What changed in this filing

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Item 1. Financial Statements

2020-07-28 compared with 2020-04-27 · 319 added, 200 removed, 670 unchanged (44% of the section changed)

4 unchanged sentences

Three Months Ended

Six Months Ended

Cost of goods sold

Selling, general and administrative expenses

Gain on sale of fixed and intangible assets

Equity earnings from joint venture

1 unchanged sentence

Interest expense

Other non-operating expense (income), net

(Loss) earnings from continuing operations before income taxes

Income tax (benefit) expense

(Loss) earnings from continuing operations

Net earnings from discontinued operations, net of tax (benefit) of $- and ($ 0.1 )

(Loss) gain from disposal of discontinued businesses, net of tax (benefit) of ($ 1.4 ) and $-

Net (loss) gain from discontinued operations

Net (loss) earnings

Other comprehensive income, net of tax:

Other non-operating (income) expense, net

Earnings (loss) from continuing operations before income taxes

Income tax expense (benefit)

Earnings (loss) from continuing operations

Net (loss) from discontinued operations, net of tax expense of $ -,

$ 4.8 , $ - and $ 4.7

Earnings (loss) from disposal of discontinued businesses, net of tax

expense (benefit) of $ -, $ 0.1 , ($ 1.4 ) and $ 0.1

Net earnings (loss) from discontinued operations

Net earnings (loss)

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustments

1 unchanged sentence

Pension and postretirement adjustments

Total other comprehensive income

Total other comprehensive (loss) income

Total comprehensive income

(Loss) earnings per share of common stock, continuing operations:

(Loss) earnings per share of common stock, discontinued operations:

Net (loss) earnings per share of common stock:

Earnings (loss) per share of common stock, continuing operations:

Earnings (loss) per share of common stock, discontinued operations:

Net earnings (loss) per share of common stock:

Average number of common shares outstanding:

3 unchanged sentences

(amounts in millions, except share and per share data)

March 31, 2020

June 30, 2020

December 31, 2019

30 unchanged sentences

Common stock, $ 0.01 par value per share, 200 million shares authorized, 62,509,396

shares issued and 47,659,955 shares outstanding as of March 31, 2020 and

shares issued and 47,856,179 shares outstanding as of June 30, 2020 and

62,263,395 , shares issued and 47,992,348 shares outstanding as of December 31, 2019

1 unchanged sentence

Retained earnings

Treasury stock, at cost, 14,653,217 shares as of March 31, 2020 and 14,271,047

Treasury stock, at cost, 14,653,217 shares as of June 30, 2020 and 14,271,047

shares as of December 31, 2019

6 unchanged sentences

(amounts in millions, except share data)

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Treasury Stock

Comprehensive

March 31, 2020

Stock issuance, net

Cash dividends - $ 0.20 per common share

Share-based employee compensation

Other comprehensive (loss)

Acquisition of treasury stock

June 30, 2020

Six Months Ended June 30, 2020

Treasury Stock

Comprehensive

December 31, 2019

4 unchanged sentences

Acquisition of treasury stock

June 30, 2020

Three Months Ended June 30, 2019

Treasury Stock

Comprehensive

March 31, 2019

Three Months Ended March 31, 2019

Stock issuance, net

Cash dividends - $ 0.175 per common share

Share-based employee compensation

Other comprehensive (loss)

Acquisition of treasury stock

June 30, 2019

Six Months Ended June 30, 2019

Treasury Stock

7 unchanged sentences

Acquisition of treasury stock

March 31, 2019

June 30, 2019

See accompanying notes to Condensed Consolidated Financial Statements beginning on page 8.

2 unchanged sentences

(amounts in millions)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

2 unchanged sentences

Depreciation and amortization

Loss (gain) on disposal of discontinued operations

Loss on disposal of discontinued operations

Gain on sale of fixed and intangible assets

Deferred income taxes

11 unchanged sentences

Cash paid for acquisitions

Payments of proceeds from Knauf to investment in joint venture

Other investing activities

6 unchanged sentences

Dividend paid

Proceeds from share-based compensation plans, net of tax

Payments from share-based compensation plans, net of tax

Payment for treasury stock acquired

Other financing activities

Net cash provided by (used for) financing activities

Net cash (used for) financing activities

Effect of exchange rate changes on cash and cash equivalents

20 unchanged sentences

In the opinion of management, all adjustments of a normal recurring nature have been included to provide a fair statement of the results for the reporting periods presented.

Operating results for the first quarter of 2020 and 2019 included in this report are unaudited.

Operating results for the second quarter and first six months of 2020 and 2019 included in this report are unaudited.

Quarterly results are not necessarily indicative of annual earnings, primarily due to the different level of sales in each quarter of the year and the possibility of changes in general economic conditions.

19 unchanged sentences

The purchase price of $ 330.0 million was previously paid by Knauf to us during 2018 and was subject to certain post-closing adjustments for cash and debt as provided in the Purchase Agreement dated as of November 17, 2017, by and between us and Knauf (the “Purchase Agreement”), including adjustments based on the economic impact of any required regulatory remedies and a working capital adjustment.

We have recorded a $ 25.9 million payable to WAVE for their remaining portion of the proceeds from Knauf and a $ 6.2 million payable to Knauf for estimated working capital and other adjustments, both of which are reflected within Accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets as of March 31, 2020.

The transaction and final gain or loss amounts are subject to finalization of customary working capital and other adjustments, as provided in the Purchase Agreement, which we expect to be completed in the second quarter of 2020.

During the second quarter of 2020, we remitted $ 20.0 million to WAVE for a portion of their remaining proceeds from Knauf.

As of June 30 2020, we have recorded a $ 5.9 million payable to WAVE for their remaining portion of the proceeds from Knauf and a $ 6.2 million payable to Knauf for estimated working capital and other adjustments, both of which are reflected within Accounts payable and accrued expenses in the Condensed Consolidated Balance Sheets as of June 30, 2020.

