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 September 30, 2001

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT
    OF 1934

               For the transition period from _______ to _________

                  Commission file numbers 1-2116 and 333-32530



                   RETIREMENT SAVINGS AND STOCK OWNERSHIP PLAN
                       OF ARMSTRONG WORLD INDUSTRIES, INC.
                            (Full title of the Plan)



                        ARMSTRONG WORLD INDUSTRIES, INC.
                            ARMSTRONG HOLDINGS, 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.
                                                                        --------

Item 1. Independent Auditors' Report                                           4
        ----------------------------

Item 2.  Statements of Net Assets Available for Benefits                       5
         -----------------------------------------------
         September 30, 2001 and 2000

Item 3. Statements of Changes in Net Assets Available for Benefits             6
        ----------------------------------------------------------
         Years ended September 30, 2001 and 2000

Notes to Financial Statements                                               7-15

Schedule H, line 4i - Schedule of Assets (Held at End of Year)                16


Exhibits
- ---------
         Consent of Independent Auditors                                      17

                                       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.

                    RETIREMENT SAVINGS AND STOCK OWNERSHIP PLAN
                    OF ARMSTRONG WORLD INDUSTRIES, INC.


March 28, 2002      By: /s/: Matthew J. Angello
                    ----------------------------

                    Matthew J. Angello Vice-Chairman of the Retirement Committee






                                       3



                          Independent Auditors' Report
                          ----------------------------

The Retirement Committee
Armstrong World Industries, Inc.:

We have audited the accompanying statements of net assets available for benefits
of the Retirement Savings and Stock Ownership Plan of Armstrong World
Industries, Inc. as of September 30, 2001 and 2000 and the related statements of
changes in net assets available for benefits for each of the years in the
two-year period ended September 30, 2001. 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 auditing standards generally accepted
in the United States of America. 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 Retirement
Savings and Stock Ownership Plan of Armstrong World Industries, Inc. as of
September 30, 2001 and 2000 and the changes in net assets available for benefits
for each of the years in the two-year period ended September 30, 2001, in
conformity with accounting principles generally accepted in the United States of
America.

Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule 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. This supplemental schedule is the
responsibility of the Plan's management. 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.


/s/ KPMG LLP

March 26, 2002
Philadelphia, Pennsylvania

                                       4



                 THE RETIREMENT SAVINGS AND STOCK OWNERSHIP PLAN
                       OF ARMSTRONG WORLD INDUSTRIES, INC.
                 Statements of Net Assets Available for Benefits
                           September 30, 2001 and 2000




                                                                   September 30,
                                                                   -------------

                                                             2001               2000
                                                             ----               ----
                                                                          
Assets:
   Investments in master trust:
     Cash equivalents:
        Fidelity Retirement Money Market Portfolio         $  4,879,049       $  5,903,335
     Shares of registered investment companies:
        Fidelity Magellan Fund                               66,064,766         99,533,958
        Fidelity Low-Priced Stock Fund                        2,245,552          1,139,349
        Fidelity OTC Portfolio                               11,979,688         29,287,077
        Fidelity Asset Manager Fund                           6,103,802          7,494,869
        Fidelity Asset Manager:  Income Fund                  2,175,824          2,405,225
        Fidelity Asset Manager:  Growth Fund                  7,937,297         10,448,524
        Fidelity Overseas Fund                                1,151,667          1,754,028
        MAS Trust Value Portfolio                             1,335,228            520,260
        MAS Trust Mid Cap Value Portfolio                     4,073,290          3,933,053
        Spartan US Equity Index Fund                         42,225,508         66,151,241
        Morgan Stanley Global Value Equity Portfolio          1,607,319          1,407,849
    Fixed income investment contracts:
        Fidelity Interest Income Fund                       122,306,844        122,783,409
    Armstrong Common Stock                                    2,824,550          4,936,531
    Participant loans                                         3,245,942          3,827,934
                                                           ------------       ------------
                                                            280,156,326        361,526,642
  Investments in employee stock ownership funds:
    Cash equivalents                                            118,445          1,243,824
    Allocated Armstrong Common Stock                          7,772,629         32,441,075
    Unallocated Armstrong Common Stock                        5,218,532         27,932,759
                                                           ------------       ------------
                                                             13,109,606         61,617,658

    Employer contributions receivable                                --            303,982
    Interest receivable                                             351              6,030
                                                           ------------       -------------

            Total assets                                    293,266,283        423,454,312
                                                           ------------       ------------
Liabilities:
  Guaranteed ESOP notes                                     142,158,150        142,158,150
  Loans due plan sponsor                                             --         39,864,575
  Interest and tax penalty                                   15,458,029                 --
  Accrued interest                                           23,428,090          3,688,334
                                                           ------------       ------------
            Total liabilities                               181,044,269        185,711,059
                                                           ------------       ------------
    Net assets available for benefits                      $112,222,014       $237,743,253
                                                           ============       ============


See accompanying notes to the financial statements.

