|
|
|
$
|
617.7
|
|
|
$
|
—
|
|
|
$
|
9.9
|
|
|
$
|
—
|
|
|
$
|
627.6
|
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
3.1
|
|
|
$
|
47.2
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
22.2
|
|
|
18.7
|
|
||
Loss on disposal of discontinued operations
|
—
|
|
|
0.8
|
|
||
Deferred income taxes
|
(3.8
|
)
|
|
(44.5
|
)
|
||
Stock-based compensation
|
2.2
|
|
|
—
|
|
||
U.S. pension expense
|
2.2
|
|
|
—
|
|
||
Other non-cash adjustments, net
|
0.2
|
|
|
(0.1
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables
|
(32.7
|
)
|
|
(17.2
|
)
|
||
Inventories
|
(1.2
|
)
|
|
(16.1
|
)
|
||
Accounts payable and accrued expenses
|
23.3
|
|
|
23.2
|
|
||
Income taxes payable
|
4.8
|
|
|
4.9
|
|
||
Other assets and liabilities
|
4.0
|
|
|
(1.9
|
)
|
||
Net cash provided by operating activities
|
24.3
|
|
|
15.0
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(18.0
|
)
|
|
(22.7
|
)
|
||
Proceeds from the sale of assets
|
0.5
|
|
|
0.1
|
|
||
Other investing activities
|
0.2
|
|
|
0.2
|
|
||
Net cash used for investing activities
|
(17.3
|
)
|
|
(22.4
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from revolving credit facility
|
100.0
|
|
|
—
|
|
||
Financing costs
|
(1.4
|
)
|
|
—
|
|
||
Payments of long-term debt
|
(10.0
|
)
|
|
—
|
|
||
Distribution paid to AWI
|
(50.0
|
)
|
|
—
|
|
||
Net transfers from AWI
|
55.6
|
|
|
7.4
|
|
||
Net cash provided by financing activities
|
94.2
|
|
|
7.4
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
0.4
|
|
|
—
|
|
||
Net increase in cash and cash equivalents
|
101.6
|
|
|
—
|
|
||
Cash and cash equivalents at beginning of year
|
—
|
|
|
—
|
|
||
Cash and cash equivalents at end of period
|
$
|
101.6
|
|
|
$
|
—
|
|
Supplemental Cash Flow Disclosure:
|
|
|
|
||||
Amounts in accounts payable for capital expenditures
|
$
|
3.5
|
|
|
$
|
13.7
|
|
Interest paid
|
0.5
|
|
|
—
|
|
||
Income taxes paid, net
|
0.5
|
|
|
—
|
|
|
June 30, 2016
|
|||||||
(Dollars in millions)
|
Condensed Consolidated Statements of Stockholders' Equity
|
|
Condensed Consolidated Statements of Cash Flows - Financing Activities
|
|||||
Net transfers from AWI for three months ended March 31, 2016
|
$
|
53.6
|
|
|
$
|
53.6
|
|
|
Net transfers (to) from AWI upon separation
|
(22.7
|
)
|
|
9.0
|
|
|||
Other activity concurrent with separation
|
—
|
|
|
(7.0
|
)
|
|||
|
30.9
|
|
|
55.6
|
|
|||
Cash distribution to AWI upon separation
|
(50.0
|
)
|
|
(50.0
|
)
|
|||
Net transfers (to) from AWI
|
$
|
(19.1
|
)
|
|
$
|
5.6
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(Dollars in millions)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Loss on disposal of discontinued business before income tax
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(1.3
|
)
|
Income tax (expense) benefit
|
|
—
|
|
|
(0.1
|
)
|
|
1.8
|
|
|
43.6
|
|
||||
Net (loss) gain on disposal of discontinued business
|
|
$
|
—
|
|
|
$
|
(0.2
|
)
|
|
$
|
1.7
|
|
|
$
|
42.3
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(Dollars in millions)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Expense (income), net:
|
|
|
|
|
|
|
|
|
||||||||
Cost of goods sold
|
|
$
|
—
|
|
|
$
|
2.7
|
|
|
$
|
—
|
|
|
$
|
5.0
|
|
Selling, general and administrative expenses
|
|
—
|
|
|
7.2
|
|
|
0.5
|
|
|
14.5
|
|
||||
Other non-operating (income)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
||||
Other non-operating expense
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
||||
Total
|
|
$
|
—
|
|
|
$
|
9.9
|
|
|
$
|
0.8
|
|
|
$
|
19.3
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(Dollars in millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Income from continuing operations before income taxes:
|
$
|
9.4
|
|
|
$
|
14.5
|
|
|
$
|
4.7
|
|
|
$
|
11.3
|
|
Income tax expense
|
3.7
|
|
|
5.7
|
|
|
3.3
|
|
|
6.4
|
|
||||
Effective tax rate
|
39.4
|
%
|
|
39.3
|
%
|
|
70.2
|
%
|
|
56.6
|
%
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(Dollars in millions, except share data)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Numerator
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
|
$
|
5.7
|
|
|
$
|
8.8
|
|
|
$
|
1.4
|
|
|
$
|
4.9
|
|
(Loss) income from discontinued operations
|
|
—
|
|
|
(0.2
|
)
|
|
1.7
|
|
|
42.3
|
|
||||
Net income
|
