Discontinued Operations

3 Months Ended

Mar. 31, 2016

Discontinued Operations [Abstract]

Discontinued Operations

NOTE 3. DISCONTINUED OPERATIONS

European Resilient Flooring

On December 4, 2014, our Board of Directors approved the cessation of funding to our DLW subsidiary, which at that time was our European flooring business.  As a result, DLW management filed for insolvency in Germany on December 11, 2014. 

The DLW insolvency filing in December 2014 resulted in our disposal and presentation of DLW for all historical periods as a discontinued operation.  However, the insolvency filing did not meet the U.S. tax criteria to be considered disposed of until the first quarter of 2015.  In determining the U.S. tax impact of the disposition, the liabilities, including an unfunded pension liability of approximately $115 million, were considered proceeds.  However, pension deductions for tax purposes result only when the benefit payments are made.  Accordingly, a deferred tax asset and non-cash income tax benefit of $43.4 million were recorded in the first quarter of 2015 within discontinued operations for the tax benefit of the future pension deductions.

At deconsolidation, DLW had a net liability of $12.9 million, representing assets of $151.9 million and liabilities of $164.8 million, which were removed from our balance sheet.  This net liability was recognized as a contingent liability on our consolidated balance sheet pending the closure and results of the insolvency proceedings.  Any shortfall will be recognized immediately when identified and any excess will be reflected when insolvency proceedings are finalized, all through discontinued operations.  The amount of the net liability was $12.1 million as of March 31, 2016.

The following is a summary of the results related to the DLW business, (previously shown within the Resilient Flooring reporting segment), which are included in discontinued operations. 

	Three Months Ended
	March 31,
	2016	2015
(Loss) on disposal of discontinued business before income tax	($0.1)	($0.6)
Income tax benefit	1.8	43.4
Net gain on disposal of discontinued business	$1.7	$42.8

Separation and Distribution of AFI

Beginning in the second quarter of 2016, AFI’s historical financial results for periods prior to April 1, 2016 will be reflected in AWI’s Consolidated Financial Statements as a discontinued operation.  See Note 20 for additional details.