========================================================================== ARMSTRONG BANKRUPTCY NEWS Issue Number 1 -------------------------------------------------------------------------- Copyright 2000 (ISSN XXXX-XXXX) December 7, 2000 -------------------------------------------------------------------------- Bankruptcy Creditors' Service, Inc., Phone 609-392-0900 Fax 609-392-0040 -------------------------------------------------------------------------- ARMSTRONG BANKRUPTCY NEWS is published by Bankruptcy Creditors' Service, Inc., 24 Perdicaris Place, Trenton, New Jersey 08618, on an ad hoc basis (generally every 10 to 20 days) as significant activity occurs in the Debtors' cases. Each issue is prepared by Peter A. Chapman, Editor. Subscription rate is US$45 per issue. Reproduction of ARMSTRONG BANKRUPTCY NEWS is prohibited without permission from the publisher. ========================================================================== IN THIS ISSUE ------------- [00000] HOW TO ORDER A SUBSCRIPTION TO ARMSTRONG BANKRUPTCY NEWS [00001] BACKGROUND & DESCRIPTION OF ARMSTRONG WORLD INDUSTRIES, INC. [00002] COMPANY'S CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2000 [00003] COMPANY'S PRESS RELEASE CONCERNING CHAPTER 11 FILING [00004] ARMSTRONG WORLD INDUSTRIES' CHAPTER 11 DATABASE [00005] LIST OF ARMSTRONG WORLD INDUSTRIES' LARGEST UNSECURED CREDITORS [00006] COMPANY'S SUPPLEMENTAL POST-FILING STATEMENTS & ANSWERS TO FAQs KEY DATE CALENDAR ----------------- 12/06/00 Voluntary Petition Date 12/21/00 Deadline for filing Schedules of Assets and Liabilities 12/21/00 Deadline for filing Statement of Financial Affairs 12/21/00 Deadline for filing List of Leases and Executory Contracts 12/26/00 Deadline to provide Utility Companies with adequate assurance 02/05/01 Deadline to assume or reject leases and executory contracts 03/06/01 Deadline for removal of actions pursuant to F.R.B.P. 9027 04/05/01 Expiration of Debtors' Exclusive Period to propose a Plan 06/04/01 Expiration of Debtors' Exclusive Solicitation Period 12/05/02 Deadline for Debtors' Commencement of Avoidance Actions Organizational Meeting with UST to form Official Committees First Meeting of Creditors pursuant to 11 U.S.C. Sec. 341(a) Bar Date for filing Proofs of Claim Expiration of DIP Financing Facility -------------------------------------------------------------------------- [00000] HOW TO ORDER A SUBSCRIPTION TO ARMSTRONG BANKRUPTCY NEWS -------------------------------------------------------------------------- ARMSTRONG BANKRUPTCY NEWS is distributed to paying subscribers by electronic mail. New issues are published on an ad hoc basis as significant activity occurs (generally every 10 to 20 days) in the Debtors' cases. The subscription rate is $45 per issue. Newsletters are delivered via e-mail; invoices, transmitted with each newsletter issue, arrive by fax. Distribution to multiple individuals at the same firm is provided at no additional charge; folks outside of your firm should set-up and pay for their own subscriptions. Subscriptions may be canceled at any time without further obligation. 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Name: ---------------------------------------------- Firm: ---------------------------------------------- Address: ---------------------------------------------- ---------------------------------------------- Phone: ---------------------------------------------- Fax: ---------------------------------------------- E-Mail: ---------------------------------------------- -------------------------------------------------------------------------- [00001] BACKGROUND & DESCRIPTION OF ARMSTRONG WORLD INDUSTRIES, INC. -------------------------------------------------------------------------- ARMSTRONG WORLD INDUSTRIES, INC. 2500 Columbia Ave. P. O. Box 3001 Lancaster, Pennsylvania 17604-3001 Telephone (717) 397-0611 Fax (717) 396-2787 http://www.armstrong.com Armstrong World Industries, Inc., the major operating subsidiary of Armstrong Holdings, Inc. (NYSE:ACK) designs, manufactures and sells interior