|
$
|
5.7
|
|
|
$
|
8.6
|
|
|
$
|
3.1
|
|
|
$
|
47.2
|
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of common shares outstanding
|
|
27,743,714
|
|
|
27,738,779
|
|
|
27,740,817
|
|
|
27,738,779
|
|
||||
Weighted average number of vested shares not yet issued
|
|
154,767
|
|
|
—
|
|
|
63,904
|
|
|
—
|
|
||||
Weighted average number of common shares outstanding - Basic
|
|
27,898,481
|
|
|
27,738,779
|
|
|
27,804,721
|
|
|
27,738,779
|
|
||||
Dilutive stock-based compensation awards outstanding
|
|
406,931
|
|
|
—
|
|
|
203,465
|
|
|
—
|
|
||||
Weighted average number of common shares outstanding - Diluted
|
|
28,305,412
|
|
|
27,738,779
|
|
|
28,008,186
|
|
|
27,738,779
|
|
(Dollars in millions)
|
June 30, 2016
|
|
December 31, 2015
|
||||
Customer receivables
|
$
|
119.9
|
|
|
$
|
85.1
|
|
Customer notes
|
1.0
|
|
|
0.8
|
|
||
Miscellaneous receivables
|
9.5
|
|
|
4.1
|
|
||
Less: allowance for warranties, discounts, and losses
|
(18.6
|
)
|
|
(17.8
|
)
|
||
Accounts and notes receivable, net
|
$
|
111.8
|
|
|
$
|
72.2
|
|
|
Six Months Ended June 30,
|
||||||
(Dollars in millions)
|
2016
|
|
2015
|
||||
Balance at beginning of period
|
$
|
7.3
|
|
|
$
|
7.7
|
|
Reductions for payments
|
(3.5
|
)
|
|
(5.3
|
)
|
||
Current year warranty accruals
|
3.7
|
|
|
5.3
|
|
||
Balance at end of period
|
$
|
7.5
|
|
|
$
|
7.7
|
|
(Dollars in millions)
|
June 30, 2016
|
|
December 31, 2015
|
||||
Finished goods
|
$
|
146.8
|
|
|
$
|
127.8
|
|
Goods in process
|
19.5
|
|
|
21.0
|
|
||
Raw materials and supplies
|
92.7
|
|
|
106.2
|
|
||
Less: LIFO and other reserves
|
(15.1
|
)
|
|
(12.2
|
)
|
||
Total inventories, net
|
$
|
243.9
|
|
|
$
|
242.8
|
|
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||
(Dollars in millions)
|
Estimated Useful Life
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
||||||||
Amortizing intangible assets
|
|
|
|
|
|
|
|
|
|||||||||
Land use rights
|
Various
|
|
$
|
5.3
|
|
|
$
|
0.6
|
|
|
$
|
5.4
|
|
|
$
|
0.6
|
|
Developed technology
|
15 years
|
|
5.3
|
|
|
1.3
|
|
|
4.9
|
|
|
1.1
|
|
||||
Other
|
Various
|
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
|
0.2
|
|
||||
Total
|
|
|
10.8
|
|
|
$
|
2.1
|
|
|
10.5
|
|
|
$
|
1.9
|
|
||
Non-amortizing intangible assets
|
|
|
|
|
|
|
|
|
|||||||||
Trademarks and brand names
|
Indefinite
|
|
34.0
|
|
|
|
|
34.0
|
|
|
|
||||||
Total intangible assets
|
|
|
$
|
44.8
|
|
|
|
|
$
|
44.5
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(Dollars in millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Amortization expense
|
$
|
0.1
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
|
$
|
0.3
|
|
(Dollars in millions)
|
June 30, 2016
|
|
December 31, 2015
|
||||
Payables, trade and other
|
$
|
128.6
|
|
|
$
|
117.7
|
|
Employment costs
|
23.3
|
|
|
24.9
|
|||
Other payables
|
16.1
|
|
|
18.4
|
|||
Accounts payable and accrued expenses
|
$
|
168.0
|
|
|
$
|
161.0
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||
(Dollars in millions)
|
Carrying amount
|
|
Estimated fair value
|
|
Carrying amount
|
|
Estimated fair value
|
||||||||
Total debt
|
$
|
(100.0
|
)
|
|
$
|
(100.0
|
)
|
|
$
|
(10.0
|
)
|
|
$
|
(10.0
|
)
|
Foreign currency contracts, net
|
0.3
|
|
|
0.3
|
|
|
2.9
|
|
2.9
|
(Dollars in millions)
|
|
|
|
|
|
|
|
|
||||||||
Recognized in AOCI
|
|
|
|
Reclassified from AOCI
|
||||||||||||
Three Months Ended June 30,
|
|
|
|
Three Months Ended June 30,
|
||||||||||||
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
||||||||
$
|
—
|
|
|
$
|
0.1
|
|
|
Cost of goods sold
|
|
$
|
(0.1
|
)
|
|
$
|
(0.3
|
)
|
0.1
|
|
|
(0.9
|
)
|
|
Net sales
|
|
0.4
|
|
|
0.9
|
|
||||
$
|
0.1
|
|
|
$
|
(0.8
|
)
|
|
Total
|
|
$
|
0.3
|
|
|
$
|
0.6
|
|
|
|
|
|
|
|
|
|
|
||||||||
Six Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
||||||||||||
2016
|
|
2015
|
|
|
|
2016
|
|
2015
|
||||||||
$
|
(0.3
|
)
|
|
$
|
(0.5
|
)
|
|
Cost of goods sold
|
|
$
|
(0.2
|
)
|
|
$
|
(0.5
|
)
|
(1.0
|
)
|
|
1.8
|
|
|
Net sales
|
|
1.4
|
|
|
2.1
|
|
||||
$
|
(1.3
|
)
|
|
$
|
1.3
|
|
|
Total
|
|
$
|
1.2
|
|
|
$
|
1.6
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(Dollars in millions)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
AFI Plans:
|
|
|
|
|
|
|
|
|
||||||||
Defined benefit pension, U.S.
