UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
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(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
☒ |
Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
Number of shares of Armstrong World Industries, Inc.’s common stock outstanding as of April 21, 2022 –
TABLE OF CONTENTS
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3 |
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Item 1. |
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5 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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28 |
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Item 4. |
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28 |
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Item 1. |
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29 |
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Item 1A. |
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29 |
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Item 2. |
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29 |
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Item 3. |
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29 |
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Item 4. |
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29 |
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Item 5. |
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29 |
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Item 6. |
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30 |
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31 |
2
When we refer to “AWI,” the “Company,” “we,” “our” or “us,” we are referring to Armstrong World Industries, Inc. and its subsidiaries.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q and the documents incorporated by reference herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those forward-looking statements are subject to various risks and uncertainties and include all statements that are not historical statements of fact and those regarding our intent, belief or expectations, including, but not limited to, our expectations concerning our markets and their effect on our operating results; the impacts of COVID-19 on our business; our expectations regarding the payment of dividends; and our ability to increase revenues, earnings and earnings before interest, taxes, depreciation and amortization (as discussed below). Words such as “anticipate,” “expect,” “intend,” “plan,” “target,” “project,” “predict,” “believe,” “may,” “will,” “would,” “could,” “should,” “seek,” “estimate” and similar expressions are intended to identify such forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors that could have a material adverse effect on our financial condition, liquidity, results of operations or future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to:
Risks Related to Our Operations
Risks Related to Our Strategy
Risks Related to Financial Matters
Risks Related to Legal and Regulatory Matters
Risks Related to General Economic and Other Factors
3
Such forward-looking statements speak only as of the date they are made. We expressly disclaim any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any change in our expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
4
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Armstrong World Industries, Inc., and Subsidiaries
Condensed Consolidated Statements of Earnings and Comprehensive Income
(amounts in millions, except per share data)
Unaudited
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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Net sales |
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$ |
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$ |
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Cost of goods sold |
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Gross profit |
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Selling, general and administrative expenses |
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Loss related to change in fair value of contingent consideration |
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Equity (earnings) from joint venture |
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Operating income |
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Interest expense |
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Other non-operating (income), net |
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( |
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Earnings from continuing operations before income taxes |
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Income tax expense |
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Earnings from continuing operations |
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Loss from disposal of discontinued businesses, net of tax expense of $ |
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Net loss from discontinued operations |
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Net earnings |
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$ |
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$ |
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Other comprehensive income, net of tax: |
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Foreign currency translation adjustments |
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Derivative gain, net |
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Pension and postretirement adjustments |
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Total other comprehensive income |
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Total comprehensive income |
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$ |
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$ |
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Earnings per share of common stock, continuing operations: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Loss per share of common stock, discontinued operations: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Net earnings per share of common stock: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Average number of common shares outstanding: |
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Basic |
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Diluted |
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See accompanying notes to Condensed Consolidated Financial Statements beginning on page 9.
5
Armstrong World Industries, Inc., and Subsidiaries
Condensed Consolidated Balance Sheets
(amounts in millions, except share and per share data)
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Unaudited |
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March 31, 2022 |
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December 31, 2021 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts and notes receivable, net |
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Inventories, net |
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Income taxes receivable |
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Other current assets |
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Total current assets |
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Property, plant, and equipment, less accumulated depreciation and amortization of |
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Operating lease assets |
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Finance lease assets |
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Prepaid pension costs |
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Investment in joint venture |
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Goodwill |
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Intangible assets, net |
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Income taxes receivable |
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Other non-current assets |
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Total assets |
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$ |
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$ |
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Liabilities and Shareholders' Equity |
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Current liabilities: |
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Current installments of long-term debt |
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Accounts payable and accrued expenses |
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Operating lease liabilities |
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Finance lease liabilities |
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Income taxes payable |
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Total current liabilities |
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Long-term debt, less current installments |
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Operating lease liabilities |
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Finance lease liabilities |
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Postretirement benefit liabilities |
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Pension benefit liabilities |
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Other long-term liabilities |
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Income taxes payable |
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Deferred income taxes |
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Total non-current liabilities |
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Shareholders' equity: |
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Common stock, $ |
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Capital in excess of par value |
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Retained earnings |
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Treasury stock, at cost, |
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( |
) |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
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$ |
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$ |
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See accompanying notes to Condensed Consolidated Financial Statements beginning on page 9.