The final loss amounts are subject to finalization of customary working capital and other adjustments, as provided in the Purchase Agreement.

We are currently in negotiations with Knauf related to the valuation of certain liabilities included in the Sale totaling $ 11 million, which we expect to be finalized in 2020.

We have no t accrued a liability for this matter as of June 30, 2020.

In 2019, we entered into a Transition Services Agreement with Knauf for its benefit and the benefit of the buyer of the divestment business, pursuant to which we are providing certain transition technology, finance and information technology support services through September 30, 2020.

In connection with the closing of the Sale, we also entered into (i) a royalty-free intellectual property License Agreement with Knauf under which they license patents, trademarks and know-how from us for use in licensed territories in which the business was conducted prior to the Sale, and (ii) a Supply Agreement with Knauf under which the parties may continue to purchase certain products from each other following the closing of the Sale.

WAVE also entered into similar agreements with Knauf for such purposes.

The term of the granted licenses, with respect to each intellectual property right, extend until the expiration or abandonment of each such intellectual property right.

Armstrong World Industries, Inc., and Subsidiaries

1 unchanged sentence

(dollar amounts in millions, except share data)

The EMEA and Pacific Rim segment historical financial results for the three months ended March 31, 2019 have been reflected in AWI’s Condensed Consolidated Statements of Operations and Comprehensive Income as discontinued operations , while the assets and liabilities of discontinued operations were removed from AWI’s Condensed Consolidated Balance Sheet as of September 30 , 2019 .

Revision of Previously Issued Financial Statements

During 2019, we revised the Condensed Consolidated Financial Statements and related notes included herein to correct an immaterial error related to the previously reported estimated loss on sale of our EMEA and Pacific Rim businesses.

The immaterial correction increased the estimated loss on sale and reduced the assets held for sale by $ 35.2 million as of December 31, 2017.

For the periods presented, the impacts of this error correction are as follows:

Shareholders’ Equity

Retained Earnings

Total Shareholders' Equity

December 31, 2018

March 31, 2019

purchase certain products from each other following the closing of the Sale.

WAVE also entered into similar agreements with Knauf for such purposes.

The term of the granted licenses, with respect to each intellectual property right, extend until the expiration or abandonment of each such intellectual property right.

The EMEA and Pacific Rim segment historical financial results for the three and six months ended June 30, 2019 have been reflected in AWI’s Condensed Consolidated Statements of Operations and Comprehensive Income as discontinued operations, while the assets and liabilities of discontinued operations were removed from AWI’s Condensed Consolidated Balance Sheet as of September 30, 2019.

Recently Adopted Accounting Standards

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Our adoption of this standard h ad no material impact on our financial condition, results of operations or cash flows.

In March 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate (LIBOR) and other interbank offered rates.

This guidance is effective through December 31, 2022.

Effective the second quarter of 2020 we adopted this standard, which had no impact on our financial condition, results of operations and cash flows.

Recently Issued Accounting Standards

5 unchanged sentences

We are evaluating the impact the adoption of this standard will have on our disclosures.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes,” which removes exceptions to the general principles in ASC Topic 740 – Income Taxes for allocating tax expense between financial statement components, accounting basis differences resulting from an ownership change in foreign investments and interim period income tax accounting for year-to-date

Armstrong World Industries, Inc., and Subsidiaries

1 unchanged sentence

(dollar amounts in millions, except share data)

losses that exceed projected losses.

This guidance is effective for fiscal years beginning after December 15, 2020.

We are evaluating the impact the adoption of this standard will have on our financial condition and results of operations.

In March 2020, the FASB issued ASU 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate (LIBOR) and other interbank offered rates.

This guidance is effective beginning on March 12, 2020 through December 31, 2022.

We are evaluating the impact the adoption of this standard will have on our financial condition, results of operations and cash flows.

COVID-19 Considerations

The recent COVID-19 outbreak has created significant volatility and economic disruption and the impact on our future consolidated results of operations is uncertain .

The COVID-19 outbreak has created significant volatility and economic disruption and the impact on our future consolidated results of operations is uncertain .

The extent to which COVID-19 impacts our employees, operations, customers, suppliers and financial results depends on numerous evolving factors that we are not be able to accurately predict, including:

5 unchanged sentences

and the ability of our customers to pay for our products.

While many of our products support life sustaining activities and essential construction, we, and certain of our customers or suppliers, may be impacted by state actions, orders and policies regarding the recent COVID-19 pandemic, including temporary closures of non-life sustaining businesses, shelter-in-place orders, and travel, social distancing and quarantine policies, the implementation and enforcement of which vary from state to state.

We did not record any asset impairments, inventory charges or bad debt reserves related to COVID-19 during the first quarter of 2020 but future events may require such charges, which could have a material adverse effect on our financial condition, liquidity or results of operations.

While many of our products support life sustaining activities and essential construction, we, and certain of our customers or suppliers, may be impacted by state actions, orders and policies regarding the COVID-19 pandemic, including temporary closures of non-life sustaining businesses, shelter-in-place orders, and travel, social distancing and quarantine policies, the implementation and enforcement of which vary by individual U.S.

states and by individual countries in the Americas.

We did not record any asset impairments, inventory charges or bad debt reserves related to COVID-19 during the second quarter and first six months of 2020 but future events may require such charges, which could have a material adverse effect on our financial condition, liquidity or results of operations.

Subsequent Event

On July 27, 2020, we completed the acquisition of all the issued and outstanding capital stock of TURF Design Inc.

(“Turf”), with its manufacturing facility in Elgin, Illinois and its design center in Chicago, Illinois, for total cash consideration of $ 70.0 million, together with contingent consideration payable upon achievement of certain future performance objectives through 2022.

The contingent consideration includes up to $ 24.0 million in additional cash consideration for performance at certain revenue and earnings before interest, taxes, depreciation and amortization (“EBITDA”) growth targets.

