Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.10.0.1
Segment Information
9 Months Ended
Sep. 30, 2018
Segment Reporting [Abstract]  
Segment Information
SEGMENT INFORMATION
Resilient Flooring — Our Resilient Flooring segment designs, manufactures, sources and sells a broad range of floor coverings primarily for homes and commercial buildings under various brands, including the Armstrong brand. Manufactured products in this segment include luxury vinyl tile ("LVT"), vinyl sheet, and vinyl tile flooring. In addition, our Resilient Flooring segment sources and sells LVT products, vinyl sheet products, and laminate products, as well as installation and maintenance materials and accessories. Resilient Flooring products are offered in a wide variety of designs, colors and installation options. We sell these products to independent wholesale flooring distributors, large home centers, retailers, flooring contractors and to the manufactured homes industry, and through secured specifications for these products through architects, designers and end-users. When market conditions and available capacity warrant, we also provide products on an original equipment manufacturer (“OEM”) basis to other flooring companies. Late in 2017, we began migrating a portion of our laminate business to a licensing model in place of the current sourcing model.
Wood Flooring — Our Wood Flooring segment designs, manufactures, sources and sells branded hardwood flooring products, including the Armstrong and Bruce brands, for use in residential construction and renovation, with some commercial applications in stores, restaurants and high-end offices. The product offering includes pre-finished solid and engineered wood floors in various wood species and dimensions, as well as related accessories. Our Wood Flooring products are generally sold to independent wholesale flooring distributors, large home centers, retailers and flooring contractors, and through secured specifications with regional and national builders. When market conditions and available capacity warrant, we may also provide products on an OEM basis to other flooring companies.
The following tables summarize segment performance:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
Net sales to external customers
 
 
 
 
 
 
 
Resilient Flooring
$
208.1

 
$
194.4

 
$
571.5

 
$
542.7

Wood Flooring
101.6

 
114.1

 
302.1

 
328.3

Total net sales to external customers
$
309.7

 
$
308.5

 
$
873.6

 
$
871.0

 
 
 
 
 
 
 
 
Operating income (loss)
 
 
 
 
 
 
 
Resilient Flooring
$
10.7

 
$
9.3

 
$
16.3

 
$
18.8

Wood Flooring
0.4

 
(38.5
)
 
(0.1
)
 
(45.3
)
Total operating income (loss)
$
11.1

 
$
(29.2
)
 
$
16.2

 
$
(26.5
)
The following table summarizes segment assets:
 
September 30, 2018
 
December 31, 2017
Assets
 
 
 
Resilient Flooring
$
577.9

 
$
547.6

Wood Flooring
289.8

 
286.3

Unallocated
43.0

 
45.6

Total assets
$
910.7

 
$
879.5


Unallocated assets primarily consist of cash and deferred income taxes.
Segment operating income is the measure of segment profit reviewed by our Chief Executive Officer who is our Chief Operating Decision Maker. The sum of the segments’ operating income (loss) equals the total combined operating income (loss) as reported on our Condensed Consolidated Statements of Operations. The following reconciles our total operating income (loss) to income before income taxes, which are only measured and managed on a combined basis:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2018
 
2017
 
2018
 
2017
Operating income (loss)
$
11.1

 
$
(29.2
)
 
$
16.2

 
$
(26.5
)
Interest expense
0.9

 
0.8

 
2.8

 
2.0

Other expense, net
0.9

 
1.0

 
2.2

 
3.4

Income (loss) before income taxes
$
9.3

 
$
(31.0
)
 
$
11.2

 
$
(31.9
)

Our indefinite-lived intangible assets are primarily trademarks and brand names, with Bruce representing the largest asset, all of which are integral to our corporate identity and expected to contribute indefinitely to our corporate cash flows, which is why they have been assigned an indefinite life. We conduct our annual impairment test for indefinite-lived intangible assets during the fourth quarter. However, during the third quarter of 2017, we conducted an interim impairment test for indefinite-lived intangible assets within our Wood Flooring segment due to our decision to cease operations at two Wood Flooring manufacturing plants in response to a decline in sales. As a result of this testing, we recorded an impairment charge of $12.5 million for our Bruce trademark during the third quarter of 2017.