UNITED STATES  
                       SECURITIES AND EXCHANGE COMMISSION           
                           Washington, DC  20549 
                                  FORM 10-K 
 
[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  
      EXCHANGE ACT OF 1934  
 
For the fiscal year ended             January 3, 1997                   
                         ---------------------------------------------- 
[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE  
      SECURITIES EXCHANGE ACT OF 1934  
 
For the transition period from                    to                    
                               ------------------    ------------------ 
 
Commission File Number:              0-22138                            
                        ----------------------------------------------- 
 
                          Triangle Pacific Corp.                        
----------------------------------------------------------------------- 
        (Exact name of registrant as specified in its charter) 
 
           Delaware                                  94-2998971         
----------------------------------------------------------------------- 
State or other jurisdiction of                    (I.R.S. Employer 
incorporation or organization                     Identification No.) 
 
           16803 Dallas Parkway, Dallas, Texas                  75248   
----------------------------------------------------------------------- 
       (Address of principal executive offices)             (Zip Code)  
 
Registrant's telephone number, including area code (214) 887-2000 
                                                   -------------------- 
 
Securities registered pursuant to Section 12(b) of the Act:   None 
 
Securities registered pursuant to section 12(g) of the Act: 
 
Common Stock, Par Value $.01 per share 
-------------------------------------- 
      (Title of Class) 
 
    Indicate by check mark whether the registrant (1) has filed all reports  
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of  
1934 during the preceding 12 months (or for such shorter period that the  
registrant was required to file such reports), and (2) has been subject to  
such filing requirements for the past 90 days.   
YES  X     NO        
    ------    ------ 
 
    Indicate by check mark if disclosure of delinquent filers pursuant to Item  
405 of Regulation S-K is not contained herein, and will not be contained, to  
the best of registrant's knowledge, in definitive proxy or information  
statements incorporated by reference in Part III of this Form 10-K or any  
amendment to this Form 10-K.  [X] 
 
    At March 1, 1997, the aggregate market value of the registrant's common  
stock held by non-affiliates was $402,239,546.   
 
    The number of shares outstanding of the registrant's Common Stock, par  
value $.01 per share, as of March 1, 1997:  Common Stock - 14,712,083 shares.   
 
                   DOCUMENTS INCORPORATED BY REFERENCE 
 
    Part III of this Form 10-K incorporates certain information by reference  
from the registrant's Proxy Statement to be issued in connection with its  
Annual Meeting of Shareholders to be held May 7, 1997.   
 
 
<PAGE> 
                                  PART I 
 
 
Item 1.  Business 
         -------- 
 
    The Company is a Delaware corporation organized in February 1986 for the  
purpose of acquiring Triangle Pacific Corp., a New York corporation ("Old  
Triangle"), in a leveraged buyout transaction completed in May 1986.  In  
September 1988, TPC Holding Corp. ("Holding") acquired the Company in a second  
leveraged buyout transaction pursuant to which the Company became a wholly- 
owned subsidiary of Holding.   
 
    On June 8, 1992, the Company successfully completed a capital  
restructuring (the "1992 Restructuring") pursuant to which substantially all  
of the Company's outstanding long-term indebtedness, redeemable preferred  
stock and common stock were exchanged for new debt with lower interest rates  
and new common stock.   
 
    The Company filed two registration statements with the Securities and  
Exchange Commission in 1993 and sold to the public 7,939,750 shares of the  
Company's Common Stock and $160 million aggregate principal amount of  
10-1/2% Senior Notes due 2003 (collectively, "the Offerings").  The net  
proceeds of the Offerings together with borrowings under a new $90 million  
credit facility were used (i) to repay the entire unpaid balance under the  
Company's previously-existing senior debt financing agreements, redeem certain  
previously outstanding debentures and pay related accrued interest, for a  
total of approximately $227 million, and (ii) for working capital and general  
corporate purposes.   
 
    The Company's operations are conducted through a single business segment  
which consists of the manufacture and distribution of building products.  The  
Company, through its Flooring Division, produces and sells hardwood flooring  
and other flooring and related products and, through its Cabinet Division,  
manufactures and distributes kitchen and bathroom cabinets.  The Company's  
products are used primarily in residential new construction and remodeling.  
The Company's products are also used for commercial applications such as  
retail stores and restaurants.  The Company's business is seasonal, with  
demand for its products generally highest between April and November.   
 
    Presented below is a summary of sales results for each of the fiscal years  
1991 through 1996.   
 
                     1996      1995      1994      1993      1992      1991 
                    --------------------------------------------------------- 
                                    (in millions) 
Net Sales: 
 
 Flooring Division  $ 336.4   $ 261.8   $ 244.0   $ 202.0   $ 152.9   $ 117.2 
 
 Cabinet Division*    197.9     197.1     166.2     144.3     139.9     138.9 
                     ------    ------    ------    ------    ------    ------ 
 Total Net Sales    $ 534.3   $ 458.9   $ 410.2   $ 346.3   $ 292.8   $ 256.1 
                     ======    ======    ======    ======    ======    ====== 
 
 
 
 
    *In 1996, Building Products financal results were combined with those of  
the Cabinet Division.  All previous years have been restated to reflect this  
change.   
 
 
Bruce, Premier, Coastal Woodlands, Crystalguard, Expressions, Flexform,  
Herringstrip, Jewels Of Nature, Kennedale, Kingsford, Natural Reflections,  
Pattern Plus,Plantation, Somerset, Traffic Zone, Wearmaster, Aspen, Hampton,  
Quadric, Tiara, Tudor and Vantage are Trademarks or Registered Trademarks of  
Triangle Pacific Corp. 
 
<PAGE> 
Flooring Division 
----------------- 
 
    The Company's Flooring Division is the largest and best known manufacturer  
of hardwood flooring in the world.  The Company produces a complete line of  
hardwood flooring products and believes that it is generally recognized for  
its superior quality and service.  The Company offers four distinct brand  
names; Bruce, Hartco, Premier and Traffic Zone.   
 
Industry Overview 
----------------- 
 
    Hardwood flooring competes primarily with carpet, vinyl, tile and high  
pressure laminate flooring in the floorcovering market.  The Company believes  
that the principal competitive factors in the floorcovering market are  
aesthetic appeal, price, durability and ease of installation and maintenance.   
 
    Sales of hardwood flooring in the United States are growing at a rate of  
8% per year, more than twice as fast as the entire floorcovering industry as a  
whole.  The Company believes that the growth of hardwood flooring sales is due  
to increased consumer preference for the aesthetic appeal of hardwood flooring  
and technological advances in the production, installation and maintenance of  
hardwood flooring, which allows wood flooring to compete favorably in total  
cost with other flooring products.   
 
Products and Product Development 
-------------------------------- 
 
    The Company offers approximately 1200 varieties of hardwood flooring and  
related products in a multitude of wood species, grades, sizes, styles and  
finishes.  The Company's hardwood flooring products are generally available in  
various widths and lengths and are differentiated in terms of quality and  
price based primarily on whether the product is finished or unfinished and on  
the grade of the raw materials used to produce the product.   
 
    The Company has been a leader in developing a wide variety of new flooring  
products, including (i) 5/16" thick solid parquet flooring, (ii) 3/8" thick  
laminated flooring, (iii) 3/8" thick laminated, square-edge, pre-finished  
flooring, (iv) 3/8" thick acrylic-impregnated flooring for commercial  
applications (all of the above for glue-down installation), (v) 3/4" thick  
square-edge, pre-finished flooring and (vi) most recently, 5/16" thick solid  
strip flooring.  The Company believes that new product development has enabled  
it to increase its sales and has contributed to the overall growth of hardwood  
flooring since the mid-1970s.  The Company's product innovations have made  
hardwood flooring a viable alternative for a variety of floorcovering  
applications.   
 
    The Company has been instrumental in the development of thinner hardwood  
flooring products which can be glued to the concrete slab foundations  
increasingly used in new home construction.  Installation of 3/4" thick  
hardwood flooring over concrete slabs requires the construction of a false  
floor above the slab to which the hardwood flooring can be nailed, thereby  
increasing installation time and expense.  The Company has developed 5/16"  
thick flooring products, which can be glued to wood or concrete slab  
foundations, eliminating the need for a false floor.  The development of 3/8"  
thick laminated flooring (consisting of multiple layers of oak veneer, glued  
and pressed together), which can be glued to a wood or concrete sub-floor,  
further expanded the uses for hardwood flooring.  The dimensional stability of  
laminated flooring permits its installation in kitchens and basements where  
the presence of moisture had previously rendered hardwood flooring  
impractical.   
 
    In 1995, the Company introduced Natural Reflections, a 5/16" thick solid  
oak pre-finished strip.  This was developed as an alternative to the  
traditional 3/4" thick unfinished strip that is the primary commodity product  
of the hardwood flooring industry.  This thinner strip offers many benefits.   
It approximately doubles the yield of product from raw material, saving  
resources by using fewer trees in the manufacturing process.  Because it  
<PAGE> 
contains less than half the wood in a traditional 3/4" thick strip, it is less  
expensive to make, less expensive to ship, and easier and faster to install.   
 
    Also in 1995, the Company introduced a new product group, high pressure  
laminate flooring.  This product, which is called Traffic Zone, features a  
CrystalGuard melamine wear-layer surface over a high-density fiberboard core.   
It offers superior wear characteristics in a variety of overlays that simulate  
fine wood finishes as well as marble, granite, and other materials.  Traffic  
Zone is designed for consumers who want highly durable, easy-care, hard  
surface floorcovering as an alternative to sheet vinyl, vinyl tile and carpet.
In addition to a residential product line of 24 styles and colors, the Company  
also offers a commercial-grade version called Traffic Zone Elite, which  
provides even greater durability for high-traffic areas.   
 
    One of the benefits of the Hartco acquisition (see below) was a  
sophisticated research and development center in Oneida, Tennessee, where the  
Company has consolidated the Flooring Division's R & D efforts.  The Company  
believes this facility will further enhance its ability to stay on the leading  
edge of product, manufacturing and engineering technology.   
 
Manufacturing 
------------- 
 
    The Company manufactures its 3/4" thick solid oak hardwood flooring  
products at its plants in Nashville and Jackson, Tennessee, Beverly, West  
Virginia, West Plains, Missouri and Oneida, Tennessee.  The Beverly, West  
Virginia plant also produces 5/16" thick solid strip prefinished flooring.   
The Company manufactures its 3/8" thick laminated hardwood flooring products  
at its plants in Center, Texas, Port Gibson, Mississippi, Statesville, North  
Carolina and Somerset, Kentucky.  The Center plant produces sufficient 1/8"  
thick oak veneer to supply approximately one-half of its veneer requirements.   
The Port Gibson, Mississippi plant supplies most of the remainder of the  
Center plant's veneer requirements and a portion of the veneer requirements  
for the Statesville plant for the production of 3/8" thick laminated products.
The Company manufactures its 5/16" thick solid parquet products at its plants  
in Jackson and Oneida, Tennessee in addition to its production of 3/4" thick  
product.   
 