Full payout for target performance requires compounded annual growth rates in excess of 23 % through 2022.

The contingent consideration also includes up to $ 24.0 million in additional cash consideration for over-achievement performance against revenue and EBITDA growth targets.

Full payout for over-achievement performance requires compounded annual growth rates in excess of 38 % through 2022.

Turf is a designer and manufacturer of acoustic felt ceilings and wall products primarily used in commercial building applications with 2019 revenues in excess of $ 20.0 million.

SEGMENT RESULTS

Three Months Ended

Six Months Ended

Mineral Fiber

2 unchanged sentences

Three Months Ended

Six Months Ended

Segment operating income (loss)

3 unchanged sentences

Total consolidated operating income

Three Months Ended

Total consolidated operating income

Interest expense

Other non-operating expense (income), net

(Loss) earnings from continuing operations before income taxes

Armstrong World Industries, Inc., and Subsidiaries

1 unchanged sentence

(dollar amounts in millions, except share data)

March 31, 2020

Three Months Ended

Six Months Ended

Total consolidated operating income

Interest expense

Other non-operating (income) expense, net

Earnings (loss) from continuing operations before income taxes

June 30, 2020

December 31, 2019

4 unchanged sentences

Total consolidated assets

During the second quarter of 2020, we sold our idled mineral fiber plant in China, which was recorded as a component of our Unallocated Corporate segment.

We recorded a gain of $ 14.1 million on the sale and a receivable of $ 20.8 million for the proceeds as of June 30, 2020.

Revenue Recognition

27 unchanged sentences

Disaggregation of Revenues

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

Our Mineral Fiber and Architectural Specialties operating segments both manufacture and sell ceiling and wall systems (primarily mineral fiber, fiberglass wool, metal, wood, wood fiber, glass-reinforced-gypsum and felt) throughout the Americas.

6 unchanged sentences

This category includes sales primarily to U.S.

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

Direct customers – represents net sales to contractors, subcontractors, and large architect and design firms.

2 unchanged sentences

Geographically, this category includes sales throughout the U.S.

The following tables provide net sales by major customer group within the Mineral Fiber and Architectural Specialties segments for the three months ended March 31, 2020 and 2019:

The following tables provide net sales by major customer group within our Mineral Fiber and Architectural Specialties segments for the three and six months ended June 30, 2020 and 2019:

Three Months Ended

Six Months Ended

Mineral Fiber

2 unchanged sentences

Three Months Ended

Six Months Ended

Architectural Specialties

5 unchanged sentences

All of the acquired goodwill is deductible for tax purposes .

These amounts are subject to adjustment in connection with our ongoing purchase accounting analysis .

On March 4, 2019, we acquired the business and assets of ACGI.

1 unchanged sentence

The total fair value of tangible assets acquired, less liabilities assumed, was $ 7.3 million.

The total fair value of identifiable intangible assets acquired was $ 12.0 million, mostly comprised of amortizable customer relationships of $ 7.4 million and amortizable tradenames of $ 2.8 million, resulting in $ 23.6 million of goodwill.

The total fair value of identifiable intangible

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

assets acquired was $ 12.0 million, mostly comprised of amortizable customer relationships of $ 7.4 million and amortizable tradenames of $ 2.8 million, resulting in $ 23.6 million of goodwill.

All of the acquired goodwill is deductible for tax purposes .

The 2019 acquisitions, both individually and in the aggregate, did not have a material impact on reported net sales or operating income for the three months ended March 31, 2020 and 2019.

The ACGI and MRK acquisitions, both individually and in the aggregate, did not have a material impact on reported net sales or operating income for the three and six months ended June 30, 2020 and 2019.

DISCONTINUED OPERATIONS

2 unchanged sentences

The Sale was completed on September 30, 2019.

Prior to completion of the Sale, each quarter, we compared the anticipated sales proceeds

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

from Knauf to the carrying value of EMEA and Pacific Rim net assets.

We record ed an estimated lo ss when the carrying value exceeded the anticipated sales proceeds.

Prior to completion of the Sale, each quarter, we compared the anticipated sales proceeds from Knauf to the carrying value of EMEA and Pacific Rim net assets.

We recorded an estimated loss when the carrying value exceeded the anticipated sales proceeds.

Net gains were only recorded to the extent of previous estimated losses.

During the three months ended March 31, 2019, we recorded a net gain of $ 2.2 million, which included $ 9.1 million of favorable Accumulated Other Comprehensive Income (“AOCI”) adjustments, primarily to accumulated foreign currency translation amounts.

During the three months ended March 31, 2020, we recorded a net loss of $ 5.0 million representing preliminary working capital and other adjustments.

The transaction and final gain or loss amount are subject to finalization of customary working capital and other adjustments, as provided in the Purchase Agreement, which we expect to be completed in the second quarter of 2020.

During the three and six months ended June 30, 2019, we recorded a loss on sale of $ 6.8 million and $ 4.6 million, respectively.

We did not record a gain or loss during the three months ended June 30, 2020.

During the six months ended June 30, 2020, we recorded a loss of $ 5.0 million, representing preliminary working capital and other adjustments.

The final loss amounts are subject to finalization of customary working capital and other adjustments, as provided in the Purchase Agreement.

See Note 1 for further discussion of the Sale.

FLOORING BUSINESSES

Separation and Distribution of AFI

On April 1, 2016, we completed our separation of Armstrong Flooring, Inc.

(“AFI”) by allocating the assets and liabilities related primarily to our Resilient and Wood Flooring segments to AFI and then distributing the common stock of AFI to our shareholders at a ratio of one share of AFI common stock for every two shares of AWI common stock.

European Resilient Flooring

During the three and six months ended June 30, 2020, we recorded a gain of $ 0.8 million related to AOCI adjustments from a previously discontinued foreign flooring entity, which was dissolved in the second quarter of 2020.

The AOCI adjustments related to accumulated foreign currency translation amounts.