|
|
|
|
|
|
|
|
|
||||||||
Service cost
|
|
$
|
1.5
|
|
|
$
|
—
|
|
|
$
|
1.5
|
|
|
$
|
—
|
|
Interest cost
|
|
3.9
|
|
|
—
|
|
|
3.9
|
|
|
—
|
|
||||
Expected return on plan assets
|
|
(5.8
|
)
|
|
—
|
|
|
(5.8
|
)
|
|
—
|
|
||||
Amortization of prior service cost
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
||||
Amortization of net actuarial loss
|
|
2.5
|
|
|
—
|
|
|
2.5
|
|
|
—
|
|
||||
Total, defined benefit pension, U.S.
|
|
$
|
2.2
|
|
|
$
|
—
|
|
|
$
|
2.2
|
|
|
$
|
—
|
|
Defined benefit pension, Canada
|
|
|
|
|
|
|
|
|
||||||||
Interest cost
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
Expected return on plan assets
|
|
(0.3
|
)
|
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
||||
Amortization of net actuarial loss
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
||||
Total, defined benefit pension, Canada
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Defined benefit postretirement, U.S.
|
|
|
|
|
|
|
|
|
||||||||
Service cost
|
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
—
|
|
Interest cost
|
|
0.8
|
|
|
0.1
|
|
|
0.9
|
|
|
0.1
|
|
||||
Amortization of prior service cost
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
||||
Amortization of net actuarial loss
|
|
(1.1
|
)
|
|
—
|
|
|
(1.1
|
)
|
|
—
|
|
||||
Total defined benefit postretirement, U.S.
|
|
$
|
(0.3
|
)
|
|
$
|
0.1
|
|
|
$
|
(0.2
|
)
|
|
$
|
0.1
|
|
Shared Plans:
|
|
|
|
|
|
|
|
|
||||||||
Defined benefit pension, U.S.
|
|
$
|
—
|
|
|
$
|
2.6
|
|
|
$
|
2.2
|
|
|
$
|
6.3
|
|
Defined benefit pension, Canada
|
|
—
|
|
|
0.2
|
|
|
0.1
|
|
|
0.2
|
|
||||
Defined benefit postretirement, U.S.
|
|
—
|
|
|
0.2
|
|
|
(0.3
|
)
|
|
0.3
|
|
Risk-free rate of return
|
|
0.8
|
%
|
|
Expected volatility
|
|
36.2
|
%
|
|
Dividend yield
|
|
—
|
|
|
Grant date stock price
|
|
$
|
13.51
|
|
Award Type
|
|
Number Granted
(in thousands)
|
|
Grant Date Fair Value
|
|
Plan
|
|||
PSA
|
|
703
|
|
|
$
|
12.44
|
|
|
2016 LTIP Plan
|
PSU
|
|
226
|
|
|
13.51
|
|
|
2016 LTIP Plan
|
|
RSU
|
|
117
|
|
|
13.51
|
|
|
2016 LTIP Plan
|
|
Director RSU
|
|
71
|
|
|
13.51
|
|
|
2016 Directors' Plan
|
|
Number of Shares
|
|
Weighted Average Exercise Price (per share)
|
|
Weighted Average Remaining Contractual Term (years)
|
|
Aggregate Intrinsic Value (dollars in millions)
|
|||||
Outstanding
|
681,085
|
|
|
$
|
12.89
|
|
|
|
|
|
||
Exercisable
|
456,863
|
|
|
12.05
|
|
|
5.8 years
|
|
$
|
2.2
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(Dollars in millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Stock-based compensation expense
|
$
|
2.2
|
|
|
$
|
1.7
|
|
|
$
|
3.0
|
|
|
$
|
3.5
|
|
Income tax benefit
|
0.8
|
|
|
0.6
|
|
|
1.1
|
|
|
1.3
|
|
(Dollars in millions)
|
June 30, 2016
|
|
December 31, 2015
|
||||
Foreign currency translation adjustments
|
$
|
2.0
|
|
|
$
|
0.1
|
|
Derivative gain, net
|
0.2
|
|
|
2.3
|
|
||
Pension and postretirement adjustments
|
(62.1
|
)
|
|
(0.4
|
)
|
||
Accumulated other comprehensive income (loss)
|
$
|
(59.9
|
)
|
|
$
|
2.0
|
|
(Dollars in millions)
|
Foreign Currency Translation Adjustments
|
|
Derivative Gain (Loss)
|
|
Pension and Postretirement Adjustments
|
|
Total Accumulated Other Comprehensive Income (Loss)
|
||||||||
Balance, December 31, 2015
|
$
|
0.1
|
|
|
$
|
2.3
|