finishings, most notably floor coverings and ceiling systems, around the world. Armstrong's products are sold primarily for use in the finishing, refurbishing and repair of residential, commercial and institutional buildings. Armstrong also designs, manufactures and sells other products, including kitchen and bathroom cabinets. Armstrong products are principally sold through building products distributors, who re-sell products to retailers, builders, contractors, installers and others. Armstrong also sells a significant portion of its products to home center chains and industry buying groups. For example, approximately $348 million of product -- roughly 10% of annual sales -- were sold directly to The Home Depot, Inc., in 1999. Floor Coverings -- 50% of Annual Sales Armstrong leads the market for flooring solutions, producing vinyl, laminate, linoleum and wood floor coverings for both residential and commercial applications. Armstrong's reputation for industry leadership and innovation continued in 2000 with the introduction of ToughGuard vinyl -- manufactured with a new manufacturing process that dramatically improves the durability of resilient vinyl flooring, plus innovations in natural designs with its new Timberline and Natural Inspirations flooring products. Armstrong is a worldwide manufacturer of floor coverings for the interiors of homes and commercial and institutional buildings, with a broad range of resilient flooring together with adhesives, installation and maintenance materials and accessories. Resilient flooring, in both sheet and tile forms, together with laminate flooring and linoleum, is made in a wide variety of types, designs, and colors. Included are types of flooring that offer such features as ease of installation, reduced maintenance (no-wax), and cushioning for greater underfoot comfort. Floor covering products are sold to the commercial, residential and institutional market segments through wholesalers, retailers (including large home centers and buying groups), contractors, and to the hotel/motel and manufactured homes industries. Building Products -- 25% of Annual Sales Armstrong Building Products leads the industry for the manufacturing and distribution of acoustical ceiling panels, ceiling suspension systems and acoustical walls. The company has strengthened its market leadership and strong brand identity in the ceilings sector by developing innovative approaches to the use of suspended ceiling systems for leading-edge performance in acoustics, humidity resistance, connectivity and aesthetic appeal. New product introductions such as Optima Vector combine high functionality with a fine texture surface and virtually no visible grid. As a major producer of ceiling materials in the United States and abroad, Armstrong markets both residential and commercial ceiling systems. Ceiling materials for the home are offered in a variety of types and designs. Most provide noise reduction and incorporate features intended to permit ease of installation. These residential ceiling products are sold through wholesalers and retailers (including large home centers). Commercial suspended ceiling systems, designed for use in shopping centers, offices, schools, hospitals, and other commercial and institutional settings, are available in numerous colors, performance characteristics and designs and offer characteristics such as acoustical control, accessibility to the plenum (the area above the ceiling), rated fire protection, and aesthetic appeal. The Company sells commercial ceiling materials and accessories, along with acoustical wall panels, to ceiling systems contractors and to resale distributors. Framework (grid) for suspension ceiling systems products are manufactured and sold through a joint venture with Worthington Industries. Wood Products -- 25% of Annual Sales Armstrong Wood Products is the company's fastest-growing operating division, comprising the wood floor and cabinet businesses of Dallas-based Triangle Pacific Corp., enabling Armstrong to take a lead role in the dynamic wood flooring market. The