-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WDwsseGFgDHHIV373mJbWP81No91gtWdAKr2Z5z4xWtAQGno6fdwW6aiXX9h8+3F Q5+WM4ebNhMCSLq8xeAspg== 0000950109-99-000888.txt : 19990319 0000950109-99-000888.hdr.sgml : 19990319 ACCESSION NUMBER: 0000950109-99-000888 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19990318 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARMSTRONG WORLD INDUSTRIES INC CENTRAL INDEX KEY: 0000007431 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 230366390 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-02116 FILM NUMBER: 99567837 BUSINESS ADDRESS: STREET 1: P O BOX 3001 STREET 2: 313 W LIBERTY ST CITY: LANCASTER STATE: PA ZIP: 17604 BUSINESS PHONE: 7173970611 MAIL ADDRESS: STREET 1: P.O. BOX 3001 CITY: LANCASTER STATE: PA ZIP: 17604 FORMER COMPANY: FORMER CONFORMED NAME: ARMSTRONG CORK CO DATE OF NAME CHANGE: 19800611 11-K 1 RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES 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, 1998 ------------------------------------------------- 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 ------------------------------------------------------- RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. (Full title of the Plan) ARMSTRONG WORLD INDUSTRIES, INC. 2500 Columbia Avenue Lancaster, Pennsylvania 17604 (Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office) Page No. ------- Item 1. Statements of Net Assets 4 ------------------------ September 30, 1998 and 1997 Item 2. Statements of Changes in Plan Equity 6-9 ------------------------------------ (a) Year ended September 30, 1998 (b) Year ended September 30, 1997 (c) Year ended September 30, 1996 Notes to Financial Statements 10-15 - ----------------------------- Item 3. Independent Auditors' Report 16 ---------------------------- Exhibits - -------- 23. Consent of Independent Auditors 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 PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. March 18, 1999 By: /s/ Douglas L. Boles ------------------------------------------ Douglas L. Boles Vice - Chairman of the Retirement Committee RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. Statements of Net Assets September 30, 1998 and 1997
1998 Commingled Specialized Low-Priced Money Fixed Income Equity Fund Equity Fund Stock Fund Market Fund Fund ----------- ----------- ---------- ----------- ---- Assets: Investments in master trust at fair value (note 3) $8,583,441 $12,540,209 $168,683 $582,926 $46,277,835 ---------- ----------- -------- -------- ----------- Total assets $8,583,441 $12,540,209 $168,683 $582,926 $46,277,835 ---------- ----------- -------- -------- ----------- Plan equity $8,583,441 $12,540,209 $168,683 $582,926 $46,277,835 ========== =========== ======== ======== =========== 1998 "OTC" Asset Asset Mgr. Asset Mgr. Mid Cap Value Portfolio Fd. Manager Fund Income Fund Growth Fund Portfolio Fund ------------- ------------ ----------- ----------- -------------- Assets: Investments in master trust at fair value (note 3) $2,238,113 $1,017,123 $94,315 $1,436,814 $458,830 ---------- ---------- ------- ---------- -------- Total assets $2,238,113 $1,017,123 $94,315 $1,436,814 $458,830 ---------- ---------- ------- ---------- -------- Plan equity $2,238,113 $1,017,123 $94,315 $1,436,814 $458,830 ========== ========== ======= ========== ========
RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. Statements of Net Assets September 30, 1998 and 1997
Global Equity Armstrong Overseas Portfolio Fund Stock Fund Fund -------------- ---------- ---- Assets: Investments in master trust at fair value (note 3) $139,500 $8,438,568 $41,636 -------- ---------- ------- Total assets $139,500 $8,438,568 $41,636 -------- ---------- ------- Plan equity $139,500 $8,438,568 $41,636 ======== ========== ======= Value Loan Portfolio Fund Portfolio Fund Total -------------- -------------- ----- Assets: Investments in master trust at fair value (note 3) $46,506 $2,272,842 $84,337,341 ------- ---------- ----------- Total assets $46,506 $2,272,842 $84,337,341 ------- ---------- ----------- Plan equity $46,506 $2,272,842 $84,337,341 ======= ========== =========== The accompanying notes are an integral part of the financial statements. (Continued)
