Exhibit No. 28(ii)(d)
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, 1994
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to _______________________
Commission file number 1-2116
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ARMSTRONG WORLD INDUSTRIES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
("SHARE IN SUCCESS PLAN")
(Full title of the Plan)
ARMSTRONG WORLD INDUSTRIES,INC.
Liberty and Charlotte Streets
Lancaster, Pennsylvania 17604
(Name of issuer of the securities held pursuant to
the Plan and the address of its principal executive office)
Page No.
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Item 1. Statements of Net Assets Available for Plan Benefits
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September 30, 1994 and 1993 4
Item 2. Statements of Changes in Net Assets Available
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for Plan Benefits
-----------------
Years ended September 30, 1994, 1993 and 1992 5
Notes to Financial Statements 6-8
- -----------------------------
Item 3. Independent Auditors' Report 9
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Exhibits
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24. Consent of Independent Auditors
- 2 -
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the members of the committee constituting the administrator which
administers the plan have duly caused this annual report to be signed by the
undersigned hereunto duly authorized.
ARMSTRONG WORLD INDUSTRIES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
("SHARE IN SUCCESS PLAN")
March 24, 1995 By: /s/ E. Allen Deaver
-----------------------------------------
E. Allen Deaver
Chairman of the Retirement Committee
- 3 -
ARMSTRONG WORLD INDUSTRIES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Net Assets Available for Plan Benefits
September 30, 1994 and 1993
1994 1993
--------------------------------------- ---------------------------------------
Allocated Unallocated Total Allocated Unallocated Total
--------- ----------- ----- --------- ----------- -----
Assets
- ------
Investment in Armstrong World
Industries, Inc. Preferred
Stock (note 2) $ 60,224,715 $ 201,433,916 $ 261,658,631 $ 47,543,551 $ 216,483,904 $ 264,027,455
Cash and short-term investments 20,970 994,647 1,015,617 3,261 972,034 975,295
Employee contributions receivable -- 537,086 537,086 -- 505,921 505,921
Employer contributions receivable -- 1,620,924 1,620,924 -- 1,134,655 1,134,655
Dividends receivable 1,275,486 4,270,106 5,545,592 1,007,039 4,587,620 5,594,659
Interest receivable 24 1,127 1,151 2 659 661
------------- ------------- ------------- ------------- -------------- --------------
Total assets 61,521,195 208,857,806 270,379,001 48,553,853 223,684,793 272,238,646
------------- ------------- ------------- ------------- -------------- --------------
Liabilities
- -----------
Guaranteed ESOP notes (note 6) -- 249,954,403 249,954,403 -- 257,303,403 257,303,403
Accrued interest -- 6,301,726 6,301,726 -- 6,425,906 6,425,906
------------- ------------- ------------- ------------- -------------- --------------
Total liabilities -- 256,256,129 256,256,129 -- 263,729,309 263,729,309
------------- ------------- ------------- ------------- -------------- --------------
Net assets available for plan benefits $ 61,521,195 $(47,398,323) $ 14,122,872 $ 48,553,853 $ (40,044,516) $ 8,509,337
- -------------------------------------- ============= ============= ============= ============= ============== ==============
See accompanying notes to financial statements.
ARMSTRONG WORLD INDUSTRIES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Changes in Net Assets Available for Plan Benefits
Years Ended September 30, 1994, 1993 and 1992
1994 1993
------------------------------------ --------------------------------
Allocated Unallocated Total Allocated Unallocated Total
--------- ----------- ----- --------- ----------- -----
Increases:
- ----------
Employee contributions (note 1) $ -- $6,158,036 $6,158,036 $ -- $5,956,851 $5,956,851
Employer contributions -- 4,533,805 4,533,805 -- 3,274,572 3,274,572
Dividends (note 2) 3,942,264 15,108,800 19,051,064 3,043,702 16,174,289 19,217,991
Interest income -- 29,957 29,957 -- 20,905 20,905
Realized gain (note 4) 156,242 -- 156,242 -- -- --
Allocation of preferred stock of
Armstrong World Industries, Inc. 11,377,004 -- 11,377,004 11,570,821 -- 11,570,821
---------- ---------- ---------- ---------- ---------- ----------
15,475,510 25,830,598 41,306,108 14,614,523 25,426,617 40,041,140
Decreases:
- ----------
Interest expense -- (21,807,401) (21,807,401) -- (22,477,390) (22,477,390)
Benefits paid (note 3) (2,508,168) -- (2,508,168) (2,334,716) -- (2,334,716)
Allocation of preferred stock of
Armstrong World Industries, Inc. -- (11,377,004) (11,377,004) -- (11,570,821) (11,570,821)
---------- ---------- ---------- ---------- ---------- ----------
(2,508,168) (33,184,405) (35,692,573) (2,334,716) (34,048,211) (36,382,927)
Net increase (decrease) 12,967,342 (7,353,807) 5,613,535 12,279,807 (8,621,594) 3,658,213
Net assets available for
plan benefits:
Beginning of year 48,553,853 (40,044,516) 8,509,337 36,274,046 (31,422,922) 4,851,124