Triangle Pacific subsidiary, manufactures and sells hardwood flooring and other flooring, kitchen and bathroom cabinets and related products. These products are used primarily in residential new construction and remodeling, with some commercial applications such as retail stores and restaurants. Flooring sales are generally made through independent wholesale flooring distributors and retailers (including large home centers and buying groups). Cabinets are sold through both independent or company owned distributors. -------------------------------------------------------------------------- [00002] COMPANY'S CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2000 -------------------------------------------------------------------------- Armstrong Holdings, Inc., and Subsidiaries Condensed Consolidated Balance Sheets at September 30, 2000 (Unaudited) Assets ------ Current assets: Cash and cash equivalents $33,600,000 Accounts receivable less allowance for discounts and losses 479,600,000 Inventories: Finished goods 263,400,000 Work in process 54,400,000 Raw materials and supplies 162,500,000 -------------- Total gross inventories 480,300,000 Less LIFO and other reserves 50,800,000 -------------- Total inventories 429,500,000 Deferred income taxes 55,700,000 Other current assets 84,100,000 -------------- Total current assets 1,082,500,000 Property, plant, and equipment 2,365,600,000 Less accumulated depreciation and amortization (1,061,100,000) -------------- Net property, plant and equipment 1,304,500,000 Insurance for asbestos-related liabilities, noncurrent 236,100,000 Investment in affiliates 35,600,000 Goodwill, net 890,500,000 Other intangibles, net 55,800,000 Other noncurrent assets 427,200,000 -------------- Total assets $4,032,200,000 ============== Liabilities and Shareholders' Equity ------------------------------------ Current liabilities: Short-term debt $24,000,000 Current installments of long-term debt 14,800,000 Accounts payable and accrued expenses 724,500,000 Income taxes 35,800,000 -------------- Total current liabilities 799,100,000 Long-term debt, less current installments 1,314,300,000 Employee Stock Ownership Plan (ESOP) loan guarantee 142,200,000 Postretirement and postemployment benefit liabilities 244,600,000 Pension benefit liabilities 147,100,000 Asbestos-related long-term liabilities 483,800,000 Other long-term liabilities 94,800,000 Deferred income taxes 62,700,000 Minority interest in subsidiaries 8,300,000 -------------- Total noncurrent liabilities 2,497,800,000 Shareholders' equity: Common stock 51,900,000 Capital in excess of par value 166,900,000 Reduction for ESOP loan guarantee (180,500,000) Retained earnings 1,251,300,000 Accumulated other comprehensive loss (35,700,000) Treasury stock (518,600,000) -------------- Total shareholders' equity 735,300,000 -------------- Total liabilities and shareholders' equity $4,032,200,000 ============== -------------------------------------------------------------------------- [00003] COMPANY'S PRESS RELEASE CONCERNING CHAPTER 11 FILING -------------------------------------------------------------------------- ARMSTRONG FILES FOR VOLUNTARY CHAPTER 11 PROTECTION IN MOVE TO RESOLVE ASBESTOS LIABILITY LANCASTER, Pennsylvania -- December 6, 2000 -- Armstrong Holdings, Inc. (NYSE:ACK) today said its major operating subsidiary, Armstrong World Industries Inc., filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code in Wilmington, Delaware, in order to resolve its asbestos liability. Armstrong Holdings, Triangle Pacific Corp., WAVE (Armstrong's ceiling grid systems joint venture with Worthington Industries), Armstrong Canada, Armstrong DLW AG and its other non-U.S. operating subsidiaries were not a part of the filing. The company said that all its businesses are operating as usual and that it is maintaining its high standards of customer service. Suppliers will be paid on normal terms for goods delivered and services provided after the Chapter 11 filing. Employee pay and normal benefit programs will not be interrupted. Normal retiree and health