4 RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. Statements of Net Assets 1997
Commingled Specialized Money Fixed Income Armstrong Equity Fund Equity Fund Market Fund Fund Stock Fund ----------- ----------- ----------- ---- ---------- Assets: Investments in master trust at fair value (note 3) $7,455,996 $11,265,055 $733,693 $45,727,952 $9,711,278 ---------- ----------- -------- ----------- ---------- Total assets $7,455,996 $11,265,055 $733,693 $45,727,952 $9,711,278 ---------- ----------- -------- ----------- ---------- Plan equity $7,455,996 $11,265,055 $733,693 $45,727,952 $9,711,278 ========== =========== ======== =========== ==========
RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. Statements of Net Assets
"OTC" Asset Asset Mgr. Asset Mgr. Loan Portfolio Fund Manager Fund Income Fund Growth Fund Portfolio Fund Total -------------- ------------ ----------- ----------- -------------- ----- Assets: Investments in master trust at fair value (note 3) $2,096,966 $966,047 $73,122 $992,028 $2,295,906 $81,318,043 ---------- -------- ------- -------- ---------- ----------- Total assets $2,096,966 $966,047 $73,122 $992,028 $2,295,906 $81,318,043 ---------- -------- ------- -------- ---------- ----------- Plan equity $2,096,966 $966,047 $73,122 $992,028 $2,295,906 $81,318,043 ========== ======== ======= ======== ========== ===========
The accompanying notes are an integral part of the financial statements. 5 RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. Statements of Changes in Plan Equity Years Ended September 30, 1998, 1997, and 1996
1998 Commingled Specialized Low-Priced Money Fixed Income Equity Fund Equity Fund Stock Fund Market Fund Fund ----------- ----------- ---------- ----------- ---- Plan equity at October 1, 1997 $7,455,996 $11,265,055 $ -- $733,693 $45,727,952 ---------- ----------- ---------- -------- ----------- Increases in plan equity: Contributions 495,303 924,620 12,740 60,163 3,361,949 Dividends 236,319 833,278 13,318 33,165 - Interest 17,008 30,922 273 4,435 2,975,022 Realized gain (loss) on investments (note 3) 289,916 352,659 (465) - - Loan activity, net (32,657) (34,952) (2,994) 2,420 (28,966) ---------- ---------- ---------- ---------- ---------- 1,005,889 2,106,527 22,872 100,183 6,308,005 ---------- ---------- ---------- ---------- ---------- Decreases in plan equity: Unrealized appreciation (depreciation) of investments 98,226 (684,488) (46,765) - - Benefits paid (note 4) (274,019) (501,878) - (100,665) (3,620,812) Transfers (to) from other employee benefit plans (11,093) (15,278) - 22,718 (185,481) Interfund transfers, net 308,442 370,271 192,576 (173,003) (1,951,829) ---------- ---------- ---------- ---------- ---------- 121,556 (831,373) 145,811 (250,950) (5,758,122) ---------- ---------- ---------- ---------- ---------- Plan equity at September 30,1998 $8,583,441 $12,540,209 $168,683 $582,926 $46,277,835 ========== =========== ======== ======== ===========
RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. Statements of Changes in Plan Equity Years Ended September 30, 1998, 1997, and 1996
Global Equity Armstrong Overseas Portfolio Fund Stock Fund Fund -------------- ---------- ---- Plan equity at October 1, 1997 $-- $9,711,278 $-- --- ---------- --- Increases in plan equity: Contributions 9,646 493,575 5,200 Dividends 1,427 267,830 - Interest 221 32,223 151 Realized gain (loss) on investments (note 3) (1,539) 354,202 (1,335) Loan activity, net 6,923 (49,051) 4,501 ---------- ---------- ---------- 16,678 1,098,779 8,517 ---------- ---------- ---------- Decreases in plan equity: Unrealized appreciation (depreciation) of investments (25,765) (2,333,738) (8,431) Benefits paid (note 4) - (358,401) (187) Transfers (to) from other employee benefit plans - (16,656) - Interfund transfers, net 148,587 337,306 41,737 ---------- ---------- ---------- 122,822 (2,371,489) 33,119 ---------- ---------- ---------- Plan equity at September 30, 1998 $139,500 $8,438,568 $41,636 ======== ========== =======