|
|
$
|
(0.4
|
)
|
|
$
|
2.0
|
|
Net transfer from AWI
|
8.6
|
|
|
(0.2
|
)
|
|
(62.6
|
)
|
|
(54.2
|
)
|
||||
Other comprehensive income (loss) before reclassifications, net of tax expense of $ –, $0.2, $ – and $0.2
|
(6.7
|
)
|
|
(1.1
|
)
|
|
(0.1
|
)
|
|
(7.9
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
(0.8
|
)
|
|
1.0
|
|
|
0.2
|
|
||||
Net current period other comprehensive income (loss)
|
(6.7
|
)
|
|
(1.9
|
)
|
|
0.9
|
|
|
(7.7
|
)
|
||||
Balance, June 30, 2016
|
$
|
2.0
|
|
|
$
|
0.2
|
|
|
$
|
(62.1
|
)
|
|
$
|
(59.9
|
)
|
|
|
|
|
|
|
|
|
||||||||
Balance, December 31, 2014
|
$
|
12.2
|
|
|
$
|
1.7
|
|
|
$
|
(0.2
|
)
|
|
$
|
13.7
|
|
Other comprehensive income (loss) before reclassifications, net of tax expense of $ –, $–, $ – and $ –
|
(3.5
|
)
|
|
1.3
|
|
|
—
|
|
|
(2.2
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
(1.6
|
)
|
|
—
|
|
|
(1.6
|
)
|
||||
Net current period other comprehensive income (loss)
|
(3.5
|
)
|
|
(0.3
|
)
|
|
—
|
|
|
(3.8
|
)
|
||||
Balance, June 30, 2015
|
$
|
8.7
|
|
|
$
|
1.4
|
|
|
$
|
(0.2
|
)
|
|
$
|
9.9
|
|
|
Six Months Ended June 30,
|
|
|
||||||
(Dollars in millions)
|
2016
|
|
2015
|
|
Affected Line Item
|
||||
Derivative Adjustments:
|
|
|
|
|
|
||||
Foreign exchange contracts - purchases
|
$
|
0.2
|
|
|
$
|
0.5
|
|
|
Cost of goods sold
|
Foreign exchange contracts - sales
|
(1.4
|
)
|
|
(2.1
|
)
|
|
Net sales
|
||
Total expense before tax
|
(1.2
|
)
|
|
(1.6
|
)
|
|
|
||
Tax impact
|
0.4
|
|
|
—
|
|
|
Income tax expense
|
||
Total expense, net of tax
|
$
|
(0.8
|
)
|
|
$
|
(1.6
|
)
|
|
|
|
|
|
|
|
|
||||
Pension and Postretirement Adjustments:
|
|
|
|
|
|
||||
Amortization of net actuarial loss
|
$
|
0.6
|
|
|
$
|
—
|
|
|
Cost of goods sold
|
Amortization of net actuarial loss
|
0.9
|
|
|
—
|
|
|
Selling, general and administrative expenses
|
||
Total expense before tax
|
1.5
|
|
|
—
|
|
|
|
||
Tax impact
|
(0.5
|
)
|
|
—
|
|
|
Income tax expense
|
||
Total expense, net of tax
|
1.0
|
|
|
—
|
|
|
|
||
Total reclassifications for the period
|
$
|
0.2
|
|
|
$
|
(1.6
|
)
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(Dollars in millions)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net sales to external customers
|
|
|
|
|
|
|
|
|
||||||||
Resilient Flooring
|
|
$
|
194.7
|
|
|
$
|
199.9
|
|
|
$
|
358.6
|
|
|
$
|
356.7
|
|
Wood Flooring
|
|
129.0
|
|
|
126.7
|
|
|
249.5
|
|
|
229.3
|
|
||||
Total net sales to external customers
|
|
$
|
323.7
|
|
|
$
|
326.6
|
|
|
$
|
608.1
|
|
|
$
|
586.0
|
|
|
|
|
|
|
|
|
|
|
||||||||
Segment operating income (loss)
|
|
|
|
|
|
|
|
|
||||||||
Resilient Flooring
|
|
$
|
13.4
|
|
|
$
|
14.8
|
|
|
$
|
8.0
|
|
|
$
|
15.3
|
|
Wood Flooring
|
|
(1.6
|
)
|
|
(0.2
|
)
|
|
(0.8
|
)
|
|
(4.1
|
)
|
||||
Total operating income
|
|
$
|
11.8
|
|
|
$
|
14.6
|
|
|
$
|
7.2
|
|
|
$
|
11.2
|
|
(Dollars in millions)
|
June 30, 2016
|
|
December 31, 2015
|
||||
Segment assets
|
|
|
|
||||
Resilient Flooring
|
$
|
525.9
|
|
|
$
|
539.5
|
|
Wood Flooring
|
341.0
|
|
|
323.9
|
|
||
Unallocated
|
119.2
|
|
|
—
|
|
||
Total assets
|
$
|
986.1
|
|
|
$
|
863.4
|
|
•
|
global economic conditions,
|
•
|
construction activity,
|
•
|
key customers,
|
•
|
competition,
|
•
|
availability and costs of raw materials and energy,
|
•
|
our liquidity,