benefits will also not be interrupted. Armstrong's pension plan is fully funded and qualified pension benefits are protected by law. To enhance its liquidity, Armstrong said it had obtained a commitment for a $400 million debtor-in-possession facility with Chase Manhattan Bank, which will be submitted to the court for approval today. Like other companies involved in asbestos litigation, Armstrong has tried a number of different approaches to manage its asbestos liability, including negotiating broad-based solutions and supporting efforts to find a legislative resolution. Despite these efforts, the number of cases filed and the cost to settle cases have continued to increase. The company said that the cash demands of asbestos settlements now "threaten the long-term health of its valuable and fundamentally sound businesses." In addition, the company said that liquidity concerns about Armstrong raised after the Owens Corning Chapter 11 filing, had begun to have an adverse impact in the marketplace. "Our historical approach to resolving asbestos claims has not worked. The actions that would now be required to wait for legislation --for which there is no reasonable hope for quick passage-- would reduce our ability to invest in our businesses," said Chairman and CEO Michael D. Lockhart. "Armstrong comprises profitable, industry leading businesses. We can no longer allow the asbestos uncertainty to eat away at these businesses, nor can we cutback on investment without damaging them. Given this, filing for protection under Chapter 11 was the best option we had. "Triangle Pacific, WAVE and our non-U.S. businesses are not included in the filing. Their customers, employees and suppliers will be unaffected by the filing," he added. Armstrong said that while operating in Chapter 11, it would have the resources it needs to continue to invest in its businesses and its customers growth programs. At the same time, Chapter 11 will give the company the opportunity to use the court-supervised reorganization process to achieve a binding, legal resolution to the asbestos situation and put this difficult issue behind it. This will enable Armstrong to emerge from Chapter 11 stronger and better positioned than it is today. Also filing for relief were two of Armstrong World Industries wholly- owned subsidiaries, Nitram Liquidators, Inc. and Desseaux Corporation of North America, Inc. -------------------------------------------------------------------------- [00004] ARMSTRONG WORLD INDUSTRIES' CHAPTER 11 DATABASE -------------------------------------------------------------------------- Debtors: Nitram Liquidators, Inc. Desseaux Corporation of North America Armstrong World Industries, Inc. Chapter 11 Petition Date: December 6, 2000 Bankruptcy Case Nos.: 00-04469 though 00-04471 Court: United States Bankruptcy Court District of Delaware Marine Midland Plaza Building 824 Market Street Wilmington, Delaware 19801 Judge: Not Yet Assigned Circuit: Third Debtors' Counsel: Stephen Karotkin, Esq. Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 (212) 310-8000 and Debra A. Dandeneau, Esq. Weil, Gotshal & Manges LLP 701 Brickell Ave., Suite 2100 Miami, FL 33131 (305) 577-3118 and Mark D. Collins, Esq. Russell C. Silberglied, Esq. Richards, Layton & Finger, P.A. One Rodney Square P.O. Box 551 Wilmington, DE 19899 (302) 658-6541 Debtors' Financial Advisor: Barry Ridings Lazard Freres & Co. LLC 30 Rockefeller Plaza New York, NY 10020 U.S. Trustee: Daniel K. Astin, Esq. Office of the United States Trustee Curtis Center, 9th Floor West 901 Walnut Street Philadelphia, PA 19106 (215) 597-4411 Reported financial condition as of September 30, 2000: Total Assets: $ 4,032,200,000 Total Debts : $ 3,296,900,000 -------------------------------------------------------------------------- [00005] LIST OF ARMSTRONG WORLD INDUSTRIES' LARGEST UNSECURED CREDITORS -------------------------------------------------------------------------- Creditor Nature of Claim Amount -------- --------------- ------ Bank One N.A. (f/k/a The First National Bank of Chicago) Bank One