                                       5



                 THE RETIREMENT SAVINGS AND STOCK OWNERSHIP PLAN
                       OF ARMSTRONG WORLD INDUSTRIES, INC.
           Statements of Changes in Net Assets Available for Benefits
                     Years Ended September 30, 2001 and 2000



                                                        Year Ended September 30,
                                                        ------------------------
                                                        2001                2000
                                                        ----                ----
                                                                    
Additions to net assets attributed to:
     Employee contributions                          $  14,030,407        $  19,030,119
     Employer contributions, match                       2,721,561           13,582,859
     Employer contributions, loan forgiveness           39,864,575                   --
                                                     -------------        -------------
                                                        56,616,543           32,612,978

     Dividends                                           7,014,324           24,586,821
     Interest                                            7,766,751            7,827,032
     Realized gain on investments, net                          --            9,438,878
                                                     -------------        -------------
                                                        14,781,075           41,852,731
                                                     -------------        -------------

           Total additions                              71,397,618           74,465,709
                                                     -------------        -------------
Reduction in net assets attributed to:
     Benefits paid to participants                      34,567,234           37,075,307
     Interest expense                                   19,757,800           13,541,861
     Interest and tax penalty                           15,458,029                   --
     Realized loss on investments, net                   4,117,739                   --
     Unrealized depreciation of investments            113,577,437          151,108,227
     Transfers to other employee benefit plans           9,440,618            7,519,393
                                                     -------------        -------------

           Total reductions                            196,918,857          209,244,788
                                                     -------------        -------------

     Net (decrease)                                   (125,521,239)        (134,779,079)

Net assets available for benefits:
     Beginning of year                                 237,743,253          372,522,332
                                                     -------------        -------------

     End of year                                     $ 112,222,014        $ 237,743,253
                                                     =============        =============


 See accompanying notes to the financial statements.

                                       6



                 THE RETIREMENT SAVINGS AND STOCK OWNERSHIP PLAN
                       OF ARMSTRONG WORLD INDUSTRIES, INC.
                          Notes to Financial Statements

(1)  Summary of Significant Accounting Policies
     ------------------------------------------

     (a) Basis of Presentation
         ---------------------
         The accompanying financial statements have been prepared on the accrual
         basis.

         The preparation of financial statements in conformity with generally
         accepted accounting principles in the United States of America requires
         management to make estimates and assumptions that affect the reported
         amounts of assets and liabilities and disclosure of contingent assets
         and liabilities at the date of the financial statements and the
         reported amounts of revenues and expenses during the reporting period.
         Actual results could differ from estimates recorded.

     (b) Investments in Master Trust
         ---------------------------
         The money market portfolio is stated at cost, which approximates fair
         value. The interest income fund is comprised of guaranteed interest
         rate contracts within the Master Trust which are fully benefit
         responsive; and therefore are reflected at contract value plus credited
         interest in the financial statements. The value of the participant
         loans represents the unpaid principal of employee loans. The value of
         all other investments is based on quoted market price.

         Securities transactions are recognized on the settlement date (the date
         on which payment for a buy or sell order is made or received), since
         adjustment to a trade-date basis would not be material. Dividend income
         is recorded on the ex-dividend date.

         Realized gains and losses on investments are determined by the average
         cost method.

         Employee Stock Ownership Funds
         ------------------------------
         Investments in the Employee Stock Ownership Funds represent shares of
         Armstrong Holdings, Inc. common stock valued at quoted market price.
         Cash equivalents are stated at cost, which approximates fair value.

     (c) Expenses
         --------
         All legal, accounting and administrative expenses associated with Plan
         operations are paid by Armstrong World Industries, Inc. ("Armstrong")


(2)  Plan Description
     ----------------
     The Retirement Savings and Stock Ownership Plan of Armstrong World
     Industries, Inc. ("the Plan") is a defined-contribution plan established
     for the purpose of providing participants a means for long-term savings
     intended for the accumulation of retirement income. The Plan is comprised
     of two parts--Retirement Savings Plan and Employee Stock Ownership Plan
     (ESOP). Each part has its own set of participant accounts and investment
     funds. On December 6, 2000 Armstrong filed a voluntary petition for relief
     under Chapter 11 of the U.S. Bankruptcy Code in Wilmington, DE in order to
     use the court-supervised reorganization process to achieve a resolution of
     its asbestos liability. On December 6, 2000 Armstrong filed a motion with
     the bankruptcy court to allow Armstrong to continue making contributions to
     the Plan. The motion was approved by the bankruptcy court. Management does
     not anticipate that Armstrong's bankruptcy filing will have an adverse
     impact on the operations of the Plan.