6
Armstrong World Industries, Inc., and Subsidiaries
Condensed Consolidated Statements of Shareholders’ Equity
(amounts in millions, except share data)
Unaudited
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Three Months Ended March 31, 2022 |
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Accumulated |
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Additional |
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Other |
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Common Stock |
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Paid-In |
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Retained |
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Treasury Stock |
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Comprehensive |
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Shares |
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Amount |
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Capital |
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Earnings |
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Shares |
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Amount |
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(Loss) |
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Total |
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December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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Stock issuance, net |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Cash dividends - $ |
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- |
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- |
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- |
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( |
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- |
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- |
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- |
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( |
) |
Share-based employee compensation |
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- |
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- |
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- |
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- |
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- |
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- |
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Net earnings |
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- |
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- |
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- |
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- |
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- |
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- |
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Other comprehensive income |
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- |
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- |
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- |
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- |
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- |
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- |
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Acquisition of treasury stock |
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( |
) |
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- |
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- |
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- |
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( |
) |
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- |
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( |
) |
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March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Three Months Ended March 31, 2021 |
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Accumulated |
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Additional |
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Other |
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Common Stock |
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Paid-In |
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Retained |
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Treasury Stock |
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Comprehensive |
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Shares |
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Amount |
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Capital |
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Earnings |
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Shares |
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Amount |
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(Loss) |
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Total |
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December 31, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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Stock issuance, net |
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- |
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- |
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- |
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- |
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- |
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- |
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- |
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Cash dividends - $ |
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- |
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- |
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- |
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( |
) |
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- |
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- |
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- |
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( |
) |
Share-based employee compensation |
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- |
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- |
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- |
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- |
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- |
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- |
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Net earnings |
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- |
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- |
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- |
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- |
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- |
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- |
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Other comprehensive income |
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- |
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- |
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- |
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- |
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- |
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- |
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Acquisition of treasury stock |
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( |
) |
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- |
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- |
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- |
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( |
) |
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- |
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( |
) |
|
March 31, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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See accompanying notes to Condensed Consolidated Financial Statements beginning on page 9.
7
Armstrong World Industries, Inc., and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(amounts in millions)
Unaudited
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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Cash flows from operating activities: |
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Net earnings |
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$ |
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$ |
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Adjustments to reconcile net earnings to net cash provided by operating activities: |
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Depreciation and amortization |
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Deferred income taxes |
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Share-based compensation |
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Loss on disposal of discontinued operations |
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Equity earnings from joint venture |
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( |
) |
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( |
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U.S. pension (credit) |
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( |
) |
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Loss from change in fair value of contingent consideration |
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Payments of contingent consideration in excess of acquisition-date fair value |
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( |
) |
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Other non-cash adjustments, net |
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Changes in operating assets and liabilities: |
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Receivables |
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( |
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( |
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Inventories |
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( |
) |
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( |
) |
Accounts payable and accrued expenses |
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( |
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( |
) |
Income taxes receivable and payable, net |
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Other assets and liabilities |
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( |
) |
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( |
) |
Net cash provided by operating activities |
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Cash flows from investing activities: |
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Purchases of property, plant and equipment |
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( |
) |
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( |
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Return of investment from joint venture |
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Payments to Knauf upon disposal of discontinued operations |
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( |
) |
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Other investing activities |
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( |
) |
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Net cash provided by (used for) investing activities |
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( |
) |
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Cash flows from financing activities: |
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Proceeds from revolving credit facility |
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Payments of revolving credit facility |
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( |
) |
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( |
) |
Payments of long-term debt |
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( |
) |
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( |
) |
Dividends paid |
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( |
) |
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( |
) |
Proceeds from share-based compensation plans, net of tax |
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Payments for finance leases |
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( |
) |
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( |
) |
Payments of acquisition-related contingent consideration |
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