Corporatate Trust Division 153 WEst 51st Street 7.45% Unsecured New York, NY 10019 Senior Notes $ 200,000,000 Wells Fargo Bank Minnesota National Association Corporate Trust Office Sixth and Marquette Minneapolis, Minnesota 6.35% Senior 55479-0069 Unsecured Notes $ 200,000,000 Wells Fargo Bank Minnesota National Association Corporate Trust Office Sixth and Marquette 7.45% Senior Minneapolis, Minnesota Unsecured Quarterly 55479-0069 Inters Bonds $ 180,000,000 Wells Fargo Bank Minnesota National Association 6th Street and Marquette Avenue MAC No. 9303-120 6.5% Senior Minneapolis, Minnesota 55479 Unsecured Notes $ 149,795,250 Bank One N.A. Ruth Fussell 153 W. 51st Street 9.75% Unsecured New York, NY 10019 Debentures $ 125,000,000 The Chase Manhattan Bank Commercial Paper Service 450 West 33rd Street 15th Floor Long-Term Commercial New York, NY 10001-2697 Paper $ 50,000,000 Mellon Bank, N.A. Corporate Trust Group 701 Market Street Philadelphia Industrial Pennsylvania 19106 Revenue Bonds $ 10,806,193 State Street Bank and Trust Fleet National Bank Corporate Trust 777 Main Street Industrial Hartford, CT 06115 Development Bonds $ 10,000,000 Chase Manhattan Trust Company, N.A. Kevin Rockwell One Oxford Centre 301 Grant Street Floor 13 Pittsburgh Industrial Pennsylvania 15219 Development Bonds $ 8,500,000 Oxyvinyls, LP Martia White 5005 LBJ Freeway Suite 500 LB 30 Dallas, TX 75244 Trade Creditor $ 4,779,343 Bankers Trust Company Kena Dougherty P.O. Box 998 Bowling Green Station New York, NY 10004 Unsecured Note $ 3,534,400 W.W. Henry Company Mike Crouch Ardex Engineered Cements Ardex Park Drive Aliquippa, PA 15001 Trade Creditor $ 2,209,089 Berry Floor NV Art Henderson Berry Wood La Parqueterie Rn 144 Meauline, Belgium 03360 Trade Creditor $ 2,012,209 Exxonmobil Chemical Art Henderson 13501 Katy Freeway Houston, TX 77079 Trade Creditor $ 1,457,307 IFCO Systems Keith Reinstetle 240 East Main Street Bartow, FL 33841 Trade Creditor $ 1,217,395 Dupont Company Gregory Parks BMP36-1172 P.O. Box 80036 Wilmington, DE 19880 Trade Creditor $ 1,182,244 Scana Energy Marketing, Inc. P.O. Box 751684 Charlotte, NC 28725 Trade Creditor $ 1,058,828 Occidental Chemical Corp. Karen Haydock 5005 LBJ P.O. Box 809050 Dallas, TX 75380 Trade Creditor $ 1,016,366 BANK LENDERS UNDER CHASE-LED $450,000,000 PREPETITION FACILITY -------------------------------------------------------------- The Chase Manhattan Bank 270 Park Avenue, 47th Floor New York, New York 10017-2070 Attn: Mr. Bob Sachs, Vice President $ 35,500,000 Morgan Guaranty Trust Company of New York 60 Wall Street New York, NY 10260 Attn: John Simmons, VP $ 35,500,000 Bank of America National Trust & Savings Association 335 Madison Avenue New York, NY 10017 Attn: John Pocalyko $ 35,500,000 Wachovia Bank, N.A. 191 Peachtree Street, N.E. Atlanta, GA 30303 Attn: Jim Barwis $ 35,500,000 Deutsche Bank AG, New York Branch and/or Cayman Islands Branch 31 West 52nd Street New York, NY 10019 Attn: Rolf-Peter Mikolayezyk $ 35,500,000 Barclays Bank PLC 222 Broadway, 12th Floor New York, NY 10285 Attn: Terance Bullock $ 21,750,000 Citibank, N.A. 399 Park Avenue, 8th Floor New York, NY 10043 Attn: Wolfgang Viragh $ 21,750,000 First Union National Bank 100 N. Queen Street Lancaster, PA 17604 Attn: Ken Wood $ 21,750,000 Bank One f/k/a/ The First National Bank of Chicago 153 West 51st Street Suite 4000 New York, NY 10019 Attn: Steve Liggins $ 21,750,000 HSBC Bank f/k/a/ Marine Midland Bank 140 Broadway, 4th Floor New York, NY 10005-1196 Attn: Ann O'Laughlin $ 21,750,000 Societe Generale Finance (Ireland) Limited 1221 Avenue of the Americas New York, NY 10020 Attn: Bill Connelly $ 21,750,000 Fortis 520 Madison Avenue New York, NY 10022 Attn: Douglas Riahi $ 16,500,000 BW Capital Markets, Inc. 630 Fifth Avenue, Suite 1919 New York, NY 10111 Attn: Philip Waldrup $ 16,500,000 Banque Nationale De Paris 140 Broadway, 4th Floor New York, NY 10005-1196 Attn: Ann O'Loughlin $ 16,500,000 Unicredito Italiano S.p.A. 375 Park Avenue, 2nd Floor New York, NY 10152 Attn: Chris Elden $ 16,500,000 Landesgirokasse Offentliche