                                       7



                 THE RETIREMENT SAVINGS AND STOCK OWNERSHIP PLAN
                       OF ARMSTRONG WORLD INDUSTRIES, INC.
                   Notes to Financial Statements, (Continued)

     (a) Retirement Savings
         ------------------
         Separate balances are maintained for contributions made by or on behalf
         of a participant. The balances in each fund reflect the participants'
         contributions together with dividends, interest, other income, and
         realized and unrealized gains and losses allocated thereon.

         Each participant may have up to five accounts that make up the
         participant's total balance:

                Sheltered account - Participants may contribute from 1% to 15%
                -----------------
                of before-tax compensation as deferred compensation, as
                permitted under Section 401(k) of the Internal Revenue Code.

                Standard account - Participants may contribute from 1% to 10% of
                ----------------
                after-tax compensation.

                Rollover account - Participants may invest any untaxed amounts
                ----------------
                rolled over from another tax-qualified, employer-sponsored plan.

                Retirement savings match account - This account holds any cash
                --------------------------------
                match amount contributed by Armstrong beginning in December
                2000. Armstrong contributed an amount equal to 50% of the
                exchange contributions made by each participant during the stock
                ownership allocation period ending December 13, 2000. Effective
                for pay periods ending on or after March 1, 2001, Armstrong
                contributes an amount equal to 50% of the first 6% of each
                participant's sheltered account contributions. This account also
                holds any amount contributed by Armstrong before cash matching
                contributions were discontinued in 1990 (formerly referred to as
                the Old Match account), prior to the reinstatement of the cash
                match in December 2000.

                Tax-deductible account (MIRA) - This account holds any
                -----------------------------
                contributions made to the Plan before January 1, 1987. No new
                contributions can be made to this account.

         Participants have an immediate 100% vested interest with respect to
         their contributions and are fully vested with regard to any Armstrong
         contributions in the retirement savings match account attributable to
         matching contributions made before December 1, 2000. Participants have
         a 100% vested interest in amounts contributed to their retirement
         savings match account made on or after December 1, 2000 upon completion
         of five years of service.

     (b) Stock Ownership
         ---------------
         The ESOP portion of the Plan has three accounts maintained for each
         member for contributions and allocations of shares of Armstrong common
         stock from the Unallocated Armstrong Common Stock Fund.

         Participants who elect to reduce their before-tax compensation in
         amounts ranging from 1% to 6% have these contributions credited to an
         Exchange Account. Contributions to the Exchange Account were invested
         in Armstrong common stock. The Plan matched a portion of the
         contributions made to the Exchange Account with additional shares of
         Armstrong common stock. The matching amounts were recorded in
         participants' Match Accounts. The match percentage, either 50% or 75%,
         was determined by the closing stock price on the last day of the
         allocation period. For the allocation periods ended in December 1999
         and June 2000 there was a 50% fixed match on employee Exchange Account
         contributions. Effective December 1, 2000, all contributions and
         allocations to the Exchange Account ceased.

                                       8



                 THE RETIREMENT SAVINGS AND STOCK OWNERSHIP PLAN
                       OF ARMSTRONG WORLD INDUSTRIES, INC.
                   Notes to Financial Statements, (Continued)

         Eligible participants also received shares of Armstrong common stock in
         their Equity Account. The Equity Account was intended to provide a
         source of funds to replace certain retiree medical benefits which were
         phased out in conjunction with the adoption of the ESOP. Effective
         December 1, 2000, all allocations to the Equity Account ceased.

         Participants have an immediate 100% vested interest in the full value
         of their Exchange Account. Interest in the Equity and Match Accounts
         vest after five years of service.

(3)  Investments in Master Trust
     ---------------------------

     (a) Retirement Savings Funds
         ------------------------
         Assets are held in a Master Trust administered by Fidelity Management
         Trust Co., as Trustee, and are segregated into fourteen investment
         options.

         The following is a brief description of the investment funds to which
         Plan participants may elect to allocate their contributions.
         Participants should refer to fund prospectuses for more complete
         information regarding the investment funds.

             1.   Spartan US Equity Index Fund - This fund is principally a
                  portfolio of common stocks constructed and maintained with the
                  objective of providing investment results which approximate
                  the overall performance of the common stocks included in the
                  Standard & Poor's Composite Index of 500 stocks.

             2.   Fidelity Magellan Fund - This fund invests in common stocks of
                  companies having substantial growth prospects as determined by
                  independent investment managers.

             3.   Fidelity  Low-Priced  Stock Fund - This fund seeks capital
                  appreciation  through  investments  primarily in U.S. and
                  foreign low-priced stocks that may be undervalued, overlooked
                  or out of favor.

