FORM 11-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______ to _________
Commission file number 1-2116
HARTCO FLOORING COMPANY
BARGAINING EMPLOYEES'RETIREMENT SAVINGS PLAN
(Full title of the Plan)
ARMSTRONG WORLD INDUSTRIES, INC.
2500 Columbia Avenue Lancaster, Pennsylvania 17604
(Name of issuer of the securities held pursuant to the Plan
and the address of its principal executive office)
1
Page No.
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Item 1. Independent Auditors' Report 4
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Item 2. Statements of Net Assets Available for Benefits
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December 31, 1999 and 1998 5
Item 3. Statements of Changes in Net Assets Available for Benefits
----------------------------------------------------------
Years ended December 31, 1999 and 1998 6
Notes to Financial Statements 7-13
Schedule of Assets Held for Investment Purposes 14
Exhibits 15
- --------
Consent of Independent Auditors
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the members
of the committee constituting the administrator which administers the plan have
duly caused this annual report to be signed by the undersigned hereunto duly
authorized.
HARTCO FLOORING COMPANY BARGAINING
EMPLOYEES' RETIREMENT SAVINGS PLAN
June 26, 2000 By: /s/ Jennifer E. Wisdom
----------------------------
Jennifer E. Wisdom Vice President Human Resources
3
Independent Auditors' Report
To the Retirement Committee of the
Hartco Flooring Company
Bargaining Employees' Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Hartco Flooring Company Bargaining Employees' Retirement Savings Plan as
of December 31, 1999 and 1998, and the related statements of changes in net
assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Hartco
Flooring Company Bargaining Employees' Retirement Savings Plan as of December
31, 1999 and 1998, and the changes in net assets available for benefits for the
years then ended in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedule has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, is
fairly started in all material respects in relation to the basic financial
statements taken as a whole.
KPMG LLP
Dallas, Texas
June 16, 2000
4
HARTCO FLOORING COMPANY
BARGAINING EMPLOYEES' RETIREMENT SAVINGS PLAN
Statements of Net Assets Available For Benefits
December 31, 1999 and 1998
1999 1998
--------------- ---------------
Assets:
Investments, at fair value (note 5):
Armstrong Holdings, Inc. common stock $ 16,077 $ --
Fidelity Magellan Fund 386,145 204,974
Fidelity Equity Income Fund 1,127,827 1,014,315
Fidelity Intermediate Bond Fund 1,922,404 2,147,731
Fidelity Overseas Fund 131,200 74,403
Fidelity Asset Manager Fund 171,386 94,429
Fidelity Retirement Money Market Fund 431,866 302,944
Participant loans 385,805 271,590
--------------- ---------------
Total investments 4,572,710 4,110,386
Receivables (note 2):
Employer contributions -- 400
Employee contributions 2,342 816
Participant loans -- 295
--------------- ---------------
Total receivables 2,342 1,511
--------------- ---------------
Total assets 4,575,052 4,111,897
--------------- ---------------
Net assets available for benefits $ 4,575,052 $ 4,111,897
=============== ===============
See accompanying notes to financial statements.
5
HARTCO FLOORING COMPANY
BARGAINING EMPLOYEES' RETIREMENT SAVINGS PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 1999 and 1998
1999 1998
-------------- ---------------
Additions to net assets attributed to:
Investment income:
Interest and dividend income $ 325,826 $ 244,305
Net appreciation (depreciation) in fair value of
investments (note 5) (81,276) 101,186
-------------- ---------------
Net investment income 244,550 345,491
Contributions:
Participant (note 2) 292,904 276,166
Employer (note 2) 134,274 127,488
Rollovers (note 3) 1,198 9,132
-------------- ---------------
Total contributions 428,376 412,786
-------------- ---------------
Total additions 672,926 758,277
-------------- ---------------
Deductions from net assets attributed to benefits
paid to participants (notes 2 and 3) (209,771) (281,313)
-------------- ---------------
Net increase 463,155 476,964
Net assets available for benefits at beginning of year 4,111,897 3,634,933
-------------- ---------------
Net assets available for benefits at end of year $ 4,575,052 $ 4,111,897
============== ===============
See accompanying notes to financial statements.
6
HARTCO FLOORING COMPANY
BARGAINING EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(1) General Information
The Hartco Flooring Company Bargaining Employees' Retirement Savings Plan
(the Plan) was established on January 1, 1985. On June 28, 1996, Triangle
Pacific Corp. (the Company or Plan Administrator) acquired all of the
stock of Hartco Flooring Company from Premark International, Inc. The
Company assumed responsibility for administering and sponsoring the Plan
effective June 30, 1996, and to continue the Plan without interruption by
amending and restating the Plan in its entirety effective June 28, 1996,
to change the sponsoring employer.