Bank Und Landessparkasse (SE Banken) 245 Park New York, NY 10167 Attn: Einar Thodal-Ness $ 16,500,000 PNC Bank, National Association 1600 Market Street, F2-F070-21-5 Philadelphia, PA 19103 Attn: Eric Erickson $ 16,500,000 Sun Trust Bank, Atlanta P.O. box 4418 MIC 1926 Atlanta, GA 30302-4418 Attn: Brad Staples $ 16,500,000 Westdeutsche Landesbank 1211 Avenue of the Americas, 23rd Floor New York, NY 10036 Attn: Alan Bookspan $ 16,500,000 The Bank of New York One Wall Street, 21st Floor New York, NY 10286 Attn: Walter Parelli $ 10,000,000 PURCHASERS OF ESOP NOTES, OWED AN AGGREGATE OF $125,653,650 ----------------------------------------------------------- First Chicago Mail Suite 0126 One First National Plaza Chicago, IL 60670-0126 Attn: Sharon McGrath Assistant V.P. $ 1,515,585 First Penn-Pacific Life Insurance Company c/o Lincoln National Investment Management 200 East Berry Street Renaissance Square Fort Wayne, IN 46802 $ 227,787 Attn: Investments/Private Placement $ 1,500,000 Lincoln National Life Insurance Company $ 75,929 c/o Lincoln National Investment Management $ 75,929 200 East Berry Street $ 151,858 Renaissance Square $ 303,717 Fort Wayne, IN 46802 $ 452,575 Attn: Investments/Private Placement $ 2,000,000 $ 2,500,000 $ 2,500,000 $ 3,000,000 $ 7,007,000 Massachusetts Mutual Life Insurance Company 1295 State Street Springfield, MA 01111-0001 $ 1,137,805 Attn: Laura Hamel $ 1,137,805 Investment Services F-381 $ 8,003,000 Principal Mutual Life Insurance Company 711 High Street Des Moines, IA 50392-0001 Attn: Jason Maty Inv Sec Dept $ 761,792 Sher Company c/o American Express Financial Advisors NW-9744/P.O. Box 1450 Minneapolis, MN 55485 Attn: Mary Amsler $ 4,174,809 Sigler & Company c/o Chase Manhattan Bank 4 NY Plaza/13th Floor Non-Std Sec Dept New York, NY 10004 $ 227,787 Attn: Annette Falchetti $ 1,000,000 Variable Annuity Life Insurance c/o American General Corporation Mailcode A29-04 2929 Allen Parkway Houston, TX 77019 $ 1,515,585 Attn: Brian Fox $ 3,037,003 Wachovia Corporate Services Inc. 151 Peachtree Street, N.E. Mail Code GA-370 28th Floor Atlanta, GA 30303 $ 6,940,197 Wallar & Company c/o American Express Financial Advisors NW-9744/P.O. Box 1450 Minneapolis, MN 55485 Attn: Mary Amsler $ 300,663 Wrap Two & Company c/o American Express Financial Advisors NW-9744/P.O. Box 1450 Minneapolis, MN 55485 Attn: Mary Amsler $ 78,315 Atwell & Company Standard Insurance Company c/o Chase Manhattan Bank 770 Broadway 13th Floor New York, NY 10003 $ 2,000,000 Atwell & Company Pacific Mutual Life Insurance c/o Chase Manhattan Bank 770 Broadwat 13th Floor New York, NY 10003 $ 1,003,000 Cig & Company c/o Cigna Investment Inc. Hartford, CT 06152-2307 Attn: Private Securities Div S-0307 $ 15,005,000 Cudd & Company c/o Chase Manhattan Bank P.O. Box 1508 Church Street Station New York, NY 10008 Attn: Gloria McCulloug $ 500,000 Cudd & Company c/o Chase Manhattan Bank P.O. Box 1508 Church Street Station New York, NY 10008 $ 9,003,000 Attn: Bond Servicing $ 10,004,000 Farm Bureau Insurance Co. 5400 University Avenue W. Des Moines, IA 50265 Attn: Investment Dept $ 3,001,000 Franklin Life Insurance Company c/o American General Corporation Mailcode A-29-04 2929 Allen Parkway Houston, TX 77019 Attn: Brian Fox $ 5,002,000 Jefferson Pilot c/o The Bank of New York P.O. Box 19266 Newark, NJ 07195 Attn: P&I Department $ 15,005,000 Northwestern Mutual Life Insurance Company 720 East Wisconsin Ave Milwaukee, WI 53202 Attn: Securities Dept $ 12,504,500 Pebble Harbor & Co c/o State Street Bank & Trust Company 225 Franklin Str-Concourse Boston, MA 02110 $ 1,000,000 Principal Mutual Life Insurance Company 711 HIgh Street Des Moines, IA 50392-0001 Attn: Cheryl Holliday $ 2,001,000 -------------------------------------------------------------------------- [00006] COMPANY'S SUPPLEMENTAL POST-FILING STATEMENTS & ANSWERS TO FAQs -------------------------------------------------------------------------- On December 6, 2000, Armstrong World Industries filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code in order to resolve its