             4.   Fidelity Retirement Money Market Portfolio - This fund invests
                  in short-term (less than one year maturity) fixed income
                  instruments such as U.S. Treasury Bills, bank certificates of
                  deposit, and high grade commercial paper.

             5.   Fidelity Interest Income Fund - Prior to May 15, 2001,
                  contributions to this fund were invested in the general
                  accounts of insurance companies and were credited at
                  contracted interest rates. Invested principal and accumulated
                  interest amounts were guaranteed against loss by the insurance
                  company.  Crediting interest rates were reset periodically
                  during the plan year.  At September 30, 2001, the interest
                  rates ranged between 4.22% and 10.62%.  At September 30,
                  2000, the interest rates ranged between 4.73% and 7.58%.  The
                  average yields at September 30, 2001 and September 30, 2000,
                  were 7.31% and 6.25%, respectively.   Beginning May 15, 2001,
                  contributions to this fund are invested in the Fidelity
                  Managed Income Portfolio II (MIPII) fund.  Fidelity is
                  transferring all existing participant monies in the Interest
                  Income Fund to the MIPII fund as contracts mature or are
                  liquidated.  Fidelity expects this action to be completed by
                  the end of 2002.  MIPII is a commingled pool of the Fidelity
                  Group Trust for 401(k) plans which is comprised of
                  high-quality fixed income investment contracts.

             6.   Morgan Stanley Global Value Equity Portfolio - This fund
                  invests in a diversified selection of stocks throughout the
                  world, after a detailed analysis by local country investment
                  experts. It seeks to increase the value of the investment over
                  the long term through growth of capital.

                                       9



                 THE RETIREMENT SAVINGS AND STOCK OWNERSHIP PLAN
                       OF ARMSTRONG WORLD INDUSTRIES, INC.
                   Notes to Financial Statements, (Continued)

             7.   Armstrong Common Stock - Amounts invested in this fund, along
                  with dividend earnings thereon, are invested in Armstrong
                  common stock. Common stock shares held by the fund at
                  September 30, 2001 and 2000 were 1,034,634 and 413,514,
                  respectively. On May 1, 2000, Armstrong Holdings, Inc.
                  acquired the stock of Armstrong World Industries, Inc. An
                  indirect holding in Armstrong World Industries, Inc. makes up
                  substantially all of the assets of Armstrong Holdings, Inc. As
                  of December 19, 2000, the Plan was amended to eliminate this
                  investment option effective with contributions made on or
                  after December 27, 2000 and transfers processed on or after
                  January 1, 2001.

             8.   Fidelity Overseas Fund - This fund invests in securities of
                  issuers whose principal business activities are outside the
                  U.S. Investments may include common stock and securities
                  convertible into common stock, as well as debt instruments.

             9.   Fidelity OTC Portfolio - This fund invests in securities
                  traded in the over-the-counter securities market with the
                  objective of maximizing capital appreciation. Over-the-counter
                  securities include common and preferred stocks, securities
                  convertible into common stock, warrants, and debt instruments.

             10.  Fidelity Asset Manager Fund - This is an asset allocation fund
                  which invests in a portfolio of stocks, bonds, and short-term
                  instruments. The fund has a balanced investment strategy with
                  a goal of high total return with reduced risk over the long
                  term.

             11.  Fidelity Asset Manager:  Income Fund - This is an asset
                  allocation  fund which invests in a diversified  portfolio of
                  stocks, bonds, and short-term instruments. The fund has an
                  investment strategy focusing on bonds and short-term
                  instruments to achieve a high level of current income and
                  capital preservation.

             12.  Fidelity Asset Manager: Growth Fund - This is an asset
                  allocation fund invested in a diversified mix of stocks,
                  bonds, and short-term instruments. The fund's investment
                  strategy is an aggressive one emphasizing stocks with the goal
                  of maximum total return over the long term.

             13.  MAS Trust Mid Cap Value Portfolio - This fund invests in
                  undervalued common stocks of mid-sized companies with a strong
                  potential for increase in share price. It seeks to provide
                  above-average long-term returns.

             14.  MAS Trust Value Portfolio - This fund seeks to provide above
                  average long-term returns by investing mostly in common stocks
                  of large companies that are considered undervalued.

         Participant loans represent the unpaid principal balances of loans made
         by Plan participants in accordance with established loan provision
         guidelines.

