NOTE 2. SEGMENT RESULTS

Effective April 1, 2016 and in connection with our separation of AFI, our former Resilient Flooring and Wood Flooring segments have been excluded from our results of continuing operations. In addition, effective April 1, 2016, we disaggregated our former Building Products operating segment into the following three distinct geographical segments: Americas; Europe, Middle East and Africa (“EMEA”); and Pacific Rim.

Each of our geographical segments produces suspended fiber and metal ceilings for use in commercial and institutional settings in addition to sourcing complimentary ceiling products. Commercial ceiling materials and accessories are sold to resale distributors and to ceiling systems contractors. Residential ceiling products are sold in the Americas primarily to wholesalers and retailers (including large home centers). Each segment also includes the results of our Worthington Armstrong Venture (“WAVE”) joint venture with Worthington Industries, Inc., which manufactures suspension system (grid) products that are invoiced by both us and WAVE. Segment results relating to WAVE consist primarily of equity earnings and reflect our 50% equity interest in the joint venture. In each of our segments, WAVE primarily sells its suspension system products directly to customers, for which we provide sales and administrative support. To a lesser extent, however, in some markets, WAVE sells its suspension systems products to us for resale to customers. Our segment results reflect those sales transactions, which are not typically material.

Effective April 1, 2016, we reclassified the majority of the assets and liabilities formally reported in our Unallocated Corporate segment to our Americas segment. The assets and liabilities reclassified to our Americas segment most notably included the Armstrong trade name intangible asset, property, plant and equipment comprised primarily of Corporate campus facilities, the cash surrender value of life insurance supporting deferred compensation liabilities, income tax assets and liabilities, and pension and postretirement assets and liabilities.

Balance sheet items classified as Unallocated Corporate for all periods presented primarily include cash and cash equivalents and outstanding borrowings under our senior credit facilities.

Segment results below have been restated for all periods presented as a result of the disaggregation of our former Building Products segment and the reclassification of Unallocated Corporate assets. These revisions did not impact any previously reported consolidated revenues, gross profit, results of continuing operations, or asset or liability balances.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Net sales to external customers
Americas	$	226.0	$	221.5	$	640.9	$	615.5
EMEA		74.2		78.2		199.4		217.3
Pacific Rim		34.7		36.2		96.3		101.2
Total net sales to external customers	$	334.9	$	335.9	$	936.6	$	934.0

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Segment operating income (loss)
Americas	$	68.6		$	88.7		$	189.0		$	225.0
EMEA		4.1			1.3			(5.2	)		(7.0	)
Pacific Rim		1.0			(0.2	)		(2.4	)		(4.2	)
Unallocated Corporate		(2.7	)		(30.5	)		(37.1	)		(79.2	)
Total consolidated operating income	$	71.0		$	59.3		$	144.3		$	134.6

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2016			2015		2016			2015
Total consolidated operating income	$	71.0		$	59.3	$	144.3		$	134.6
Interest expense		9.0			11.3		43.4			33.9
Other non-operating expense		-			10.8		-			13.5
Other non-operating (income)		(1.6	)		-		(8.9	)		(5.4	)
Earnings from continuing operations before income taxes	$	63.6		$	37.2	$	109.8		$	92.6

	September 30, 2016		December 31, 2015
Segment assets
Americas	$	1,144.4	$	1,137.4
EMEA		296.1		283.3
Pacific Rim		146.6		154.5
Unallocated Corporate		145.6		237.8
Total consolidated assets	$	1,732.7	$	1,813.0

Impairment testing of our tangible assets occurs whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

Effective January 1, 2016, in anticipation of the April 1, 2016 AFI separation, the majority of our historical corporate support functions, representing costs of approximately $22.0 million and $58.0 million for the three and nine months ended September 30, 2016, respectively, were incorporated into our Americas segment. As a result, Unallocated Corporate support expenses have decreased significantly during the three and nine months ended September 30, 2016 in comparison to the same periods in 2015.

For the three and nine months ended September 30, 2016 and 2015, Unallocated Corporate segment operating (loss) was comprised of the following:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
Corporate expenses	$	(0.7	)	$	(23.1	)	$	(4.1	)	$	(62.4	)
Separation costs		(2.0	)		(7.4	)		(33.0	)		(16.8	)
Total Unallocated Corporate segment operating (loss)	$	(2.7	)	$	(30.5	)	$	(37.1	)	$	(79.2	)