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
TRIANGLE PACIFIC CORP. SALARIED EMPLOYEES' PROFIT SHARING 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,
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2001 and 2000 5
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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.
TRIANGLE PACIFIC CORP.
SALARIED EMPLOYEES' PROFIT SHARING 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
Triangle Pacific Corp. Salaried Employees' Profit
Sharing Plan:
We have audited the accompanying statements of net assets available for benefits
of the Triangle Pacific Corp. Salaried Employees' Profit Sharing Plan as of
December 31, 2001 and 2000, 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 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 Triangle
Pacific Corp. Salaried Employees' Profit Sharing 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.
KPMG LLP
Dallas, Texas
May 24, 2002
4
TRIANGLE PACIFIC CORP.
SALARIED EMPLOYEES' PROFIT SHARING 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 $ 452,592 340,765
Fidelity Magellan Fund 8,795,424 10,397,393
Fidelity Equity Income Fund 5,110,950 5,775,531
Fidelity Intermediate Bond Fund 1,410,214 1,222,144
Fidelity Overseas Fund 585,396 1,088,727
Fidelity Asset Manager Fund 2,206,636 2,608,688
Fidelity Retirement Money Market Fund 5,872,456 6,448,762
Participant loans 68,500 --
------------------------- ---------------------
Total investments 24,502,168 27,882,010
Receivables (note 2):
Employer contributions 26,071 557,097
Employee contributions 71,888 --
------------------------- ---------------------
Total assets 24,600,127 28,439,107
Refunds payable to participants 46,908 180,097
------------------------- ---------------------
Net assets available for benefits $ 24,553,219 28,259,010
========================= =====================
See accompanying notes to financial statements.
5
TRIANGLE PACIFIC CORP.
SALARIED EMPLOYEES' PROFIT SHARING 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 $ 735,589 1,795,631
Net depreciation in fair value of investments (note 5) (2,024,345) (3,015,447)
------------ -----------
Net investment loss (1,288,756) (1,219,816)
------------- -----------
Contributions
Participant (note 2) 1,840,233 1,340,784
Employer (note 2) 609,394 1,103,343
------------ ----------
Total contributions 2,449,627 2,444,127
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Total additions 1,160,871 1,224,311
Deductions from net assets attributed to:
Benefits paid to participants (notes 2 and 3) 4,866,662 3,465,253
------------ ------------
Net decrease (3,705,791) (2,240,942)
Net assets available for benefits at beginning of year 28,259,010 30,499,952
------------ -----------
Net assets available for benefits at end of year $ 24,553,219 28,259,010
============ ===========
See accompanying notes to financial statements.
6
TRIANGLE PACIFIC CORP.
SALARIED EMPLOYEES' PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(1) General Information
The Triangle Pacific Corp. Salaried Employees' Profit Sharing Plan (the
Plan) was established on January 5, 1976 by Armstrong Wood Products, Inc.
(formerly known as Triangle Pacific Corp.) (the Company). The
Plan was amended and restated effective January 1, 1993, to comply with
applicable requirements of the Internal Revenue Code (IRC). On July 22,
1998, Armstrong Wood Products, Inc. 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 the salaried employees of the Company who have worked
1,000 hours in a consecutive 12-month period, and have attained
age 21. Effective November 1, 2001, the Plan was amended to allow
for immediate participation by employees upon the completion of
one hour of service. The participants are not required nor
permitted to make any contributions to the profit sharing portion
of the Plan except for transfers of balances from other qualified
plans, but participants are permitted to contribute up to 10% of
their compensation to the 401(k) portion of the Plan. The Plan is
administered by Bruce Hardwood Flooring, LLC, a subsidiary of
Armstrong Wood Products, Inc., and advised by the Company's Profit
Sharing Committee (Committee), whose members are appointed by the
Board of Directors of the Company (the Board).