                                       10



                 THE RETIREMENT SAVINGS AND STOCK OWNERSHIP PLAN
                       OF ARMSTRONG WORLD INDUSTRIES, INC.
                   Notes to Financial Statements, (Continued)


         The following table presents the cost and estimated fair values of the
         investments in securities of the Master Trust at September 30, 2001 and
         2000:
                                             September 30, 2001               September 30, 2000          Unrealized
                                             ------------------               ------------------
                  Investment                Cost         Fair Value         Cost         Fair Value      Depreciation
                  ----------                ----         ----------         ----         ----------      ------------
                                                                                        
         Spartan US Equity
         Index Fund                      $ 29,120,662     $ 42,225,508   $ 31,484,347    $ 66,151,241     $(21,562,048)
         Fidelity Magellan Fund            62,092,013       66,064,766     64,330,330      99,533,958      (31,230,875)
         Fidelity Low-Priced
         Stock Fund                         2,367,175        2,245,552      1,245,060       1,139,349          (15,912)
         Fidelity Retirement
         Money Market Portfolio             4,879,049        4,879,049      5,903,335       5,903,335               --
         Fidelity Interest Income
         Fund                             122,306,844      122,306,844    122,783,409     122,783,409               --
         Morgan Stanley Global
         Value Equity Portfolio             2,046,026        1,607,319      1,615,085       1,407,849         (231,471)
         Armstrong Common Stock            12,972,047        2,824,550     13,567,354       4,936,531       (1,516,674)
         Fidelity Overseas Fund             1,872,018        1,151,667      1,795,013       1,754,028         (679,366)
         Fidelity OTC Portfolio            22,271,603       11,979,688     23,502,042      29,287,077      (16,076,950)
         Fidelity Asset Manager
         Fund                               7,018,659        6,103,802      6,701,296       7,494,869       (1,708,430)
         Fidelity Asset Manager:
         Income Fund                        2,324,843        2,175,824      2,349,147       2,405,225         (205,097)
         Fidelity Asset Manager:
         Growth Fund                        9,884,670        7,937,297      8,803,204      10,448,524       (3,592,693)
         MAS Trust Mid Cap
         Value Portfolio                    5,116,628        4,073,290      3,411,543       3,933,053       (1,564,848)
         MAS Trust Value
         Portfolio                          1,488,243        1,335,228        640,932         520,260          (32,343)
         Participant loans                  3,245,942        3,245,942      3,827,934       3,827,934               --
                                         ------------     ------------   ------------    ------------     ------------
                                         $289,006,422     $280,156,326   $291,960,031    $361,526,642     $(78,416,707)
                                         ============     ============   ============    ============     ============


         The amounts of realized gain (loss) on investments in securities of the
         Master Trust for the years ended September 30, 2001 and 2000 are
         presented below:


                                                            Aggregate            Aggregate            Realized
                             2001                            Proceeds               Cost             Gain (Loss)
                             ----                            --------               ----             -----------
                                                                                          
         Spartan US Equity Index Fund                       $11,935,773         $ 7,376,840           $4,558,933
         Fidelity Magellan Fund                              14,268,626          11,960,101            2,308,525
         Fidelity Low-Priced Stock Fund                         522,670             522,638                   32
         Morgan Stanley Global Equity Portfolio                 200,642             229,963              (29,321)
         Armstrong Common Stock                                 557,240           2,185,165           (1,627,925)
         Fidelity Overseas Fund                                 455,406             559,356             (103,950)
         Fidelity OTC Portfolio                               4,489,893           5,714,683           (1,224,790)
         Fidelity Asset Manager Fund                          1,335,063           1,394,997              (59,934)
         Fidelity Asset Manager: Income Fund                    410,352             421,450              (11,098)
         Fidelity Asset Manager: Growth Fund                  1,375,058           1,471,186              (96,128)
         MAS Mid Cap Value Portfolio                            849,208             913,193              (63,985)
         MAS Value Portfolio                                    183,664             182,350                1,314
                                                            -----------         -----------           ----------
                                                            $36,583,595         $32,931,922           $3,651,673
                                                            ===========         ===========           ==========



                                       11



                   RETIREMENT SAVINGS AND STOCK OWNERSHIP PLAN
                       OF ARMSTRONG WORLD INDUSTRIES, INC.
                   Notes to Financial Statements, (Continued)



                                                                  Aggregate           Aggregate            Realized
                                2000                               Proceeds              Cost             Gain (Loss)
                                ----                               --------              ----             -----------
                                                                                                   
         Spartan US Equity Index Fund                              $14,686,180        $ 8,372,340          $ 6,313,840
         Fidelity Magellan Fund                                     16,009,985         10,996,590            5,013,395
         Fidelity Low-Priced Stock Fund                                525,811            571,013              (45,202)
         Morgan Stanley Global Value Equity Portfolio                  466,681            520,227              (53,546)
         Armstrong Common Stock                                      8,467,302          9,141,524             (674,222)
         Fidelity Overseas Fund                                        402,420            363,012               39,408
         Fidelity OTC Portfolio                                      5,414,601          3,785,200            1,629,401
         Fidelity Asset Manager Fund                                 1,099,660          1,032,503               67,157
         Fidelity Asset Manager: Income Fund                           721,606            710,618               10,988
         Fidelity Asset Manager: Growth Fund                         1,804,247          1,605,335              198,912
         MAS Trust Mid Cap Value Portfolio                             662,169            626,808               35,361
         MAS Trust Value Portfolio                                     220,591            279,160              (58,569)
                                                                   -----------        -----------          -----------
                                                                   $50,481,253        $38,004,330          $12,476,923
                                                                   ===========        ===========          ===========