|
•
|
environmental matters,
|
•
|
international operations,
|
•
|
strategic transactions,
|
•
|
plant construction projects,
|
•
|
negative tax consequences,
|
•
|
claims and litigation,
|
•
|
labor,
|
•
|
our intellectual property rights,
|
•
|
outsourcing,
|
•
|
cost saving and productivity initiatives, and
|
•
|
other risks detailed from time to time in our filings with the Securities and Exchange Commission (the "SEC"), press releases, and other communications.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||
|
|
|
|
Change
|
|
Change
|
|
|
|
Change
|
|
Change
|
||||||||||||||||||
(Dollars in millions)
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
2016
|
|
2015
|
|
$
|
|
%
|
||||||||||||||
Net sales
|
|
$
|
323.7
|
|
|
$
|
326.6
|
|
|
$
|
(2.9
|
)
|
|
(0.9
|
)%
|
|
$
|
608.1
|
|
|
$
|
586.0
|
|
|
$
|
22.1
|
|
|
3.8
|
%
|
Cost of goods sold
|
|
260.5
|
|
|
260.2
|
|
|
(0.3
|
)
|
|
(0.1
|
)%
|
|
497.7
|
|
|
478.1
|
|
|
(19.6
|
)
|
|
(4.1
|
)%
|
||||||
Gross profit
|
|
63.2
|
|
|
66.4
|
|
|
(3.2
|
)
|
|
(4.8
|
)%
|
|
110.4
|
|
|
107.9
|
|
|
2.5
|
|
|
2.3
|
%
|
||||||
Selling, general and administrative expenses
|
|
51.4
|
|
|
51.8
|
|
|
0.4
|
|
|
0.8
|
%
|
|
103.2
|
|
|
96.7
|
|
|
(6.5
|
)
|
|
(6.7
|
)%
|
||||||
Operating income
|
|
11.8
|
|
|
14.6
|
|
|
(2.8
|
)
|
|
(19.2
|
)%
|
|
7.2
|
|
|
11.2
|
|
|
(4.0
|
)
|
|
(35.7
|
)%
|
||||||
Interest expense
|
|
0.7
|
|
|
—
|
|
|
(0.7
|
)
|
|
|
|
|
0.7
|
|
|
—
|
|
|
(0.7
|
)
|
|
|
|||||||
Other non-operating expense
|
|
1.9
|
|
|
0.1
|
|
|
(1.8
|
)
|
|
|
|
|
2.2
|
|
|
0.1
|
|
|
(2.1
|
)
|
|
|
|||||||
Other non-operating income
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
|
|
|
0.4
|
|
|
0.2
|
|
|
0.2
|
|
|
|
|
||||||
Income from continuing operations before income taxes
|
|
9.4
|
|
|
14.5
|
|
|
(5.1
|
)
|
|
|
|
|
4.7
|
|
|
11.3
|
|
|
(6.6
|
)
|
|
|
|
||||||
Income tax expense
|
|
3.7
|
|
|
5.7
|
|
|
2.0
|
|
|
|
|
|
3.3
|
|
|
6.4
|
|
|
3.1
|
|
|
|
|
||||||
Income from continuing operations
|
|
5.7
|
|
|
8.8
|
|
|
(3.1
|
)
|
|
|
|
|
1.4
|
|
|
4.9
|
|
|
(3.5
|
)
|
|
|
|
||||||
Net (loss) gain on disposal of discontinued business, net of tax benefit (expense) of $-, $(0.3), $1.8 and $43.4
|
|
—
|
|
|
(0.2
|
)
|
|
0.2
|
|
|
|
|
|
1.7
|
|
|
42.3
|
|
|
(40.6
|
)
|
|
|
|
||||||
Net (loss) income from discontinued operations
|
|
—
|
|
|
(0.2
|
)
|
|
0.2
|
|
|
|
|
|
1.7
|
|
|
42.3
|
|
|
(40.6
|
)
|
|
|
|
||||||
Net income
|
|
$
|
5.7
|
|
|
$
|
8.6
|
|
|
$
|
(2.9
|
)
|
|
|
|
|
$
|
3.1
|
|
|
$
|
47.2
|
|
|
$
|
(44.1
|
)
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
||||||||
|
|||||||||||
(Dollars in millions)
|
2016
|
|
2015
|
|
Change
|
||||||
Resilient Flooring
|
$
|
13.4
|
|
|
$
|
14.8
|
|
|
$
|
(1.4
|
)
|
Wood Flooring
|
(1.6
|
)
|
|
(0.2
|
)
|
|
(1.4
|
)
|
|||
Total
|
$
|
11.8
|
|
|
$
|
14.6
|
|
|
$
|
(2.8
|
)
|
|
Six Months Ended
June 30,
|
|
||||||||||
(Dollars in millions)
|
2016
|
|
2015
|
|
Change
|
|||||||
Resilient Flooring
|
$
|
8.0
|
|
|
$
|
15.3
|
|
|
$
|
(7.3
|
)
|
|
Wood Flooring
|
(0.8
|
)
|
|
(4.1
|
)
|
|
3.3
|
|
||||
Total
|
$
|
7.2
|
|
|
$
|
11.2
|
|
|
$
|
(4.0
|
)
|
(Dollars in millions)
|
Six Months Ended June 30,
|
||||||
2016
|
|
2015
|
|||||
Cash provided by operating activities
|
$
|
24.3
|
|
|
$
|
15.0
|
|
