Attached files
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EX-10.4 - EX-10.4 - Armstrong Flooring, Inc. | d683999dex104.htm |
EX-10.3 - EX-10.3 - Armstrong Flooring, Inc. | d683999dex103.htm |
EX-10.2 - EX-10.2 - Armstrong Flooring, Inc. | d683999dex102.htm |
EX-10.1 - EX-10.1 - Armstrong Flooring, Inc. | d683999dex101.htm |
8-K - 8-K - Armstrong Flooring, Inc. | d683999d8k.htm |
Exhibit 99.1
Unaudited Pro Forma Condensed Consolidated Financial Information
On December 31, 2018 (the Closing Date), Armstrong Flooring, Inc. (the Company) completed the previously announced sale of its wood flooring business (the Transaction) to AHF Holding, Inc. (formerly known as Tarzan Holdco, Inc.), a Delaware corporation and an affiliate of American Industrial Partners (the Purchaser). The Transaction was completed pursuant to the terms of the November 14, 2018 Stock Purchase Agreement between the Company and the Purchaser, by means of the sale of all of the issued and outstanding shares of Armstrong Wood Products, Inc., a Delaware corporation, including its direct and indirect wholly owned subsidiaries, AHFC and HomerWood Hardwood Flooring Company, a Delaware corporation, to the Purchaser. Pursuant to the Stock Purchase Agreement, consideration for the sale was $100 million, subject to customary adjustments. The Company received proceeds from the Transaction of approximately $90 million, net of closing costs, transaction fees and taxes. The Transaction is subject to a customary post-closing working capital adjustment process.
The following unaudited pro forma condensed consolidated balance sheet and statements of income have been derived by the application of adjustments to the Companys historical financial statements as previously filed. The unaudited pro forma balance sheet as of September 30, 2018 depicts the impact of the Transaction as if it had occurred on September 30, 2018. The unaudited pro forma statements of income for the nine months ended September 30, 2018 and the years ended December 31, 2017, December 31, 2016 and December 31, 2015 depict the pro forma impact of the Transaction as if the Transaction had occurred on January 1, 2015. The unaudited pro forma condensed consolidated financial information is presented for comparative purposes only and is not intended to be indicative of the balance sheet and statements of income which would have been realized had the Transaction been consummated as of the date or during the periods for which the unaudited pro forma condensed consolidated financial information is presented or for any future period or date. The unaudited pro forma condensed consolidated financial information should be read in conjunction with the Companys historical financial statements and related notes for the periods presented.
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Armstrong Flooring, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statement of Earnings
(amounts in millions, except per share data)
Year Ended December 31, 2015 | ||||||||||||||||
Historical AFI (as reported) |
Discontinued Operation - Wood (a) |
Pro Forma Adjustments |
Pro Forma AFI Continuing Operations |
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Net sales |
$ | 1,188.7 | $ | 471.8 | $ | 716.9 | ||||||||||
Cost of goods sold |
993.0 | 430.3 | 562.7 | |||||||||||||
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Gross profit |
195.7 | 41.5 | 0.0 | 154.2 | ||||||||||||
Selling, general and administrative expenses |
209.7 | 43.8 | 165.9 | |||||||||||||
Intangible asset impairment |
0.0 | 0.0 | 0.0 | |||||||||||||
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Operating (loss) |
(14.0 | ) | (2.3 | ) | 0.0 | (11.7 | ) | |||||||||
Interest expense (income) |
0.0 | 0.3 | (0.3 | ) | ||||||||||||
Other expense (income), net |
3.6 | 2.6 | 1.0 | |||||||||||||
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(Loss) before income taxes |
(17.6 | ) | (5.2 | ) | 0.0 | (12.4 | ) | |||||||||
Income tax (benefit) |
(7.3 | ) | (1.3 | ) | (6.0 | ) | ||||||||||
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Net (loss) |
$ | (10.3 | ) | $ | (3.9 | ) | $ | 0.0 | $ | (6.4 | ) | |||||
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(Loss) per share of common stock: |
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Basic |
$ | (0.37 | ) | $ | (0.23 | ) | ||||||||||
Diluted |
(0.37 | ) | (0.23 | ) | ||||||||||||
Average number of common shares outstanding: |
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Basic |
27.7 | 27.7 | ||||||||||||||
Diluted |
27.7 | 27.7 |
See accompanying notes to Unaudited Pro Forma Consolidated Financial Statements on page 6
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Armstrong Flooring, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statement of Earnings