    The Company's continuous advances in the area of technology and  
manufacturing are the basis for its ability to improve yields from raw  
material and make products that are more appealing to consumers, easier to  
install, and more cost competitive.  This year again, the Company made even  
greater improvements in labor efficiency and productivity as it sought ways to  
counter the difficult economic and market conditions.   
 
    The 1994 expansion of its Beverly, West Virginia, and Port Gibson,  
Mississippi, plants gave the Company additional manufacturing capacity, along  
with the acquisition of Premier Wood Floors in Statesville, North Carolina.   
Following the acquisition, the Company improved productivity in Premier's  
operations and broadened the Premier product line to include 3/4" thick solid  
strip and 5/16" thick solid parquet.  Further efficiencies were achieved at  
all plants.   
 
    In 1996, the Company acquired Hartco Flooring Company.  This acquisition  
added manufacturing capacity to the Company without incurring larger capital  
expenditures required for new construction.   
 
 
 
 
 
 
 
 
 
 
 
 
 
<PAGE> 
    The following table sets forth certain information concerning the  
manufacturing facilities operated by the Flooring Division.  
 
                    Owned/                                
Location            Leased           Product              
--------            ------    ------------------------    
Nashville, TN        Owned    3/4" thick strip and plank; 
                              pre-finished, unfinished 
 
West Plains, MO      Owned    3/4" thick strip; pre-finished,  
                              unfinished 
 
Beverly, WV (1)      Leased   5/16" thick solid strip;         
                              pre-finished  
                              and 3/4" thick strip;            
                              pre-finished, unfinished  
 
Jackson, TN (2)      Owned    5/16" thick solid parquet;       
                              pre-finished, unfinished 
                              3/4" thick strip; unfinished     
 
Center, TX (3)       Owned    3/8" thick laminated strip,      
                              plank and parquet; pre-finished, 
                              unfinished 
 
Port Gibson, MS (3)  Owned    3/8" thick laminated strip,      
                              plank and parquet; pre-finished,  
                              unfinished     
 
Statesville, NC      Owned    3/8" thick laminated strip,     
                              plank, pre-finished, unfinished  
                                                              
 
Oneida, TN           Owned    5/16" thick solid parquet;  
                              pre-finished, unfinished 
                              3/4" thick strip; unfinished 
 
Somerset, KY         Owned    3/8" thick laminated strip,  
                              plank, pre-finished, unfinished 
 
------------------ 
(1)  During 1995, the operating lease agreement was amended to allow for a  
     purchase option of $1 until 2018.  The Company recorded the present  
     value of the remaining future minimum lease payments as a capitalized  
     lease asset and related capitalized lease obligation.   
 
(2)  The Jackson plant also manufactures kitchen cabinet front frame parts  
     used by the Cabinet Division in cabinet production.  See "- Cabinet  
     Division -  Manufacturing" below.   
 
(3)  The Center and Port Gibson plants also produce 1/8" thick veneer,  
     which is used in the manufacture of 3/8" thick laminated products at  
     these plants and at the Statesville, N.C. plant.   
 
    Raw materials for the hardwood flooring products produced at the  
Nashville, Jackson, Beverly, West Plains, Oneida and Somerset plants consist  
primarily of rough cut oak lumber.  Each plant obtains lumber from local  
independent sawmill operators, purchasing entire truckloads of ungraded, mixed  
specie lumber.  The Company maintains an inventory of purchased lumber which  
is sufficient for approximately three to four months of operations.  The  
quality and efficiency of lumber purchasing and grading operations are  
important determinants of manufacturing yields and productivity.   
 
    Purchased lumber is stacked for drying in the open air for 90 to 120 days,  
and then placed in dry kilns for approximately five to seven days to reduce  
moisture content.  Where necessary, the Company operates pre-drying kilns,  
which shorten the required open-air drying time.  The Company's drying  
processes are another important determinant of satisfactory product yields.   
Following drying, the flooring-grade lumber is cut into various sizes of  
strip, plank and parquet flooring.  The products are then sanded and, in most  
 
<PAGE> 
cases, beveled.  A majority of the Company's products are pre-finished with a  
urethane or combination stain and wax finish.  Pre-finished products are more  
durable and do not require a time-consuming sanding and finishing process at  
the installation site.  The Company also treats a portion of its 3/8" thick  
laminated product with an acrylic impregnating process to produce its Wear  
Master line of commercial flooring.  Hartco produces Pattern Plus, an acrylic- 
impregnated engineered product at its Oneida plant.  The Statesville, N.C.  
plant purchases veneer from outside sources and also obtains veneer from the  
Port Gibson plant, which is converted into laminated products.   
 
    Raw materials for the laminated hardwood flooring products manufactured at  
the Company's plants in Center, Texas and Port Gibson, Mississippi consist of  
oak logs which are purchased primarily from independent loggers located within  
about 100 miles of the respective plants.  Purchased logs are stored in  
soaking ponds until needed, and then debarked, soaked in hot water or steamed,  
cut into five-foot lengths, loaded into a lathe, and peeled to produce sheets  
of thin oak veneer.  Layers of veneer are then pressed into plywood which is  
cut into strip, plank and parquet hardwood flooring and pre-finished.  The  
Company employs advanced veneer manufacturing processes which substantially  
increase material yields, thereby reducing costs.  The total conversion time  
for laminated products, from log to finished product, is approximately one  
week.   
 
Sales 
----- 
 
    The Flooring Division sells its products to independent wholesale  
floorcovering distributors located throughout the United States and a number  
of other countries.  Most distributors handle a diverse line of floorcovering  
products in addition to hardwood flooring.  The Company's distributors sell  
their products to retail floorcovering dealers, installation contractors,  
builders, remodelers and retail home center stores.  The Company believes that  
new home construction and remodeling account for approximately 40% and 60%,  
respectively, of its hardwood flooring sales.   
 
    The Bruce trademark is a valuable asset because of its significant brand  
name recognition.  Based on independent surveys, the Company believes that the  
Bruce name is one of the best recognized consumer brand names of any  
floorcovering product.  Sales and marketing efforts for Bruce flooring are  
designed to heighten Bruce's brand name recognition among end users.  The  
Company advertises its Bruce flooring products in national and regional  
publications including House Beautiful, Better Homes and Gardens, Sunset,  
Southern Living and others.   
 
    The addition of Hartco's distributors in 1996 expanded our overall  
presence in the marketplace.  This expanded access to the market is  
strengthened by our ability to offer four distinct brands - Bruce, Hartco,  
Premier and Traffic Zone.   
 
    The Company has developed Bruce product displays, more than 55,000 of  
which have been placed in floorcovering dealer showrooms across the U.S.   
Additionally, Hartco, Premier and Traffic Zone have placed more than 1,800,  
3,200, and 4,500 displays, respectively, in floor covering dealer showrooms.   
These product displays are available in a variety of sizes designed to  
accommodate the varying floor spaces available in dealer showrooms.  The  
Company has also developed marketing programs specifically tailored to retail  
home center stores and commercial users and has developed displays to  
demonstrate the ease of do-it-yourself installation of hardwood floors.  The  
do-it-yourself installation displays have been placed in floorcovering  
retailers, lumber yards, home centers and other do-it-yourself specialty  
stores.  Management believes that both the product displays and the do-it- 
yourself installation displays are important sales promotion devices.   
 
    The Company operates a Flooring Division training facility at its  
Nashville plant to give its Bruce, Hartco, Premier and Traffic Zone  
floorcovering distributors, dealers and contractors, training in the sale,  
installation and maintenance of hardwood and high pressure laminate floors.  
Providing this training results in better educated resellers and installers,  
which the Company believes should enhance their ability to sell more Bruce  
products and improve consumer satisfaction with the installed products.   
 
<PAGE> 
    The Flooring Division currently has salespersons who are assigned  
geographical sales territories.  In addition to making direct sales to  
independent distributors, the sales force assists distributors in broadening  
their market penetration by making joint sales calls on dealers, conducting  
installation training for distributors and their customers, and advising on  
the use of advertising and special product promotions.  Salespersons earn  
bonuses, in addition to their salaries, based on volume and sales mix.   
 
Competition 
----------- 
 
    While the Flooring Division is currently the largest manufacturer of  
hardwood flooring in the world, it is a small part of the highly competitive  
floor-covering market.  The floor-covering market includes companies which are  
substantially larger in sales and financial resources then the Company.   
Also,the domestic floor-covering industry is facing greater competition from  
imported flooring products.   
 
    The floorcovering industry, which includes carpet, sheet vinyl, vinyl  
tile, hardwood, high pressure laminate, and ceramic tile, is highly  
competitive.  The principal competitive factors in floorcovering are aesthetic  
appeal, price, durability and ease of installation and maintenance.  Hardwood  
flooring is generally more durable than other floorcoverings.  Thus, although  
the average selling price of hardwood flooring is higher than that of the  
selling price of most other floorcoverings, the Company believes that the  
overall cost is competitive after taking into account average product life,  
maintenance expenses and removal and replacement costs.   
 
    The Company believes it competes favorably based on the high quality of  
the Company's products and the additional product support services offered by  
the Company and on the Company's network of independent distributors, its  
production of a complete line of hardwood flooring products, its innovative  
product development and manufacturing technology, and its well-known brand  
names and trademarks.   
 
Cabinet Division 
---------------- 
 
Industry Overview 
----------------- 
 
    The Company estimates that new construction accounts for approximately  
one-third of the total cabinet industry sales with remodeling generating the  
remaining two-thirds.  Residential new construction activity is more cyclical  
than remodeling activity, which has historically been relatively stable.   
Cabinet manufacturing is a highly fragmented industry with competitors of  
widely varying production capacities, distribution capabilities and financial  
resources.  In recent years, contraction in the industry has resulted in  
smaller competitors leaving the market and more aggressive cost controls and  
marketing programs being implemented by the remaining participants.  The  
Kitchen Cabinet Manufacturing Association estimates that there are 8,000  
manufacturers of kitchen and bathroom cabinets competing for approximately 50%  
of the total cabinet market.  The balance of the market is supplied by trim  
carpenters and job-site cabinet makers.  The market is dependent on new home  
construction and remodeling activity.   
 