The accompanying notes are an integral part of the financial statements. (Continued) 6 RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. Statements of Changes in Plan Equity
1998, cont. "OTC" Asset Asset Mgr. Asset Mgr. Mid Cap Value Portfolio Fd. Manager Fund Income Fund Growth Fund Portfolio Fund ------------- ------------ ----------- ----------- -------------- Plan equity at October 1, 1997 $2,096,966 $966,047 $73,122 $992,028 $-- ---------- -------- ------- -------- --- Increases in plan equity: Contributions 250,172 74,257 15,448 166,605 34,325 Dividends 234,320 91,620 5,879 116,109 - Interest 9,258 2,605 71 3,741 521 Realized gain (loss) on investments (note 3) 94,079 26,839 4,983 20,698 (5,354) Loan activity, net (7,689) 2,784 (799) (3,857) 3,144 ----------- ---------- ---------- ---------- ---------- 580,140 198,105 25,582 303,296 32,636 ----------- ---------- ---------- ---------- ---------- Decreases in plan equity: Unrealized appreciation (depreciation) of investments (354,071) (65,257) (3,855) (93,854) (83,021) Benefits paid (note 4) (63,377) (7,398) (7) (15,955) (1,081) Transfers (to) from other employee benefit plans - - - (10,398) - Interfund transfers, net (21,545) (74,374) (527) 261,697 510,296 ----------- ---------- ---------- ---------- ---------- (438,993) (147,029) (4,389) 141,490 426,194 ----------- ---------- ---------- ---------- ---------- Plan equity at September 30,1998 $2,238,113 $1,017,123 $94,315 $1,436,814 $458,830 ========== ========== ======= ========== ========
RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. Statements of Changes in Plan Equity
Value Loan Portfolio Fund Portfolio Fund Total -------------- -------------- ----- Plan equity at October 1, 1997 $-- $2,295,906 $81,318,043 --- ---------- ----------- Increases in plan equity: Contributions 8,519 - 5,912,522 Dividends 331 - 1,833,596 Interest 73 - 3,076,524 Realized gain (loss) on investments (note 3) (1,156) - 1,133,527 Loan activity, net 681 140,512 - ---------- ---------- ---------- 8,448 140,512 11,956,169 ---------- ---------- ---------- Decreases in plan equity: Unrealized appreciation (depreciation) of investments (12,183) - (3,613,202) Benefits paid (note 4) (125) - (4,943,905) Transfers (to) from other employee benefit plans - (163,576) (379,764) Interfund transfers, net 50,366 - - ---------- ---------- ---------- 38,058 (163,576) (8,936,871) ---------- ---------- ---------- Plan equity at September 30,1998 $46,506 $2,272,842 $84,337,341 ======= ========== ===========
The accompanying notes are an integral part of the financial statements. (Continued) 7 RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. Statements of Changes in Plan Equity, Continued
1997 Commingled Specialized Money Fixed Income Armstrong Equity Fund Equity Fund Market Fund Fund Stock Fund ----------- ----------- ----------- ---- ---------- Plan equity at October 1, 1996 $4,883,660 $8,578,636 $416,000 $43,406,405 $9,386,415 ---------- ---------- -------- ----------- ---------- Increases in plan equity: Contributions 396,153 925,416 82,926 3,529,199 552,192 Dividends 161,332 305,919 31,777 - 244,989 Interest 13,762 29,295 4,814 2,900,183 25,355 Realized gain on investments (note 3) 351,366 260,242 - - 550,950 Unrealized appreciation of investments 1,580,784 2,365,599 - - 161,770 Loan activity, net (130,980) (126,204) (29,492) (115,061) (48,374) ---------- ---------- -------- ----------- ---------- 2,372,417 3,760,267 90,025 6,314,321 1,486,882 ---------- ---------- -------- ----------- ---------- Decreases in plan equity: Benefits paid (note 4) (374,928) (596,146) (51,747) (4,048,400) (548,329) Transfers (to) from other employee benefit plans (1,542) (75,341) - (20,335) (16,068) Interfund transfers, net 576,389 (402,361) 279,415 75,961 (597,622) ---------- ---------- -------- ----------- ---------- 199,919 (1,073,848) 227,668 (3,992,774) (1,162,019) ---------- ---------- -------- ----------- ---------- Plan equity at September 30,1997 $7,455,996 $11,265,055 $733,693 $45,727,952 $9,711,278 ========== =========== ======== =========== ==========
RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. Statements of Changes in Plan Equity, Continued
1997 "OTC" Asset Asset Mgr. Asset Mgr. Loan Portfolio Fd. Manager Fund Income Fund Growth Fund Portfolio Fund Total ------------- ------------ ----------- ----------- -------------- ----- Plan equity at October 1, 1996 $1,436,335 $699,182 $105,627 $709,448 $1,906,340 $71,528,048 ---------- -------- -------- -------- ---------- ----------- Increases in plan equity: Contributions 217,619 62,467 11,615 121,049 - 5,898,636 Dividends 118,866 63,179 7,829 60,481 - 994,372 Interest 7,442 1,002 105 2,598 - 2,984,556 Realized gain on investments (note 3) 76,022 9,140 2,061 37,700 - 1,287,481 Unrealized appreciation of investments 305,789 108,924 2,094 127,853 - 4,652,813 Loan activity, net 4,074 (25,281) 460 (21,317) 492,175 ---------- -------- -------- -------- ---------- ----------- 729,812 219,431 24,164 328,364 492,175 15,817,858 -------- -------- ------- -------- -------- ----------- Decreases in plan equity: Benefits paid (note 4) (94,168) (24,466) (1,587) (49,821) - (5,789,592) Transfers (to) from other employee benefit plans - (12,062) - (10,314) (102,609) (238,271) Interfund transfers, net 24,987 83,962 (55,082) 14,351 - - ---------- -------- -------- -------- ---------- ----------- (69,181) 47,434 (56,669) (45,784) (102,609) (6,027,863) -------- ------- -------- -------- --------- ---------- Plan equity at September 30,1997 $2,096,966 $966,047 $73,122 $992,028 $2,295,906 $81,318,043 ========== ======== ======= ======== ========== ===========
The accompanying notes are an integral part of the financial statements. (Continued) 8 RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. Statements of Changes in Plan Equity, Continued
1996 Commingled Specialized Money Fixed Income Armstrong Equity Fund Equity Fund Market Fund Fund Stock Fund ----------- ----------- ----------- ---- ---------- Plan equity at October 1, 1995 $5,767,464 $11,315,817 $540,741 $52,340,946 $10,507,047 ---------- ----------- -------- ----------- ----------- Increases in plan equity: Contributions 391,706 1,366,042 121,611 4,511,659 651,984 Dividends 175,391 2,450,944 31,527 - 284,330 Interest 11,647 27,737 2,993 3,439,151 27,919 Realized gain on investments (note 3) 1,054,113 509,001 - - 1,338,682 Loan activity, net (43,609) (114,351) (24,188) (54,773) 40,571 ---------- ----------- -------- ----------- ----------- 1,589,248 4,239,373 131,943 7,896,037 2,343,486 ---------- ----------- -------- ----------- ----------- Decreases in plan equity: Unrealized appreciation (depreciation) of investments (105,009) (2,583,323) - - (69,393) Benefits paid (note 4) (746,345) (847,736) (114,511) (4,314,524) (681,467) Transfers (to) from other employee benefit plans (1,847,282) (3,236,368) (120,751) (11,735,341) (2,512,660) Interfund transfers, net 225,584 (309,127) (21,422) (780,713) (200,598) ---------- ----------- -------- ----------- ----------- (2,473,052) (6,976,554) (256,684) (16,830,578) (3,464,118) ---------- ----------- -------- ----------- ----------- Plan equity at September 30,1996 $4,883,660 $8,578,636 $416,000 $43,406,405 $9,386,415 ========== ========== ======== =========== ==========
RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. Statements of Changes in Plan Equity, Continued