(amounts in millions, except per share data)
Year Ended December 31, 2016 | ||||||||||||||||
Historical AFI (as reported) |
Discontinued Operation - Wood (a) |
Pro Forma Adjustments |
Pro Forma AFI Continuing Operations |
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Net sales |
$ | 1,193.2 | $ | 483.1 | $ | 710.1 | ||||||||||
Cost of goods sold |
962.1 | 407.6 | 554.5 | |||||||||||||
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Gross profit |
231.1 | 75.5 | 0.0 | 155.6 | ||||||||||||
Selling, general and administrative expenses |
210.4 | 42.3 | 168.1 | |||||||||||||
Intangible asset impairment |
0.0 | 0.0 | 0.0 | |||||||||||||
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Operating income (loss) |
20.7 | 33.2 | 0.0 | (12.5 | ) | |||||||||||
Interest expense |
1.5 | 0.0 | 1.5 | |||||||||||||
Other expense (income), net |
7.6 | 0.7 | 6.9 | |||||||||||||
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Income (loss) before income taxes |
11.6 | 32.5 | 0.0 | (20.9 | ) | |||||||||||
Income tax expense (benefit) |
4.1 | 8.8 | (4.7 | ) | ||||||||||||
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Net income (loss) |
$ | 7.5 | $ | 23.7 | $ | 0.0 | $ | (16.2 | ) | |||||||
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Earnings (loss) per share of common stock: |
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Basic |
$ | 0.27 | $ | (0.58 | ) | |||||||||||
Diluted |
0.27 | (0.58 | ) | |||||||||||||
Average number of common shares outstanding: |
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Basic |
27.9 | 27.9 | ||||||||||||||
Diluted |
28.1 | 27.9 |
See accompanying notes to Unaudited Pro Forma Consolidated Financial Statements on page 6
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Armstrong Flooring, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statement of Earnings
(amounts in millions, except per share data)
Year Ended December 31, 2017 | ||||||||||||||||
Historical AFI (as reported) |
Discontinued Operation - Wood (a) |
Pro Forma Adjustments |
Pro Forma AFI Continuing Operations |
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Net sales |
$ | 1,133.7 | $ | 429.6 | $ | 704.1 | ||||||||||
Cost of goods sold |
960.5 | 407.5 | 553.0 | |||||||||||||
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Gross profit |
173.2 | 22.1 | 0.0 | 151.1 | ||||||||||||
Selling, general and administrative expenses |
203.2 | 39.4 | 163.8 | |||||||||||||
Intangible asset impairment |
12.5 | 12.5 | 0.0 | |||||||||||||
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Operating (loss) |
(42.5 | ) | (29.8 | ) | 0.0 | (12.7 | ) | |||||||||
Interest expense |
2.8 | 0.1 | 2.7 | |||||||||||||
Other expense (income), net |
4.7 | 1.0 | 3.7 | |||||||||||||
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(Loss) before income taxes |
(50.0 | ) | (30.9 | ) | 0.0 | (19.1 | ) | |||||||||
Income tax (benefit) |
(8.2 | ) | (6.2 | ) | (2.0 | ) | ||||||||||
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Net (loss) |
$ | (41.8 | ) | $ | (24.7 | ) | $ | 0.0 | $ | (17.1 | ) | |||||
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(Loss) per share of common stock: |
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Basic |
$ | (1.54 | ) | $ | (0.63 | ) | ||||||||||
Diluted |
(1.54 | ) | (0.63 | ) | ||||||||||||
Average number of common shares outstanding: |
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Basic |
27.1 | 27.1 | ||||||||||||||
Diluted |
27.1 | 27.1 |
See accompanying notes to Unaudited Pro Forma Consolidated Financial Statements on page 6
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Armstrong Flooring, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Earnings
(amounts in millions, except per share data)
Nine Months Ended September 30, 2018 | ||||||||||||||||
Historical AFI (as reported) |
Discontinued Operation - Wood (a) |
Pro Forma Adjustments |
Pro Forma AFI Continuing Operations |
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Net sales |
$ | 873.6 | $ | 299.2 | $ | 574.4 | ||||||||||
Cost of goods sold |
710.9 | 254.7 | 456.2 | |||||||||||||
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Gross profit |
162.7 | 44.5 | 0.0 | 118.2 | ||||||||||||
Selling, general and administrative expenses |
146.5 | 27.5 | 119.0 | |||||||||||||
Intangible asset impairment |
0.0 | 0.0 | 0.0 | |||||||||||||
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Operating income (loss) |
16.2 | 17.0 | 0.0 | (0.8 | ) | |||||||||||
Interest expense |
2.8 | 0.0 | 2.8 | |||||||||||||
Other expense, net |
2.2 | 0.0 | 2.2 | |||||||||||||
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Income (loss) before income taxes |
11.2 | 17.0 | 0.0 | (5.8 | ) | |||||||||||
Income tax expense (benefit) |
3.2 | 4.9 | (1.7 | ) | ||||||||||||
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Net income (loss) |
