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 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 5
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December 31, 1999 and 1998
Item 3. Statements of Changes in Net Assets Available for Benefits 6
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Years ended December 31, 1999 and 1998
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
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
Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Hartco Flooring Company 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 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 stated 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
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 $ 56,257 $ -
Fidelity Magellan Fund 1,941,949 1,501,323
Fidelity Equity Income Fund 1,516,877 1,658,729
Fidelity Intermediate Bond Fund 980,972 1,154,431
Fidelity Overseas Fund 575,744 441,761
Fidelity Asset Manager Fund 215,799 166,944
Fidelity Retirement Money Market Fund 1,043,205 480,202
Participant loans 264,984 234,490
------------------ ------------
Total investments 6,595,787 5,637,880
Receivables (note 2):
Employer contributions - 244,123
Employee contributions 2,674 -
Other 34,098 -
----------------- ------------
Total receivables 36,772 244,123
----------------- ------------
Total assets 6,632,559 5,882,003
----------------- ------------
Net assets available for benefits $ 6,632,559 $ 5,882,003
================= ============
See accompanying notes to financial statements.
5
HARTCO FLOORING COMPANY
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 $ 498,432 $ 309,489
Net appreciation in fair value of investments (note 5) 235,315 421,079
------------------ --------------
Net investment income 733,747 730,568
Contributions:
Participant (note 2) 379,718 400,678
Employer (note 2) 50,795 299,765
Rollovers (note 3) 4,074 15,423
------------------ --------------
Total contributions 434,587 715,866
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Total additions 1,168,334 1,446,434
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Deductions from net assets attributed to - benefits paid
to participants (notes 2 and 3) (417,778) (628,893)
Net increase 750,556 817,541
Net assets available for benefits at the beginning of the year 5,882,003 5,064,462
------------------- --------------
Net assets available for benefits at the end of the year $ 6,632,559 $ 5,882,003
=================== ==============
See accompanying notes to financial statements.
6
HARTCO FLOORING COMPANY
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(1) General Information
On June 28, 1996, Triangle Pacific Corp. (the Company) acquired from
Premark all of the common stock of Hartco Flooring Company. In connection
with this acquisition, Premark and the Company agreed to spin off,
effective as of June 28, 1996, that portion of the Premark Plan benefiting
participants who were employees or former employees of Premark, to a
separate plan sponsored and maintained by the Company to be known as the
Hartco Flooring Company Retirement Savings Plan (the Plan), as set forth
herein, as a continuation, without interruption, of such portion of the
Premark Plan.
(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 not 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 25% match of active
participant's contributions, up to 4% of the participant's eligible
compensation.
Effective January 1, 1998, the Plan was amended to include a profit
sharing component. The Company may contribute a discretionary profit
sharing amount based solely at the discretion of the Board of
Directors of the Company.
7
HARTCO FLOORING COMPANY
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(c) Participant Accounts
Each participant's account is credited with the participant's
contribution and an allocation of the Company's contribution, 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.
(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 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. Common Stock - 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.
(Continued)
8
HARTCO FLOORING COMPANY
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
. Fidelity Equity Income Fund - The Fidelity Equity Income
Fund has a primary objective of seeking reasonable income
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.
. 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%.
(Continued)
9
HARTCO FLOORING COMPANY
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(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.
(h) Forfeitures
Company contributions forfeited by terminating employees are used to
reduce future Company contributions to the Plan ($10,881 in 1999 and
$5,247 in 1998). 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 ($18,305 in 1999 and $17,797 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).
(Continued)
10
HARTCO FLOORING COMPANY
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(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.
(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 is as follows:
Units at
1999 quarters ended December 31,
--------------------------------------------------------------------
March 31 June 30 September 30 December 31 1999
----------- ----------- ------------ ----------- ------------
Armstrong Holdings,
Inc. common stock $ 45.19 $ 57.81 $ 44.94 $ 33.37 1,686
Fidelity Magellan
Fund 129.75 129.77 122.02 136.63 14,213
Fidelity Equity
Income Fund 55.92 61.63 56.03 53.48 28,363
Fidelity Intermediate
Bond Fund 10.16 9.96 9.88 9.76 100,509
Fidelity Overseas
Fund 36.99 38.88 41.11 48.01 11,992
Fidelity Asset
Manager Fund 17.54 18.08 17.28 18.38 11,741
Fidelity Retirement
Money Market Fund 1.00 1.00 1.00 1.00 1,043,205
Units at
1998 quarters ended December 31,
---------------------------------------------------------------
March 31 June 30 September 30 December 31 1998
------------- --------- ------------ --------------- ------------
Fidelity Magellan
Fund $ 108.81 $ 109.63 $ 97.52 $ 120.82 12,426
Fidelity Equity
Income Fund 57.51 57.20 49.60 55.55 29,860
Fidelity Intermediate
Bond Fund 10.17 10.20 10.40 10.27 112,408
Fidelity Overseas
Fund 37.09 37.70 31.14 35.98 12,278
Fidelity Asset
Manager Fund 19.59 19.54 18.24 17.39 9,600
Fidelity Retirement
Money Market Fund 1.00 1.00 1.00 1.00 480,202
(Continued)
11
HARTCO FLOORING COMPANY
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
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:
Fair value
------------------------
1999 1998
----------- -----------
Fidelity Magellan Fund $ 1,941,949 $ 1,501,323
Fidelity Equity Income Fund 1,516,877 1,658,729
Fidelity Intermediate Bond Fund 980,972 1,154,431
Fidelity Overseas Fund 575,744 441,761
Fidelity Retirement Money Market Fund 1,043,205 480,202
Other - less than 5% 537,040 401,434
----------- -----------
Total investments $ 6,595,787 $ 5,637,880
=========== ===========
During 1999 and 1998, the Plan's investments had net realized and
unrealized gains (losses) as follows:
1999 1998
---------- ----------
Armstrong Holdings, Inc. common stock $ (23,081) $ --
Triangle Pacific Corp. common stock -- 7,899
Fidelity Magellan Fund 204,771 246,845
Fidelity Equity Income Fund (43,380) 125,163
Fidelity Intermediate Bond Fund (51,714) 7,436
Fidelity Overseas Fund 137,637 43,096
Fidelity Asset Manager Fund 11,082 (9,360
--------- ---------
Net appreciation in fair value of
investments $ 235,315 $ 421,079
========= =========
(Continued)
12
HARTCO FLOORING COMPANY
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 $ 498,432 $ 309,489
Net appreciation in fair value of investments 235,315 421,079
---------- ----------
$ 733,747 $ 730,568
========== ==========
(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 January 27, 1998, 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.
(10) Subsequent Events
Effective January 1, 2000, the Plan was amended to increase the employer
matching contribution percentage to 50% of qualified employee contributions
up to 6% of the employee's annual earnings for all participants.
13
Schedule 1
HARTCO FLOORING COMPANY
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 $ 56,257
Fidelity Investments* Fidelity Magellan Fund 1,941,949
Fidelity Investments* Fidelity Equity Income Fund 1,516,877
Fidelity Investments* Fidelity Intermediate Bond Fund 980,972
Fidelity Investments* Fidelity Overseas Fund 575,744
Fidelity Investments* Fidelity Asset Manager Fund 215,799
Fidelity Investments* Fidelity Retirement Money Market Fund 1,043,205
Participant loans* Loans to participants 264,984
----------------
Total investments $ 6,595,787
================
* Party-in-interest
See accompanying independent auditors' report.
14