(b) Contributions
Company contributions to the profit sharing portion of the Plan
are discretionary and are determined by the Board. Total
contributions per Plan year, including profit sharing and 401(k),
to any one participant cannot exceed the lesser of $30,000 or 25%
of the participant's compensation. A participant will not receive
a Company profit sharing contribution during a year in which the
participant has a break in service. Effective January 1, 1998, the
Plan was amended and restated (Amendment) to define the criteria
of the Company contributions to the 401(k) portion. Company
contributions to the 401(k) portion are matching contributions
that provide a 50% match of participant's tax deferred
contribution to the Plan up to 6% of the participants' eligible
compensation. Participants are fully vested in the current value
of their own contributions and earnings thereon, and become 100%
vested in Company contributions upon completion of five years of
service. Forfeitures resulting from nonvested employee termination
($171,603 in 2001 and $54,023 in 2000) are treated as a Company
contribution and serve to reduce Company contributions in the year
following the terminations.
7
TRIANGLE PACIFIC CORP.
SALARIED EMPLOYEES' PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(c) Payment of Benefits
Upon termination of employment, participants generally may elect
to receive the total value of their account attributable to their
contributions, as well as the vested value of their Company
contributions. Participants who are age 59 1/2 or over, or become
permanently and totally disabled are automatically 100% vested in
the value of Company contributions and related earnings credited
to their account. In the event that termination is caused by
death, the participant becomes 100% vested and the balance will be
paid in full to the beneficiary. Participants may also make
hardship withdrawals from their vested amounts, subject to
provisions of the Plan document and determination of eligibility
by the plan administrator.
(d) Participant Accounts and Allocations
Allocations of Plan income are made to the participants based upon
their relative account balances in the Plan at the beginning of
each year. The annual Company contribution is allocated on a
proportional basis relative to each participant's compensation for
the year, as defined. Participants withdrawing from the Plan with
a vested interest may only receive their account balance in a
lump-sum payment.
Participants are able to direct all contributions to their account
in 10% increments to the various investment funds. The Magellan,
Equity Income, and the Overseas funds are classified as equity
funds while the Intermediate Bond and Retirement Money Market
funds are classified as fixed income funds. The Asset Manager Fund
is considered to be a mixture of both equity and fixed income
funds.
o 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.
o 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.
o 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
TRIANGLE PACIFIC CORP.
SALARIED EMPLOYEES' PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2001 and 2000
o 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.
o Fidelity Overseas Fund - The Fidelity Overseas Fund seeks
long-term growth of capital by primarily investing in the
common stock of foreign issuers.
o 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.
o 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.
(e) Participant Loans
Effective November 1, 2001, the Plan was amended to allow
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
at December 31, 2001 was 5.75%.
(3) Summary of Significant Accounting Policies
(a) Basis of Accounting
The accompanying financial statements are prepared on the accrual
basis of accounting.
(b) Investments
The investments of the Plan are stated at fair value, determined
primarily on the basis of closing market quotations. Investment
transactions 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.
(c) Administrative Expenses
All administrative expenses, including audit fees, consulting
fees, recordkeeping fees, and trustee fees, are paid by the
Company with no liability to the Plan ($13,218 in 2001 and $20,885
in 2000).
(d) Payment of Benefits
Benefits are recorded upon distribution.
9
TRIANGLE PACIFIC CORP.
SALARIED EMPLOYEES' PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(e) 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.
(f) 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.