    The entire cabinet manufacturing industry is characterized by substantial  
excess capacity.  In the late 1970's, new construction expanded to meet the  
demands of more than two million housing starts annually, plus remodeling.   
Price competition is severe, due principally to the excess industry capacity.   
 
Products and Product Development 
-------------------------------- 
 
    The Company manufactures kitchen and bathroom cabinets in approximately  
100 different styles and colors.  The Company continues to develop new product  
styles. While the styles of the Company's cabinets vary from other  
manufacturers' brands, kitchen and bathroom cabinet construction is  
fundamentally the same throughout the industry.  Differences in the price and  
 
<PAGE> 
quality of the Company's cabinets result from variations in basic materials  
(e.g., solid oak, plywood, particleboard or fiberboard doors), the type and  
quality of exterior and interior finish, the quality of the hardware and other  
features such as adjustable shelves and interior storage aids.   
 
    During the latter part of 1994 and throughout 1995, the Company revamped  
its product line to improve marketability and mix of offerings.  Among the  
many innovations that have emerged from this effort is a new line called  
Coronet, which is made of Plantation hardwood from Malaysia.  Months of  
testing and research preceded the use of this new raw material, which produces  
an end product of the same durability and styling as other woods, but which  
can be sold at a lower price point.  The Company also completed the  
introduction of the Vantage Collection of melamine laminate products, aimed  
primarily at the multi-family housing market.  With 24 product choices and  
five different price points, the Vantage Collection offers builders a wide  
variety of styles and prices.  In its continuing effort to offer more value to  
builders and end-users, the Company introduced the Aspen Collection, a line of  
thermofoil-process products which feature high-quality vinyl laminates applied  
to fiberboard.  Through innovative manufacturing techniques, the Company was  
able to produce a lower-priced version of this popular line, available in  
maple and white finishes, for the townhouse and single-family housing market.   
 
    In 1996, the Company introduced Quadric.  Unlike most thermofoil cabinets,  
Quadric features truly square corners in both doors and drawer fronts,  
achieved by extra steps in milling that duplicate the look of fine custom  
cabinetry at very competitive prices.  Also introduced in 1996 were four new  
door styles: Tiara, Tiara Arched, Tudor and Tudor Arched.   
 
Manufacturing 
------------- 
 
    The Company operates seven cabinet manufacturing plants, generally located  
within 500 miles of most major population centers in the United States.  These  
regional plants enable the Company to compete with local and regional  
manufacturers on the basis of the cost of freight, speed of delivery and  
service to customers.   
 
    The following table sets forth certain information concerning the  
Company's cabinet manufacturing facilities:   
 
                     Owned/                              
Location             Leased            Product           
--------             ------     --------------------     
 
Auburn, NE           Owned      Kitchen and bathroom     
                                cabinets 
 
Jefferson City, TN   Owned      Kitchen and bathroom 
                                frameless cabinets 
 
McKinney, TX         Owned      Kitchen and bathroom     
                                cabinets   
 
Morristown, TN (1)   Owned      Kitchen and bathroom     
                                cabinets 
 
Morristown, TN       Owned      Kitchen and bathroom     
                                cabinets 
 
Thompsontown, PA     Owned      Kitchen and bathroom     
                                cabinets 
 
Union City, IN       Owned      Kitchen and bathroom     
                                cabinets                 
 
 
------------------ 
(1) This plant also produces finished end panels for certain other  
    cabinet plants.   
 
<PAGE> 
    The plants are primarily cabinet assembly operations.  The plant  
inventories consist of raw materials, component parts and a limited amount of  
work-in-process.  Raw materials utilized by the plants consist of sheet stock  
of plywood, particleboard or fiberboard, and component parts consist of  
dimension parts (front frame parts, doors and drawer fronts), finished end  
panels, finishing materials and hardware.  In the cabinet assembly operations,  
front frame parts, doors and drawer fronts are sanded smooth and color stained  
and finished.  Then, end panels, tops, bottoms and shelves are glued and  
stapled to the front frames, drawers are assembled to drawer fronts and  
hardware is attached.  The completed cabinet is inspected, packed and staged  
for shipment.   
 
    Sheet stock is a commodity product purchased from a variety of suppliers.   
The Company obtains its dimension parts, consisting of front frame parts,  
primarily from its manufacturing facility located at the hardwood flooring  
plant in Jackson, Tennessee.  See "- Flooring Division - Manufacturing" above.
The Company discontinued the production of cabinet doors and drawer fronts at  
its Jackson dimension plant at the end of February, 1997.  The Company  
manufacturers finished end panels at its Morristown, Tennessee cabinet plants.
Finishing materials and hardware are purchased from several suppliers.   
 
    The Cabinet Division is not dependent on any single supplier for any of  
its raw materials or component parts, other than the Jackson front frame parts  
plant.  The Company believes its sources of supply are adequate to meet its  
needs.  Imports from foreign suppliers, which account for less than ten  
percent of the Company's cabinet materials, consist of wood veneer, laminated  
veneer door panels and certain hardware items.  While the Company maintains  
insurance coverage on all of its properties, including the Jackson dimension  
parts plant, the loss of that plant could have an adverse effect on the  
Company's operations.  See "- Properties" below.   
 
Sales and Marketing 
------------------- 
 
    The Company distributes its cabinets directly from the factories and also  
through Company-operated distribution centers in major markets across the  
country.  These centers, which cater largely to builders and remodeling  
contractors, generate more than 50% of the Cabinet Division's total sales.   
 
    The Company-operated distribution centers are also used to support sales  
to major builders and retail home centers by providing prompt replacements for  
lost or damaged cabinets and delivery and storage for truckload quantities of  
cabinets pending staged deliveries to job sites. The Company believes that its  
distribution centers are an important factor in maintaining and increasing its  
sales, and intends to open additional distribution centers in new geographic  
markets as conditions warrant.   
 
    The Company provides personal computer software for use primarily by 
retail home center stores to create complete kitchen floor plans, including  
elevations and product specification lists, with related prices, based on room  
measurements provided by customers.  Management believes this software package  
to be a significant sales aid.   
 
    The Cabinet Division has one of the largest sales forces in the cabinet  
industry, currently employing approximately 225 salespersons.  The sales force  
makes direct sales and service calls on builders, independent distributors and  
retail home center stores, and offers kitchen design, cabinet installation and  
cabinet display and marketing advice to retail home center stores and  
independent distributors.  Most sales personnel are affiliated with one of the  
Company's distribution centers and are responsible for sales to all customers  
within their sales area including sales of cabinets directly by the plant.   
The Cabinet Division maintains a competitive salary base and provides  
performance incentives by compensating its sales force with bonuses tied to  
volume and profitability.   
 
Competition 
----------- 
 
    The Company is one of the largest manufacturers of kitchen and bathroom  
cabinets in the U.S.   
 
<PAGE> 
    The cabinet industry is a mature, highly competitive, regionalized and  
highly fragmented industry with thousands of cabinet makers competing  
primarily on a local basis.  There is a relatively high manual labor content  
in cabinet products.  Because of the low capital requirements for cabinet  
assembly, it is relatively easy and inexpensive for small cabinet makers to  
enter the industry as manufacturing competitors.  In addition, high  
transportation costs limit the area to which a manufacturer can ship cabinets  
and still remain competitive.  This has led the Company, and more recently,  
some of its larger competitors, to open regional manufacturing plants and  
distribution centers.  The Company's seven regional manufacturing plants and  
48 Company-operated distribution centers are important factors in the  
Company's ability to maintain cost and price competitiveness with local and  
regional manufacturers.   
 
    Due to significant excess manufacturing capacity, the cabinet industry has  
been subject to severe price competition.  Other competitive factors include  
quality of product, production capacity and speed of delivery.  The Company  
believes it competes favorably because of its breadth and quality of product  
offerings, and its production capacity, regional manufacturing facilities,  
national sales force and distribution capabilities.   
 
Building Products Division 
-------------------------- 
 
    As of January 1996, the Company elected to discontinue the sale of lumber,  
which had remained a low-profit item, and to consolidate the building products  
division into the Cabinet Division.  Beginning with the first quarter of 1996,  
the financial results of this operation has been combined with those of the  
Cabinet Division.  The Beltsville facility will continue to be a cabinet  
distribution warehouse and showroom.   
 
Backlog 
------- 
 
    The Company generally sells its flooring products from inventories on  
hand.  The Company produces its cabinets primarily in response to firm orders  
and, to a lesser extent, to maintain a working inventory at distribution  
centers operated by the Company.  The Company generally ships its cabinets  
within a short time (e.g., one week) after receipt of an order.  Accordingly,  
the dollar amount of backlog orders believed to be firm is not significant or  
indicative of the Company's future sales and earnings.   
 
Employees 
--------- 
 
    As of January 3, 1997, the Company employed approximately 4,967 persons,  
of which 3,340 were employed by the Flooring Division, 1,568 by the Cabinet  
Division, and the remainder in the Company's headquarters and other  
operations.  The Company has entered into collective bargaining agreements  
with hourly employees at four of its nine hardwood flooring plants, and three  
of its six cabinet plants covering in the aggregate approximately 1,998  
employees.  Management considers its employee relations to be satisfactory.   
 
Environmental Matters 
--------------------- 
 
    The Company's operations are subject to extensive federal, state and local  
laws and regulations relating to the generation, storage, handling, emission,  
transportation and discharge of materials into the environment.  Permits are  
required for certain of the Company's operations, and these permits are  
subject to revocation, modification and renewal by issuing authorities.   
Governmental authorities have the power to enforce compliance with their  
regulations, and violations may result in the payment of fines or the entry of  
injunctions, or both.  The Company does not believe it will be required under  
existing environmental laws and enforcement policies to expend amounts which  
will have a material adverse effect on its results of operations or financial  
condition.  However, the requirements of such laws and enforcement policies  
have generally become stricter in recent years.  Accordingly, the Company is  
 
<PAGE> 
unable to predict the ultimate cost of compliance with environmental laws and  
enforcement policies.   
 
ITEM 2.     PROPERTIES 
 
    The Company's principal manufacturing facilities are described under "-  
Flooring Division - Manufacturing" and "- Cabinet Division - Manufacturing"  
above.  Management believes that the Company's plants and properties are  
generally well-maintained and in good operating condition.   
 
    The Company maintains blanket property insurance coverage on all its  
properties with aggregate limits of $100 million.  The Company is also insured  
for losses arising from loss of inventory, business interruption and certain  
extra expense.   
 
ITEM 3.     LEGAL PROCEEDINGS 
 
    The Company is not a party to any material pending legal proceedings.   
 
ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 
 
    None. 
 
 
<PAGE> 
Executive Officers of the Registrant 
------------------------------------ 
 
    Set forth below as of March 1, 1997 are the names, ages and principal  
occupations of the executive officers of the Company, as well as certain other  
information concerning their business experience. 
 