$ | 8.0 | $ | 12.1 | $ | 0.0 | $ | (4.1 | ) | |||||||
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Earnings (loss) per share of common stock: |
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Basic |
$ | 0.31 | $ | (0.16 | ) | |||||||||||
Diluted |
0.31 | (0.16 | ) | |||||||||||||
Average number of common shares outstanding: |
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Basic |
25.9 | 25.9 | ||||||||||||||
Diluted |
26.1 | 25.9 |
See accompanying notes to Unaudited Pro Forma Condensed Consolidated Financial Statements on page 6
5
Armstrong Flooring, Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Balance Sheet
(amounts in millions, except share data)
September 30, 2018 | ||||||||||||||||
Historical AFI (as reported) |
Discontinued Operation - Wood (a) |
Pro Forma Adjustments |
Pro Forma AFI Continuing Operations |
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Current assets: |
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Cash |
$ | 39.4 | $ | (3.2 | ) | $ | 96.2 | (b) | $ | 138.8 | ||||||
Accounts and notes receivable, net |
115.9 | 23.9 | 92.0 | |||||||||||||
Inventories, net |
266.6 | 130.2 | 136.4 | |||||||||||||
Income tax receivable |
0.9 | 0.2 | 0.1 | (b) | 0.8 | |||||||||||
Prepaid expenses and other current assets |
22.5 | 3.2 | 19.3 | |||||||||||||
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Total current assets |
445.3 | 154.3 | 96.3 | 387.3 | ||||||||||||
Property, plant and equipment, less accumulated depreciation and amortization |
398.9 | 103.6 | 295.3 | |||||||||||||
Intangible assets, less accumulated amortization |
55.4 | 19.5 | 35.9 | |||||||||||||
Deferred income taxes |
3.3 | 0.0 | 12.9 | (b) | 16.2 | |||||||||||
Other noncurrent assets |
7.8 | 1.2 | 0.8 | (b) | 7.4 | |||||||||||
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Total assets |
$ | 910.7 | $ | 278.6 | $ | 110.0 | $ | 742.1 | ||||||||
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Current liabilities: |
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Current installments of long-term debt |
$ | 0.2 | $ | 0.2 | $ | 0.0 | ||||||||||
Accounts payable and accrued expenses |
169.8 | 27.0 | 142.8 | |||||||||||||
Income tax payable |
1.0 | 0.0 | (0.3 | )(b) | 0.7 | |||||||||||
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Total current liabilities |
171.0 | 27.2 | (0.3 | ) | 143.5 | |||||||||||
Long-term debt |
94.6 | 0.6 | 6.0 | (b) | 100.0 | |||||||||||
Postretirement benefit liabilities |
68.7 | 2.7 | 66.0 | |||||||||||||
Pension benefit liabilities |
2.6 | 3.4 | 0.8 | (b) | 0.0 | |||||||||||
Noncurrent income taxes payable |
0.3 | 0.2 | 0.1 | |||||||||||||
Deferred income taxes |
7.2 | 18.5 | 13.3 | (b) | 2.0 | |||||||||||
Other long-term liabilities |
9.5 | (0.7 | ) | 10.2 | ||||||||||||
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Total liabilities |
353.9 | 51.9 | 19.8 | 321.8 | ||||||||||||
Stockholders equity: |
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Common stock with par value $0.0001 per share: 100,000,000 shares authorized; 28,279,187 issued and 25,827,022 outstanding shares |
0.0 | 0.0 | 0.0 | |||||||||||||
Preferred stock with par value $0.0001 per share: 15,000,000 shares authorized; none issued |
0.0 | 0.0 | 0.0 | |||||||||||||
Treasury stock, at cost, 2,452,165 shares |
(39.7 | ) | 0.0 | (39.7 | ) | |||||||||||
Additional paid-in capital |
676.7 | 0.0 | 676.7 | |||||||||||||
Accumulated deficit |
(15.3 | ) | 227.7 | 90.2 | (b) | (152.8 | ) | |||||||||
Accumulated other comprehensive loss |
(64.9 | ) | (1.0 | ) | (63.9 | ) | ||||||||||
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Total stockholders equity |
556.8 | 226.7 | 90.2 | 420.3 | ||||||||||||
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Total liabilities and stockholders equity |
$ | 910.7 | $ | 278.6 | $ | 110.0 | $ | 742.1 | ||||||||
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(a) | Reflects the operations, assets, liabilities and equity of the North American wood business. Expense categories exclude certain general corporate overhead expenses that were allocated to the North American wood business in its historical financial statements that do not meet the requirements to be presented in discontinued operations and thus will be presented as part of AFIs continuing operations. |
(b) | Reflects the change in the funded status of our pension plans from a net liability position to a net asset position as a result of the allocation of a portion of the net pension liability to discontinued operations, and a reclassification of tax balances associated with jurisdictional netting within continuing operations. Also reflects the net proceeds from the sale, the extinguishment of existing debt and the issuance of new debt. |
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