(4) Units
Participant accounts are assigned investment fund unit/shares. The net
asset value per unit/share by fund/account for the 2001 and 2000 calendar
quarters ended is as follows:
2001 quarter 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 3.41 132,725
Fidelity Magellan Fund 104.50 111.09 94.03 104.22 84,393
Fidelity Equity Income Fund 49.77 52.19 45.62 48.77 104,797
Fidelity Intermediate Bond
Fund 10.22 10.14 10.45 10.32 136,649
Fidelity Overseas Fund 30.50 30.50 24.89 27.42 21,349
Fidelity Asset Manager Fund 15.70 16.11 14.71 15.50 142,364
Fidelity Retirement Money
Market Fund 1.00 1.00 1.00 1.00 5,872,456
2000 quarter 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 2.07 165,179
Fidelity Magellan Fund 143.25 134.63 133.84 119.30 87,153
Fidelity Equity Income Fund 50.62 50.37 53.71 53.43 108,095
Fidelity Intermediate Bond
Fund 9.75 9.75 9.86 10.04 121,727
Fidelity Overseas Fund 48.27 45.73 42.42 34.37 31,677
Fidelity Asset Manager Fund 19.05 18.80 19.11 16.82 155,094
Fidelity Retirement Money
Market Fund 1.00 1.00 1.00 1.00 6,448,762
10
TRIANGLE PACIFIC CORP.
SALARIED EMPLOYEES' PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(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 $ 8,795,424 10,397,393
Fidelity Equity Income Fund 5,110,950 5,775,531
Fidelity Intermediate Bond Fund 1,410,214 1,222,144
Fidelity Asset Manager Fund 2,206,636 2,608,688
Fidelity Retirement Money Market Fund 5,872,456 6,448,762
Other - less than 5% 1,106,488 1,429,492
---------------- ----------------
Total investments $ 24,502,168 27,882,010
================ ================
During 2001 and 2000, the Plan's investments had net realized and
unrealized gains (losses) as follows:
2001 2000
---------------- ----------------
Common stock $ 208,484 (933,958)
Equity funds (2,052,455) (1,895,646)
Fixed income funds 32,846 35,168
Equity/fixed income funds (213,220) (221,011)
---------------- ----------------
Net depreciation in fair
value of investments $ (2,024,345) (3,015,447)
================ ================
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 $ 735,589 1,795,631
Net depreciation in fair value of
investments (2,024,345) (3,015,447)
------------------ ----------------
$ (1,288,756) (1,219,816)
================== ================
(6) Tax Status of the Plan
The Internal Revenue Service has determined and informed the Company by a
letter dated January 3, 1995, that the Plan and related trust are
designed in accordance with applicable requirements of the IRC. The Plan
has been amended since receiving the determination letter. 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 IRC.
11
TRIANGLE PACIFIC CORP.
SALARIED EMPLOYEES' PROFIT SHARING PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(7) Plan Termination
Although the Company has not expressed an intent to terminate the Plan,
in the event of such a termination, the priority of distribution of
assets is in accordance with the provisions of the Employee Retirement
Income Security Act of 1974. Distribution of Plan assets will be as
follows:
(a) in the event of partial termination of the Plan, distributions
shall be treated for participants affected by the termination in
the same manner as distributions for complete termination are
treated;
(b) in the event of complete termination of the Plan, the Committee
may instruct the Trustee to:
(i) Continue to administer the Plan and distribute funds to
participants upon termination of employment until the Fund is
liquidated or
(ii) Distribute the assets remaining in the Plan, after payment of
any expenses.
(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
Effective January 1, 2002, the Company's board of directors renamed the
Plan to Armstrong Wood Products, Inc. Salaried Employees' Profit Sharing
Plan.
Additionally, 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
Schedule 1
TRIANGLE PACIFIC CORP.
SALARIED EMPLOYEES' PROFIT SHARING PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
Current
Identity of issuer Description of investment value
- ------------------------- -------------------------------------- -----------
Armstrong Holdings, Inc.* Common stock $ 452,592
Fidelity Investments* Fidelity Magellan Fund 8,795,424
Fidelity Investments* Fidelity Equity Income Fund 5,110,950
Fidelity Investments* Fidelity Intermediate Bond Fund 1,410,214
Fidelity Investments* Fidelity Overseas Fund 585,396
Fidelity Investments* Fidelity Asset Manager Fund 2,206,636
Fidelity Investments* Fidelity Retirement Money Market Fund 5,872,456
Participant loans* Loans to participants 68,500
-----------
Total investments $24,502,168
===========
* Party-in-interest.
See accompanying independent auditors' report.
13