1996 "OTC" Asset Asset Mgr. Asset Mgr. Loan Portfolio Fd. Manager Fund Income Fund Growth Fund Portfolio Fund Total ------------- ------------ ----------- ----------- -------------- ----- Plan equity at October 1, 1995 $657,654 $850,760 $103,847 $733,731 $2,381,480 $85,199,487 -------- -------- -------- -------- ---------- ----------- Increases in plan equity: Contributions 174,556 91,334 12,725 123,321 - 7,444,938 Dividends 156,848 33,031 5,802 11,678 - 3,149,551 Interest 4,912 2,722 112 1,989 - 3,519,182 Realized gain on investments (note 3) 53,313 33,020 934 50,214 - 3,039,277 Loan activity, net 3,277 427 (717) (2,282) 195,645 - -------- -------- -------- -------- ---------- ----------- 392,906 160,534 18,856 184,920 195,645 17,152,948 -------- -------- -------- -------- ---------- ----------- Decreases in plan equity: Unrealized appreciation (depreciation) of investments (6,112) 27,374 688 44,495 - (2,691,280) Benefits paid (note 4) (47,221) (96,915) (21,390) (35,812) - (6,905,921) Transfers (to) from other employee benefit plans (433,448) (342,700) (10,568) (317,283) (670,785) (21,227,186) Interfund transfers, net 872,556 100,129 14,194 99,397 - - -------- -------- -------- -------- ---------- ----------- 385,775 (312,112) (17,076) (209,203) (670,785) (30,824,387) -------- --------- -------- --------- --------- ------------ Plan equity at September 30,1996 $1,436,335 $699,182 $105,627 $709,448 $1,906,340 $71,528,048 ========== ======== ======== ======== ========== ===========
The accompanying notes are an integral part of the financial statements. 9 RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES 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 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 fair value of the commingled equity, specialized equity, low-priced stock, global equity portfolio, overseas, "OTC" portfolio, Asset Manager, Asset Manager income, Asset Manager growth, mid cap value portfolio and value portfolio is based on the underlying market value of the investments. The money market fund is stated at cost which approximates fair value. The fixed 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 Armstrong stock fund is based on quoted market price. The value of the loan portfolio fund represents the unpaid principal of employee loans. 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. (c) Expenses -------- All legal, accounting and administrative expenses associated with Plan operations are paid by Armstrong World Industries, Inc. (the Company) (2) Plan Description The Company has adopted the Retirement Savings Plan for Hourly-Paid Employees of Armstrong World Industries, Inc. (the Plan). The Plan is a defined contribution plan established for the purpose of providing to eligible hourly-paid employees a means for long-term savings intended for the accumulation of retirement income in addition to that provided under other retirement plans maintained for the benefit of employees. Participants may elect to make contributions to the Plan in each of the following methods: 1. Up to 15% of their before-tax compensation, as deferred compensation as permitted under Section 401(k) of the Internal Revenue Code. 2. Up to 10% of their after-tax compensation. Separate accounts are maintained for contributions made by or on behalf of a participant. The accounts in each fund reflect the participants' contributions together with dividends, interest, other income, and realized and unrealized gains and losses allocated thereon. Participants have an immediate 100 percent vested interest with respect to their contributions and are fully vested with regard to any previously made matching company contributions. 10 RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. Notes to Financial Statements, (Continued) (3) Investments in Master Trust --------------------------- Assets are held in a Master Trust administered by Fidelity Management Trust Co., as Trustee, and are segregated into fourteen investment options: a commingled equity mutual fund (Fidelity U.S. Equity Index Portfolio), a specialized equity mutual fund (Fidelity Magellan), a low-priced stock fund (Fidelity Low-Priced Stock Fund), a money market mutual fund (Fidelity Retirement Money Market Portfolio), a fixed income fund (Interest Income Fund), a global equity mutual fund (Morgan Stanley Institutional Fund, Inc. - Global Equity Portfolio), an Armstrong stock fund, an overseas fund (Fidelity Overseas Fund), an "OTC" mutual fund (Over-the-counter Portfolio), three Asset Manager mutual funds (Fidelity Asset Manager Fund, Fidelity Asset Manager: Income Fund, and Fidelity Asset Manager: Growth Fund), and two value-oriented mutual funds (Miller, Anderson & Sherrard, LLP Value Portfolio and Miller, Anderson & Sherrard, LLP Mid Cap Value Portfolio). The Plan utilizes the Trustee and associated investment managers to direct investment activity. The Plan participates in all fourteen investment alternatives. The following is a brief description of the investment funds to which Plan participants can elect to allocate their contributions. Participants should refer to fund prospectuses for more complete information regarding the investment funds. 