Cash used for investing activities
|
(17.3
|
)
|
|
(22.4
|
)
|
||
Cash provided by financing activities
|
94.2
|
|
|
7.4
|
|
Armstrong Flooring, Inc.
|
|
(Registrant)
|
|
|
|
Date:
|
August 12, 2016
|
|
|
By:
|
/s/ John W. Thompson
|
|
|
|
John W. Thompson
|
|
Senior Vice President and Chief Financial Officer
|
|
(As Duly Authorized Officer and Principal Financial Officer)
|
|
|
Date:
|
August 12, 2016
|
|
|
By:
|
/s/ Kimberly Z. Boscan
|
|
|
|
Kimberly Z. Boscan
|
|
Vice President and Controller
|
|
(As Duly Authorized Officer and Principal Accounting Officer)
|
Exhibit
Number
|
|
Description
|
|
|
|
2.1
|
|
Separation and Distribution Agreement by and between Armstrong Flooring, Inc., and AFI Intermediate Co. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on April 4, 2016).
|
|
|
|
3.1
|
|
Amended and Restated Certificate of Incorporation of Armstrong Flooring, Inc. dated March 30, 2016 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on April 4, 2016).
|
|
|
|
3.2
|
|
Amended and Restated Bylaws of Armstrong Flooring, Inc. dated March 30, 2016 (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on April 4, 2016).
|
|
|
|
10.1
|
|
Transition Services Agreement, dated as of April 1, 2016, by and between Armstrong World Industries, Inc. and Armstrong Flooring, Inc. (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on April 4, 2016).
|
|
|
|
10.2
|
|
Tax Matters Agreement, dated as of April 1, 2016, by and between Armstrong World Industries, Inc. and Armstrong Flooring, Inc. (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on April 4, 2016).
|
|
|
|
10.3
|
|
Employee Matters Agreement, dated as of April 1, 2016, by and between Armstrong World Industries, Inc. and Armstrong Flooring, Inc. (incorporated by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on April 4, 2016).
|
|
|
|
10.4
|
|
Trademark License Agreement, dated as of April 1, 2016, by and between Armstrong World Industries, Inc. and Armstrong Flooring, Inc. (incorporated by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on April 4, 2016).
|
|
|
|
10.5
|
|
Transition Trademark License Agreement, dated as of April 1, 2016, by and between Armstrong World Industries, Inc. and Armstrong Flooring, Inc. (incorporated by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on April 4, 2016).
|
|
|
|
10.6
|
|
Campus Lease Agreement, dated as of April 1, 2016, by and between Armstrong World Industries, Inc. and Armstrong Flooring, Inc. (incorporated by reference to Exhibit 10.6 to the Company's Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on April 4, 2016).
|
|
|
|
10.7
|
|
Credit Agreement, dated as of April 1, 2016, among Armstrong Flooring, Inc. and Armstrong Hardwood Flooring Company, as Borrowers, certain subsidiaries of Armstrong Flooring, Inc. identified therein, as the Guarantors, Bank of America, N.A., as Administrative Agent and Collateral Agent, the other lenders party thereto, JPMorgan Chase Bank, N.A. and SunTrust Robinson Humphrey, Inc., as Co-Syndication Agents, and Bank of America, N.A., JPMorgan Chase Bank, N.A. and SunTrust Robinson Humphrey, Inc. as Joint Lead Arrangers and Joint Book Managers (incorporated by reference to Exhibit 10.7 to the Company's Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on April 4, 2016).
