Nature Of Operations

12 Months Ended

Dec. 31, 2011

Nature Of Operations [Abstract]

Nature Of Operations

NOTE 3. NATURE OF OPERATIONS

Building Products — produces suspended mineral fiber, soft fiber and metal ceiling systems for use in commercial, institutional and residential settings. In addition, our Building Products segment sources complementary ceiling products. Our products, which are sold worldwide, are available in numerous colors, performance characteristics and designs, and offer attributes such as acoustical control, rated fire protection and aesthetic appeal. Commercial ceiling materials and accessories are sold to ceiling systems contractors and to resale distributors. Residential ceiling products are sold in North America primarily to wholesalers and retailers (including large home centers). Suspension system (grid) products manufactured by Worthington Armstrong Venture ("WAVE") are sold by both us and WAVE.

Resilient Flooring — produces and sources a broad range of floor coverings primarily for homes and commercial and institutional buildings. Manufactured products in this segment include vinyl sheet, vinyl tile and linoleum flooring. In addition, our Resilient Flooring segment sources and sells laminate flooring products, vinyl tile products, vinyl sheet products, adhesives, and installation and maintenance materials and accessories. Resilient Flooring products are offered in a wide variety of types, designs, and colors. We sell these products worldwide to wholesalers, large home centers, retailers, contractors and to the manufactured homes industry.

Wood Flooring — produces and sources wood flooring products for use in new residential construction and renovation, with some commercial applications in stores, restaurants and high-end offices. The product offering includes pre-finished solid and engineered wood floors in various wood species, and related accessories. Virtually all of our Wood Flooring sales are in North America. Our Wood Flooring products are generally sold to independent wholesale flooring distributors and large home centers.

Cabinets — produces kitchen and bathroom cabinetry and related products, which are used primarily in the U.S. residential new construction and renovation markets. Through our system of Company-owned and independent distribution centers and through direct sales to builders, our Cabinets segment provides design, fabrication and installation services to single and multi-family homebuilders, remodelers and consumers. All of Cabinets' sales are in the U.S.

Unallocated Corporate — includes assets, liabilities, income and expenses that have not been allocated to the business units. Balance sheet items classified as Unallocated Corporate are primarily income tax related accounts, cash and cash equivalents, the Armstrong brand name, the U.S. prepaid pension cost and long-term debt. Expenses for our corporate departments and certain benefit plans are allocated to the reportable segments based on known metrics, such as specific activity, headcount, or net sales. The remaining items, which cannot be attributed to the reportable segments without a high degree of generalization, are reported in Unallocated Corporate.

	Building Products			Resilient Flooring		Wood Flooring			Cabinets			Unallocated Corporate		Total
For the year ended 2011
Net sales to external customers	$	1,237.5		$	1,002.3	$	483.3		$	136.4		-		$	2,859.5
Equity (earnings) from joint venture		(54.9	)		-		-			-		-			(54.9	)
Segment operating income (loss) (1)		226.1			15.8		43.4			(0.7	)	(45.4	)		239.2
Restructuring charges		1.5			6.8		(0.2	)		-		0.9			9.0
Segment assets		935.6			575.9		329.5			46.3		1,107.4			2,994.7
Depreciation and amortization		57.8			32.3		10.5			2.2		11.0			113.8
Asset impairments		-			2.2		0.7			0.4		-			3.3
Investment in joint venture		141.0			-		-			-		-			141.0
Capital additions		101.5			43.1		9.8			0.5		6.7			161.6
	Building Products			Resilient Flooring		Wood Flooring			Cabinets			Unallocated Corporate		Total
For the year ended 2010
Net sales to external customers	$	1,135.5		$	1,013.2	$	479.1		$	138.6		-		$	2,766.4
Equity (earnings) from joint venture		(45.0	)		-		-			-		-			(45.0	)
Segment operating income (loss) (1)		171.0			13.1		(45.8	)		(6.4	)	(50.8	)		81.1
Restructuring charges		3.2			13.9		0.9			-		4.0			22.0
Segment assets		931.4			582.6		340.7			47.9		1,019.8			2,922.4
Depreciation and amortization		62.5			38.6		26.4			2.0		13.8			143.3
Asset impairments		-			2.1		22.4			-		6.1			30.6
Investment in joint venture		188.6			-		-			-		-			188.6
Capital additions		47.7			24.0		12.2			3.0		5.8			92.7
	Building Products			Resilient Flooring		Wood Flooring			Cabinets			Unallocated Corporate		Total
For the year ended 2009
Net sales to external customers	$	1,087.7		$	1,031.7	$	510.4		$	150.2		-		$	2,780.0
Equity (earnings) from joint venture		(40.0	)		-		-			-		-			(40.0	)
Segment operating income (loss) (1)		155.9			0.1		(5.9	)		(18.3	)	(41.2	)		90.6
Segment assets		966.0			645.2		410.3			53.2		1,227.9			3,302.6
Depreciation and amortization		61.5			45.2		14.9			7.2		18.0			146.8
Asset impairments		-			3.0		18.0			-		-			21.0
Investment in joint venture		194.5			0.1		-			-		-			194.6
Capital additions		31.8			50.5		10.3			2.5		10.0			105.1

⁽¹⁾ Segment operating income (loss) is the measure of segment profit or loss reviewed by the chief operating decision maker. The sum of the segments' operating income (loss) equals the total consolidated operating income as reported on our income statement. The following reconciles our total consolidated operating income to earnings before income taxes. These items are only measured and managed on a consolidated basis:

	2011			2010			2009
Segment operating income	$	239.2		$	81.1		$	90.6
Interest expense		48.5			21.2			17.7
Other non-operating expense		1.4			1.2			0.9
Other non-operating (income)		(3.8	)		(8.0	)		(3.2	)
Earnings before income taxes	$	193.1		$	66.7		$	75.2

Accounting policies of the segments are the same as those described in the summary of significant accounting policies.