     (b) Stock Ownership Funds
         ---------------------
         According to the terms of the trust agreement between Mellon Bank, N.A.
         through January 31, 2000 and JPMorgan Chase Bank, formerly Chase
         Manhattan Bank, ("the Trustee"), beginning February 1, 2000, and
         Armstrong World Industries, Inc., the Trustee manages a trust fund that
         has been created under the Plan and has been granted authority to
         purchase and sell Armstrong common stock as is necessary to administer
         the Plan in accordance with its terms.

         At September 30, 2001, the investment in Armstrong common stock
         represents 4,758,667 shares, valued at a quoted market price of $2.73.
         There are 2,847,117 shares held in the Allocated Armstrong Stock Fund
         and 1,911,550 shares held in the Unallocated Armstrong Stock Fund.
         During 2001, aggregate proceeds on sales were $25,479,943, aggregate
         costs were $33,249,355, and the realized loss was $7,769,412. Losses of
         $3,038,045 were realized during 2000.

 (4) Armstrong Contributions
     -----------------------
     Armstrong was obligated to make semi-annual contributions in cash or
     Armstrong stock to the Stock Ownership Funds, on June 15 and December 15 of
     each year, which when aggregated with all exchange contributions, dividends
     received by the Trustee on the common stock held by the Trust, and trust
     earnings, was at least equal to the amount necessary to enable the Trustee
     to pay currently maturing obligations under the Guaranteed ESOP notes (Note
     6). The contributions from Armstrong on December 15, 1999 and June 15, 2000
     included 199,053 and 237,500 shares, respectively, of Armstrong common
     stock contributed directly to allocated accounts. The December 15, 2000
     match was made in cash instead of in Armstrong stock. Beginning in March
     2001, Armstrong matches in cash 50% of the first 6% of each employee's
     before-tax contribution into the Sheltered Account. In 2001 Armstrong also
     made a non-cash contribution of $39,864,575 by forgiving loans which were
     due from the ESOP to Armstrong. See Note 6 for further discussion.

(5)  Employee ESOP Contributions and Dividends
     -----------------------------------------
     Employee ESOP contributions made during the year and dividends paid on
     Allocated Armstrong Stock are initially deposited into the Fidelity
     Retirement Money Market Portfolio until the next semi-annual allocation
     date, at which time they are contributed to the ESOP. During the time in
     the Fidelity Retirement Money Market Portfolio, these funds earn interest.
     At September 30, 2001 and 2000, the amounts in the Fidelity Retirement
     Money Market Portfolio to be contributed to the ESOP were $0 and
     $3,553,389, respectively.

                                       12



                   RETIREMENT SAVINGS AND STOCK OWNERSHIP PLAN
                       OF ARMSTRONG WORLD INDUSTRIES, INC.
                   Notes to Financial Statements, (Continued)

(6)  Guaranteed ESOP Notes and Loans Due Plan Sponsor
     ------------------------------------------------
     The shares of Armstrong common stock held in the Plan's Stock Ownership
     Accounts were purchased from Armstrong from the proceeds of the sale of
     Guaranteed ESOP notes in a total principal amount of $270,000,000 in 1989.
     Armstrong guaranteed the payment of principal and interest on the notes.
     The notes were scheduled to be repaid in semi-annual installments with
     interest per annum at 8.35% on the Series A Guaranteed Serial ESOP Notes
     due 1989-2001 and 8.92% on the Series B Guaranteed Serial ESOP notes due
     2001-2004. At September 30, 2000, the principal amounts of the Guaranteed
     ESOP notes for Series A and Series B were $22,115,150 and $120,043,000,
     respectively. On November 22, 2000, Armstrong failed to repay $50,000,000
     in commercial paper that was due. As a result, the Plan's remaining
     principal balance of $142,158,150 and unpaid interest became immediately
     payable along with a $15,458,029 interest and tax penalty. As discussed in
     Note 2, Armstrong filed a voluntary petition for relief under Chapter 11 of
     the U.S. Bankruptcy Code on December 6, 2000. On December 15, 2000, the
     Plan failed to make the scheduled principal and interest payment and, in
     light of Armstrong's Chapter 11 filing, Armstrong was not permitted to
     comply with its guarantee to pay such amounts. Subsequent to December 15,
     2000, no debt service payments have been made and interest on unpaid
     principal, interest, and penalty accrues at contractual gross-up interest
     rates, 10.61% for the Series A notes and 11.32% for the Series B notes,
     plus 2% as stipulated in the ESOP notes. After Armstrong's Chapter 11
     filing, such interest amounts are not recorded on Armstrong's financial
     statements. None of the Plan's assets have been pledged as collateral for
     the Guaranteed ESOP notes.