Summarized Financial Information of Discontinued Operations

The following tables detail the businesses and line items that comprise discontinued operations on the Condensed Consolidated Statements of Operations and Comprehensive Income.

Three Months Ended

Three Months Ended June 30, 2020

Gain from disposal of discontinued businesses, before income tax

Income tax (benefit) expense

Gain from disposal of discontinued businesses, net of tax

Net earnings from discontinued operations

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

EMEA and Pacific Rim Businesses

Cost of goods sold

Selling, general and administrative expenses

Operating income

Earnings from discontinued operations before income tax

Income tax (benefit)

Net earnings from discontinued operations, net of tax

Six Months Ended June 30, 2020

(Loss) gain from disposal of discontinued businesses, before income tax

2 unchanged sentences

Net (loss) earnings from discontinued operations

EMEA and Pacific Rim Businesses

Three Months Ended June 30, 2019

Cost of goods sold

Selling, general and administrative expenses

Operating income

Other non-operating expense, net

Earnings from discontinued operations before income tax

Income tax expense

Net (loss) from discontinued operations, net of tax

(Loss) from disposal of discontinued businesses, before income tax

Income tax expense

(Loss) from disposal of discontinued business, net of tax

Net (loss) from discontinued operations

EMEA and Pacific Rim Businesses

Six Months Ended June 30, 2019

Cost of goods sold

Selling, general and administrative expenses

Operating income

Other non-operating expense, net

Earnings from discontinued operations before income tax

Income tax expense

Net (loss) from discontinued operations, net of tax

(Loss) from disposal of discontinued businesses, before income tax

Income tax expense

(Loss) from disposal of discontinued businesses, net of tax

Net (loss) from discontinued operations

Armstrong World Industries, Inc., and Subsidiaries

1 unchanged sentence

(dollar amounts in millions, except share data)

The following is a summary of total estimated gains and losses, capital expenditures and operating lease information related to our former EMEA and Pacific Rim businesses which are presented as discontinued operations and included as components of operating and investing cash flows on our Condensed Consolidated Statements of Cash Flows.

Three Months Ended

The following is a summary of total estimated gains and losses, capital expenditures and operating lease information related to our former EMEA and Pacific Rim businesses, and gains on the dissolution of our previously discontinued flooring entity, which are presented as discontinued operations and included as components of operating and investing cash flows on our Condensed Consolidated Statements of Cash Flows.

Six Months Ended

Loss on sale to Knauf (1)

Estimated loss on sale to Knauf (2)

Reversal of previous estimated loss on sale to Knauf (2)

Gain on dissolution of flooring entity (3)

Purchases of property, plant and equipment

1 unchanged sentence

Right-of-use assets obtained in exchange for lease obligations (5)

Represents preliminary working capital and other adjustments.

Represents working capital and other adjustments.

Represents comparison of the EMEA and Pacific Rim net assets to the expected final sales proceeds.

The amount of cash paid for amounts included in the measurement of lease liabilities was not materially different from the operating lease cost for the three months ended March 31, 2019.

Represents AOCI adjustments related to accumulated foreign currency translation amounts.

The amount of cash paid for amounts included in the measurement of lease liabilities was not materially different from the operating lease cost for the six months ended June 30, 2019.

Represents initial right-of-use assets recognized upon adoption on January 1, 2019.

We did no t obtain any new right-of-use assets in exchange for lease obligations during the three months ended March 31, 2019.

We did no t obtain any new right-of-use assets in exchange for lease obligations during the six months ended June 30, 2019.

ACCOUNTS AND NOTES RECEIVABLE

March 31, 2020

June 30, 2020

December 31, 2019

5 unchanged sentences

We consider these factors and the financial condition of each customer when establishing our allowance for losses from doubtful accounts.

March 31, 2020

As of June 30, 2020, miscellaneous receivables includes a $ 20.8 million receivable related to the sale of our idled plant in China in the second quarter of 2020.

See Note 2 for further information.

June 30, 2020

December 31, 2019

5 unchanged sentences

OTHER CURRENT ASSETS

March 31, 2020

June 30, 2020

December 31, 2019

2 unchanged sentences

Total other current assets

As of March 31, 2020 and December 31, 2019, assets held for sale include the assets of our idled mineral fiber plant in China, as we entered into a sale agreement during the third quarter of 2019 with closing expected during 2020.

As of December 31, 2019, assets held for sale included the assets of our idled plant in China, which was sold during the second quarter of 2020.

See Note 2 for further information.

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

EQUITY INVESTMENT

2 unchanged sentences

The European and Pacific Rim businesses of WAVE were included in the Sale to Knauf on September 30, 2019.

Accordingly, beginning in 2017, WAVE’s European and Pacific Rim historical financial statement results have been reflected in WAVE’s consolidated financial statements as a

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

discontinued operation for all periods presented.

Accordingly, beginning in 2017, WAVE’s European and Pacific Rim historical financial statement results have been reflected in WAVE’s consolidated financial statements as a discontinued operation for all periods presented.

Condensed financial statement data for WAVE is summarized below on a continuing operations basis.

Three Months Ended

Six Months Ended

We enter into operating leases for certain manufacturing plants, warehouses, equipment and automobiles.

7 unchanged sentences

We recognize lease expense for these leases on a straight-line basis over the lease term.

Short-term lease expense was not material for the three months ended March 31, 2020 and 2019.

Short-term lease expense was not material for the three and six months ended June 30, 2020 and 2019.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate (“IBR”) based on information that is available at the lease commencement date to compute the present value of lease payments.

1 unchanged sentence

We used the IBR on January 1, 2019 for operating leases that commenced prior to that date.

As of March 31, 2020, we do no t have any finance leases and we have no additional operating leases that have not yet commenced .

As of June 30, 2020, we did no t have any finance leases or any operating leases that had not yet commenced.

