Separation and Distribution FAQs
- On February 23, 2015, AWI announced that its board
of directors had unanimously approved a plan to separate
AWI’s Resilient Flooring and Wood Flooring segments
from its Building Products (Ceilings) segment. The separation
was effected by allocating the assets and liabilities
related primarily to the Resilient Flooring and Wood
Flooring segments to AFI and then distributing the common
stock of AFI to AWI’s shareholders. The separation and
distribution resulted in AWI and AFI becoming two independent,
publicly traded companies, with AFI owning and operating
the Resilient Flooring and Wood Flooring segments and
AWI continuing to own and operate the Building Products
(Ceilings) segment. The separation of AFI from AWI and
the distribution of AFI common stock were intended to
provide shareholders with equity ownership in two separate,
publicly traded companies to focus exclusively on each
of their respective businesses. AWI and AFI expect that
the separation will result in enhanced long-term performance
of each business.
- AFI has provided these FAQs for legacy holders of
AWI common shares. Holder of AWI common shares as of
the close of business on March 21, 2016, the record
date of the distribution, were entitled to receive one
share of AFI common stock for every two AWI common shares
held at the close of business on such date. This FAQ
document will help you understand how the separation
and distribution will affect your post-separation ownership
in AFI and AWI, respectively.
- To accomplish the separation, AWI engaged in a division
under Pennsylvania law (the “division”), in which the
assets and liabilities of AWI related primarily to AWI’s
Resilient Flooring and Wood Flooring segments were allocated
to a newly-formed Pennsylvania corporation that resulted
from the division (the “Resulting PA Corporation”).
After the division became effective, the Resulting PA
Corporation merged with and into AFI (the “second step
merger”), with AFI surviving the second step merger
as a Delaware corporation and the successor to the Resulting
PA Corporation. In addition to the division and the
second step merger, any assets and liabilities of AWI’s
retained subsidiaries that were related primarily to
AWI’s Resilient Flooring and Wood Flooring segments
were assigned, assumed or transferred to AFI or one
of its subsidiaries.
After the completion of the division, the second step
merger, and any related assignment, assumption or transfer
of additional assets and liabilities, AWI distributed
all of the outstanding shares of AFI common stock to
AWI shareholders on a pro rata basis as a distribution
intended to be generally tax-free for U.S. federal income
- AWI believes that a generally tax-free distribution
of shares in the United States of AFI common stock to
the AWI shareholders was an efficient way to separate
its Resilient Flooring and Wood Flooring segments in
a manner that will create long-term value for AFI, AWI
and their respective shareholders.
- The record date for the distribution was March 21,
- Shares of AFI common stock were distributed by AWI
at 11:59 p.m., Eastern time, on April 1, 2016 to holders
of record of AWI common shares at the close of business
on March 21, 2016, the record date for the distribution.
- Shares of AFI common stock were received through
the same channels currently used to hold or trade AWI
common shares, whether through a brokerage account,
401(k) plan or other channel. Receipt of AFI shares
were documented in the same manner typically used to
receive shareholder updates, such as monthly broker
statements and 401(k) statements.
If you owned AWI common shares as of the close of business
on the record date for the distribution, including shares
owned in certificated form, AWI, with the assistance
of American Stock Transfer & Trust Company, LLC (“AST”),
the distribution agent, electronically distributed shares
of AFI common stock to you or to your brokerage firm
on your behalf in book-entry form.
- AWI distributed one share of AFI common stock for
every two shares of AWI held as of the close of business
on the record date for the distribution. Based on approximately
55,477,557 AWI common shares outstanding as of March
9, 2016, a total of approximately 27,738,778 shares
of AFI common stock was distributed.
- No. AFI did not issue fractional shares of its common
stock in the distribution. Fractional shares that AWI
shareholders would otherwise have been entitled to receive
were aggregated and sold in the public market. The aggregate
net cash proceeds of these sales were distributed pro
rata (based on the fractional share such holder would
otherwise be entitled to receive) to those shareholders
who would otherwise have been entitled to receive fractional
shares. Recipients of cash in lieu of fractional shares
are not entitled to any interest on the amounts of payment
made in lieu of fractional shares.
