Armstrong World Industries Inc. has a market cap of $2.1 billion; its shares were traded at around $36.52 with a P/E ratio of 33.5 and P/S ratio of 0.8. AWI is in the portfolios of Chuck Royce of Royce& Associates, George Soros of Soros Fund Management LLC, Richard Pzena of Pzena Investment Management LLC, Michael Price of MFP Investors LLC, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:SG&A expenses in the second quarter of 2010 were $131.8 million, or 18.2% of net sales, and in the first six months of 2010 were $275.3, or 19.9% of net sales compared to $127.3 million, or 18.0% of net sales, and $264.5, or 19.3% of net sales for the corresponding periods in 2009. The increase in absolute expense and expenses as a percent of net sales was due to $11.2 million of separation costs for our
Equity earnings from our WAVE joint venture were $14.3 million for the second quarter of 2010 compared to $10.4 million in the second quarter of 2009, and $25.4 million for the first six months of 2010 compared to $17.3 million in first six months of 2009. See Note 7 for further information.
Operating income improved for the second quarter and first six months of 2010 compared to the same periods in 2009. In both periods reduced manufacturing and SG&A expenses offset the margin impact of lower sales and raw material inflation. Operating income included a loss related to European Resilient Flooring of $7.2 million for the second quarter, including a $2.1 million fixed asset impairment charge, and $14.3 million for the first half of 2010, compared to $5.8 million and $20.7 million, respectively, for the same periods in 2009.
Unallocated corporate expense of $10.8 million in the second quarter of 2010 and $29.4 million for the first six months increased from $1.9 million and $7.4 million, respectively, in the prior year. The second quarter of 2010 includes a $3.0 million impairment charge related to the termination of our flight operations. The first six months of 2010 included $11.2 million of severance and related expenses to reflect the separation costs for our former Chairman and Chief Executive Officer and $6.1 million of asset impairment charges related to the termination of our flight operations. In addition to the factors discussed above, both the second quarter and first six months of 2010 were negatively impacted compared to the same periods of 2009 by a lower pension credit and costs related to the support of our LEAN initiatives. The first six months of 2009 included $3.4 million of employee separation costs, partially offset by a reduction of our stock-based compensation expense of $1.6 million related to stock grants that were forfeited by employees.
Net cash provided by investing activities was $2.7 million for the first six months of 2010. This was primarily due to a distribution from WAVE of $24.0 million and proceeds from the sales of fixed assets of $10.5 million, which included $9.2 million received from the sale of one of our European metal ceilings manufacturing facilities, partially offset by capital expenditures of $31.8 million. Net cash used for investing activities was $1.2 million for the first six months of 2009. This was primarily due to capital expenditures of $36.6 million partially offset by a distribution from WAVE of $26.0 million, and the receipt of the remaining proceeds from the divestiture of the European Textile and Sports Flooring business of $8.0 million.
Our liquidity needs for operations vary throughout the year. We retain lines of credit to facilitate our seasonal needs. On October 2, 2006, Armstrong executed a $1.1 billion senior credit facility with Bank of America, N.A., JPMorgan Chase Bank, N.A. and Barclays Bank PLC. This facility was made up of a $300 million revolving credit facility (with a $150 million sublimit for letters of credit), a $300 million Term Loan A (due in October 2011), and a $500 million Term Loan B (due in 2013). We plan to address the pending maturities before year end. There were no outstanding borrowings under the revolving credit facility, but $39.4 million in letters of credit were outstanding as of June 30, 2010 and, as a result, availability under the revolving credit facility was $260.6 million.
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