The sales in the table below are allocated to geographic areas based upon the location of the customer.

Geographic Areas
Net trade sales	2011		2010		2009
Americas:
United States	$	1,798.1	$	1,742.4	$	1,810.5
Canada		179.6		179.4		152.0
Other Americas		42.9		39.5		30.1
Total Americas	$	2,020.6	$	1,961.3	$	1,992.6
Europe:
Germany	$	147.8	$	146.3	$	154.7
United Kingdom		85.6		79.9		94.1
Other Europe		317.0		334.0		347.3
Total Europe	$	550.4	$	560.2	$	596.1
Pacific Rim:
Australia	$	86.1	$	85.3	$	63.4
China		73.6		57.1		47.2
Other Pacific Rim		128.8		102.5		80.7
Total Pacific Rim	$	288.5	$	244.9	$	191.3
Total net trade sales	$	2,859.5	$	2,766.4	$	2,780.0

Property, plant and equipment, net	2011		2010
at December 31
Americas:
United States	$	656.3	$	635.7
Other Americas		1.9		6.0
Total Americas	$	658.2	$	641.7
Europe:
Germany	$	113.7	$	115.2
Other Europe		43.1		44.3
Total Europe	$	156.8	$	159.5
Pacific Rim:
China	$	58.3	$	28.4
Other Pacific Rim		29.6		25.3
Total Pacific Rim	$	87.9	$	53.7
Total property, plant and equipment, net	$	902.9	$	854.9

Impairment testing of our tangible assets occurs whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

During the third quarter of 2011, we recorded an asset impairment charge of $2.2 million in selling, general and administrative ("SG&A") expense for a European Resilient Flooring office building. The fair value was determined by management estimates of market prices based upon information available, including offers received from potential buyers of the property (considered Level 3 inputs in the fair value hierarchy as described in Note 18 to the Consolidated Financial Statements).

During the fourth quarter of 2011, we recorded asset impairment charges of $1.1 million in SG&A expense for two previously occupied manufacturing facilities. We have been actively pursuing a sale of

both facilities. The fair values were determined by management estimates and independent market valuations based on information available at that time. The valuation information included sales of similar facilities and estimates of market prices (considered Level 2 inputs in the fair value hierarchy) for these assets.

The Wood Flooring business recorded operating losses in 2010 and 2009 primarily due to non-cash impairment charges of $22.4 million and $18.0 million, respectively. The 2010 operating loss also included restructuring charges. See Note 15 to the Consolidated Financial Statements for further information on our restructuring charges. The Wood Flooring business had positive cash flows for both 2011 and 2010. There were no indicators of impairment for the tangible assets of the Wood Flooring business in 2011 and 2010.

During 2010, management decided to exit our corporate flight operations. As a result, we recorded a $6.1 million impairment charge in SG&A expense. The fair value was determined by management estimates and an independent valuation based on information available at that time. The valuation information included sales of similar equipment and estimates of market prices (considered Level 2 inputs in the fair value hierarchy) for these assets. We sold the corporate aircraft in the fourth quarter of 2010.

During the first quarter of 2010, we announced that one of our European metal ceilings manufacturing facilities would be shut down, which prompted us to perform an impairment test for this asset group. The carrying amount of the tangible assets was determined to be recoverable as the projected undiscounted cash flows exceeded the carrying value. We sold the facility in the third quarter of 2010.

During the second quarter of 2010, we recorded an asset impairment charge of $2.1 million in SG&A expense for a European Resilient Flooring warehouse facility due to the decline in the commercial property sector. The fair value was determined by management estimates of market prices available at that time. This data included sales and leases of comparable properties within similar real estate markets (considered Level 3 inputs in the fair value hierarchy). We sold the warehouse in the first quarter of 2011.

During the third quarter of 2010, we decided to close a ceilings plant, one of our previously idled Wood Flooring plants, portions of another previously idled Wood Flooring plant, and a Resilient Flooring facility. These facilities were shut down in 2010 or 2011. We concluded that an indicator of impairment existed for these asset groups, which prompted us to perform impairment analyses for these asset groups. In each case the carrying amount of the tangible assets was determined to be recoverable as the projected undiscounted cash flows, or estimated fair value of the assets, exceeded the carrying value.

In the third quarter of 2010, we announced our intention to exit the residential flooring business in Europe. We concluded that an indicator of impairment existed which prompted us to perform an impairment analysis. The carrying amount of the tangible assets was determined to be recoverable as the estimated fair value of the assets exceeded the carrying value. We sold the assets related to this business during the fourth quarter of 2010.

The Cabinets business incurred operating losses beginning in 2008 and continuing through 2011. In 2009, 2010 and 2011 the carrying amount of the tangible assets was determined to be recoverable as the projected undiscounted cash flows exceeded the carrying value.