- The separation and distribution was completed on
April 1, 2016., when the shares of AFI common stock
were be distributed by AWI at 11:59 p.m., Eastern time,
on such date, to the holders of record of AWI common
shares at the close of business on March 21, 2016, the
record date for the distribution.
- AFI common stock currently trades on the New York
Stock Exchange under the symbol “AFI.”
- AWI common shares continued to trade on the New
York Stock Exchange after the distribution under the
- No. The number of AWI common shares owned did not
change as a result of the distribution.
- Yes. As a result of the distribution, AWI’s trading
price of AWI common shares immediately following the
distribution was lower than the “regular-way” trading
price of such shares immediately prior to the distribution
because the trading price no longer reflected the value
of the Resilient Flooring and Wood Flooring segments.
There can be no assurance that the aggregate market
value of the AWI common shares and the AFI common stock
following the separation will be higher or lower than
the market value of AWI common shares before the separation.
This means, for example, that the combined trading prices
of two AWI common shares and one share of AFI common
stock after the distribution may be equal to, greater
than or less than the trading price of two AWI common
shares before the distribution.
- The distribution was conditioned upon, among other
things, AWI’s receipt of an opinion of outside counsel,
in form and substance satisfactory to AWI, regarding
the qualification of the separation and distribution
as a transaction that generally is tax-free to AWI and,
except to the extent of cash received in lieu of fractional
shares, AWI’s shareholders, for U.S. federal income
tax purposes, under Sections 355 and 368(a)(1)(D) of
the Code. As a result, AWI shareholders generally should
not be required, for U.S. federal income tax purposes,
to recognize any gain or loss or to include any amount
in their income upon their receipt of AFI common stock
in the distribution except with respect to cash received
in lieu of a fractional share of AFI common stock.
- For U.S. federal income tax purposes, a shareholder’s
aggregate basis in the common shares that held in AWI
and the new AFI common stock received in the distribution
(including any fractional share interest in AFI common
stock for which cash was received) equaled the aggregate
basis in the AWI common shares held immediately before
the distribution, allocated between AWI common shares
and the AFI common stock (including any fractional share
interest in AFI common stock for which cash is received)
received in the distribution in proportion to the relative
fair market value of each on the distribution date.
You should consult your tax advisor about the particular
consequences of the separation and distribution to you,
including the application of the tax basis allocation
rules and the application of state, local and non-U.S.
- AFI entered into a separation and distribution agreement
with AWI to effect the separation and provide a framework
for AFI’s relationship with AWI after the separation
and entered into certain other agreements, such as a
transition services agreement, a tax matters agreement,
an employee matters agreement, a campus lease agreement
and trademark license agreements. These agreements,
together with a plan of division that adopted by AWI’s
board of directors, provided for the separation and
allocation between AFI and AWI of the assets, employees,
liabilities and obligations of AWI and its subsidiaries
attributable to periods prior to, at and after AFI’s
separation from AWI and govern the relationship between
AFI and AWI subsequent to the completion of the separation
- Yes. Ownership of AFI common stock is subject to
both general and specific risks relating to AFI’s business,
the industry in which it operates, its ongoing contractual
relationships with AWI and its status as a separate,
publicly traded company. Ownership of AFI common stock
is also subject to risks relating to the separation.
These risks are described in the “Risk Factors” section
of our Form 10, which is accessible on the SEC’s website
- AFI currently does not intend to pay a regular cash
dividend. The decision to pay cash dividends on the
common stock will be subject to the sole discretion
of AFI’s board of directors and will depend upon many
- Yes. AFI launched as a new publicly traded company
with approximately $100.0 million of indebtedness upon
completion of the separation. AFI distributed approximately
$50.0 million of the funds that it borrowed before the
separation to AWI.
- The distribution agent, transfer agent and registrar
for the AFI common stock is AST. For questions relating
to the mechanics of the distribution or matters relating
to the subsequent transfer of AFI common stock, you
should call AST shareholder services at (877) 248-6417.
If your shares are held by a bank, broker or other nominee,
you should contact your bank or broker.
- Additional information regarding the separation and distribution agreement and other transaction agreements, can be found in AFI’s filings on the SEC’s website at www.sec.gov.