(2) Description of the Plan
The following description of the Plan provides only general information.
Participants should refer to the Plan documents for more detailed
information.
(a) General
The Plan is a defined contribution plan which provides retirement
benefits to employees of Hartco Flooring Company, a division of
Triangle Pacific Corp., who are members of a collective bargaining
agreement and whose customary employment is for at least 1,000
hours during a 12 month period. Employees are eligible to
participate in the Plan on the first day of the month coincident
with or following the completion of six months of service. All
eligible employees whose customary employment is not for at least
1,000 hours during a year participate in the Plan on the first day
of the month coincident with or following the 12 month period
after their employment or any plan year thereafter, provided 1,000
hours of service is completed during this time period. However,
employees must not be active participants in any other defined
contribution plan to which the Company or any subsidiary
contributes on their behalf. The Plan is administered by Triangle
Pacific Corp. and advised by the retirement committee appointed by
the Board of Directors. The Plan is subject to the provisions of
the Employee Retirement Income Security Act of 1974 (ERISA).
(b) Contributions
Participants are permitted to contribute from 1% to 16% of their
eligible compensation to the Plan, as defined by the Plan
documents. Participants may elect to invest their contributions in
any of the available investment funds offered by Fidelity
Management Trust Company, the Trustee. The Company will provide a
50% match of active participant's contributions, up to 6% of the
participant's eligible compensation.
(c) Participant Accounts
Each participant's account is credited with the participant's
contributions and an allocation of the Company's contributions,
Plan earnings, and forfeitures of terminated participants'
nonvested accounts. The benefit to which a participant is entitled
is the benefit that can be provided from the participant's vested
account.
(Continued)
7
HARTCO FLOORING COMPANY
BARGAINING EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(d) Vesting
Participants are fully vested in the current value of their own
contributions and earnings thereon, and become fully vested in
Company contributions and related earnings credited to their
accounts based upon their years of vesting service as shown in the
following table:
Years of Vested
Vesting Service Percentage
----------------------- -------------------
Less than 1 0%
1 but less than 2 20
2 but less than 3 40
3 but less than 4 60
4 but less than 5 80
5 or more 100
Participants who are age 65 or over or become permanently disabled
are automatically 100% vested in the value of Company
contributions and related earnings credited to their account.
(e) Investment Options
Elective and nondeductible contributions may be invested in
guaranteed income funds, fixed income funds, equity funds or a
money market fund at the option of the participating employee. The
Plan has investment options available to which participants may
allocate their contributions follow:
. Armstrong Holdings, Inc. - Effective April 1, 1999, the
Plan was amended to include Armstrong Holdings, Inc.
common stock as one of the investment options. Armstrong
Holdings, Inc. (formerly Armstrong World Industries, Inc.)
is the parent company of Triangle Pacific Corp. (see note
6). Armstrong is publicly traded on the New York Stock
Exchange.
. Fidelity Magellan Fund - The Fidelity Magellan Fund is a
diversified portfolio of common stocks of domestic and
foreign issuers. The portfolio seeks capital appreciation
by investing in growth stocks, value stocks or both.
. Fidelity Equity Income Fund - The Fidelity Equity Income
Fund has a primary objective of seeking moderate income
levels by investing 65% of total assets in foreign and
domestic income producing equity securities, such as
stocks, bonds and other debt securities. The fund also
seeks capital appreciation when consistent with its
primary objective.
(Continued)
8
HARTCO FLOORING COMPANY
BARGAINING EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
. Fidelity Intermediate Bond Fund - The Fidelity
Intermediate Bond Fund has a primary objective of seeking
high current income by investing in U.S. dollar-dominated
investment grade debt securities with maturities between
three to ten years. The Lehman Brothers Intermediate
Government/ Corporate Bond Index is used as a guide in
structuring the fund and selecting the investments.
. Fidelity Overseas Fund - The Fidelity Overseas Fund seeks
long-term growth of capital by primarily investing in the
common stock of foreign issuers.
. Fidelity Asset Manager Fund - The Fidelity Asset Manager
Fund strives for high total return with reduced risk over
the long-term. The fund pursues this goal with diversified
investments of stocks, bonds and short-term and money
market instruments, both domestic and international, while
maintaining a diversified mix of securities.