    Name and Positions held        Principal Occupation 
    with the Company               and Other Information 
    -----------------------        --------------------- 
 
    Floyd F. Sherman               Mr. Sherman has served as Chairman 
    Chairman of the Board of       of the Board and Chief Executive 
    Directors, and Chief           Officer since July, 1992.  Prior to 
    Executive Officer              November, 1994 he served as  
                                   President of the Company since 1981. 
                                   Prior to 1981, he served as  
                                   Executive Vice President of the 
                                   Company.  Mr. Sherman is 57 years 
                                   old and became a director of the  
                                   Company in 1982.   
 
    M. Joseph McHugh               Mr. McHugh has served as President 
    Director, President            and Chief Operating Officer of the 
    and Chief Operating            Company since November, 1994.   
    Officer                        Prior thereto, he served as Senior 
                                   Executive Vice President and  
                                   Treasurer of the Company since 1981. 
                                   Prior to 1981, he served as 
                                   Executive Vice President of the  
                                   Company.  He became a director of  
                                   the Company in 1986.  Mr. McHugh is 
                                   also a director of Pillowtex  
                                   Corporation.  He is 59 years old.   
 
    Robert J. Symon                Mr. Symon has served as Executive 
    Executive Vice President,      Vice President, Treasurer and  
    Treasurer and Chief            Chief Financial Officer of the 
    Financial Officer              Company since November, 1994.  Prior 
                                   thereto, he served as Vice President 
                                   - Controller of the Company since 
                                   1978.  Mr. Symon is 65 years old and 
                                   served as a director of the Company 
                                   from December 1988 to June 1992.   
 
    Darryl T. Marchand             Mr. Marchand has served as Vice  
    Vice President, Secretary      President, Secretary and General 
    and General Counsel            Counsel of the Company since 1986.   
                                   Prior thereto, he served as Vice  
                                   President - Legal of the Company  
                                   from 1981 to 1986 and as Treasurer  
                                   from February to August, 1981.  Mr.  
                                   Marchand is 54 years old.   
 
    Charles A. Engle               Mr. Engle has served as President of 
    Vice President                 the Cabinet Division since January,  
                                   1996.  Prior thereto, he served as Vice 
                                   President of the Company since 1979.   
                                   Mr. Engle is 53 years old.   
 
    John W. Esch                   Mr. Esch has served as a Vice  
    Vice President                 President of the Company since 
                                   November, 1994.  He has been a 
                                   division Controller of the Cabinet 
                                   Division since 1977.  Mr. Esch is  
                                   52 years old.   
 
 
 
 
 
<PAGE> 
    James T. Fidler                Mr. Fidler has served as a Vice 
    Vice President                 President of the Company since 1981.  
                                   He has been Vice President-Operations  
                                   since August, 1995.  Prior thereto, he  
                                   was Director-Management Information  
                                   Operations for the Company.  Mr. Fidler  
                                   is 54 years old.     
 
    Michael J. Kearins             Mr. Kearins has served as a Vice 
    Vice President                 President of the Company since 1985.  
                                   He had been a divisional Vice  
                                   President of sales of the Bruce  
                                   Hardwood Floors Division from  
                                   December, 1983 to May, 1985.  He is  
                                   primarily responsible for sales and  
                                   marketing in the Bruce Hardwood  
                                   Floors Division.  Prior to 1983, he  
                                   had been a Regional Sales Manager of  
                                   the Company.  Mr. Kearins is 50  
                                   years old.   
 
    E. Dwain Plaster               Mr. Plaster has served as a Vice 
    Vice President                 President of the Company since  
                                   November, 1994.  He has been a  
                                   divisional Controller of the Bruce  
                                   Hardwood Floors Division since 1977.   
                                   Mr. Plaster is 47 years old.   
 
    James E. Price                 Mr. Price has served as a Vice  
    Vice President                 President of the Company since  
                                   November, 1994.  He has been Vice 
                                   President of manufacturing of the 
                                   Bruce Hardwood Floors Division since 
                                   March, 1993.  Prior thereto, he was  
                                   General Manager of that division  
                                   since 1984.  He had been a Plant  
                                   Manager of the Company since 1979.   
                                   Mr. Price is 54 years old.   
 
    Allen Silver                   Mr. Silver has served as a Vice 
    Vice President                 President of the Company since 1985.  
                                   Prior to that time he had been a  
                                   divisional Vice President of  
                                   manufacturing of the Cabinet  
                                   Division.  Mr. Silver is 57 years  
                                   old.   
 
 
 
<PAGE> 
                                PART II 
 
ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED 
         STOCKHOLDER MATTERS 
 
    A)   Price range of common stock 
 
    The following table shows the range of market prices for the common stock  
on the NASDAQ National Market System for each quarter during the past two  
fiscal years.   
 
                                         Market Price 
         1995                           High      Low 
         ----                          ------    ------ 
         First Quarter                 14        11-7/8 
         Second Quarter                17-3/8    12-7/8 
         Third Quarter                 19-1/8    14-5/8 
         Fourth Quarter                18-3/4    15-1/4 
 
         1996 
         ---- 
         First Quarter                 18-1/8    15-3/4 
         Second Quarter                21-3/8    16-3/8 
         Third Quarter                 22-3/4    19 
         Fourth Quarter                24-7/8    19-3/4 
 
B)   Approximate number of equity security holders (As of January  
     3, 1997) 
 
         Class of Security             Number of Record Holders 
         -----------------             ------------------------ 
 
         Common Stock ($.01 par value)     4,100 
 
    C)   Dividend Policy   
 
    The Company has not declared or paid any dividends on its Common Stock.   
Management currently intends to retain future earnings for the operation and  
expansion of the Company's business and does not anticipate paying any cash  
dividends in the foreseeable future.  The payment of cash dividends is  
restricted under the terms of the bank credit facility and the indenture  
relating to the Company's 10 1/2% Senior Notes due 2003.   
 
 
<PAGE> 
ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA 
         (In thousands, except per share amounts) 
 
    The selected consolidated financial data of the Company presented  
below for the five fiscal years ended January 3, 1997 was derived from  
the consolidated financial statements of the Company and should be read  
in conjunction with the consolidated financial statements and related  
notes included herein.   
 
<TABLE> 
               Fiscal    Fiscal    Fiscal    Fiscal    Seven     Five 
               year      year      year      year      months    months 
               ended     ended     ended     ended     ended     ended  
INCOME         Jan.      Dec.      Dec.      Dec.      Jan.      June   
STATEMENT      3,        29,       30,       31,       1,        8,    
DATA           1997      1995      1994      1993      1993      1992(1) 
              ---------------------------------------------------------- 
<S>          <C>        <C>       <C>       <C>       <C>       <C> 
Net sales    $534,261   $458,868  $410,159  $346,296  $173,426  $119,417 
Cost of sales 402,759    342,348   300,160   269,360   137,413    90,991 
              ---------------------------------------------------------- 
Gross profit  131,502    116,520   109,999    76,936    36,013    28,426 
Selling, 
 general and 
 admin- 
 istrative     68,611     60,841    57,928    44,213    27,179    19,404 
Gain on  
 insurance 
 settlement         -          -         -         -    (1,350)   (3,624) 
Amortization 
 of goodwill    1,739      1,520     1,520     1,613       884     1,863 
Interest       19,719     18,380    18,920    19,406    11,289    25,786 
              ---------------------------------------------------------- 
Income (loss) 
 before income 
 taxes and 
 extra- 
 ordinary  
 items         41,433     35,779    31,631    11,704    (1,989)  (15,003) 
Provision  
 (benefit) for 
 income taxes  15,809     13,774    12,829     4,501      (940)        - 
             ----------------------------------------------------------- 
Income (loss) 
 before extra- 
 ordinary  
 items         25,624     22,005    18,802     7,203    (1,049)  (15,003) 
Extraordinary  
 items - gain  
 from extin- 
 guishment 
 of debt            -          -         -         -         -   201,308 
 - Loss from  
 repayment of  
 debt               -          -         -   (11,307)        -         - 
             ----------------------------------------------------------- 
Net income 
 (loss)      $ 25,624   $ 22,005  $ 18,802  $ (4,104) $ (1,049) $186,305 
             =========================================================== 
 
Per share 
 data: (2) 
Net income (loss) 
 before 
extraordinary  
 items       $   1.71   $   1.49  $   1.28  $   0.74  $ (0.16) 
Net income  
 (loss)      $   1.71   $   1.49  $   1.28  $  (0.42) $ (0.16) 
 
Weighted average 
 shares out- 
 standing      15,005     14,815    14,660     9,714    6,707 
 
</TABLE> 
<TABLE> 
               Jan.      Dec.      Dec.      Dec.      Jan.      June  
BALANCE        3,        29,       30,       31,       1,        8,   
SHEET DATA     1997      1995      1994      1993      1993      1992(1) 
              --------------------------------------------------------- 
<S>         <C>        <C>       <C>       <C>       <C>       <C> 
Working 
 capital    $114,509   $113,397  $ 94,354  $ 74,082  $ 53,480  $ 79,421 
Total assets 449,963    399,815   363,451   326,545   302,259   323,563 
Long-term  
 debt, net  
 of current  
 portion     190,604    183,044   168,388   162,897   198,332   222,483 
Common  
 shareholders' 
 investment  154,637    128,901   106,894    88,047    18,951    20,000 
</TABLE> 
[FN] 
__________ 
(1)  In connection with the Company's June 8, 1992 Restructuring, the 
     Company applied quasi-reorganization accounting procedures.     
(2)  As the Company was a whollyowned subsidiary of another company,  
     earnings per share for the periods prior to June 8, 1992, are not  
     meaningful.   
 
 
 
 
<PAGE> 
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND  
         RESULTS OF OPERATIONS 
 
Results of Operations 
--------------------- 
 
    The following table sets forth selected information concerning the  
Company's results of operations for fiscal 1996, 1995 and 1994.   
 
                                              Fiscal Year            
                                ------------------------------------- 
                                  1996           1995           1994  
                                ------------------------------------- 
                                         (Dollars in millions) 
Net sales: 
    Flooring                    $ 336.4        $ 261.8        $ 244.0 
    Cabinets                      197.9          197.1          166.2 
                                 ------         ------         ------ 
         Total net sales          534.3          458.9          410.2 
                                 ------         ------         ------ 
 
Gross profit                      131.5          116.5          110.0 
Selling, general and  
    administrative expenses        68.6           60.8           57.9 
Amortization of goodwill            1.7            1.5            1.5 
                                 ------         ------         ------ 
Operating income                $  61.2        $  54.2        $  50.6 
                                 ======         ======         ====== 
 
As a percent of net sales: 
    Gross profit                   24.6%          25.4%          26.8% 
    Selling, general and 
         administrative expenses   12.8           13.3           14.1 
    Operating income               11.4           11.8           12.3 
 
Fiscal year 1996 compared to fiscal year 1995 
--------------------------------------------- 
 
    Net sales for fiscal 1996 were $534.3 million, an increase of 16.4% over  
1995 net sales of $458.9 million.   
 