     Refinancing loans from Armstrong were used to ensure that the number of
     shares allocated during a semi-annual allocation period was equal to the
     sum of participants' exchange, equity and match shares. At September 30,
     2000, there were 11 loans outstanding totaling $39,864,575. In July 2001,
     Armstrong forgave these outstanding loans, resulting in a non-cash employer
     contribution to the Plan of $39,864,575.

     The sources of cash used to repay the Plan's debt were employee
     contributions, employer contributions, and dividends on unallocated shares.
     Currently, there are no employee or employer contributions being made to
     the ESOP portion of the Plan. In addition, Armstrong has not declared any
     dividends since July 2000.

 (7) Benefits
     --------
     (a) Retirement Savings Accounts
         ---------------------------
         Under terms of the Plan, a participant (or a beneficiary) is eligible
         for benefits upon retirement, termination of employment, or death
         before retirement. Disbursement of the total amount credited to a
         participant's account is payable (i) in a lump sum or (ii) in the case
         of retirement, in such other manner as requested by the participant and
         approved by the Plan Administrator.

         In addition, an active employee may elect to withdraw all or any part
         of his account attributable to after-tax contributions. Before reaching
         age 59 1/2, an active employee may withdraw his pretax contributions
         from the Sheltered Account, provided he can demonstrate financial
         hardship. Such employee shall be ineligible to make contributions for a
         12-month period. An active employee may elect to withdraw all or any
         portion of his account balance in the Tax-Deductible (MIRA) and
         Rollover Accounts.

         Under the rules of the Plan, the participant may borrow up to the
         lessor of 50% of his balance or $50,000. The money borrowed must come
         from the Sheltered, Rollover, Standard, or Retirement Savings Match
         Accounts. The amount of the loan is transferred to a Loan Reserve
         pledged as security for the loan and is evidenced by a promissory note
         payable to the Plan. Interest rates are determined periodically by the
         Retirement Committee in accordance with prevailing interest rates. The
         loans are reflected in the Loan Portfolio investment fund. Loan
         repayments are made by payroll deductions or in a manner agreed to by
         the employee and the Plan Administrator.

                                       13



                   RETIREMENT SAVINGS AND STOCK OWNERSHIP PLAN
                       OF ARMSTRONG WORLD INDUSTRIES, INC.
                   Notes to Financial Statements, (Continued)

      (b) Stock Ownership Accounts
          ------------------------
          Upon death or any other separation from service from Armstrong,
          participants are entitled to receive a distribution of their vested
          account balances. Distributions are in the form of a lump sum cash
          payment or, upon request, Armstrong common stock.

(8)   Obligation for Benefits
      -----------------------
      All the funds of the Plan are held by investing institutions appointed by
      Armstrong under a trust agreement or investment contract. Benefits under
      the Plan are payable only out of these funds. Armstrong has no legal
      obligation to make any direct payment of benefits accrued under the Plan.
      Except as may be provided in an investment contract, neither Armstrong nor
      any investing institution guarantees the funds of the Plan against any
      loss or depreciation or guarantees the payment of any benefit thereunder.
      Although Armstrong has not expressed any intent to terminate the Plan, it
      may do so at any time. In case of termination or partial termination, the
      total amount in each employee's account will be distributed as the Plan
      Administrator directs.

(9)   Eligibility
      -----------
      All employees of Armstrong or of any participating affiliated Armstrong
      are eligible to participate in the Plan except for foreign nationals,
      leased employees, and those employees in a collective bargaining unit
      unless the collective bargaining agent for that unit agrees to coverage
      under the Plan. Eligible participants who leave Armstrong and are later
      reemployed, can resume participation in the Plan on the date of rehire.

(10)  Diversification
      ---------------
      Effective January 1, 1997, Plan participants who meet certain age and
      service requirements were granted the ability to diversify specified
      portions of their ESOP account balances in any combination of the other
      investment funds available for Retirement Savings Account balances, except
      for the Fidelity Retirement Money Market Portfolio. As of December 19,
      2000, the Plan was amended to allow all participants, regardless of age
      and vested status, to fully diversify their ESOP accounts.