|
|
|
|
10.8
|
|
Armstrong Flooring, Inc. 2016 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 4.3 to the Registration Statement on Form S-8 filed by Armstrong Flooring, Inc. with the SEC on April 1, 2016).*
|
|
|
|
10.9
|
|
Form of 2016 Long-Term Performance - Based Restricted Stock Grant - Tier 1 Executive - Free Cash Flow.*†
|
|
|
|
10.10
|
|
Form of 2016 Long-Term Performance - Based Restricted Stock Grant - Tier 1 Executive - EBITDA.*†
|
|
|
|
10.11
|
|
Form of 2016 Long-Term Performance - Based Restricted Stock Grant - Free Cash Flow (incorporated by reference to Exhibit 10.11 to the Company's Current Report on Form 10-Q, as filed with the U.S Securities and Exchange Commission on May 9, 2016). *
|
|
|
|
10.12
|
|
Form of 2016 Long-Term Performance - Based Restricted Stock Grant - EBITDA(incorporated by reference to Exhibit 10.12 to the Company's Current Report on Form 10-Q, as filed with the U.S Securities and Exchange Commission on May 9, 2016).
|
|
|
|
10.13
|
|
Form of 2016 Long-Term Performance - Based Restricted Stock Grant - Non U.S. (China) - Free Cash Flow - Payable in Cash.(incorporated by reference to Exhibit 10.13 to the Company's Current Report on Form 10-Q, as filed with the U.S Securities and Exchange Commission on May 9, 2016).
|
|
|
|
10.14
|
|
Form of 2016 Long-Term Performance - Based Restricted Stock Grant - Non U.S. (China) - EBITDA - Payable in Cash (incorporated by reference to Exhibit 10.14 to the Company's Current Report on Form 10-Q, as filed with the U.S Securities and Exchange Commission on May 9, 2016). *
|
|
|
|
10.15
|
|
Form of 2016 Long-Term Time - Based Restricted Stock Grant - U.S. and Non-U.S. (incorporated by reference to Exhibit 10.15 to the Company's Current Report on Form 10-Q, as filed with the U.S Securities and Exchange Commission on May 9, 2016). *
|
|
|
|
10.16
|
|
Form of 2016 Long-Term Time - Based Restricted Stock Grant - Non-U.S. (China) - Payable in Cash(incorporated by reference to Exhibit 10.16 to the Company's Current Report on Form 10-Q, as filed with the U.S Securities and Exchange Commission on May 9, 2016). *
|
|
|
|
10.17
|
|
Armstrong Flooring, Inc. 2016 Directors Stock Unit Plan (incorporated herein by reference to Exhibit 4.4 to the Registration Statement on Form S-8 filed by Armstrong Flooring, Inc. with the SEC on April 1, 2016).*
|
|
|
|
10.18
|
|
Form of Director Stock Unit Grant Agreement (incorporated by reference to Exhibit 10.18 to the Company's Current Report on Form 10-Q, as filed with the U.S Securities and Exchange Commission on May 9, 2016).*
|
|
|
|
10.19
|
|
Armstrong Flooring, Inc. Nonqualified Deferred Compensation Plan (incorporated by reference to Exhibit 10.10 to the Company's Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on April 4, 2016).*
|
|
|
|
10.20
|
|
Retirement Benefit Equity Plan of Armstrong Flooring, Inc. (incorporated by reference to Exhibit 10.11 to the Company's Current Report on Form 8-K, as filed with the U.S. Securities and Exchange Commission on April 4, 2016).*
|
|
|
|
After a Change in Control:
Involuntary Termination Without Cause
Death
Long-Term Disability
|
Performance Shares calculated upon the Change in Control and accrued dividends are earned as described in
Exhibit A
.
|
|
In the event of any inconsistency between the foregoing summary and the Terms and Conditions or the 2016 Long-Term Incentive Plan, the Terms and Conditions or the 2016 Long-Term Incentive Plan, as applicable, will govern. Capitalized terms used but not defined in this grant letter will have the meanings set forth in the 2016 Long-Term Incentive Plan or the Terms and Conditions, as applicable.
Please contact
Clement Lodiong
(
717
-
672
-
9585
) if you have questions.
Sincerely,
Donald R. Maier
President and Chief Executive Officer
The information contained in this letter is confidential and any discussion, distribution or use of this information is prohibited.
|
Cumulative Free Cash Flow Performance Scale
|
||
Performance Level
|
|
Payout
|
Below 2.127% of Target Performance
|
|
0%
|
2.127% of Target Performance
|
|
50%
|
Target Performance
|
|
100%
|
291.489% of Target Performance or greater
|
|
200%
|
Ending Share Price + Aggregate Dividends
^(1/2.75)
Starting Share Price
|
-1
|
•
|
“Ending Share Price” means the volume weighted average closing price of the Company Stock for the highest consecutive 30 trading days in the 60 trading day period beginning with and immediately following January 2, 2019.
|
•
|
“Aggregate Dividends” means a cumulative number of shares of Company Stock assuming same day reinvestment in Company Stock on the ex-dividend date of the dividends paid on a share of Company Stock during the Performance Period.