    Net sales for the Flooring Division increased 28.5% to $336.4 million from  
$261.8 million in the prior year. These results benefited from the acquisition  
of Hartco Flooring Company in June, 1996.  Unit sales of hardwood flooring  
increased 29.6%, and without Hartco the increase in units was 13.5%.  The  
National Oak Flooring Manufacturers Association (NOFMA) reported that 3/4"  
thick flooring sales increased 11.3% in units in 1996.  Without Bruce, NOFMA's  
growth for 3/4" thick industry shipments increased 9.2%.  The Bruce flooring  
unit, which is the major producer of 3/4" thick flooring, increased 13.7% in  
units in 1996.  International sales were 11.5% of total flooring sales, which  
represented an increase of 55.6% in 1996.   
 
    Cabinet Division net sales, without the impact of the decline in sales  
from the discontinued sales of the Beltsville Building Products unit,  
increased 8.0%, which represents a growth in unit sales of 5.1% and an average  
unit selling price increase of 2.8%.  Cabinet industry shipments in 1996, as  
reported by the Kitchen Cabinet Manufacturers Association, were 74 million  
units, an increase of 2.5% over 1995.   
 
    Consolidated gross profit for 1996 was $131.5 million, or 24.6% of net  
sales, compared to $116.5 million, or 25.4% of net sales in 1995.  The  
decrease in gross profit percentage in 1996 was caused primarily by three  
factors: lower prices in the Flooring Division which were down 1.1% for the  
year; expenses incurred in the first half of 1996 related to the closing of  
the Building Products Division; and higher lumber costs, primarily in the  
fourth quarter.   
 
    Selling, general and administrative expenses were $68.6 million, or 12.8%  
of net sales in 1996, compared to $60.8 million or 13.3% of net sales in 1995. 
The total spending increase of $7.8 million was primarily due to marketing and  
<PAGE> 
selling expenses required to support the higher sales, and to the selling and  
administrative expenses of Hartco since June 28, 1996.   
 
    Operating income was $61.2 million, or 11.4% of net sales in 1996,  
compared to $54.2 million, or 11.8% of net sales in 1995.   
 
    Interest expense was $19.7 million in 1996, compared to $18.4 million in  
1995.  The higher interest expense is attributable to the cost of financing  
the acquisition of Hartco Flooring Company in June, 1996.   
 
    Net income for 1996 was $25.6 million, compared to $22.0 million in 1995,  
an increase of 16.4% on a 16.4% increase in net sales.   
 
Fiscal year 1995 compared to fiscal year 1994 
--------------------------------------------- 
 
    Record net sales for 1995 were $458.9 million, or 11.9% greater than the  
$410.2 million in net sales for fiscal 1994.  This was in spite of a 7.8%  
decline in housing starts in 1995.  Single-family starts were lower by 11.9%.   
Remodeling expenditures were flat and existing home sales were down 3.4%.  Net  
sales for the Flooring Division increased 7.3% to $261.8 million from $244.0  
million in the prior year.  Unit sales of hardwood flooring products were up  
almost 10%.  This compares to an increase in units of 7.3% reported by the  
National Oak Flooring Manufacturers Association.   
 
    Cabinet Division net sales for 1995, excluding the Beltsville Building  
Products unit, were $183.2 million, or an increase of 25.1% over 1994 net  
sales of $146.5 million.  This increase resulted primarily from an increase in  
unit sales of 12.2% and higher priced mix of cabinets sold.  During 1995, we  
introduced many new Cabinet products and have completely revitalized the  
kitchen cabinet product line, and increased the number of Company-operated  
distribution centers and retail-remodeling showrooms.  Cabinet sales to the  
remodeling sector were $47 million, up 20.5% over 1994.  We also had  
significant increased sales to the single-family builder.  In the government  
sector, where we are one of three cabinet suppliers to the City Housing  
Authorities, our sales were up 30.9% 
 
    Net sales of the Building Products Division, now included in the Cabinet  
Division, decreased 25.1% in 1995 to $16.1 million compared to $21.5 million  
in 1994.  The Company has decided to discontinue the sale of lumber, which was  
a low margin product, and to consolidate the Building Products Division into  
the Cabinet Division.   
 
    Consolidated gross profit for 1995 was $116.5 million, or 25.4% of net  
sales, compared to $110.0 million, or 26.8% of net sales in 1994.   A major  
factor impacting gross margins in 1995 was the incentive pricing and  
promotional programs which were designed to increase sales in the Flooring  
Division.  In 1995, the LIFO charge for lumber primarily in the Flooring  
Division, was $0.5 million.  In 1994, we had a LIFO benefit of $2.7 million,  
resulting in a net difference between the two years of $3.2 million.   
 
    Selling, general and administrative expenses were $60.8 million, or 13.2%  
of net sales in 1995, compared to $57.9 million, or 14.1% of net sales in  
1994.   
 
    Operating income was $54.2 million, or 11.8% of net sales in 1995,  
compared to $50.6 million, or 12.3% of net sales in 1994.   
 
    Interest expense was $18.4 million in 1995 compared to $18.9 million in  
1994.  This decrease resulted primarily from an increase in short-term  
investment interest income.   
 
    Net income for 1995 was $22.0 million compared to $18.8 million in 1994,  
an increase of 17% on an 11.9% increase in net sales.   
 
 
 
 
 
<PAGE> 
Liquidity And Capital Resources 
------------------------------- 
 
    The Company has a Credit Facility which provides for up to $90 million of  
revolving credit loans for working capital and for letters of credit.   
Availability of borrowings under the Credit Facility is based upon a formula  
related to inventory and accounts receivable.  At January 3, 1997, there were  
no borrowings under this facility.   
 
    For the year ended January 3, 1997, cash decreased by $12.9 million.  Net  
cash provided by operating activities was $40.5 million.  Cash of $41.2  
million was used for the acquisition of Hartco Flooring Company on June 28,  
1996.  In addition, cash of $12.4 million was used for additions to property,  
plant and equipment less proceeds from certain sales of assets and long-term  
debt payments.   
 
    At January 3, 1997, the Company had working capital of $114.5 million, or  
25.4% of total assets, and $70.4 million of unused bank borrowing capacity.   
 
    The Company believes that borrowing availability under the Credit Facility  
and cash generated from operations will be adequate to fund working capital  
requirements, debt service payments and planned capital expenditures.   
 
    This report includes "forward-looking statements" within the meaning of  
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the  
Securities Exchange Act of 1934, as amended.  All statements other than  
statements of historical fact, including, without limitation, statements  
contained in this "Management's Discussion and Analysis of Financial Condition  
and Results of Operations" regarding the Company's financial position, are  
forward-looking statements.  Although the Company believes that the  
expectations reflected in such forward-looking statements are reasonable, it  
can give no assurance that such expectations will prove to have been correct.   
 
 
<PAGE> 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 
 
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 
 
To the Board of Directors of Triangle Pacific Corp.:   
 
    We have audited the accompanying consolidated balance sheets of Triangle  
Pacific Corp. and subsidiaries (a Delaware corporation) as of January 3, 1997,  
and December 29, 1995, and the related consolidated statements of operations,  
changes in shareholders' investment, and cash flows for the fiscal years ended  
January 3, 1997, December 29, 1995 and December 30, 1994.  These financial  
statements and the schedule referred to below, are the responsibility of the  
Company's management.  Our responsibility is to express an opinion on these  
financial statements and schedule 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 consolidated financial statements referred to above  
present fairly, in all material respects, the financial position of Triangle  
Pacific Corp. and subsidiaries as of January 3, 1997, and December 29, 1995,  
and the results of their operations and their cash flows for the fiscal years  
ended January 3, 1997, December 29, 1995 and December 30, 1994, in conformity  
with general accepted accounting principles.   
 
    Our audits were made for the purpose of forming an opinion on the basic  
consolidated financial statements taken as a whole.  Schedule II is the  
responsibility of the Company's management and is presented for purposes of  
complying with the Securities and Exchange Commission's rules and is not part  
of the basic consolidated financial statements.  This schedule has been  
subjected to the auditing procedures applied in our audits of the basic  
consolidated financial statements and, in our opinion, fairly states in all  
material respects the financial data required to be set forth therein in  
relation to the basic consolidated financial statements taken as a whole.   
 
 
 
 
                                          Arthur Andersen LLP 
 
Dallas, Texas 
January 29, 1997 
 
 
 
<PAGE> 
<TABLE> 
                     Triangle Pacific Corp. and Subsidiaries 
                          Consolidated Balance Sheets 
                                 (In thousands) 
 
                                                 January 3,      December 29, 
                                                   1997            1995     
                                                ------------     ------------ 
<S>                                             <C>              <C> 
ASSETS 
Current assets: 
    Cash and cash equivalents                   $  19,638        $  32,581 
    Receivables (net of allowances of 
         $3,053 and $2,588, respectively)          59,236           50,406 
    Inventories                                    95,096           74,572 
    Prepaid expenses                                3,713            4,735 
                                                 --------         -------- 
         Total current assets                     177,683          162,294 
                                                 --------         -------- 
 
Property, plant and equipment  
    Land                                           15,537           15,855 
    Buildings                                      56,274           49,808 
    Equipment, furniture and fixtures             133,197          110,719 
                                                 --------         -------- 
                                                  205,008          176,382 
Less:  accumulated depreciation                    40,258           30,540 
                                                 --------         -------- 
                                                  164,750          145,842 
Other assets: 
    Goodwill                                       70,986           55,090 
    Trademark                                      28,333           29,133 
    Deferred financing costs                        5,290            5,988 
    Other                                           2,921            1,468 
                                                 --------         -------- 
Total assets                                    $ 449,963        $ 399,815 
                                                 ========         ======== 
 
LIABILITIES AND SHAREHOLDERS' INVESTMENT 
 
Current liabilities:   
    Current portion of long-term debt           $   2,437        $   3,210 
    Accounts payable                               18,520           17,086 
    Accrued liabilities                            40,226           28,601 
    Income taxes payable                            1,991                - 
                                                 --------         -------- 
         Total current liabilities                 63,174           48,897 
                                                 --------         -------- 
 
Long-term debt, net of current portion            190,604          183,044 
Other long-term liabilities                         2,331                - 
Deferred income taxes                              39,217           38,973 
                                                 --------         -------- 
    Total liabilities                             295,326          270,914 
                                                 --------         -------- 
Shareholders' investment: 
    Common stock - $.01 par value, 
      authorized shares - 30,000,000 
      issued and outstanding shares - 
      14,686,558 at January 3, 1997 
      and 14,663,365 at December 29, 1995             147              147 
    Additional paid-in capital                     93,212           93,100 
    Retained earnings                              61,278           35,654 
                                                 --------         -------- 
Total shareholders' investment                    154,637          128,901 
                                                 --------         -------- 
Total liabilities and shareholders' investment  $ 449,963        $ 399,815 
                                                 ========         ======== 
</TABLE> 
The accompanying notes to consolidated financial statements are an integral  
part of these balance sheets.   
 