asbestos liability. Armstrong Holdings, Triangle Pacific, Armstrong DLW AG, Armstrong Canada, WAVE and other non-U.S. operations subsidiaries were not a part of the filing. Our decision to file for Chapter 11 protection is a function of our asbestos liability -- not any difficulties or problems with our businesses. We continue to operate profitable flooring, ceiling and cabinet businesses. We continue to generate a great deal of cash and will have the ability to make the investments that are needed to ensure we can properly support your growth objectives. These investments include more emphasis on new products and brand development. We take pride in our industry leading positions and want to strengthen them. Since stronger market positions mean increased value, everyone sees this as a desirable objective. While we operate in Chapter 11, we will continue to serve our customers, and pay our people, and suppliers for post-filing goods and services. We will work with our creditors, including asbestos plaintiffs, to formulate a Chapter 11 plan that will fairly and equitably address all of our pre- filing liabilities and enable Armstrong to emerge from Chapter 11 as a healthy and competitive business enterprise. Nitram's Chapter 11 Filing Nitram Liquidators, Inc. formerly, sold, installed and manufactured synthetic running tracks and athletic flooring, artificial grass surfaces and maintenance products. Previously known in the marketplace as DD Martin Surfacing, Inc. the business was renamed Nitram in June of 1999 after substantially all of the assets were sold by Armstrong World Industries. Nitram no longer has any operations or employees. It has very little cash on hand, with its remaining assets consisting largely of aged accounts receivable and a $4.5 million dollar promissory note arising from the sale. Subsequent to the sale of Nitram's business, Nitram has been faced with numerous existing and potential claims, including claims from former employees and warranty claims from former customers. Chapter 11 provides a mechanism by which Nitram will be able to address these claims in an orderly manner. Desseaux's Chapter 11 Filing Desseaux Corporation of North America, Inc., is the direct parent corporation of Nitram. Desseaux has no employees and no operations. Desseaux does not believe that any unaffiliated entities have any valid claims against it, although parties may seek to assert claims against Desseaux as a result of Nitram's liability. Chapter 11 provides a mechanism by which Desseaux North America will be able to address these issues in an orderly fashion. FREQUENTLY ASKED QUESTIONS 1Q: What exactly has Armstrong done? Armstrong World Industries filed for voluntary reorganization under Chapter 11 of the U.S. Bankruptcy Code. By filing for reorganization under Chapter 11, Armstrong will be able to use the court-supervised reorganization process to achieve a binding, legal resolution to its asbestos situation. Armstrong Holdings, Triangle Pacific Corp., our WAVE joint venture (ceiling grid systems), Armstrong Canada, Armstrong DLW AG and its other foreign subsidiaries were not a part of the filing. During the Chapter 11 process, we will continue to serve customers, honor product warranties, pay employees and suppliers, and continue to make the needed investments in our businesses. 2Q: How will this impact the day-to-day business? Armstrong continues to take orders for, manufacture and ship floors, ceilings and cabinets. All of our operations will continue, including employee compensation and benefits plans; customer sales, support and service activities; insurance policies; and payment of obligations due to suppliers and vendors who ship goods and furnish services after the filing date. Armstrong World Industries filed for a Chapter 11 reorganization to enable it to resolve its asbestos liability. Chapter 11 will allow Armstrong to suspend payments to its pre-filing creditors while it seeks a determination of the size of its asbestos liability and develops a plan that addresses the claims of all its pre-filing creditors in a fair and equitable manner. Triangle Pacific, our WAVE joint venture (ceiling grid systems), Armstrong Canada, Armstrong DLW AG, and its other foreign subsidiaries are not a part of the filing. 