1. Commingled Equity 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. At September 30, 1998, there were 467 active participants in this investment fund. 2. Specialized Equity Fund - This fund invests in common stocks of companies having substantial growth prospects as determined by independent investment managers. At September 30, 1998, there were 735 active participants in this investment fund. 3. Low-priced Stock Fund - This fund seeks capital appreciation through investments in mainly U.S. and foreign low-priced stocks that may be undervalued, overlooked or out of favor. At September 30, 1998, there were 40 active participants in this investment fund. 4. Money Market Fund - 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. At September 30, 1998, there were 78 active participants in this investment fund. 5. Fixed Income Fund - Contributions to this fund are invested in the general accounts of insurance companies and are credited at contracted interest rates. Invested principal and accumulated interest amounts are guaranteed against loss by the insurance company. Credited interest rates are reset periodically during the plan year. At September 30, 1998, the interest rates ranged between 5.45% and 8.26%. At September 30, 1997, the interest rates ranged between 5.53% and 8.26%. The average yields for the plan year ended September 30, 1998 and September 30, 1997 were 6.27% and 6.31%, respectively. The fair value of the contracts approximate cost. At September 30, 1998, there were 1,920 active participants in this investment fund. 6. Global 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. At September 30, 1998, there were 27 active participants in this investment fund. 7. Armstrong Stock Fund - Amounts invested in this fund, along with dividend earnings thereon, are invested in Armstrong common stock. At September 30, 1998, there were 1,063 active participants in this investment fund. Common stock shares held by the fund at September 30, 1998 and 1997 were 157,730 and 144,808, respectively. 11 RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. Notes to Financial Statements, (Continued) 8. 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. At September 30, 1998, there were 17 active participants in this investment fund. 9. OTC Portfolio Fund - 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. At September 30, 1998, there were 225 active participants in this investment fund. 10. Asset Manager Fund - 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. At September 30, 1998, there were 96 active participants in this investment fund. 11. Asset Manager - Income Fund - 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. At September 30, 1998, there were 26 active participants in this investment fund. 12. Asset Manager - Growth Fund - 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. At September 30, 1998, there were 153 active participants in this investment fund. 13. 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. At September 30, 1998, there were 74 active participants in this investment fund. 14. 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. At September 30, 1998, there were 18 active participants in this fund. The Loan Portfolio Fund represents the unpaid principal balances of loans made by Plan participants in accordance with established loan provision guidelines. At September 30, 1998, there were 473 loans outstanding. 12 RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES 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, 1998 and 1997:
September 30, 1998 September 30, 1997 ------------------ ------------------ Investment Cost Fair Value Cost Fair Value ---------- ---- ---------- ---- ---------- Commingled equity $5,084,737 $8,583,441 $4,055,518 $7,455,996 Specialized equity 10,263,076 12,540,209 8,303,434 11,265,055 Low-priced stock 215,448 168,683 - - Money market 582,926 582,926 733,693 733,693 Fixed income 46,277,835 46,277,835 45,727,952 45,727,952 Global equity portfolio 165,265 139,500 - - Armstrong stock 7,112,972 8,438,568 6,051,944 9,711,278 Overseas 50,067 41,636 - - OTC portfolio 2,172,671 2,238,113 1,677,453 2,096,966 Asset manager 924,767 1,017,123 808,434 966,047 Asset manager income 91,920 94,315 66,872 73,122 Asset manager growth 1,312,490 1,436,814 773,850 992,028 Mid cap value portfolio 541,851 458,830 - - Value portfolio 58,689 46,506 - - Loan portfolio 2,272,842 2,272,842 2,295,906 2,295,906 --------- --------- --------- --------- 77,127,556 84,337,341 $70,495,056 $81,318,043 ========== ========== =========== ===========
The amounts of realized gain (loss) on investments in securities of the Master Trust for the years ended September 30, 1998, 1997, and 1996 are presented below:
Aggregate Aggregate Realized 1998 Proceeds Cost Gain (Loss) ---- -------- ---- ----------- Commingled equity $1,405,186 $1,115,270 $289,916 Specialized equity 3,886,313 3,533,654 352,659 Low-priced stock 10,083 10,548 (465) Global equity portfolio 24,746 26,285 (1,539) Armstrong stock 958,311 604,109 354,202 Overseas 30,474 31,809 (1,335) OTC portfolio 3,943,120 3,849,041 94,079 Asset manager 234,620 207,781 26,839 Asset manager income 51,173 46,190 4,983 Asset manager growth 348,024 327,326 20,698 Mid cap value portfolio 66,556 71,910 (5,354) Value portfolio 7,977 9,133 (1,156) ----------- ---------- ---------- $10,966,583 $9,833,056 $1,133,527 =========== ========== ========== 1997 Commingled equity $1,225,383 $874,017 $351,366 Specialized equity 3,517,283 3,257,041 260,242 Armstrong stock 1,497,284 946,334 550,950 OTC portfolio 3,026,966 2,950,944 76,022 Asset manager 116,680 107,540 9,140 Asset manager income 80,693 78,632 2,061 Asset manager growth 253,077 215,377 37,700 ---------- ---------- ---------- $9,717,366 $8,429,885 $1,287,481 ========== ========== ==========
13 RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. Notes to Financial Statements, (Continued)
Aggregate Aggregate Realized 1996 Proceeds Cost Gain (Loss) - ---- -------- ---- ----------- Commingled equity $2,844,308 $1,790,195 $1,054,113 Specialized equity 8,058,491 7,549,490 509,001 Armstrong stock 3,660,766 2,322,084 1,338,682 OTC portfolio 1,393,457 1,340,144 53,313 Asset manager 514,737 481,717 33,020 Asset manager income 54,345 53,411 934 Asset manager growth 453,629 403,415 50,214 ----------- ----------- ---------- $16,979,733 $13,940,456 $3,039,277 =========== =========== ==========
(4) Benefits -------- 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 his 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. A Tax-Deductible (MIRA) Account holds contributions made to the Plan before January 1, 1987. No new contributions may be made to this account. 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, and Standard Accounts. Before-tax contributions are made to the Sheltered Account and after-tax contributions are made to the Standard Account. 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 Savings Plan 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. (5) Obligation for Benefits ----------------------- All the funds of the Plan are held by investing institutions appointed by the Company under a trust agreement or investment contract. Benefits under the Plan are payable only out of these funds. The Company 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 the Company nor any investing institution guarantees the funds of the Plan against any loss or depreciation or guarantees the payment of any benefit hereunder. Although the Company 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. (6) Federal Income Taxes -------------------- By a letter dated February 13, 1996, the Internal Revenue Service has determined and informed the Company that the Plan qualifies under the applicable provisions of the Internal Revenue Code and is therefore exempt from federal income taxes. 14 RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES OF ARMSTRONG WORLD INDUSTRIES, INC. Notes to Financial Statements, (Continued) (7) 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 and Stock Ownership Plan of Armstrong World Industries, Inc. 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, 1998 and 1997:
September 30, 1998 September 30, 1997 Cost Fair Value Cost Fair Value ---- ---------- ---- ---------- Money market fund 7,277,128 7,277,128 4,332,728 4,332,728 Armstrong common stock fund 15,494,806 18,779,265 13,793,357 22,471,238 Registered investment companies 137,463,217 184,878,481 111,940,786 167,806,037 Fixed income insurance contracts 180,069,533 180,069,533 176,728,629 176,728,629 Loan portfolio 7,298,722 7,298,722 6,869,084 6,869,084 --------- --------- --------- --------- Total investments in Master Trust 347,603,406 398,303,129 313,664,584 378,207,716 =========== =========== =========== =========== Plan's interest in Master Trust 77,127,556 84,337,341 70,495,056 81,318,043 Plan's percentage in Master Trust 22.2% 21.2% 22.5% 21.5%
During 1998 and 1997, the Plan's investments (including investments bought, sold, and held during the year) appreciated in value as follows:
1998 1997 ---- ---- Net appreciation (depreciation) in fair value of investments in the Fidelity Management Trust Company Master Trust (6,524,510) 40,903,095 Allocated net appreciation (depreciation) in fair value of investments in the Master Trust (2,479,675) 5,940,294 During 1998 and 1997, interest and dividends were as follows: 1998 1997 ---- ---- Interest and dividends in Fidelity Management Trust Company Master Trust 23,337,613 17,683,902 Allocated interest and dividends from investment in Master Trust 4,910,120 3,978,928
All of the above information was certified by the trustee at September 30, 1998 and 1997 and for the years then ended. 15 Independent Auditors' Report ---------------------------- The Retirement Committee Armstrong World Industries, Inc.: We have audited the accompanying statements of net assets of the Retirement Savings Plan for Hourly-Paid Employees of Armstrong World Industries, Inc. as of September 30, 1998 and 1997 and the related statements of changes in plan equity for each of the years in the three-year period ended September 30, 1998. 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 Retirement Savings Plan for Hourly-Paid Employees of Armstrong World Industries, Inc. as of September 30, 1998 and 1997 and the changes in its plan equity for each of the years in the three-year period ended September 30, 1998, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The fund information in the statements of net assets and the statements of changes in plan equity is presented for purposes of additional analysis rather than to present the net assets and changes in plan equity of each fund. The fund information 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 Philadelphia, PA March 11, 1999 16 EXHIBIT INDEX 23 Consent of Independent Auditors EX-23 2 CONSENT OF INDEPENDENT AUDITORS Consent of Independent Auditors ------------------------------- The Retirement Committee Armstrong World Industries, Inc.: We consent to incorporation by reference in the Registration Statement No. 33- 18997 on Form S-8 of Armstrong World Industries, Inc. of our report dated March 11, 1999, relating to the statements of net assets of the Retirement Savings Plan for Hourly-Paid Employees of Armstrong World Industries, Inc. as of September 30, 1998 and 1997 and the related statements of changes in plan equity for each of the years in the three-year period ended September 30, 1998, which report is included herein. KPMG LLP Philadelphia, PA March 11, 1999 -----END PRIVACY-ENHANCED MESSAGE-----