<PAGE> 
<TABLE> 
                    Triangle Pacific Corp. and Subsidiaries 
                     Consolidated Statements of Operations 
                    (In thousands, except per share amounts) 
 
                                             Fiscal Years Ended 
                                ---------------------------------------------- 
                                  January 3,     December 29,     December 30, 
                                     1997           1995              1994 
                                -------------    ------------     ------------ 
<S>                             <C>              <C>              <C> 
Net sales                       $ 534,261        $ 458,868        $ 410,159 
                                 ---------        ---------        --------- 
Costs and expenses: 
    Cost of sales                 402,759          342,348          300,160 
    Selling, general and  
       administrative              68,611           60,841           57,928 
    Amortization of goodwill        1,739            1,520            1,520 
    Interest                       19,719           18,380           18,920 
                                 --------         --------         -------- 
                                  492,828          423,089          378,528 
                                 --------         --------         -------- 
Income before income taxes         41,433           35,779           31,631 
Provision for income taxes         15,809           13,774           12,829 
                                 --------         --------         -------- 
Net income                      $  25,624        $  22,005        $  18,802 
                                 ========         ========         ======== 
 
Per share data:   
Net income                      $    1.71        $    1.49        $    1.28 
Weighted average shares 
    outstanding                    15,005           14,815           14,660 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
</TABLE> 
The accompanying notes to consolidated financial statements are an integral  
part of these statements.   
<PAGE> 
<TABLE> 
                   Triangle Pacific Corp. and Subsidiaries 
       Consolidated Statements of Changes in Shareholders' Investment 
                               (In thousands) 
 
                                      Additional     Retained 
                            Common      Paid-In      Earnings 
                            Stock       Capital      (Deficit)        Total 
---------------------------------------------------------------------------- 
<S>                         <C>        <C>           <C>            <C> 
Balance, December 31, 1993  $ 146      $ 93,054      $ (5,153)      $ 88,047 
Net income                      -             -        18,802         18,802 
Exercise of stock options       1            44             -             45 
---------------------------------------------------------------------------- 
Balance, December 30, 1994  $ 147      $ 93,098      $ 13,649       $106,894 
Net income                      -             -        22,005         22,005 
Exercise of stock options       -             2             -              2 
---------------------------------------------------------------------------- 
Balance, December 29, 1995  $ 147      $ 93,100      $ 35,654       $128,901 
Net income                      -             -        25,624         25,624 
Stock incentive bonus  
   shares issued                -            18             -             18 
Exercise of stock options       -            94             -             94 
---------------------------------------------------------------------------- 
Balance, January 3, 1997    $ 147      $ 93,212      $ 61,278       $154,637 
============================================================================ 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
</TABLE> 
The accompanying notes to consolidated financial statements are an integral  
part of these statements.   
<PAGE> 
<TABLE> 
                   Triangle Pacific Corp. and Subsidiaries 
                    Consolidated Statements of Cash Flows 
                                 (In Thousands) 
 
                                              Fiscal Years Ended 
                                    ------------------------------------------ 
                                    January 3,    December 29,    December 30, 
                                      1997           1995            1994 
------------------------------------------------------------------------------ 
<S>                               <C>             <C>             <C> 
Cash flows from operating 
 activities:  
    Net income                    $  25,624       $  22,005       $  18,802 
    Adjustments: 
      Depreciation                   11,946           9,439           8,217 
      Deferred income taxes            (313)           (507)          2,163 
      Amortization of goodwill  
         and trademark                2,539           2,320           2,320 
      Amortization of deferred  
         financing costs                898           1,432           1,432 
      Provision for doubtful  
         accounts                       422             435             884 
    Changes in assets and  
     liabilities: 
      Receivables                    (1,562)         (7,538)         (3,936) 
      Inventories                    (6,306)         (3,672)         (6,328) 
      Prepaid expenses                1,291            (801)            364 
      Accounts payable                 (365)           (637)          4,238 
      Accrued liabilities -  
        other                         5,107            (197)          7,964 
      Accrued liabilities -  
        interest                       (204)           (641)          1,197 
      Income taxes payable            1,991               -               - 
      Other                            (575)            348            (278) 
------------------------------------------------------------------------------ 
Net cash provided by operating  
  activities                         40,493          21,986          37,039 
------------------------------------------------------------------------------ 
Cash flows from investing activities: 
  Proceeds from sale of property,  
    plant and equipment               4,341              10             913 
  Additions to property, plant  
    and equipment                   (13,506)        (11,624)        (12,217) 
  Acquisition of Hartco Flooring    (36,140)              -               - 
  Acquisition of KREDA Bonds         (5,012)              -               - 
  Acquisition of Premier Wood Floors      -               -          (5,123) 
  Construction deposits                   -               -          (2,073) 
------------------------------------------------------------------------------ 
Net cash (used) in investing  
  activities                        (50,317)        (11,614)        (18,500) 
------------------------------------------------------------------------------ 
Cash flows from financing activities: 
  Long-term debt borrowings               -               -           7,000 
  Long-term debt payments            (3,213)         (3,767)         (1,449) 
  Refinancing costs                       -            (712)            (14) 
  Exercise of stock options              94               2              45 
  Reimbursement of construction  
    deposits                              -           1,780               - 
------------------------------------------------------------------------------ 
Net cash provided by (used in)  
  financing activities               (3,119)         (2,697)          5,582 
------------------------------------------------------------------------------ 
Net increase (decrease) in cash   $ (12,943)      $   7,675       $  24,121 
Cash and cash equivalents,  
  beginning of period                32,581          24,906             785 
------------------------------------------------------------------------------ 
Cash and cash equivalents,  
  end of period                   $  19,638       $  32,581       $  24,906 
============================================================================== 
</TABLE> 
<PAGE> 
                   Triangle Pacific Corp. and Subsidiaries 
                 Consolidated Statements of Cash Flows (cont'd) 
                                 (In Thousands) 
<TABLE> 
                                                Fiscal Years Ended 
                                    ------------------------------------------ 
                                    January 3,    December 29,    December 30, 
                                      1997           1995            1994 
------------------------------------------------------------------------------ 
<S>                               <C>             <C>             <C> 
Supplemental disclosures of cash  
 flow information: 
 
  Cash paid during the period for: 
    Interest (net of amount  
      capitalized)                $  18,352       $  18,603       $  16,969 
    Income taxes                     13,391          17,831           8,935 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
</TABLE> 
 
The accompanying notes to consolidated financial statements are an integral  
part of these statements.             
 
 
 
<PAGE> 
TRIANGLE PACIFIC CORP. AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
 
NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:   
 
    Triangle Pacific Corp. ("The Company") conducts its operations through a  
single business segment which consists of the manufacture and distribution of  
building products.  The Company, through its Flooring Division, produces and  
sells hardwood flooring and other flooring and related products and, through  
its Cabinet Division, manufactures and distributes kitchen and bathroom  
cabinets.  The Company's products are used primarily in residential new  
construction and remodeling.  The Flooring Division and the Cabinet Division  
accounted for approximately 63% and 37%, respectively, of the Company's  
revenues during 1996.  The Company's products are sold throughout the U.S. and  
a portion of the flooring products are sold worldwide.   
 
Basis of Consolidation:   
----------------------- 
 
    The consolidated financial statements include the financial statements of  
Triangle Pacific Corp. and its subsidiaries.  All intercompany balances and  
transactions have been eliminated.  The Company maintains its records on a  
52/53 week year.   
 
Cash and Cash Equivalents:   
-------------------------- 
 
    The Company considers all investments with an original maturity of less  
than three months to be cash equivalents.  All cash equivalents are investment  
grade such as U.S. Government or A-1 or better securities rated by Standard &  
Poor's Corporation.   
 
Inventories: 
------------ 
 
    Inventories are valued at the lower of cost or market.  The last-in,  
first-out (LIFO) method is used primarily for lumber and certain other  
inventories and the first-in, first-out (FIFO) method is used for all other  
inventories.  Inventories valued by the LIFO method were $35,311,000 at  
January 3, 1997 and $21,154,000 at December 29, 1995.  Had all inventories  
been valued by the FIFO method, which approximates current cost, inventories  
would have been increased by $2,851,000 at January 3, 1997 and $2,071,000 at  
December 29, 1995.  Raw materials inventories include purchased parts and  
supplies to be used in manufactured products.  Work-in-process and finished  
goods inventories include material, labor and overhead costs incurred in the  
manufacturing process.  The major components of inventories are as follows:   
 
                                   January 3,          December 29, 
                                     1997                 1995 
                                   -------------------------------- 
                                          (in thousands) 
         Raw materials             $ 50,873            $ 42,088 
         Work-in-process              7,259               3,625 
         Finished goods              36,964              28,859 
                                    -------             ------- 
              Total                $ 95,096            $ 74,572 
                                    =======             ======= 
 
Property, plant and Equipment: 
------------------------------ 
 
    Property, plant and equipment were restated to fair value as of June 8,  
1992, when the Company successfully completed a capital restructuring.  All  
additions, subsequent thereto, are stated at acquisition or construction cost. 
Expenditures for maintenance, repairs, renewals and improvements which do not  
extend the useful lives of assets are charged to appropriate expense accounts  
in the year incurred.  Upon disposition of an asset, cost and accumulated  
depreciation are removed from the accounts, and any gain or loss is included  
in the results of operations.  Depreciation and amortization are computed on  
the straight-line basis using the following estimated useful lives:   
 
<PAGE> 
         Buildings                              10 to 50 years 
         Equipment, furniture and fixtures       3 to 22 years 
 
    Amortization of leasehold improvements is provided over the terms of the  
leases or the useful lives of the assets, whichever is shorter.  For income  
tax purposes, all assets are depreciated under allowable tax depreciation  
methods.   
 