. Fidelity Retirement Money Market Fund - The Fidelity
Retirement Money Market Fund seeks to earn a high level of
current income while maintaining a stable $1.00 share
price by investing in high-quality, short- term
securities. These securities may include, but are not
limited to, high-quality short-term U.S. dollar
denominated money market securities, domestic and foreign
issuers.
(f) Participant Loans
Participants may borrow from the Plan an amount greater than
$1,000 but less than 50% of the participant's vested account
balance. In no event can the participant borrow more than $50,000.
Loans are for a period not to exceed five years and bear interest
at 1% above the prime rate of interest being charged by local
banks at the time the loan is authorized. The interest rate for
1999 was 9.25%.
(g) Payment of Benefits
On termination of service due to death, disability or retirement,
a participant may elect to receive the total value of their
account attributable to their contributions, as well as the vested
value of their Company contributions, in cash or by purchasing an
annuity under the terms of an annuity contract. For termination of
service due to other reasons, a participant may receive the value
of the vested interest in his or her account as a lump sum
distribution. Participants may make hardship withdrawals from
their earnings deferred contributions at specified times, subject
to the determination by the Plan administrator that the withdrawal
is required to meet an immediate and heavy financial need.
(Continued)
9
HARTCO FLOORING COMPANY
BARGAINING EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(h) Forfeitures
Company contributions forfeited by terminating employees are used
to reduce future Company contributions to the Plan ($3,691 and
$849 in 1999 and 1998, respectively). The Company will reinstate
forfeited balances to the accounts of participants who rejoin the
Company within five years of their termination.
(3) Summary of Significant Accounting Policies
(a) Basis of Accounting
The financial statements of the Plan are prepared under the
accrual method of accounting.
(b) Investment Valuation and Income Recognition
The Plan's investments are stated at fair value and have been
determined based on closing market quotations. Purchases and sales
of securities are recorded by the trustee at current cost on the
trade date. Realized and unrealized gains (losses) on investments
are based on the fair value of the assets at the beginning of the
Plan year or at the time of purchase during the year. Interest
income is recorded on the accrual basis. Dividends are recorded on
the ex-dividend date.
(c) Administration Expenses
In accordance with the provisions of the Plan, unless paid by the
Company, all costs of administering the Plan are charged to the
Plan. During 1999 and 1998, all significant expenses were paid by
the Company ($19,071 in 1999 and $17,647 in 1998, respectively).
(d) Payment of Benefits
Benefits are recorded when distributed.
(e) Rollover Contributions
Employee rollovers represent receipts from employees receiving
distributions from their previous employers' qualified plan(s).
(f) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets, liabilities, and changes therein, and disclosure of
contingent assets and liabilities. Actual results could differ
from those estimates.
(Continued)
10
HARTCO FLOORING COMPANY
BARGAINING EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(4) Units
Participant accounts are assigned investment fund units/shares. The net
asset value per unit/shares by fund/account for the 1999 and 1998
calendar quarters ended are as follows:
1999 Quarters Ended Units at
----------------------------------------------------------------
December 31,
March 31 June 30 September 30 December 31 1999
------------- ------------ ---------------- ---------------- -----------------
Armstrong Holdings,
Inc. common
stock $ 45.19 $ 57.81 $ 44.94 $ 33.37 482
Fidelity Magellan
Fund 129.75 129.77 122.02 136.63 2,826
Fidelity Equity
Income Fund 55.92 61.63 56.03 53.48 21,089
Fidelity Intermediate
Bond Fund 10.16 9.96 9.88 9.76 196,968
Fidelity Overseas
Fund 36.99 38.88 41.11 48.01 2,733
Fidelity Asset
Manager Fund 17.54 18.08 17.28 18.38 9,325
Fidelity Retirement 1.00 1.00 1.00 1.00 431,866
Money Market
Fund
1998 Quarters Ended Units at
----------------------------------------------------------------
December 31,
March 31 June 30 September 30 December 31 1998
------------- ------------ ---------------- ---------------- -----------------
Fidelity Magellan
Fund $ 108.81 $ 109.63 $ 97.52 $ 120.82 1,697
Fidelity Equity
Income Fund 57.51 57.20 49.60 55.55 18,260
Fidelity Intermediate
Bond Fund 10.17 10.20 10.40 10.27 209,127
Fidelity Overseas
Fund 37.09 37.70 31.14 35.98 2,068
Fidelity Asset
Manager Fund 19.59 19.54 18.24 17.39 5,430
Fidelity Retirement 1.00 1.00 1.00 1.00 302,944
Money Market
Fund
(Continued)
11
HARTCO FLOORING COMPANY
BARGAINING EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(5) Investments
In September 1999, the American Institute of Certified Public Accountants
issued Statement of Position 99-3, Accounting for and Reporting of
Certain Defined Contribution Plan Investments and Other Disclosure
Matters (SOP 99-3). SOP 99-3 simplifies the disclosure for certain
investments and is effective for plan years ending after December 15,
1999. The Plan adopted SOP 99-3 during the Plan year ending December 31,
1999. Accordingly, information previously required to be disclosed about
participant directed fund investment programs is not presented in the
Plan's 1999 financial statements. The Plan's 1998 financial statements
have been reclassified to conform with the current year's presentation.