|
•
|
“Starting Share Price” means the volume weighted average closing price of the Company Stock for the 30 trading days beginning with and immediately following April 4, 2016.
|
Absolute TSR
|
||
Performance Level
|
|
Modifier
|
66.66% of Target Performance or below
|
|
50%
|
83.33% of Target Performance
|
|
75%
|
Target Performance
|
|
100%
|
166.66% of Target Performance
|
|
125%
|
250% of Target Performance or greater
|
|
150%
|
•
|
The number of Performance Shares earned with respect to the Cumulative Free Cash Flow Performance Goal will be based on actual Cumulative Free Cash Flow through the date of the Change in Control (or through December 31, 2018, if earlier) relative to the 2016, 2017 and 2018 portions of the total Cumulative Free Cash Flow target, as determined by the Committee before the Change in Control in its sole discretion. Cumulative Free Cash Flow through the date of the Change in Control (or through December 31, 2018, if earlier) shall be compared to the annual and quarterly targets for the period through the date of the Change in Control.
|
•
|
Absolute TSR will be calculated using the per-share sales price in the Change in Control as the Ending Share Price and as if the Change in Control date were the end of the Performance Period, as determined by the Committee before the Change in Control in its sole discretion.
|
1.
|
Grant
.
|
After a Change in Control:
Involuntary Termination Without Cause
Death
Long-Term Disability
|
Performance Shares calculated upon the Change in Control and accrued dividends are earned as described in
Exhibit A
.
|
|
In the event of any inconsistency between the foregoing summary and the Terms and Conditions or the 2016 Long-Term Incentive Plan, the Terms and Conditions or the 2016 Long-Term Incentive Plan, as applicable, will govern. Capitalized terms used but not defined in this grant letter will have the meanings set forth in the 2016 Long-Term Incentive Plan or the Terms and Conditions, as applicable.
As described in the Terms and Conditions, if and to the extent that the terms of this award agreement conflict with the terms of a change in control agreement or employment agreement between you and the Company, the terms of this award agreement shall supersede the terms of the change in control agreement or employment agreement
.
Please contact
Clement Lodiong
(
717
-
672
-
9585
) if you have questions.
Sincerely,
Donald R. Maier
President and Chief Executive Officer
The information contained in this letter is confidential and any discussion, distribution or use of this information is prohibited.
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Cumulative EBITDA Performance Scale
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||
Performance Level
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Payout
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Below 80% of Target Performance
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0%
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80% of Target Performance
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50%
|
Target Performance
|
|
100%
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150% of Target Performance or greater
|
|
200%
|
Ending Share Price + Aggregate Dividends
^(1/2.75)
Starting Share Price
|
-1
|
•
|
“Ending Share Price” means the volume weighted average closing price of the Company Stock for the highest consecutive 30 trading days in the 60 trading day period beginning with and immediately following January 2, 2019.
|
•
|
“Aggregate Dividends” means a cumulative number of shares of Company Stock assuming same day reinvestment in Company Stock on the ex-dividend date of the dividends paid on a share of Company Stock during the Performance Period.
|
•
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“Starting Share Price” means the volume weighted average closing price of the Company Stock for the 30 trading days beginning with and immediately following April 4, 2016.
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Absolute TSR
|
||
Performance Level
|
|
Modifier
|
66.66% of Target Performance or below
|
|
50%
|
83.33% of Target Performance
|
|
75%
|
Target Performance
|
|
100%
|
166.66% of Target Performance
|
|
125%
|
250% of Target Performance or greater
|
|
150%
|
•
|
The number of Performance Shares earned with respect to the Cumulative EBITDA Performance Goal will be based on Cumulative EBITDA through the date of the Change in Control (or through December 31, 2018, if earlier) relative to the 2016, 2017 and 2018 portions of the total Cumulative EBITDA target, as determined by the Committee before the Change in Control in its sole discretion. Cumulative EBITDA through the date of the Change in Control (or through December 31, 2018, if earlier) shall be compared to the annual and quarterly targets for the period through the date of the Change in Control.
|
•
|
Absolute TSR will be calculated using the per-share sales price in the Change in Control as the Ending Share Price and as if the Change in Control date were the end of the Performance Period, as determined by the Committee before the Change in Control in its sole discretion.
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ARMSTRONG FLOORING, INC.
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By:
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Name:
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Title:
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|
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[Indemnitee]
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Date:
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August 12, 2016
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By:
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/s/ Donald R. Maier
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Donald R. Maier
|
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President and Chief Executive Officer
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(Principal Executive Officer)
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Date:
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August 12, 2016
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|
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By:
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/s/ John W. Thompson
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John W. Thompson
|
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Senior Vice President and Chief Financial Officer
|
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(Principal Financial Officer)
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/s/ Donald R. Maier
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Donald R. Maier
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Chief Executive Officer
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(Principal Executive Officer)
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August 12, 2016
|
/s/ John W. Thompson
|
|
John W. Thompson
|
Chief Financial Officer
|
(Principal Financial Officer)
|
August 12, 2016
|