The following tables present our operating lease cost and supplemental cash flow information related to our operating leases:

Three Months Ended

Six Months Ended

Operating lease cost

Six Months Ended

ROU assets obtained in exchange for lease obligations

Includes initial ROU assets of $ 29.2 million recognized upon adoption on January 1, 2019.

The amount of cash paid for amounts included in the measurement of lease liabilities was not materially different from our operating lease cost for the three months ended March 31, 2020 and 2019.

The amount of cash paid for amounts included in the measurement of lease liabilities was not materially different from our operating lease cost for the six months ended June 30, 2020 and 2019.

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

The following table presents supplemental balance sheet information related to our operating leases:

Balance Sheet Classification

March 31, 2020

June 30, 2020

December 31, 2019

Other non-current assets

Current lease liabilities

Current portion of lease liabilities

Accounts payable and accrued expenses

2 unchanged sentences

The following table presents the weighted average assumptions used to compute our ROU assets and lease liabilities:

March 31, 2020

June 30, 2020

December 31, 2019

1 unchanged sentence

Weighted average discount rate

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

Undiscounted future minimum lease payments as of March 31, 2020, by year and in the aggregate, having non-cancelable lease terms in excess of one year are as follows:

Undiscounted future minimum lease payments as of June 30, 2020, by year and in the aggregate, having non-cancelable lease terms in excess of one year are as follows:

Maturities of

3 unchanged sentences

Present value of lease liabilities

Scheduled maturities of lease liabilities represent the time period of April 1, 2020 to December 31, 2020.

Scheduled maturities of lease liabilities represent the time period of July 1, 2020 to December 31, 2020.

GOODWILL AND INTANGIBLE ASSETS

The following table details amounts related to our goodwill and intangible assets as of March 31, 2020 and December 31, 2019.

March 31, 2020

The following table details amounts related to our goodwill and intangible assets as of June 30, 2020 and December 31, 2019.

June 30, 2020

December 31, 2019

8 unchanged sentences

Total intangible assets

Three Months Ended

Six Months Ended

Amortization expense

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

OTHER NON-CURRENT ASSETS

March 31, 2020

June 30, 2020

December 31, 2019

Cash surrender value of Company owned life insurance policies

Operating lease ROU assets

Fair value of derivative assets

Total other non-current assets

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

March 31, 2020

June 30, 2020

December 31, 2019

8 unchanged sentences

Three Months Ended

(Loss) earnings from continuing operations before income taxes

Income tax (benefit) expense

Six Months Ended

Earnings (loss) from continuing operations before income taxes

Income tax expense (benefit)

Effective tax rate

Excluding the impact of the pension settlement, the effective tax rate for the first quarter of 2020 was lower compared to the same period in 2019 primarily due to unfavorable deferred tax adjustments recognized in the first quarter of 2019 related to share-based compensation.

The effective tax rate in the second quarter of 2020 was lower as compared to the same period in 2019, largely driven by the favorable tax impact of the gain on sale of our idled mineral fiber plant in China in the second quarter of 2020.

The effective tax rate for the first six months of 2020 was higher than the effective tax rate for the same period in 2019 primarily due to the tax effects of our first quarter of 2020 pension settlement, partially offset by the tax benefit from the second quarter of 2020 gain on sale of our idled mineral fiber plant in China.

See Note 16 for additional details related to our pension settlement.

In the first and second quarters of 2020, the U.S.

Department of Treasury deferred the due date for the first two estimated federal income tax payments to July 15, 2020 as part of its response to COVID-19.

As a result, no U.S.

federal income tax payments have been made for the six months ended June 30, 2020.

It is reasonably possible that the amount of unrecognized tax benefits could significantly increase or decrease within the next twelve months.

1 unchanged sentence

Changes to unrecognized tax benefits could result from the completion of ongoing examinations, the expiration of statutes of limitations or other unforeseen circumstances.

As of March 31, 2020 and December 31, 2019, our long-term debt included borrowings outstanding under our $ 1,000.0 million variable rate senior credit facility, which is composed of a $ 500.0 million revolving credit facility (with a $ 150.0 million sublimit for letters of credit) and a $ 500.0 million Term Loan A.

As of March 31, 2020 and December 31, 2019, borrowings outstanding under our revolving credit facility were $ 195.0 million and $ 115.0 million, respectively.

Our Term Loan A was fully drawn as of March 31, 2020 and December 31, 2019.

As of June 30, 2020 and December 31, 2019, our long-term debt included borrowings outstanding under our $ 1,000.0 million variable rate senior credit facility, which is composed of a $ 500.0 million revolving credit facility (with a $ 150.0 million sublimit for letters of credit) and a $ 500.0 million Term Loan A.

As of June 30, 2020 and December 31, 2019, borrowings outstanding under our revolving credit facility were $ 130.0 million and $ 115.0 million, respectively.

Our Term Loan A was fully drawn as of June 30, 2020 and December 31, 2019.

We also have a $ 25.0 million letter of credit facility, also known as our bi-lateral facility.

In March 2020, we amended and decreased our $ 36.2 million Accounts Receivable Securitization Facility with the Bank of Nova Scotia (the “funding entity”) to $ 30.0 million and we extended the maturity to September 2020 .

Borrowings under this amended facility bear interest at a monthly commercial paper rate.

Under this facility, we sell 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.

therefore, any receivables sold to ARC are not available

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

to the general creditors of AWI.

ARC can use this facility to borrow cash or issue letters of credit.

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All new receivables under the program are continuously purchased by ARC with the proceeds from collections of receivables previously purchased.

As of March 31, 2020, total borrowings outstanding under this facility were $ 30.0 million, which were classified as Short-term debt in the Condensed Consolidated Balance Sheets, and no letters of credit were issued under this facility.

As of June 30 , 2020, total borrowings outstanding under this facility were $ 30.0 million , which were classified as S hort-term debt in the Condensed Consolidated Balance Sheets, and no letters of credit were issued under this facility .

There were no borrowings outstanding under this facility as of December 31, 2019 .

The weighted-average interest rate on this short-term debt was 1.69 % during the first quarter of 2020.