3Q: Why is this filing necessary? Armstrong has filed for Chapter 11 protection because despite decades of trying to resolve its asbestos liability, Armstrong's asbestos payments have increased to levels which cannot continue without jeopardizing its valuable and successful businesses. For many years, we pursued legal strategies in state and federal courts, tried to negotiate broad-based settlements of claims, and supported efforts to develop a legislative solution to asbestos. These initiatives were not successful and the number of claims and costs to resolve claims continued to grow. By entering into Chapter 11 at this time, we can focus on making investments in capital expenditures and new products while we work to solve our asbestos situation and emerge as a stronger company. 4Q: Did the Company explore other options besides filing under Chapter 11? Armstrong explored a wide range of alternatives to Chapter 11. For many years, we pursued legal strategies in state and federal courts, tried to negotiate broad-based settlements of claims, and supported efforts to develop a legislative solution for asbestos. These initiatives were not successful and the number of claims and costs to resolve claims continued to grow. Looking ahead, we do not see likely prospects for a legislative resolution of asbestos. That leaves Chapter 11 as the best option. 5Q: How will Armstrong finance its day-to-day operations? We have successful operating businesses that generate enough cash to fund daily operations. Our cash needs have dropped dramatically since we are not paying dividends, interest or asbestos claims during the Chapter 11 process. We also have a commitment for $400 million of new financing through a Debtor-In-Possession (DIP) facility from Chase Manhattan Bank. That will supplement our cash flow to ensure that all our operations will continue, including employee compensation and benefits plans; customer sales, support and service activities; insurance policies; and payment of obligations due to suppliers and vendors who ship goods and furnish services after the filing date. 6Q: What is the Chapter 11 process? Chapter 11 is a legal mechanism for Court-supervised restructuring of a company's liabilities. Chapter 11 provides "breathing room" for companies to gain time to restructure or reduce those liabilities while continuing day-to-day operations. The Chapter 11 filing triggers an automatic "stay" of all the Company's obligations prior to the filing. This "stay" includes loan payments, payments to vendors for goods or services received before the filing, and asbestos claims settlements. Chapter 11 also stops all current litigation, including asbestos claims. The Company is still in business. The corporate headquarters, business units, sales organizations and plants will keep operating. Employees will be paid. Goods and services purchased after the filing date will be paid for in the ordinary course of business. While business continues, management and the creditors will negotiate a plan of reorganization to address the pre-filing claims against the Company. 7Q: How long will the Chapter 11 process take? Chapter 11 is a process, not an event. It can be a long process -- other asbestos-related bankruptcies have lasted an average of 5-6 years. Resolving this expeditiously is a key objective of Armstrong management. *** End of Issue No. 1 *** ------------------------------------------------------------------------- Peter A. Chapman peter@bankrupt.com http://bankrupt.com ------------------------------------------------------------------------- Recommended Reading: "Kirby Benedict: Frontier Federal Judge" -- history and a biography by Aurora Hunt. Order your copy of this title today at http://www.amazon.com/exec/obidos/ASIN/1893122808/internetbankrupt -------------------------------------------------------------------------