(11)  Litigation
      ----------
      About 350 former Armstrong employees that were separated in two
      divestitures in 2000 have brought a purported class action against the
      Retirement Committee of Armstrong World Industries, Inc., named and
      unnamed members of the Retirement Committee, and the Plan. The case is
      pending in the United States District Court (Eastern District of PA). A
      similar proof of claim has been filed against Armstrong in its Chapter 11
      case. Plaintiffs allege breach of Employee Retirement Income Security Act
      (ERISA) fiduciary duties and other violations of ERISA pertaining to
      losses in their Plan accounts, which were invested in Armstrong common
      stock. Losses are alleged to be in the range of several million dollars.
      Armstrong believes there are strong substantive defenses to the
      allegations.

(12)  Federal Income Taxes
      --------------------
      By a letter dated April 21, 1998, the Internal Revenue Service has
      determined and informed Armstrong that the Plan qualifies under the
      applicable provisions of the Internal Revenue Code and is therefore exempt
      from federal income taxes. The Plan has been amended since receiving the
      determination letter. In the opinion of the Plan administrator and the
      Plan's qualified tax adviser, the Plan is currently designed and being
      operated in compliance with the applicable requirements of the Internal
      Revenue Code. Therefore, they believe that the Plan is qualified and the
      related trust is tax-exempt as of the financial statement date.

                                       14



                   RETIREMENT SAVINGS AND STOCK OWNERSHIP PLAN
                       OF ARMSTRONG WORLD INDUSTRIES, INC.
                   Notes to Financial Statements, (Continued)

(13) Master Trust Agreement
     ----------------------
     Effective October 1, 1990, the Plan established a Master Trust Agreement
     with Fidelity Management Trust Company. Under the Master Trust Agreement,
     the Plan assets held by Fidelity Management Trust Company are commingled
     and invested with the assets of the Retirement Savings Plan for Hourly-Paid
     Employees of Armstrong World Industries, Inc., the Bonus Replacement
     Retirement Plan of Armstrong World Industries, Inc., the Triangle Pacific
     Corp. Salaried Employees' Profit Sharing Plan, the Triangle Pacific Corp.
     Non-union Hourly 401(k) Plan, the Robbins Hardwood Flooring Inc. Employees'
     Retirement Savings Plan, the Hartco Flooring Co. Bargaining Employees
     Retirement Savings Plan, and the Hartco Flooring Co. Retirement Savings
     Plan. Separate accounting for each plan under the Master Trust Agreement is
     provided by Fidelity Management Trust Company. The Plan has an undivided
     interest in the assets of this trust, and ownership is represented by
     proportionate dollar interest. The following summarizes the financial
     information of the Master Trust at September 30, 2001 and 2000:



                                                     September 30, 2001                   September 30, 2000
                                                  Cost           Fair Value            Cost            Fair Value
                                                  ----           ----------            ----            ----------
                                                                                             
    Cash equivalents                            $ 14,645,669      $ 14,645,669        $ 15,477,286      $ 15,477,286
    Armstrong Common Stock                        26,915,537         6,368,209          26,493,157        10,181,553
    Registered investment companies              202,308,085       199,406,910         202,786,119       297,113,053
    Fixed income investment contracts            167,338,355       167,338,355         166,384,012       166,384,012
    Participant loans                              5,692,396         5,692,396           6,140,006         6,140,006
                                                ------------      ------------        ------------      ------------
        Total investments in Master Trust       $416,900,042      $393,451,539        $417,280,580      $495,295,910
                                                ============      ============        ============      ============

    Plan's interest in Master Trust             $289,006,422      $280,156,326        $291,960,031      $361,526,642
    Plan's percentage in Master  Trust                 69.3%             71.2%               70.0%             73.0%


     During 2001 and 2000, the Master Trust's investments (including investments
     bought, sold, and held during the year) appreciated in value as follows:



                                                               2001                    2000
                                                               ----                    ----
                                                                            
     Net appreciation (depreciation) in Master
     Trust                                                 ($98,225,088)            $ 9,258,013
     Allocated net appreciation (depreciation) in
     Master Trust                                          ($74,765,034)            $12,282,354



     During 2001 and 2000, interest and dividends were as follows:
                                                               2001                    2000
                                                               ----                    ----
     Interest and dividends in Master Trust                 $21,020,196             $32,031,519
     Allocated interest and dividends from
     investment in Master Trust                             $16,079,551             $22,804,637


     All of the above information was certified as complete and accurate by the
     trustee at September 30, 2001 and 2000 and for the years then ended.

                                       15



                 THE RETIREMENT SAVINGS AND STOCK OWNERSHIP PLAN
                       OF ARMSTRONG WORLD INDUSTRIES, INC.
         Schedule H, line 4i - Schedule of Assets (Held at End of Year)
                               September 30, 2001

Description of Investment                       Cost                 Fair Value
- -------------------------------------------------------------------------------

Unallocated Armstrong Common Stock           $91,276,513             $5,218,532

Allocated Armstrong Common Stock            $121,646,262             $7,772,629

Investments in Master Trust                 $289,006,422           $280,156,326


                                       16