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

We utilize lines of credit and other commercial commitments in order to ensure that adequate funds are available to meet operating requirements.

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The following table presents details related to our letters of credit facilities:

March 31, 2020

June 30, 2020

Financing Arrangements

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Three Months Ended

Six Months Ended

defined benefit plans:

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This plan is reported as a component of our Unallocated Corporate segment.

Net periodic pension cost for this plan was immaterial for the three months ended March 31, 2020 and 2019.

The service cost component of net benefit cost has been presented in the Condensed Consolidated Statements of Operations and Comprehensive Income within cost of goods sold and SG&A expenses for all periods presented, which are the same line items as other compensation costs arising from services rendered by the pertinent employees during the period.

Net periodic pension cost for this plan was immaterial for the three and six months ended June 30, 2020 and 2019.

The service cost component of net benefit cost has been presented in the Condensed Consolidated Statements of Operations and Comprehensive Income within cost of goods sold and selling, general and administrative (“SG&A”) expenses for all periods presented, which are the same line items as other compensation costs arising from services rendered by the pertinent employees during the period.

The other components of net benefit cost are presented in the Condensed Consolidated Statements of Operations and Comprehensive Income separately from the service cost component within other non-operating expense (income), net.

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Retirement Income Plan (“RIP”) to AAIA and AANY.

Under the agreements, we effectively settled $ 1,045.3 million of retiree defined benefit pension obligations related to approximately 10,300 retirees and beneficiaries (the “Transferred Participants”), which were irrevocably transferred to AAIA and AANY and which guarantees the pension benefits of the Transferred Participants.

Under the agreements, we effectively settled $ 1,045.3 million of retiree defined benefit pension

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

obligations related to approximately 10,300 retirees and beneficiaries (the “ Transferred Participants”) , which were irrevocably transferred to AAIA and AANY and which guarantee s the pension benefits of the Transferred Participants .

As a result of the transaction, we recorded a $ 374.4 million settlement loss in the first quarter of 2020, which was reflected as a component of other non-operating expense.

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The expected long-term return on plan assets remained at 5.25 % and did not change as a result of the settlement.

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

FINANCIAL INSTRUMENTS

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The estimated fair values of our financial instruments are as follows:

March 31, 2020

June 30, 2020

December 31, 2019

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This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The fair value measurement of interest rate swap contracts measured at fair value on a recurring basis and reported on the Condensed Consolidated Balance Sheets were valued using Level 2 (other observable) inputs as of March 31, 2020 and December 31, 2019.

We did not have any financial assets or liabilities that are valued using Level 1 (quoted, active market) or Level 3 (unobservable) inputs as of March 31, 2020 and December 31, 2019.

We did not have any financial assets or liabilities that are valued using Level 1 (quoted, active market) or Level 3 (unobservable) inputs as of June 30, 2020 and December 31, 2019.

DERIVATIVE FINANCIAL INSTRUMENTS

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We use derivative financial instruments as risk management tools and not for speculative trading purposes.

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

Counterparty Risk

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Exposure to individual counterparties is controlled and we consider the risk of counterparty default to be negligible.

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

Commodity Price Risk

We purchase natural gas and other various commodities for use in the manufacturing process.

Although we are exposed to fluctuations in commodity pricing, we currently have no outstanding commodity derivative hedge positions.

Although we are exposed to fluctuations in commodity pricing, we currently have no outstanding positions and do not expect to enter into any commodity derivative products.

Currency Rate Risk – Sales and Purchases

As of March 31, 2020, our only major foreign currency exposure is to the Canadian dollar.

As of June 30, 2020, our only major foreign currency exposure is to the Canadian dollar.

We currently have no outstanding positions and do not expect to enter into any foreign exchange derivative products.

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These swaps are designated as cash flow hedges against changes in LIBOR for a portion of our variable rate debt.

The following table summarizes our interest rate swaps as of March 31, 2020:

The following table summarizes our interest rate swaps as of June 30, 2020:

Coverage Period

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These are inclusive of a 0 % floor.

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

Financial Statement Impacts

The following tables detail amounts related to our derivatives as of March 31, 2020 and December 31, 2019.

We did no t have any derivative assets or liabilities not designated as hedging instruments as of March 31, 2020 or December 31, 2019.

The following tables detail amounts related to our derivatives as of June 30, 2020 and December 31, 2019.

We did no t have any derivative assets or liabilities not designated as hedging instruments as of June 30, 2020 or December 31, 2019.

The derivative asset and liability amounts below are shown in gross amounts and we have not netted assets with liabilities.

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Other long-term liabilities

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

Amount of (Loss)

Recognized in AOCI

Location of (Loss)

Location of Gain (Loss)

Reclassified from

AOCI into Net (Loss)

AOCI into Net Earnings (Loss)

Gain (Loss) Reclassified

from AOCI into Net (Loss)

Three Months Ended

from AOCI into Net Earnings (Loss)

Six Months Ended

Three Months Ended

Six Months Ended

Derivatives in cash flow hedging relationships

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Interest expense

As of March 31, 2020, the amount of existing losses in AOCI expected to be recognized in earnings over the next twelve months was $ 6.8 million.

Total gain (loss)

As of June 30, 2020, the amount of existing losses in AOCI expected to be recognized in earnings over the next twelve months was $ 9.3 million.

OTHER LONG-TERM LIABILITIES

March 31, 2020

June 30, 2020

December 31, 2019

Operating lease liabilities

Lease liabilities

Long-term deferred compensation arrangements

Environmental liabilities

Fair value of derivative liabilities

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On July 31, 2018, we announced that our Board of Directors had approved an additional $ 300.0 million authorization to repurchase shares, increasing the total authorized amount under the Program to $ 700.0 million, excluding commissions.

Repurchases under the Program may be made through open market, block and privately-negotiated transactions, including Rule 10b5-1 plans, at such times and in such amounts as management deems appropriate, subject to market and business conditions, regulatory requirements and other factors.

