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, 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
ROBBINS HARDWOOD FLOORING, INC. EMPLOYEES' RETIREMENT SAVINGS PLAN
(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
Item 1. Independent Auditors' Report 4
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Item 2. Statements of Net Assets Available for Benefits as of
------------------------------------------------------
December 31, 2001 and 2000 5
--------------------------
Item 3. Statements of Changes in Net Assets Available for Benefits for
---------------------------------------------------------------
the years ended December 31, 2001 and 2000 6
------------------------------------------
Notes to Financial Statements 7
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 13
Schedules not included herewith are omitted because of the absence of conditions
under which they are required.
Exhibits
- --------
Consent of Independent Auditors 14
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.
ROBBINS HARDWOOD FLOORING, INC.
EMPLOYEES' RETIREMENT SAVINGS PLAN
July 1, 2002 By: /s/: Donald C. Fetzer, Jr.
------------------------------
Donald C. Fetzer, Jr., Member of the Administrative Committee
3
Independent Auditors' Report
----------------------------
To the Profit Sharing Committee of the
Robbins Hardwood Flooring, Inc.
Employees' Retirement Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Robbins Hardwood Flooring, Inc. Employees' Retirement Savings Plan as of
December 31, 2001 and 2000, and 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 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 Robbins
Hardwood Flooring, Inc. Employees' Retirement Savings Plan as of December 31,
2001 and 2000, and the changes in net assets available for benefits for the
years then ended 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 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.
/s/ KPMG LLP
Dallas, Texas
May 24, 2002
4
ROBBINS HARDWOOD FLOORING, INC.
EMPLOYEES' RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Benefits
December 31, 2001 and 2000
2001 2000
---------------- ----------------
Assets:
Investments, at fair value (note 5):
Armstrong Holdings, Inc. common stock $ 70,687 47,578
Fidelity Magellan Fund 1,047,456 1,185,585
Fidelity Equity Income Fund 111,777 193,501
Fidelity Intermediate Bond Fund 122,589 116,037
Fidelity Overseas Fund 40,913 39,983
Fidelity Asset Manager Fund 51,279 121,498
Fidelity Retirement Money Market Fund 969,759 889,395
Participant loans 96,808 119,739
---------------- ----------------
Total investments 2,511,268 2,713,316
---------------- ----------------
Receivables (note 2):
Employer contributions 2,728 133,273
Employee contributions 8,202 2,166
Participants loans 1,115 129
---------------- ----------------
Total receivables 12,045 135,568
---------------- ----------------
Total assets 2,523,313 2,848,884
Refunds payable to participants 23,704 38,845
---------------- ----------------
Net assets available for benefits $ 2,499,609 2,810,039
================ ================
See accompanying notes to financial statements.
5
ROBBINS HARDWOOD FLOORING, INC.
EMPLOYEES' RETIREMENT SAVINGS PLAN
Statements of Changes in Net Assets Available for Benefits
Years ended December 31, 2001 and 2000
2001 2000
------------ ------------
Additions to net assets attributed to:
Investment income (loss):
Interest and dividend income $ 70,012 159,780
Net depreciation in fair value
of investments (note 5) (138,867) (352,461)
------------ ------------
Net investment loss (68,855) (192,681)
------------ ------------
Contributions:
Employer (note 2) 87,143 224,315
Participant (note 2) 289,790 236,765
Rollovers (note 3) -- 4,521
------------ ------------
Total contributions 376,933 465,601
------------ ------------
Total additions 308,078 272,920
Deductions from net assets attributable to:
Benefits paid to participants (notes 2 and 3) 618,508 949,359
------------ ------------
Net decrease (310,430) (676,439)
Net assets available for benefits at beginning of year 2,810,039 3,486,478
------------ ------------
Net assets available for benefits at end of year $ 2,499,609 2,810,039
============ ============
See accompanying notes to financial statements.
6
ROBBINS HARDWOOD FLOORING, INC.
EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(1) General Information
The Robbins Hardwood Flooring, Inc. Employees' Retirement Savings Plan (the
Plan) became effective on March 28, 1997. On July 22, 1998, Armstrong Wood
Products, Inc. (formerly known as Triangle Pacific Corp.) was acquired by
Armstrong World Industries, Inc. (a subsidiary of Armstrong Holdings,
Inc.). The Board of Directors of Armstrong Wood Products, Inc. intends to
continue providing retirement benefits through the Company's defined
contribution plans.
(2) Description of the Plan
The following description of the Plan provides only general information.
Participants should refer to the Plan document for more detailed
information.
