http://www.morningstar.com/earnings/19074143-armstrong-world-industries-inc-awi-q3-2010.aspx

Armstrong World Industries Inc AWI
Q3 2010 Earnings Call Transcript

Transcript Call Date 11/05/2010

Operator: Good day, ladies and gentlemen and welcome to the Third Quarter 2010 Armstrong World Industries Incorporated Earnings Conference Call. My name is Tessa, and I'll be your operator for today. At this time, all participants are in a listen-only mode. We will conduct the question-and-answer session towards the end of this conference.

I would now like to turn the conference over to your host for today, Beth Riley, Vice President of Investor Relations Communication. Please proceed.

Beth A. Riley - VP, IR, Communication, Diversity: Thank you, Tessa. Good afternoon and welcome. Please note that members of the media have been invited to listen to this call, and the call is being broadcast live on our website at armstrong.com.

With me this afternoon are Matt Espe, our new President and CEO; Tom Mangas, our CFO and Frank Ready, the CEO of our Worldwide Floor businesses. Hopefully, you've seen our press release this morning, and both the release and the presentation, Tom will reference during the call, are posted on our website in the Investor Relations section.

In keeping with SEC requirements, I advise that during this call, we will be making forward-looking statements that involve risks and uncertainties. Actual outcomes may differ materially from those expected or implied. For a more detailed discussion of the risks and uncertainties that may affect Armstrong, please review our SEC filings including the 10-Q filed today. We undertake no obligation to update any forward-looking statements.

In addition, our discussion of operating performance will include non-GAAP financial measures within the meaning of SEC Regulation G. A reconciliation of these measures with the most directly comparable GAAP measures is included in the press release and in the appendix of the presentation. Again both are available on our website.

With that, I'll turn the call over to Matt.

Matthew J. Espe - President and CEO: Thanks, Beth. Good afternoon, everyone and thanks for participating in our earnings call today. I'll discuss our refinancing and dividend announcement, provide an update on our strategy and discuss some of the business highlights from the third quarter. Tom, will then review the financial details and after which, we'll answer your questions.

To begin, in addition to earnings, this morning, we announced our intent to undertake a leverage recapitalization to refinance our existing credit facility and to fund a special dividend. We finished the third quarter with net cash of $236 million and expect to continue to generate cash. We consistently stated that we'd be comfortable with more leverage and would likely return cash beyond that required for our expected strategic and operating needs in order to create shareholder value, while efficiently allocating our capital.

Recently the Trust and TPG, which together own more than 60% of our shares, asked our Board of Directors to consider a large special cash dividend. Before deciding on an $800 million special dividend, the Board worked with management to assess a number of relevant factors before agreeing to the request, including substantial net cash on our balance sheet; good availability; and attractive pricing in the credit markets; funding required to pursue strategic initiatives; servicing the increased debt; and maintaining operations.

Read our Earnings Call Transcript disclaimer.
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