The Program does not obligate AWI to repurchase any particular amount of common stock and may be suspended or discontinued at any time without notice.

During the three months ended March 31, 2020, we repurchased 0.4 million shares under the Program for a total cost of $ 34.4 million, excluding commissions, or an average price of $ 89.99 per share.

Since inception, through March 31, 2020, we have repurchased 9.6 million shares under the Program for a total cost of $ 596.2 million, excluding commissions, or an average price of $ 62.13 per share.

During March 2020, we temporarily suspended our share repurchase program.

In February 2020, our Board of Directors declared a $ 0.20 per share quarterly dividend to be paid in March 2020 .

On April 22, 2020, our Board of Directors declared a $ 0.20 per share quarterly dividend to be paid in May 2020 .

On July 28, 2020, we announced that our Board of Directors had approved an additional $ 500.0 million authorization to repurchase shares, increasing the total authorized amount under the Program to $ 1.2 billion, excluding commissions, and extending the currently suspended Program through December 31, 2023.

Armstrong World Industries, Inc., and Subsidiaries

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(dollar amounts in millions, except share data)

requirements and other factors.

The Program does not obligate AWI to repurchase any particular amount of common stock and may be suspended or discontinued at any time without notice.

During the six months ended June 30, 2020, we repurchased 0.4 million shares under the Program for a total cost of $ 34.4 million, excluding commissions, or an average price of $ 89.99 per share.

Since inception, through June 30, 2020, we have repurchased 9.6 million shares under the Program for a total cost of $ 596.2 million, excluding commissions, or an average price of $ 62.13 per share.

In February and April 2020, our Board of Directors declared $ 0.20 per share quarterly dividends, which were paid to shareholders in March and May 2020 , respectively.

On July 22, 2020, our Board of Directors declared a $ 0.20 per share quarterly dividend to be paid in August 2020 .

Accumulated Other Comprehensive (Loss)

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Comprehensive

Balance, March 31, 2020

Other comprehensive income (loss) before reclassifications,

net of tax benefit (expense) of $ -, $ 0.4 , $ - and $ 0.4

Amounts reclassified from accumulated other

comprehensive (loss)

Net current period other comprehensive income (loss)

Balance, June 30, 2020

Translation Adjustments

Pension and Postretirement Adjustments (1)

Comprehensive

Balance, December 31, 2019

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comprehensive (loss)

Net current period other comprehensive (loss) income

Net current period other comprehensive income (loss)

Balance, June 30, 2020

Translation Adjustments

Gain (Loss) (1)

Pension and Postretirement Adjustments (1)

Comprehensive

Balance, March 31, 2019

Other comprehensive (loss) before reclassifications,

net of tax benefit (expense) of $ -, $ 2.9 , ($ 0.8 ) and $ 2.1

Amounts reclassified from accumulated other

comprehensive (loss)

Net current period other comprehensive income (loss)

Balance, June 30, 2019

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

Translation Adjustments

Gain (Loss) (1)

Pension and Postretirement Adjustments (1)

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Net current period other comprehensive income (loss)

Balance, March 31, 2019

Balance, June 30, 2019

Amounts are net of tax.

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and Comprehensive

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Derivative Adjustments:

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Prior service credit amortization

Other non-operating expense (income), net

Amortization of net actuarial loss

Other non-operating expense (income), net

Total income, before tax

Other non-operating (income) expense, net

Amortization of net actuarial (gain) loss

Other non-operating (income) expense, net

Total (income) loss, before tax

Income tax expense

Total income, net of tax

Total income (loss), net of tax

Total reclassifications for the period

Includes activity from discontinued operations.

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

LITIGATION AND RELATED MATTERS

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While these expenditures are not typically material, the applicable regulatory requirements continually change and, as a result, we cannot predict with certainty the amount, nature or timing of future expenditures associated with environmental compliance.

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

Environmental Sites

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Between 2017 and 2019, we entered settlement agreements totaling $ 39.8 million with certain legacy insurance carriers to resolve ongoing litigation and recover fees and costs previously incurred by us in connection with certain environmental sites.

These settlements were recorded as a $ 9.2 million reduction to cost of goods sold and a $ 30.6 million reduction to selling, general, and administrative (“SG&A”) expenses reflecting the same income statement categories where environmental expenditures were historically recorded.

In 2020, we entered into one new settlement agreement totaling $ 0.1 million.

This settlement was recorded as a reduction to SG&A expenses.

These settlements were recorded as a $ 9.2 million reduction to cost of goods sold and a $ 30.6 million reduction to SG&A expenses reflecting the same income statement categories where environmental expenditures were historically recorded.

In the first six months of 2020, we entered into two new settlement agreements totaling $ 0.2 million.

These settlements were recorded as a reduction to SG&A expenses.

We anticipate that we may enter into additional settlement agreements in the future, which may or may not be material, with other legacy insurers to obtain reimbursement or contribution for environmental site expenses.

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Through voluntary mediation in November 2017 with ODEQ, OC and Kaiser, we reached settlement with ODEQ documented in a Public Notice and proposed consent judgment (“Consent Judgment”);

in exchange for a release from ODEQ for all contamination

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

claims against us, we would pay $ 8.6 million to the State of Oregon and perform a previously scoped remedial action for the upland area.

in exchange for a release from ODEQ for all contamination claims against us, we would pay $ 8.6 million to the State of Oregon and perform a previously scoped remedial action for the upland area.

We submitted the settlement payment to ODEQ and completed the remedial action for the upland area in 2019.

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As a result of the settlements with ODEQ and Kaiser, and these actions by ODEQ, we do not expect to incur any future material costs relating to this matter.

Environmental Protection Agency (the “EPA”) has listed two landfills located on a portion of our facility in Macon, GA, along with the former Macon Naval Ordnance Plant landfill adjacent to our property, portions of Rocky Creek, and certain tributaries leading to Rocky Creek (collectively, the “Macon Site”) as a Superfund site on the National Priorities List due to the presence of contaminants, most notably polychlorinated biphenyls (“PCBs”).