The following investments exceed 5% of the Plan's net assets available
for Plan benefits at December 31, 1999 and 1998:
December 31,
------------------------------------
1999 1998
----------------- -----------------
Fidelity Magellan Fund $ 386,145 $ 204,974
Fidelity Equity Income Fund 1,127,827 1,014,315
Fidelity Intermediate Bond Fund 1,922,404 2,147,731
Fidelity Retirement Money Market Fund 431,866 302,944
Participant loans 385,805 271,590
Other - less than 5% 318,663 168,832
----------------- -----------------
Total investments $ 4,572,710 $ 4,110,386
================= =================
During 1999 and 1998, the Plan's investments had net realized and
unrealized gains (losses) as follows:
1999 1998
--------------- ---------------
Armstrong Holdings, Inc. common stock $ (8,940) $ --
Fidelity Magellan Fund 36,870 27,259
Fidelity Equity Income Fund (43,645) 55,786
Fidelity Intermediate Bond Fund (103,281) 14,073
Fidelity Overseas Fund 30,165 6,861
Fidelity Asset Manager Fund 7,555 (3,542)
Triangle Pacific Corp. Common Stock -- 749
--------------- ---------------
Net appreciation (depreciation)
in fair value of investments $ (81,276) $ 101,186
=============== ===============
(Continued)
12
HARTCO FLOORING COMPANY
BARGAINING EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
The components of investment income for the years ended December 31, 1999
and 1998 are as follows:
1999 1998
----------------- -----------------
Investment income:
Interest and dividend income $ 325,826 $ 244,305
Net appreciation (depreciation)
in fair value of investments (81,276) 101,186
----------------- -----------------
$ 244,550 $ 345,491
================= =================
(6) Acquisition
On July 22, 1998, Triangle Pacific Corp. was acquired by Armstrong
World Industries, Inc. (a subsidiary of Armstrong Holdings, Inc.). The
Board of Directors of Triangle Pacific Corp. intends to continue
providing retirement benefits through the Company's defined contribution
plans.
(7) Tax Status of the Plan
The Internal Revenue Service has determined and informed the Company by a
letter dated November 26, 1997, that the Plan and related trust are
designed in accordance with applicable requirements of the Internal
Revenue Code (IRC). The Plan has been amended since receiving the
determination letter. However, the Plan administrator and Plan's
management believe that the Plan is designed and is currently being
operated in compliance with the applicable requirements of the IRC.
(8) Plan Termination
Although it has not expressed intent to do so, the Company has the right
to discontinue its contribution at any time and to terminate the Plan
subject to the provision of ERISA. In the event of Plan termination,
participants will become fully vested in their accounts.
(9) Related-party Transactions
Certain Plan investments are shares of common stock of Armstrong
Holdings, Inc. and shares of mutual funds managed by Fidelity
Investments. Triangle Pacific Corp. is a wholly owned subsidiary of
Armstrong Holdings, Inc. Fidelity Management Trust Company is the Trustee
as defined by the Plan. Therefore, transactions involving these entities
or funds qualify as party-in-interest transactions.
13
Schedule 1
HARTCO FLOORING COMPANY
BARGAINING EMPLOYEES' RETIREMENT SAVINGS PLAN
Schedule of Assets Held for Investment Purposes
at end of year December 31, 1999
Current
Identity of issuer Description of investment value
- ----------------------------------------- ------------------------------------------------- ---------------
Armstrong Holdings, Inc.* Common stock $ 16,077
Fidelity Investments* Fidelity Magellan Fund 386,145
Fidelity Investments* Fidelity Equity Income Fund 1,127,827
Fidelity Investments* Fidelity Intermediate Bond Fund 1,922,404
Fidelity Investments* Fidelity Overseas Fund 131,200
Fidelity Investments* Fidelity Asset Manager Fund 171,386
Fidelity Investments* Fidelity Retirement Money Market Fund 431,866
Participant Loans* Loans to participants 385,805
---------------
Total investments $ 4,572,710
===============
* Party-in-interest.
See accompanying independent auditors' report.
14