---------- ---------- --------- ---------- ---------- ---------
End of year $61,521,195 ($47,398,323) $14,122,872 $48,553,853 ($40,044,516) $8,509,337
=========== ============ =========== =========== ============ ==========
1992
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Allocated Unallocated Total
--------- ----------- -----
Increases
- ---------
Employee contributions (note 1) $ -- $5,836,465 $5,836,465
Employer contributions -- 2,338,248 2,338,248
Dividends (note 2) 2,170,867 17,192,736 19,363,603
Interest income -- 28,843 28,843
Realized gain (note 4) -- -- --
Allocation of preferred
stock of Armstrong
World Industries, Inc. 11,743,418 -- 11,743,418
---------- ---------- ----------
13,914,285 25,396,292 39,310,577
Decreases:
- ----------
Interest expense -- (22,980,291) (22,980,291)
Benefits paid (note 3) (1,303,347) -- (1,303,347)
Allocation of preferred stock of
Armstrong World Industries, Inc. -- (11,743,418) (11,743,418)
--------- ---------- ----------
(1,303,347) (34,723,709) (36,027,056)
Net increase (decrease) 12,610,938 (9,327,417) 3,283,521
Net assets available for
plan benefits:
Beginning of year 23,663,108 (22,095,505) 1,567,603
End of year $36,274,046 ($31,422,922) $4,851,124
----------- ----------- ----------
See accompanying notes to financial statements.
ARMSTRONG WORLD INDUSTRIES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
1. Plan Description
----------------
Armstrong World Industries, Inc. (the Company) established the Armstrong
World Industries, Inc. Employee Stock Ownership Plan (the Plan) in 1989. The
Plan, which is both a stock bonus plan with a cash or deferred arrangement
and an employee stock ownership plan, is designed to attract and keep
employees possessing the qualities required for future growth of the Company.
The Plan intends to provide such employees with additional incentive for
enhanced performance by permitting eligible employees to acquire a
proprietary interest in the Company and to accumulate capital for future
economic security.
All employees of the Company and of certain domestic subsidiaries, who are at
least twenty-one years of age and have completed one year of service, 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.
Under the Plan, participants receive interest in shares of Company preferred
stock held by the trust established under the Plan. The shares of Company
preferred stock held by the trust were purchased from the Company from the
proceeds of the sale of the Guaranteed ESOP notes in a total principal amount
of $270,000,000 in 1989. All shares of preferred stock acquired with the
proceeds of the notes are held in a suspense account and released to members'
accounts as the notes are repaid. The shares are released in proportion to
the ratio of the proportion of principal and interest paid down by any debt
payment to the total principal and interest to be paid over the life of the
notes.
The Plan maintains three accounts for each member for contributions and
allocations of shares from the suspense account. Participants who elect to
reduce their before-tax compensation in amounts ranging from one percent to
four percent (exchange contributions) will have such amounts credited to an
exchange contribution account. Shares released from the suspense account
will be first allocated to members' exchange contribution accounts with a
value as of the allocation date equal to the amount of their exchange
contributions.
Shares released from the suspense account not used for the purpose of
exchange allocations will be allocated to members' equity accounts (equity
allocations) based on an established shares released schedule. The equity
account is intended to provide a source of funds to replace certain retiree
medical benefits which were phased-out in conjunction with the adoption of
this Plan. The allocation schedule, therefore, is designed to provide
greater allocation of shares to older employees.
If any shares released from the suspense account remain unallocated after the
exchange and equity allocations, such shares will be allocated to members'
bonus accounts in proportion to the ratio of exchange contributions made by a
member to the exchange contributions made by all members.
Participants have an immediate 100 percent vested interest with respect to
their exchange contributions. Interest in the Equity and Bonus Accounts vest
after five years of service.
ARMSTRONG WORLD INDUSTRIES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements, (Continued)
2. Summary of Significant Accounting Policies
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(a) Basis of Presentation
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The accompanying financial statements have been prepared on an accrual
basis.
(b) Investment in Armstrong World Industries, Inc., Preferred Stock
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According to the terms of the trust agreement between Mellon Bank,
N.A., the Trustee, 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 stock of the Company as is
necessary to administer the Plan in accordance with its terms.
The investment in Company preferred stock is presented at fair value.