Intangible Assets: 
------------------ 
 
    The Company annually evaluates its carrying value and expected period of  
benefit of trademark and goodwill in relation to results of operations.  In  
determining the recoverability of these assets the Company analyzes its  
historical and future ability to generate earnings before interest and taxes  
using the non-discounted method.  Deferred financing costs are being amortized  
on the straight-line method over the lives of the related debt.  The trademark  
and goodwill are being amortized over 40 years.  Accumulated amortization of  
trademark and goodwill is $3,667,000 and $7,281,000, respectively, at January  
3, 1997 and $2,867,000 and $5,537,000, respectively, at December 29, 1995.   
 
Fair Value of Financial Instruments: 
------------------------------------ 
 
    The Company's cash equivalents and long-term debt are recorded at cost,  
which approximates fair market value at January 3, 1997.   
 
Use of Estimates: 
----------------- 
 
    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 at the  
date of the financial statements and the reported amounts of revenues and  
expenses during the reporting period.  Actual results could differ from those  
estimates.   
 
NOTE 2 - LONG-TERM DEBT: 
 
    Long-term debt consists of the following: 
 
                                          January 3,     December 29, 
                                            1997            1995 
                                         ---------------------------- 
                                               (in thousands) 
    Senior Notes, 10 1/2% 
         due 8-1-2003                    $ 160,000       $ 160,000 
    Capitalized lease obligations           16,996          19,547 
    Industrial revenue bonds                16,045           6,707 
                                          --------        -------- 
                                           193,041         186,254 
         Less: Current portion 
              of long-term debt             (2,437)         (3,210) 
                                          --------        -------- 
                                         $ 190,604       $ 183,044 
                                          ========        ======== 
 
    Letters of credit outstanding were $15.0 million at January 3, 1997 and  
$9.7 million at December 29, 1995 under a facility pursuant to which they can  
be renewed or replaced.   
 
Senior Notes: 
------------- 
 
    The Senior Notes are senior unsecured obligations of the Company with an  
aggregate principal amount of $160 million.  The Senior Notes mature on August  
1, 2003 and bear interest at an annual rate of 10 1/2%, payable in two equal  
semi-annual installments of $8,400,000 each, with each semi-annual period  
deemed to have 180 days.  The Senior Notes are issued under an Indenture (the  
 
<PAGE> 
"Indenture") between the Company and Comerica Bank, as the present Trustee  
(the "Trustee").  The Senior Notes rank pari passu with all present and future  
senior indebtedness of the Company and senior to all present and future  
subordinated indebtedness of the Company.  However, because borrowings under  
the Credit Facility are secured by inventory and accounts receivable of the  
Company and the proceeds thereof, the Senior Notes are effectively  
subordinated to such borrowings to the extent of such security interest.   
 
    The Senior Notes are not redeemable prior to August 1, 1998.  Thereafter,  
the Senior Notes are redeemable at the option of the Company at redemption  
prices specified in the Indenture.  The Senior Notes are not subject to any  
mandatory sinking fund requirements.   
 
    Upon a "change of control" (as defined in the Indenture), the Company is  
required to offer to purchase all outstanding Senior Notes at 101% of the  
principal amount thereof, plus accrued interest to the date of repurchase.  In  
addition, the Company may be required to offer to purchase the Senior Notes at  
100% of the principal amount plus accrued interest with the net cash proceeds  
of certain sales or other dispositions of assets.   
 
    The Indenture contains covenants which limit, among other things, the  
incurrence of additional indebtedness by the Company and its subsidiaries, the  
payment of dividends on, or the purchase of the capital stock of the Company  
("Restricted Payments"), the creation of liens on the assets of the Company  
and its subsidiaries, the creation of certain restrictions on the payment of  
dividends and other distributions by the Company's subsidiaries, the issuance  
of preferred stock by the Company's subsidiaries, and certain mergers, sales  
of assets and transactions with affiliates.   
 
    Based on the Company's operations through January 3, 1997, the amount of  
Restricted Payments that the Company could make under the Indenture was  
$39,254,000. 
 
    The Indenture specifies a number of events of default including, among  
others, the failure to make timely principal and interest payments or to  
perform the covenants contained therein.  The Indenture contains a cross- 
default to other indebtedness of the Company aggregating more than $5,000,000  
and certain customary bankruptcy and insolvency defaults.  Upon the occurrence  
of an event of default under the Indenture, the Trustee or the holders of not  
less than 25% in principal amount of the outstanding Senior Notes may declare  
all amounts thereunder immediately due and payable, except that such amounts  
automatically become immediately due and payable in the event of a bankruptcy  
or insolvency default.   
 
Credit Facility: 
---------------- 
 
     In December 1995, the Company entered into a Credit Facility, which  
provides for up to $90 million of revolving loans for working capital and  
general corporate purposes and for letters of credit.  Availability of  
borrowings under the Credit Facility is based upon a formula related to  
inventory and accounts receivable.  At January 3, 1997, the Company had no  
borrowings under the Credit Facility and had $70.4 million of borrowing  
capacity under this facility.  Borrowings under the Credit Facility bear  
interest at the agent's prime rate plus 0.375% (8.625% at January 3, 1997) or,  
at the Company's option, at certain alternate floating rates and are secured  
by a pledge of the Company's inventory and accounts receivable.  The Credit  
Facility expires on December 21, 2000.   
 
     The Credit Facility contains covenants which restrict, among other  
things, the incurrence of additional indebtedness and rental obligations by  
the Company and its subsidiaries, the payment of dividends and other  
distributions in respect to the capital stock of the Company, the creation of  
liens on the assets of the Company and its subsidiaries, the creation of  
certain restrictions on the payment of dividends and other distributions by  
the Company's subsidiaries, the making of investments and capital expenditures  
by the Company and its subsidiaries, the creation of new subsidiaries by the  
Company, and certain mergers, sales of assets and transactions with  
affiliates.   
 
<PAGE> 
     The Credit Facility also contains certain financial covenants relating to  
the consolidated financial condition of the Company and its subsidiaries,  
including covenants relating to their net worth, the ratio of their earnings  
to their fixed charges, the ratio of their earnings to their interest expense,  
the ratio of their current assets to their current liabilities, and the ratio  
of their indebtedness to their total capitalization.  At January 3, 1997, the  
Company was in compliance with all financial covenants.   
 
     The Credit Facility specifies a number of events of default including,  
among others, the failure to make timely payments of principal, fees, and  
interest, the failure to perform the covenants contained therein, the failure  
of representations and warranties to be true, the occurrence of a "change of  
control" (as defined in the Credit Facility, to include, among other things,  
the ownership by any person or group of more than 25% (or, in case of The TCW  
Group, Inc. and its affiliates, 50%) of the total voting securities of the  
Company), and certain impairments of the security for the Credit Facility.   
The Credit Facility also contains a cross-default to other indebtedness of the  
Company aggregating more than $2,000,000 and certain customary bankruptcy,  
insolvency and similar defaults.  Upon the occurrence of an event of default  
under the Credit Facility, at least three of the lenders holding at least 60%  
in amount of the principal indebtedness outstanding under the Credit Facility  
may declare all amounts thereunder immediately due and payable, except that  
such amounts automatically become immediately due and payable in the event of  
certain bankruptcy, insolvency or similar defaults.   
 
    The Credit Facility generally prohibits the Company from prepaying in  
excess of $50.0 million of the Senior Notes whether the prepayment would  
result from the redemption of the Senior Notes, an offer by the Company to  
purchase the Senior Notes following a change of control or a sale or other  
disposition of assets, or the acceleration of the due date for payment of the  
Senior Notes.   
 
Capitalized Lease Obligations: 
------------------------------ 
 
    During the fourth quarter of 1995, the operating lease agreement relating  
to the Company's Beverly, West Virginia, plant and related equipment was  
amended to allow for a purchase option of $1 until 2018.  As a result, the  
Company recorded the present value of the remaining future minimum lease  
payments as a capitalized lease asset and related capitalized lease  
obligation.   
 
Industrial Revenue Bonds: 
------------------------- 
 
    On June 28, 1996, in connection with the acquisition of Hartco Flooring  
Company, the Company acquired $10,000,000 floating interest rate, City of  
Somerset, Kentucky, Industrial Revenue Bonds, due in full on August 1, 2009.   
These bonds were used to finance the Somerset, Kentucky hardwood flooring  
plant and are collateralized by a $10,000,000 letter of credit.  At January 3,  
1997, the various Industrial Revenue Bond (IRB) notes had interest rates that  
ranged up to 7.87% and at December 29, 1995, the interest rates ranged up to  
7.88%.   
 
    These IRB notes are payable through 2009 and are collateralized by the  
related underlying assets.   
 
 
    Maturaties for all long-term debt are as follows: 
 
                                   (in thousands) 
                  1997             $     2,437 
                  1998                   2,408 
                  1999                   2,460 
                  2000                   5,009 
                  2001                   4,418 
                  Thereafter           176,309 
                                    ---------- 
                      Total        $   193,041 
                                    ========== 
 
<PAGE> 
NOTE 3 - INCOME TAXES: 
 
    The components of the deferred tax liability and asset are as follows: 
 
                                        January 3,       December 29, 
                                          1997              1995 
                                       ------------------------------ 
                                             (in thousands) 
Deferred Tax Liability: 
    Property, plant and equipment      $ 27,824          $ 24,229 
    Trademark                            11,022            11,449 
    Other                                 7,338             7,250 
                                        -------           ------- 
    Total                              $ 46,184          $ 42,928 
                                        =======           ======= 
 
Deferred Tax Asset: 
    Other                              $  6,967          $  3,955 
                                        -------           ------- 
    Total                              $  6,967          $  3,955 
                                        =======           ======= 
 
    The provision for income taxes consists of the following: 
 
                                         Fiscal Years Ended  
                            -------------------------------------------- 
                            January 3,      December 29,    December 30, 
                              1997             1995            1994 
                            -------------------------------------------- 
                                           (in thousands) 
Current: 
         Federal            $ 12,338        $ 12,006        $ 10,015 
         State and local       2,625           1,689             651 
                             -------         -------         ------- 
                            $ 14,963        $ 13,695        $ 10,666 
                             =======         =======         ======= 
Deferred: 
         Federal            $    722        $     22        $  1,926 
         State and local         124              57             237 
                             -------         -------         ------- 
                            $    846        $     79        $  2,163 
                             -------         -------         ------- 
         Total              $ 15,809        $ 13,774        $ 12,829 
                             =======         =======         ======= 
 
    The tax provision for the periods ending January 3, 1997, December 29,  
1995, and December 30, 1994 was 38.2%, 38.5%, and 40.6% of pre-tax income,  
respectively.  The factors causing the rate to vary from the U.S. Federal  
Statutory rate are as follows: 
 
                                           Fiscal Years Ended 
                              -------------------------------------------- 
                              January 3,      December 29,    December 30, 
                                1997             1995            1994 
                              -------------------------------------------- 
                                             (in thousands) 
 
Computed (expected)  
   tax provision              $ 14,502        $ 12,522        $ 11,059 
Increase (decrease) from: 
   State and local taxes         1,830           1,155           1,359 
   Amortization of goodwill        609             532             597 
   Foreign sales                  (394)           (292)              - 
   Other book to tax  
     differences, net             (738)           (143)           (186) 
                               -------         -------         ------- 
         Total                $ 15,809        $ 13,774        $ 12,829 
                               =======         =======         ======= 
 
<PAGE> 
NOTE 4 - OPERATING LEASE COMMITMENTS: 
 
    The Company rents certain real estate and equipment under leases expiring  
at various dates to 2015.  Several leases include options for renewal or  
purchase and contain clauses for payment of real estate taxes and insurance.   
In most cases, management expects that, in the normal course of business,  
leases will be renewed or replaced by other leases.   
 