(a) General
The Plan is a defined contribution plan which provides retirement
benefits to employees of the Robbins Hardwood Flooring, Inc. division
of Armstrong Wood Products, Inc. (the Plan administrator or the
Company) who are not members of a collective bargaining agreement who
work at least 1,000 hours annually, with new participants required to
be at least 21 years of age and employed by the Company at least one
year. Effective November 1, 2001, the Plan was amended to allow for
immediate participation by employees, except for certain employees
covered by a collective bargaining agreement, upon the completion of
one hour of service. The Plan is administered by Armstrong Wood
Products, Inc. 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 up to 16% of their eligible
compensation to the Plan, as defined by the committee. Participants
may elect to invest their contributions in any of the available
investment funds offered by Fidelity Management Trust Company, the
Trustee. Participants are able to direct all contributions to their
account in 25% increments to the investment funds offered by the
Trustee.
Effective January 1, 2000, the Plan increased the employer matching
percentage to 50% of qualified employee contributions up to 6% of the
employee's annual earnings for all participants who are not covered
under a collective bargaining agreement. Additionally, the Plan
includes a profit sharing component. The Company may contribute a
discretionary profit sharing amount solely at the discretion of the
board of directors. The board of directors approved discretionary
profit sharing contributions totaling $0 and $131,607 for the plan
years ended December 31, 2001 and 2000, respectively.
7
ROBBINS HARDWOOD FLOORING, INC.
EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(c) Participant Accounts
Each participant's account is credited with the participant's
contribution and an allocation of the Company's contributions, Plan
earnings, and forfeitures of terminated participants' nonvested
accounts. Allocations to participant accounts are based on the
participant's annual earnings for profit sharing contributions. 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 their voluntary contributions plus
actual earnings thereon. Employee vesting in the Company's matching
and profit sharing contributions is based on the participant's years
of service with the Company. The participants are vested on an
incremental basis. The participants become 20% vested after one year
of service. The vesting percentage increases 20% a year until becoming
fully vested after five years of service.
(e) Investment Options
Elective and nondeductible contributions may be invested in a
guaranteed income fund, 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 as follows:
. Armstrong Holdings, Inc. Common Stock - Effective April 1, 1999,
the Plan was amended to include Armstrong World Industries, Inc.
common stock as one of the investment options. 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. Armstrong Holdings, Inc. is publicly
traded on the New York Stock Exchange. On December 6, 2000,
Armstrong World Industries, Inc. 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. Armstrong Wood Products, Inc. was not included in the
filing. As of December 19, 2000, the Plan was amended to
eliminate the Armstrong Holdings, Inc. Common Stock fund as an
investment option effective with contributions made on or after
December 27, 2000 and transfers processed on or after January 1,
2001.
. 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 reasonable 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.
8
ROBBINS HARDWOOD FLOORING, INC.
EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
. 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, 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 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, except for loans to acquire any dwelling to
be used as the principal residence for the participant, and bear
interest at a reasonable rate as established by the Plan
administrator. Interest rate at December 31, 2001 was 5.75%.
(g) Payment of Benefits
On termination of service due to death, disability, or retirement,
a participant may elect to receive either a lump-sum distribution
or a rollover into another investment. The timing of the lump-sum
payment will be determined by the Plan administrator or disbursed
as soon as administratively feasible upon filing a notice with the
Employee Benefits Department. 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 ($10,624 and
$6,339 in 2001 and 2000, respectively). The Company will reinstate
forfeited balances to the accounts of participants who rejoin the
Company within five years of their termination.
9
ROBBINS HARDWOOD FLOORING, INC.
EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(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 2001 and 2000, all significant expenses were paid by
the Company ($1,289 in 2001 and $8,526 in 2000).
(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
accounting principles generally accepted in the United States of
America 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.
(g) New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued
SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities (SFAS No. 133). SFAS No. 133 requires that an entity
recognize all derivatives in its statement of net assets and
measure those instruments at fair value with changes recognized
in the statement of changes in net assets.
SFAS No. 133 is effective for fiscal years beginning after June
15, 2000. Pursuant to SFAS No. 137, the Plan adopted SFAS No. 133
effective January 1, 2001. The adoption of SFAS No. 133 did not
have a material impact on the Plan financial statements.
10
ROBBINS HARDWOOD FLOORING, INC.
EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(4) Units
Participant accounts are assigned investment fund units/shares. The net
asset value per unit/share by fund/account for the 2001 and 2000 calendar
quarters ended is as follows:
2001 quarters ended Units at
------------------------------------------------ December 31,
March 31 June 30 September 30 December 31 2001
---------- --------- ------------ ----------- ------------
Armstrong Holdings, Inc.
common stock $ 4.05 3.55 2.73 3.41 20,729
Fidelity Magellan Fund 104.50 111.09 94.03 104.22 10,050
Fidelity Equity Income Fund 49.77 52.19 45.62 48.77 2,292
Fidelity Intermediate Bond
Fund 10.22 10.14 10.45 10.32 11,879
Fidelity Overseas Fund 30.50 30.50 24.89 27.42 1,492
Fidelity Asset Manager Fund 15.70 16.11 14.71 15.50 3,308
Fidelity Retirement Money
Market Fund 1.00 1.00 1.00 1.00 969,759
2000 quarters ended Units at
------------------------------------------------ December 31,
March 31 June 30 September 30 December 31 2000
---------- --------- ------------ ----------- ------------
Armstrong Holdings, Inc.
common stock $ 17.88 15.30 11.94 2.07 23,063
Fidelity Magellan Fund 143.25 134.63 133.84 119.30 9,938
Fidelity Equity Income Fund 50.62 50.37 53.71 53.43 3,622
Fidelity Intermediate Bond
Fund 9.75 9.75 9.86 10.04 11,557
Fidelity Overseas Fund 48.27 45.73 42.42 34.37 1,163
Fidelity Asset Manager Fund 19.05 18.80 19.11 16.82 7,223
Fidelity Retirement Money
Market Fund 1.00 1.00 1.00 1.00 889,395
(5) Investments
The following investments exceed 5% of the Plan's net assets available
for Plan benefits at December 31, 2001 and 2000:
Fair value
--------------------------
2001 2000
------------ ------------
Fidelity Magellan Fund $ 1,047,456 1,185,585
Fidelity Equity Income Fund 111,777 193,501
Fidelity Retirement Money Market Fund 969,759 889,395
Other - less than 5% 382,276 444,835
------------ ------------
Total investments $ 2,511,268 2,713,316
============ ============
11
ROBBINS HARDWOOD FLOORING, INC.
EMPLOYEES' RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
During 2001 and 2000, the Plan's investments had net realized and
unrealized gains (losses) as follows:
2001 2000
------------ -----------
Armstrong Holdings, Inc. common stock $ 30,425 (139,630)
Fidelity Magellan Fund (147,014) (192,967)
Fidelity Equity Income Fund (11,335) 465
Fidelity Intermediate Bond Fund 3,014 3,097
Fidelity Overseas Fund (9,047) (13,049)
Fidelity Asset Manager Fund (4,910) (10,377)
------------ -----------
Net depreciation in fair value of investments $ (138,867) (352,461)
============ ===========
The components of investment income (loss) for the years ended
December 31,2001 and 2000 are as follows:
2001 2000
------------ -----------
Investment income (loss):
Interest and dividend income $ 70,012 159,780
Net depreciation in fair value of investments (138,867) (352,461)
------------ -----------
$ (68,855) (192,681)
============ ===========
(6) Tax Status of the Plan
The Company has not yet received a determination letter from the
Internal Revenue Service as of December 31, 2001. However, the Plan
administrator and the Plan's management believe that the Plan is
designed and is currently being operated in compliance with the
applicable requirements of the Internal Revenue Code.
(7) Plan Termination
Although it has not expressed intent to do so, the Plan administrator
has the right to terminate the Plan at any time, subject to the
provisions of ERISA. In the event of termination, participants will
become fully vested in their accounts.
(8) Related-Party Transactions
Certain Plan investments are shares of common stock of Armstrong
Holdings, Inc. and shares of mutual funds managed by Fidelity
Investments. Armstrong Wood Products, Inc. is a wholly owned
subsidiary of Armstrong World Industries, 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.
(9) Subsequent Events
In 2002, the Plan was amended due to changes in various legislation
and governmental regulations. These amendments were compliance related
and no changes were made to the design of the Plan.
Subsequent to December 31, 2001, the date for valuation of plan assets
provided herein, the value of plan investments has changed, and some
have fallen significantly from their values shown here.
12
ROBBINS HARDWOOD FLOORING, INC.
EMPLOYEES' RETIREMENT SAVINGS PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
Identity of issuer Description of investment Current value
- ------------------------- ------------------------------------- -------------
Armstrong Holdings, Inc.* Common stock $ 70,687
Fidelity Investments* Fidelity Magellan Fund 1,047,456
Fidelity Investments* Fidelity Equity Income Fund 111,777
Fidelity Investments* Fidelity Intermediate Bond Fund 122,589
Fidelity Investments* Fidelity Overseas Fund 40,913
Fidelity Investments* Fidelity Asset Manager Fund 51,279
Fidelity Investments* Fidelity Retirement Money Market Fund 969,759
Participant loans* Loans to participants 96,808
-------------
Total investments $ 2,511,268
=============
*Party-in-interest
See accompanying independent auditors' report.
13