Fair value is determined to be the greater of $47.75 per share, the
preferred stock s minimum conversion value, or the market price per
share of Company common stock. At September 30, 1994 and 1993, the
investment in preferred stock represents 5,479,762 and 5,529,371
shares, respectively, purchased at a cost per share of $47.75. Each
share of preferred stock is convertible into one share of Company
common stock. A dividend of $3.462 per share per annum is payable
semi-annually on the preferred stock held in the trust. The preferred
stock is redeemable at the option of the holder at a redemption price
of $47.75 per share plus accrued but unpaid dividends.
(c) Expenses
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All costs and expenses incurred in administering the Trust and the
Plan are paid by the Company.
3. Benefits
--------
Upon death or any other separation from service from the Company,
participants are entitled to receive a distribution of their vested ESOP
account. Distributions are in the form of a lump sum cash payment or, upon
request, Company common stock. Participants entitled to a distribution can
direct the Trustee to either sell their ESOP Preferred Shares to the Company
at a per share price of $47.75 or convert the shares into shares of Company
common stock on a one-for-one basis.
During the years ended September 30, 1994, 1993 and 1992, distributions were
made to participants of $2,508,168 representing 49,609 shares, $2,334,716
representing 48,894 shares, and $1,303,347 representing 27,296 shares,
respectively.
ARMSTRONG WORLD INDUSTRIES, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements, (Continued)
4. Realized Gain
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During the year ended September 30, 1994, 21,012 shares of preferred stock
were redeemed at prices per share in excess of $47.75. The amount of
redemption proceeds in excess of the minimum conversion value totaled
$156,242.
5. Plan Termination
----------------
While it is intended to be permanent, the Plan may be terminated at anytime
by the Company's Board of Directors. Upon Plan termination, all participants
become fully vested in their entire ESOP account balance. Any unallocated
shares held by the Trust will be either sold to the Company or converted to
Company common stock and then sold to the Company or sold on the open market,
whichever produces the greatest cash proceeds. The cash proceeds will be
used to satisfy any outstanding Guaranteed ESOP notes, with the balance of
any excess proceeds being allocated to individual ESOP account balances on a
pro-rated basis.
6. Guaranteed ESOP Notes
---------------------
The Company has guaranteed the payment of principal and interest on the
notes. The notes must be repaid in semi-annual installments with interest
per annum at 8.35% on the Series A Guaranteed Serial ESOP Notes due 1989-2001
($129,911,403 and $137,260,403 at September 30, 1994 and 1993, respectively)
and 8.92% on the Series B Guaranteed Serial ESOP Notes due 2001-2004
($120,043,000 at September 30, 1994 and 1993). The scheduled amortization of
the notes for the next five fiscal years is as follows: 1995 - $9,549,000;
1996 - $12,023,000; 1997 - $14,801,000; 1998 - $17,908,000; 1999 -
$21,392,000.
7. Company Contributions
---------------------
The Company is obligated to make semi-annual contributions in cash or Company
stock to the Plan, on June 15 and December 15 of each year, which when
aggregated with all exchange contributions, dividends received by the Trustee
on the preferred stock held by the Trust, and trust earnings, is at least
equal to the amount necessary to enable the Trustee to pay currently maturing
obligations under the Guaranteed ESOP notes.
8. Federal Income Taxes
--------------------
The Plan has received a letter of favorable determination for tax
qualification from the Internal Revenue Service on August 20, 1991.
Accordingly, the Plan qualifies under the provisions of Sections 401(a),
401(k), and 4975(e)(7) of the Internal Revenue Code and is exempt from
federal income taxes.
INDEPENDENT AUDITORS' REPORT
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The Retirement Committee
Armstrong World Industries, Inc.:
We have audited the accompanying statements of net assets available for plan
benefits of the Armstrong World Industries, Inc. Employee Stock Ownership Plan
as of September 30, 1994 and 1993 and the related statements of changes in net
assets available for plan benefits for each of the years in the three-year
period ended September 30, 1994. These financial statements are the
responsibility of the plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Armstrong World Industries,
Inc. Employee Stock Ownership Plan as of September 30, 1994 and 1993 and the
changes in its net assets available for plan benefits for each of the years in
the three-year period ended September 30, 1994, in conformity with generally
accepted accounting principles.
KPMG PEAT MARWICK LLP
Philadelphia, Pennsylvania
January 19, 1995
EXHIBIT INDEX
24 Consent of Independent Auditors
Consent of Independent Auditors
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The Retirement Committee
Armstrong World Industries, Inc.:
We consent to incorporation by reference in the Registration Statement No. 33-
29768 on Form S-8 of Armstrong World Industries, Inc. of our report dated
January 19, 1995, relating to the statements of net assets available for plan
benefits of the Armstrong World Industries, Inc. Employee Stock Ownership Plan
as of September 30, 1994 and 1993 and the related statements of changes in net
assets available for plan benefits for each of the years in the three-year
period ended September 30, 1994, which report is included herein.
KPMG PEAT MARWICK LLP
Philadelphia, Pennsylvania
March 23, 1995