NOTE 15. DEBT



	December 31, 2014	Average year-end interest rate	December 31, 2013	Average year-end interest rate
Term loan A due 2018	$ 530.9	3.14%	$ 550.0	3.13%
Term loan B due 2020	466.6	3.50%	471.4	3.50%
Tax exempt bonds due 2025 - 2041	45.1	0.88%	45.1	0.92%
Subtotal	1,042.6	3.20%	1,066.5	3.20%
Less current portion and short-term debt	39.6	3.18%	23.9	3.20%
Total long-term debt, less current portion	$ 1,003.0	3.20%	$ 1,042.6	3.20%

The average year-end interest rates are inclusive of our interest rate swaps. See Note 18 to the Consolidated Financial Statements for further information.

In March 2013, we refinanced our $1.3 billion senior credit facility. The amended facility is composed of a $250 million revolving credit facility (with a $150 million sublimit for letters of credit), a $550 million Term Loan A and a $475 million Term Loan B. The terms of the facility resulted in a lower interest rate spread (2.5% vs. 3.0%) than our previous facility. We also extended the maturity of Term Loan A from November 2015 to March 2018 and of Term Loan B from March 2018 to March 2020. The facility is secured by U.S. personal property, the capital stock of material U.S. subsidiaries, and a pledge of 65% of the stock of our material first tier foreign subsidiaries. In connection with the refinancing, we incurred $8.3 million for bank, legal, and other fees, of which $7.2 million was capitalized and is being amortized into interest expense over the life of the loans. Additionally, we wrote off $18.9 million of unamortized debt financing costs in the first quarter of 2013 related to our previous credit facility to interest expense.

The primary covenant change resulting from the 2013 refinancing is related to mandatory prepayments required under the senior credit facility. If our ratio of consolidated funded indebtedness minus AWI and domestic subsidiary unrestricted cash and cash equivalents up to $100 million to consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) (“Consolidated Net Leverage Ratio”) is greater than or equal to 3.5 to 1.0, we would be required to make a prepayment of 50% of fiscal year Consolidated Excess Cash Flow, as defined by the credit agreement. If our Consolidated Net Leverage Ratio is less than 3.5 to 1.0, no prepayment would be required. These annual payments would be made in the first quarter of the following year. No payment will be required in 2015.

As of December 31, 2014, we were in compliance with all covenants of the amended senior credit facility. Our debt agreements include other restrictions, including restrictions pertaining to the acquisition of additional debt, the redemption, repurchase or retirement of our capital stock, payment of dividends, and certain financial transactions as it relates to specified assets. We currently believe that default under these covenants is unlikely. Fully borrowing under our revolving credit facility would not violate these covenants.

In March 2012, we amended our $1.05 billion senior credit facility. We added $250 million to our existing Term Loan B facility. The amended $1.3 billion facility was made up of a $250 million revolving credit facility (with a $150 million sublimit for letters of credit), a $250 million Term Loan A and an $800 million Term Loan B. In connection with the additional $250 million Term Loan B borrowings, we paid $8.1 million for bank fees. This amount was capitalized and was being amortized into interest expense over the scheduled life of the loan.

In December 2010 we established a $100 million Accounts Receivable Securitization Facility with the Bank of Nova Scotia (the “funding entity”). The purchase and letter of credit commitments under the program were due to expire in December 2014. In March 2013, we decreased the facility to $75 million to reduce commitment fees on unused capacity. The maturity was also extended to March 2016. On December 18, 2014, we amended and increased the facility. The facility now reflects a seasonality clause that changes to $100 million from March through September, and $90 million from October through February. The maturity date has been extended from March 2016 to December 2017. Under this agreement AWI and Armstrong Hardwood Flooring Company (the Originators) sell their accounts receivables to Armstrong Receivables Company, LLC (“ARC”), a Delaware entity that is consolidated in these financial statements. ARC is a 100% wholly owned single member LLC special purpose entity created specifically for this transaction; therefore, any receivables sold to ARC are not available to the general creditors of AWI. ARC then sells an undivided interest in the purchased accounts receivables to the funding entity. This undivided interest acts as collateral for drawings on the facility. Any borrowings under this facility are obligations of ARC and not AWI. ARC contracts with and pays a servicing fee to AWI to manage, collect and service the purchased accounts receivables.

All new receivables under the program generated by the originators are continuously purchased by ARC with the proceeds from collections of receivables previously purchased. Ongoing changes in the amount of funding under the program, through changes in the amount of undivided interests sold by ARC, reflect seasonal variations in the level of accounts receivable, changes in collection trends and other factors such as changes in sales prices and volumes. ARC has issued subordinated notes payable to the originators for the difference between the face amount of uncollected accounts receivable purchased, less a discount, and cash paid to the originators that was funded by the sale of the undivided interests. The notes issued by ARC are subordinated to the undivided interests of the funding entity in the purchased receivables. The balance of the subordinated notes payable, which are eliminated during consolidation, totaled $103.1 million and $104.1 million as of December 31, 2014 and December 31, 2013, respectively. As of December 31, 2014 we had no borrowings under this facility but had $59.3 million of letters of credit issued under the facility, with an additional $0.2 million of international subsidiary letters of credit issued by other banks.

None of the remaining outstanding debt as of December 31, 2014 was secured with buildings and other assets. The credit lines at our foreign subsidiaries are subject to immaterial annual commitment fees.


Scheduled payments of long-term debt:
2015		$ 39.6
2016		52.1
2017		55.3
2018		402.9
2019		4.8
2020 and later		487.9

We utilize lines of credit and other commercial commitments in order to ensure that adequate funds are available to meet operating requirements. On December 31, 2014, we had a $250 million revolving credit facility with a $150 million sublimit for letters of credit, of which $7.8 million was outstanding. There were no borrowings under the revolving credit facility. Availability under this facility totaled $242.2 million as of December 31, 2014. We also have the $90 million securitization facility which as of December 31, 2014 had letters of credit outstanding of $59.3 million and no borrowings against it. Maximum capacity under this facility was $75.5 million (of which $16.2 million was available), subject to accounts receivable balances and other collateral adjustments, as of December 31, 2014. As of December 31, 2014, our foreign subsidiaries had available lines of credit totaling $5.0 million of which $0.3 million was available only for letters of credit and guarantees. There were $0.2 million of letters of credit and guarantees issued under these credit lines as of December 31, 2014, leaving an additional letter of credit availability of $0.1 million. There were no borrowings under these lines of credit as of December 31, 2014 leaving $4.8 million of unused lines of credit available for foreign borrowings. Letters of credit are issued to third party suppliers, insurance and financial institutions and typically can only be drawn upon in the event of AWI’s failure to pay its obligations to the beneficiary.