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

leading to Rocky Creek (collectively, the “Macon Site”) as a Superfund site on the National Priorities List due to the presence of contaminants, most notably polychlorinated biphenyls (“ PCBs”).

In September 2010, we entered into an Administrative Order on Consent for a Removal Action (the “Removal Action”) with the EPA to investigate PCB contamination in one of the landfills on our property, the Wastewater Treatment Plant Landfill (the “WWTP Landfill,” also known as “Operable Unit 1”).

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On September 25, 2018, AWI and CBS received a Special Notice Letter from the EPA under CERCLA inviting AWI and CBS to enter into the negotiation of a settlement agreement to conduct or finance the response action at the site.

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

third quarter of 2018, we increased our reserve for the cost of the interim cleanup, which we expect to be shared with CBS and the Navy.

During the third quarter of 2018, we increased our reserve for the cost of the interim cleanup, which we expect to be shared with CBS and the Navy.

In response to the September 2018 Special Notice Letter, AWI and CBS submitted a good faith offer to EPA on May 28, 2019.

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Summary of Financial Position

Total liabilities of $ 1.5 million and $ 1.6 million as of March 31, 2020 and December 31, 2019, respectively, were recorded for environmental liabilities that we consider probable and for which a reasonable estimate of the probable liability could be made.

As of March 31, 2020, the total liabilities were reflected as other long-term liabilities.

As of December 31, 2019, $ 0.1 million was reflected within Accounts payable and accrued expenses with respect to environmental liabilities.

During the three months ended March 31, 2020, we did no t record any additional reserves for environmental liabilities.

During the three months ended March 31, 2019, we recorded $ 1.0 million of additional reserves for environmental liabilities.

Total liabilities of $ 1.5 million and $ 1.6 million as of June 30, 2020 and December 31, 2019, respectively, were recorded for environmental liabilities that we consider probable and for which a reasonable estimate of the probable liability could be made.

As of June 30, 2020, the total liabilities were reflected as other long-term liabilities.

As of December 31, 2019, $ 0.1 million of

Armstrong World Industries, Inc., and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(dollar amounts in millions, except share data)

environmental liabilities w ere reflected within Accounts payable and accrued expenses.

During the three and six months ended June 30, 2020 , we did no t record any additional reserves for environmental liabilities.

During the three and six months ended June 30, 2019 , we recorded $ 1.0 million of additional reserves for environmental liabilities.

Where existing data is sufficient to estimate the liability, that estimate has been used;

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(b) all AWI exclusive distribution locations (i.e., any location where a reseller has agreed to sell only AWI ceiling system products) will remain exclusive to AWI under their respective distribution agreements, and (c) in all other non-exclusive or “open” distribution locations, resellers are free to purchase and resell ceiling systems products of any manufacturer at their discretion.

During the three months ended March 31, 2019, we incurred $ 19.7 million of expenses in connection with the matter, primarily relating to legal and professional fees incurred by us in connection with the litigation, including expenses and attorney’s fees paid under the settlement agreement.

During the first six months of 2019, we incurred $ 19.7 million of expenses in connection with the matter, primarily relating to legal and professional fees incurred by us in connection with the litigation, including expenses and attorney’s fees paid under the settlement agreement.

As a result of the settlement and Dismissal, we do not expect to incur additional future costs or expenses relating to the matter.

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When applicable and appropriate, we will pursue coverage and recoveries under those policies, but are unable to predict the outcome of those demands.

While complete assurance cannot be given to the outcome of these proceedings, we

While complete assurance cannot be given to the outcome of these proceedings, we do not believe that any current claims, individually or in the aggregate, will have a material adverse effect on our financial condition, liquidity or results of operations.

Armstrong World Industries, Inc., and Subsidiaries

1 unchanged sentence

(dollar amounts in millions, except share data)

do not believe that any current claims, individually or in the aggregate, will have a material adverse effect on our financial condition, liquidity or results of operations.

EARNINGS PER SHARE

The following table is a reconciliation of (loss) earnings to (loss) earnings attributable to common shares used in our basic and diluted (Loss) Earnings Per Share (“EPS”) calculations for the three months ended March 31, 2020 and 2019.

The following table is a reconciliation of earnings (loss) to earnings (loss) attributable to common shares used in our basic and diluted (Loss) Earnings Per Share (“EPS”) calculations for the three and six months ended June 30, 2020 and 2019.

EPS components may not add due to rounding.

Three Months Ended

(Loss) earnings from continuing operations

Loss (earnings) allocated to participating non-vested share awards

(Loss) earnings from continuing operations attributable to common shares

The following table is a reconciliation of basic shares outstanding to diluted shares outstanding for the three months ended March 31, 2020 and 2019 (shares in millions):

Six Months Ended

Earnings (loss) from continuing operations

(Earnings) allocated to participating vested share awards

Earnings (loss) from continuing operations attributable to common shares

The following table is a reconciliation of basic shares outstanding to diluted shares outstanding for the three and six months ended June 30, 2020 and 2019 (shares in millions):

Three Months Ended

Six Months Ended

Basic shares outstanding

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Diluted shares outstanding

Due to the net loss for the three months ended March 31, 2020, all common stock equivalents were considered anti-dilutive.

Anti-dilutive stock awards excluded from the computation of diluted EPS for the three months ended March 31, 2020 and 2019 were 702,513 and 30,371 , respectively.

Due to the net loss for the six months ended June 30, 2020, all common stock equivalents were considered anti-dilutive.

Anti-dilutive stock awards excluded from the computation of diluted EPS for the three and six months ended June 30, 2020 were 25,588 and 441,722 , respectively.

Anti-dilutive stock awards excluded from the computation of diluted EPS for the three and six months ended June 30, 2019 were 19 and 15,195 , respectively.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements