<PAGE>
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, 1997
-----------------------------------------------
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.
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>
Page No.
-------
Item 1. Statements of Net Assets 4
------------------------
September 30, 1997 and 1996
Item 2. Statements of Changes in Plan Equity 5-7
------------------------------------
(a) Year ended September 30, 1997
(b) Year ended September 30, 1996
(c) Year ended September 30, 1995
Notes to Financial Statements 8-11
- -----------------------------
Item 3. Independent Auditors' Report 12
----------------------------
Exhibits
- --------
24. Consent of Independent Auditors
<PAGE>
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 23, 1998 By: /s/ George A. Lorch
------------------------------------------
George A. Lorch
Chairman of the Retirement Committee
<PAGE>
RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES
OF ARMSTRONG WORLD INDUSTRIES, INC.
Statements of Net Assets
September 30, 1997 and 1996
<TABLE>
<CAPTION>
1997
Commingled Specialized Money Fixed Income Armstrong
Equity Fund Equity Fund Market Fund Fund Stock Fund
----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in master trust $7,455,996 $11,265,055 $733,693 $45,727,952 $9,711,278
at fair value (note 3) ---------- ----------- -------- ----------- ----------
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
========== =========== ======== =========== ==========
<CAPTION>
"OTC" Asset Asset Mgr. Asset Mgr. Loan
Portfolio Fd. Manager Fund Income Fund Growth Fund Portfolio Fund Total
------------- ------------ ----------- ------------ -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in master trust $2,096,966 $966,047 $73,122 $992,028 $2,295,906 $81,318,043
at fair value (note 3) ---------- -------- ------- -------- ---------- -----------
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
========== ======== ======= ======== ========== ===========
<CAPTION>
1996
Commingled Specialized Money Fixed Income Armstrong
Equity Fund Equity Fund Market Fund Fund Stock Fund
----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments in master trust $4,883,660 $8,578,636 $416,000 $43,406,405 $9,386,415
at fair value (note 3) ---------- ---------- -------- ----------- ----------
Total assets $4,883,660 $8,578,636 $416,000 $43,406,405 $9,386,415
----------- ---------- -------- ----------- ----------
Plan equity $4,883,660 $8,578,636 $416,000 $43,406,405 $9,386,415
=========== ========== ======== =========== ==========
<CAPTION>
"OTC" Asset Asset Mgr. Asset Mgr. Loan
Portfolio Fd. Manager Fund Income Fund Growth Fund Portfolio Fund Total
------------- ------------ ------------ ------------ -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in master trust $1,436,335 $699,182 $105,627 $709,448 $1,906,340 $71,528,048
at fair value (note 3) ---------- -------- -------- -------- ---------- -----------
Total assets $1,436,335 $699,182 $105,627 $709,448 $1,906,340 $71,528,048
---------- -------- -------- -------- ---------- -----------
Plan equity $1,436,335 $699,182 $105,627 $709,448 $1,906,340 $71,528,048
========== ======== ======== ======== ========== ===========
</TABLE>
See accompanying notes to financial statements
<PAGE>
RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES
OF ARMSTRONG WORLD INDUSTRIES, INC.
Statements of Changes in Plan Equity
Years ended September 30, 1997, 1996, and 1995
<TABLE>
<CAPTION>
1997
Commingled Specialized Money Fixed Income Armstrong
Equity Fund Equity Fund Market Fund Fund Stock Fund
----------- ----------- ----------- ---- ----------
<S> <C> <C> <C> <C> <C>
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 of
Armstrong World Industries, Inc. (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
========== =========== ======== =========== ==========
<CAPTION>
"OTC" Asset Asset Mgr. Asset Mgr. Loan
Portfolio Fd. Manager Fund Income Fund Growth Fund Portfolio Fund
------------- ------------ ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Plan equity at October 1, 1996 $1,436,335 $699,182 $105,627 $709,448 $1,906,340
---------- -------- -------- -------- ----------
Increases in plan equity:
Contributions 217,619 62,467 11,615 121,049 --
Dividends 118,866 63,179 7,829 60,481 --
Interest 7,442 1,002 105 2,598 --
Realized gain on investments
(note 3) 76,022 9,140 2,061 37,700 --
Unrealized appreciation of
investments 305,789 108,924 2,094 127,853 --
Loan activity, net 4,074 (25,281) 460 (21,317) 492,175
---------- -------- -------- -------- ----------
729,812 219,431 24,164 328,364 492,175
---------- -------- -------- -------- ----------
Decreases in plan equity:
Benefits paid (note 4) (94,168) (24,466) (1,587) (49,821) --
Transfers (to) from other
employee benefit plans of
Armstrong World Industries, Inc. -- (12,062) -- (10,314) (102,609)
Interfund transfers, net 24,987 83,962 (55,082) 14,351 --
---------- -------- ------- -------- ----------
(69,181) 47,434 (56,669) (45,784) (102,609)
---------- -------- ------- -------- ----------
Plan equity at September 30, 1997 $2,096,966 $966,047 $73,122 $992,028 $2,295,906
========== ======== ======= ======== ==========
Total
-----
Plan equity at October 1, 1996
$71,528,048
-----------
Increases in plan equity:
Contributions 5,898,636
Dividends 994,372
Interest 2,984,556
Realized gain on investments
(note 3) 1,287,481
Unrealized appreciation of
investments 4,652,813
Loan activity, net --
-----------
15,817,858
-----------
Decreases in plan equity:
Benefits paid (note 4) (5,789,592)
Transfers (to) from other
employee benefit plans of
Armstrong World Industries, Inc. (238,271)
Interfund transfers, net --
-----------
(6,027,863)
-----------
Plan equity at September 30, 1997 $81,318,043
===========
</TABLE>
See accompanying notes to financial statements. (Continued)
<PAGE>
RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES
OF ARMSTRONG WORLD INDUSTRIES, INC.
Statements of Changes in Plan Equity, Continued
<TABLE>
<CAPTION>
1996
Commingled Specialized Money Fixed Income Armstrong
Equity Fund Equity Fund Market Fund Fund Stock Fund
----------- ----------- ----------- ---- ----------
<S> <C> <C> <C> <C> <C>
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 of
Armstrong World Industries, Inc. (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
========== ========== ======== =========== ==========
<CAPTION>
"OTC" Asset Asset Mgr. Asset Mgr. Loan
Portfolio Fd. Manager Fund Income Fund Growth Fund Portfolio Fund
------------- ------------ ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Plan equity at October 1, 1995 $ 657,654 $850,760 $103,847 $733,731 $2,381,480
---------- -------- -------- -------- ----------
Increases in plan equity:
Contributions 174,556 91,334 12,725 123,321 --
Dividends 156,848 33,031 5,802 11,678 --
Interest 4,912 2,722 112 1,989 --
Realized gain on investments
(note 3) 53,313 33,020 934 50,214 --
Loan activity, net 3,277 427 (717) (2,282) 195,645
---------- -------- -------- -------- ----------
392,906 160,534 18,856 184,920 195,645
---------- -------- -------- -------- ----------
Decreases in plan equity:
Unrealized appreciation
(depreciation) of investments (6,112) 27,374 688 44,495 --
Benefits paid (note 4) (47,221) (96,915) (21,390) (35,812) --
Transfers (to) from other
employee benefit plans of
Armstrong World Industries, Inc. (433,448) (342,700) (10,568) (317,283) (670,785)
Interfund transfers, net 872,556 100,129 14,194 99,397 --
---------- -------- -------- -------- ----------
385,775 (312,112) (17,076) (209,203) (670,785)
---------- -------- -------- -------- ----------
Plan equity at September 30, 1996 $1,436,335 $699,182 $105,627 $709,448 $1,906,340
========== ======== ======== ======== ==========
<CAPTION>
Total
-----
<S> <C>
Plan equity at October 1, 1995 $85,199,487
-----------
Increases in plan equity:
Contributions 7,444,938
Dividends 3,149,551
Interest 3,519,182
Realized gain on investments
(note 3) 3,039,277
Loan activity, net --
-----------
17,152,948
-----------
Decreases in plan equity:
Unrealized appreciation
(depreciation) of investments (2,691,280)
Benefits paid (note 4) (6,905,921)
Transfers (to) from other
employee benefit plans of
Armstrong World Industries, Inc. (21,227,186)
Interfund transfers, net --
-----------
(30,824,387)
-----------
Plan equity at September 30, 1996 $71,528,048
===========
</TABLE>
See accompanying notes to financial statements (Continued)
<PAGE>
RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES
OF ARMSTRONG WORLD INDUSTRIES, INC.
Statements of Changes in Plan Equity, Continued
<TABLE>
<CAPTION>
1995
Commingled Specialized Money Fixed Income Armstrong
Equity Fund Equity Fund Market Fund Fund Stock Fund
----------- ----------- ----------- ---- ----------
<S> <C> <C> <C> <C> <C>
Plan equity at October 1, 1994 $4,339,507 $8,048,324 $388,854 $46,899,355 $7,897,890
---------- ---------- -------- ----------- ----------
Increases in plan equity:
Contributions 397,587 1,247,900 127,916 4,594,075 672,227
Dividends 129,522 40,507 31,863 -- 253,220
Interest 8,584 21,711 2,991 3,359,315 22,584
Realized gain (loss) on
investments (note 3) 106,949 301,571 -- -- 215,259
Unrealized appreciation of
investments 1,056,790 2,752,180 -- -- 2,087,260
Loan activity, net (70,980) (114,131) (16,042) (296,146) (1,984)
---------- ---------- -------- ----------- ----------
1,628,452 4,249,738 146,728 7,657,244 3,248,566
---------- ---------- -------- ----------- ----------
Decreases in plan equity:
Benefits paid (note 4) (231,803) (365,203) (25,866) (3,342,132) (302,964)
Transfers (to) from other
employee benefit plans of
Armstrong World Industries, Inc. (9,970) (34,962) (1,150) (43,507) (6,126)
Interfund transfers, net 41,278 (582,080) 32,175 1,169,986 (330,319)
---------- ---------- -------- ----------- ----------
(200,495) (982,245) 5,159 (2,215,653) (639,409)
---------- ---------- -------- ----------- ----------
Plan equity at September 30, 1995 $5,767,464 $11,315,817 $540,741 $52,340,946 $10,507,047
========== =========== ======== =========== ===========
<CAPTION>
"OTC" Asset Asset Mgr. Asset Mgr. Loan
Portfolio Fd. Manager Fund Income Fund Growth Fund Portfolio Fund
------------- ------------ ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
Plan equity at October 1, 1994 $451,130 $665,191 $79,890 $813,150 $1,899,989
-------- -------- ------- -------- ----------
Increases in plan equity:
Contributions 95,414 119,337 20,887 150,368 --
Dividends 16,793 25,002 3,593 22,899 --
Interest 2,443 3,230 701 2,771 --
Realized gain (loss) on
investments (note 3) 31,229 (6,672) (215) (17,965) --
Unrealized appreciation of
investments 132,867 52,303 6,409 62,284 --
Loan activity, net 2,818 (7,583) (5) 3,381 500,672
-------- -------- ------- -------- ----------
281,564 185,617 31,370 223,738 500,672
-------- -------- ------- -------- ----------
Decreases in plan equity:
Benefits paid (note 4) (7,317) (20,156) -- (23,665) --
Transfers (to) from other
employee benefit plans of
Armstrong World Industries, Inc. (3,480) -- -- -- (19,181)
Interfund transfers, net (64,243) 20,108 (7,413) (279,492) --
-------- -------- ------- -------- ----------
(75,040) (48) (7,413) (303,157) (19,181)
-------- -------- ------- -------- ----------
Plan equity at September 30, 1995 $657,654 $850,760 $103,847 $733,731 $2,381,480
======== ======== ======== ======== ==========
<CAPTION>
Total
-----
<S> <C>
Plan equity at October 1, 1994 $71,483,280
-----------
Increases in plan equity:
Contributions 7,425,711
Dividends 523,399
Interest 3,424,330
Realized gain (loss) on
investments (note 3) 630,156
Unrealized appreciation of
investments 6,150,093
Loan activity, net --
-----------
18,153,689
-----------
Decreases in plan equity:
Benefits paid (note 4) (4,319,106)
Transfers (to) from other
employee benefit plans of
Armstrong World Industries, Inc. (118,376)
Interfund transfers, net --
-----------
(4,437,482)
-----------
Plan equity at September 30, 1995 $85,199,487
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
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, over-the-
counter portfolio, and Asset Manager funds 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 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 the Company.
(2) Plan Description
Armstrong World Industries, Inc. (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.
<PAGE>
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 nine investment options: a
commingled equity mutual fund (Fidelity U.S. Equity Index Portfolio), a
specialized equity mutual fund (Fidelity Magellan), a money market mutual
fund (Fidelity Return Money Market Portfolio), three Asset Manager mutual
funds, an over-the-counter mutual fund (OTC Portfolio Fund), a fixed income
fund, and an Armstrong stock fund. The Plan utilizes the Trustee and
associated investment managers to direct investment activity. The Plan
participates in all nine investment alternatives.
The following is a description of the investment funds to which Plan
participants can elect to allocate their contributions.
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, 1997, there were 410 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, 1997, there were 675 active participants in this
investment fund.
3. 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,
1997, there were 87 active participants in this investment fund.
4. Fixed Income Fund - Contributions to this fund are invested in the general
accounts of insurance companies and are credited at contracted interest
rates. At September 30, 1997, the interest rates ranged between 5.53% and
8.26%. Invested principal and accumulated interest amounts are guaranteed
against loss by the insurance company. At September 30, 1997, there were
1,919 active participants in this investment fund.
5. Armstrong Stock Fund - Amounts invested in this fund, along with dividend
earnings thereon, are invested in Armstrong common stock. At September 30,
1997, there were 1,137 active participants in this investment fund. Common
stock shares held by the fund at September 30, 1997 and 1996 were 144,808
and150,484, respectively.
6. 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, 1997, there were 195 active participants in
this investment fund.
7. 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, 1997, there were 91 active participants in
this investment fund.
8. Asset Manager Income Fund - An asset allocation fund which invests in a
diversified portfolio of stocks, bonds, and short-term instruments. The
fund has a conservative investment strategy focusing on bonds and
short-term instruments to achieve a high level of current income and
capital preservation. At September 30, 1997, there were 19 active
participants in this investment fund.
9. 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, 1997, there
were 127 active participants in this investment fund.
<PAGE>
RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES
OF ARMSTRONG WORLD INDUSTRIES, INC.
Notes to Financial Statements, (Continued)
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, 1997, there were 453 loans outstanding.
The following table presents the cost and fair values of the investments in
securities of the Master Trust at September 30, 1997 and 1996:
<TABLE>
<CAPTION>
September 30, 1997 September 30, 1996
------------------ ------------------
Investment Cost Fair Value Cost Fair Value
---------- ---- ---------- ---- ----------
<S> <C> <C> <C> <C>
Commingled equity $4,055,518 $7,455,996 $3,063,966 $4,883,660
Specialized equity 8,303,434 11,265,055 7,982,614 8,578,636
Money market 733,693 733,693 416,000 416,000
Fixed income 45,727,952 45,727,952 43,406,405 43,406,405
Armstrong stock 6,051,944 9,711,278 5,888,851 9,386,415
OTC portfolio 1,677,453 2,096,966 1,322,611 1,436,335
Asset manager 808,434 966,047 650,493 699,182
Asset manager income 66,872 73,122 101,471 105,627
Asset manager growth 773,850 992,028 619,123 709,448
Loan portfolio 2,295,906 2,295,906 1,906,340 1,906,340
----------- ----------- ----------- -----------
$70,495,056 $81,318,043 $65,357,874 $71,528,048
=========== =========== =========== ===========
</TABLE>
The amounts of realized gain (loss) on investments in securities of the Master
Trust for the years ended September 30, 1997, 1996, and 1995 are presented
below:
<TABLE>
<CAPTION>
Aggregate Aggregate Realized
--------- --------- --------
1997 Proceeds Cost Gain (Loss)
---- -------- ---- -----------
<S> <C> <C> <C>
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
========== ========== ==========
1996
----
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
=========== =========== ==========
</TABLE>
<PAGE>
RETIREMENT SAVINGS PLAN FOR HOURLY-PAID EMPLOYEES
OF ARMSTRONG WORLD INDUSTRIES, INC.
Notes to Financial Statements, (Continued)
<TABLE>
1995 Aggregate Aggregate Realized
---- --------- --------- --------
Proceeds Cost Gain (Loss)
-------- ---- -----------
<S> <C> <C> <C>
Commingled equity $472,019 $365,070 $106,949
Specialized equity 5,448,317 5,146,746 301,571
Armstrong stock 826,591 611,332 215,259
OTC portfolio 246,546 215,317 31,229
Asset manager 176,640 183,312 (6,672)
Asset manager income 24,947 25,162 (215)
Asset manager growth 391,525 409,490 (17,965)
---------- ---------- --------
$7,586,585 $6,956,429 $630,156
========== ========== ========
</TABLE>
(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, a participant may elect to withdraw all or any
part of his account attributable to his contributions.
If the amount of a withdrawal exceeds the amount of contributions made by
the participant and not previously withdrawn, the participant shall be
ineligible to make contributions for a specified period, except that a
participant may elect to withdraw all or any portion of his account
attributable to tax deductible contributions.
Under the rules of the Plan, the participant may borrow up to 90 percent of
his account, other than amounts attributable to tax deductible
contributions or amounts invested in the Armstrong Stock Fund, with the
approval of the Plan Administrator. 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.
<PAGE>
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, 1997 and 1996 and the related statements of changes in plan equity
for each of the years in the three-year period ended September 30, 1997. 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,
1997 and 1996 and the changes in its plan equity for each of the years in the
three-year period ended September 30, 1997, 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 PEAT MARWICK LLP
Philadelphia, Pennsylvania
March 23, 1998
<PAGE>
EXHIBIT INDEX
24 Consent of Independent Auditors
<PAGE>
Consent of Independent Auditors
-------------------------------
The Retirement Committee
Armstrong World Industries, Inc.:
We consent to incorporation by reference in Registration Statement No. 33-18997
on Form S-8 of Armstrong World Industries, Inc. of our report dated March 23,
1998, 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, 1997 and 1996 and the related statements of changes in plan equity for each
of the years in the three-year period ended September 30, 1997, which report is
included herein.
KPMG PEAT MARWICK LLP
Philadelphia, Pennsylvania
March 23, 1998