    The following is a summary of minimum future rental payments required  
under operating leases that have initial non-cancelable lease terms in excess  
of one year.   
 
                                        (in thousands) 
                  1997                    $   2,129 
                  1998                        1,500 
                  1999                          799 
                  2000                          434 
                  2001                           51 
                  Thereafter                    132 
                                           -------- 
                       Total              $   5,045 
                                           ======== 
 
    Rental expense for operating leases amounted to $6,682,000, $8,335,000,  
and $7,704,000 for the fiscal years ended January 3, 1997, December 29, 1995,  
and December 30, 1994, respectively.   
 
NOTE 5 - EMPLOYEE BENEFIT PLANS: 
 
Pension and Profit Sharing Plans: 
--------------------------------- 
 
    The Company sponsors several defined benefit pension plans and is required  
to contribute to several labor union-related defined contribution plans.   
Total pension expense was $1,169,000, $1,114,000, and $991,000 for the fiscal  
years ended January 3, 1997, December 29, 1995, and December 30, 1994,  
respectively, including $517,000, $538,000, and $419,000 respectively, for  
defined benefit plans, which includes amortization of prior service costs over  
the estimated average remaining service period of active employees.   
 
 
<PAGE> 
    The following table sets forth the defined benefit pension plans' fund  
status at January 3, 1997 and December 29, 1995.   
 
                                                January 3,       December 29, 
                                                   1997             1995 
                                                ----------------------------- 
                                                       (in thousands) 
    Actuarial present value  
         of benefit obligation: 
              Vested                            $  10,519        $   9,409 
              Non-vested                              566              463 
                                                 --------         -------- 
    Accumulated and projected 
         benefit obligation                        11,085            9,872 
    Plan assets at fair value                      10,538            9,129 
                                                 --------         -------- 
 
    Projected benefit obligation in excess 
         of plan assets                              (547)            (743) 
    Unrecognized prior service costs                  598               84 
    Unrecognized net loss from past experience 
         different from that assumed and effects  
         of changes in assumptions                  1,235            1,492 
    Adjustment to recognize minimum liability      (1,761)          (1,435) 
                                                 --------         -------- 
    Accrued pension expense                     $    (475)        $   (602) 
                                                 ========          ======= 
 
    Net periodic pension costs for defined benefit pension plans for the  
fiscal years ended January 3, 1997, December 29, 1995, and December 30, 1994,  
include the following components:   
 
                                           Fiscal Years Ended 
                              -------------------------------------------- 
                              January 3,      December 29,    December 30, 
                                1997             1995            1994 
                              -------------------------------------------- 
                                             (in thousands) 
 
    Service cost-benefits 
        earned during the 
        period                $     277       $    271        $     267 
    Interest cost on 
        projected benefit 
        obligation                  818            779              735 
    Actual return on plan 
        assets                   (1,129)          (825)             106 
    Net amortization and 
        deferral                    551            313             (689) 
                               --------        -------         -------- 
    Net periodic pension 
        cost                  $     517       $    538        $     419 
                               ========        =======         ======== 
 
    A weighted average discount rate of 8.5% was used in 1996, 1995 and 1994  
to determine the benefit obligations of the Company's defined benefit pension  
plans.  The plans do not provide for future compensation increases in  
calculating benefit obligations as the benefits do not derive from  
compensation levels but from length of service.  The plans' assets are  
invested in a diversified portfolio of common stocks and fixed income  
securities.  The expected long-term rate of return on plan assets was 8.0% in  
1996, 1995 and 1994.   
 
    The Company has a profit sharing plan for salaried employees, and a  
supplemental profit sharing plan for certain salaried employees to which  
contributions are made at the discretion of its Board of Directors as long as  
the Company has met specified financial goals.  The fiscal 1996, 1995 and 1994  
contributions were $1,250,000 $1,245,450 and $1,255,385, respectively.   
 
 
<PAGE> 
Long-Term Incentive Plans: 
-------------------------- 
 
    In June 1993, the Company adopted the Triangle Pacific Corp. Long-Term  
Incentive Compensation Plan, (the "Long-Term Incentive Plan") which authorizes  
grants of various incentive awards to all regular salaried full-time officers  
and key employees of the Company.  There are 1,400,000 shares of common stock  
authorized for issue under this plan.  In February 1994, March 1994, February  
1996 and April 1996 stock options were granted for 795,200 shares at 100% of  
fair market value at the date of grant.  Also granted in February 1994 were  
28,200 stock bonus shares and $425,517 in deferred cash bonuses.   
 
    The following summarizes the Company's stock option activity:   
 
                                                                   Weighted 
                                Number                             Average 
                                  of        Exercise Price      Exercise Price 
                                Shares        Per Share           Per Share 
------------------------------------------------------------------------------ 
    Outstanding, 
       December 31, 1993       201,007           $ 2.99             $ 2.99 
 
    1994 
       Granted                 557,700      $14.44 - $15.13         $14.48 
       Exercised               (15,002)          $ 2.99             $ 2.99 
       Forfeited               (12,500)     $14.44 - $15.13         $14.58 
------------------------------------------------------------------------------ 
 
    Outstanding, 
       December 30, 1994       731,205      $ 2.99 - $15.13         $11.56 
 
    1995 
       Granted                       -             -                     - 
       Exercised                  (756)          $ 2.99             $ 2.99 
       Forfeited                     -             -                     - 
------------------------------------------------------------------------------ 
 
    Outstanding,  
       December 29, 1995       730,449      $ 2.99 - $15.13         $11.57 
 
    1996 
       Granted                 237,500           $16.38             $16.39 
       Exercised               (22,093)     $ 2.99 - $14.44         $ 4.29 
       Forfeited               (14,200)     $14.44 - $15.13         $14.64 
------------------------------------------------------------------------------ 
 
    Outstanding,  
       January 3, 1997         931,656      $ 2.99 - $16.38         $12.99 
============================================================================== 
 
    All stock options are granted with exercise prices equal to the fair  
market value of the Company's common stock at the date of grant.  The weighted  
average exercise prices of the stock options granted during 1996 was $16.38.   
Stock options expire ten years from date of grant and vest equally over a four  
year period.  The number of stock options exercisable at January 3, 1997, was  
454,582 shares.  These stock options have a weighted average exercise price of  
$11.09 per share and a weighted average contractual life of 7.39 years.   
 
    The Company accounts for stock options in accordance with Accounting  
Principles Board Opinion No. 25, under which no compensation cost has been  
recognized for stock option awards.  Had compensation cost for the stock  
options issued subsequent to January 1, 1995 been determined consistent with  
Statement of Financial Accounting Standards No. 123, "Accounting for Stock- 
Based Compensation" (SFAS 123), the Company's pro forma net income and net  
income per share for 1996 and 1995 would have been materially different from  
reported net income and net income per share.  Because the SFAS 123 method of  
accounting has not been applied to options granted prior to January 1, 1995,  
pro forma compensation cost may not be representative of that to be expected  
in future years.   
 
<PAGE> 
    The value of each stock option grant is estimated on the date of grant  
using the Black-Scholes option pricing model with the following weighted  
average assumptions used for the two grants in 1996: risk free interest rates  
of 6.34% - 6.87%; expected dividend yield of 0%; expected life of ten years;  
and expected volatility of 30.22% - 29.06%.     
 
    In 1994, the Company established a performance-based cash incentive plan  
for officers and other key employees to make annual bonus awards based upon  
pre-established criteria which were approved by the Board of Directors.  The  
expense was $3,282,000, $2,287,000 and $1,780,000 in 1996, 1995 and 1994,  
respectively.   
 
Non-Employee Director Stock Option Plan: 
---------------------------------------- 
 
    The Company has a Non-Employee Director Stock Option Plan for up to  
100,000 shares of common stock.  Options have been granted to six non-employee  
directors for an aggregate of 39,000 shares, with exercise prices equal to the  
fair market value at the date of grant.  These options are currently  
exercisable and generally expire 10 years from the date of grant.   
 
Post-retirement and Post-employment Benefits: 
--------------------------------------------- 
 
    The Company, as of January 3, 1997, generally does not provide post- 
retirement life or health insurance benefits or any post-employment benefits  
other than those previously discussed.   
 
NOTE 6 - ACCRUED LIABILITIES: 
 
    Amounts included in accrued liabilities are as follows:   
 
                                       January 3,           December 29, 
                                         1997                  1995 
                                       --------------------------------- 
                                                (in thousands) 
         Payroll                       $   8,187            $   5,827 
         Pension and profit sharing        1,919                2,295 
         Taxes                             3,311                3,224 
         Insurance                         9,340                5,149 
         Interest                          7,029                7,179 
         Marketing                         5,363                1,717 
         Other                             5,077                3,210 
                                        --------             -------- 
              Total                    $  40,226            $  28,601 
                                        ========             ======== 
 
NOTE 7 - SUPPLEMENTARY QUARTERLY FINANCIAL DATA (unaudited): 
 
               (In thousands, except per share amounts) 
 
                                                                Net 
                                                              Income 
                           Net        Gross          Net        Per 
    Quarters              Sales       Profit       Income      Share 
-------------------------------------------------------------------- 
 
    1996 
    First Quarter      $ 110,525    $  25,926    $   3,904    $ 0.26 
    Second Quarter       131,471       34,364        7,433      0.50 
    Third Quarter        142,941       34,755        6,762      0.45 
    Fourth Quarter       149,324       36,457        7,525      0.50 
 
    1995 
    First Quarter      $ 107,192    $  27,932    $   4,534    $ 0.31 
    Second Quarter       116,609       30,807        6,461      0.44 
    Third Quarter        115,738       27,941        5,379      0.36 
    Fourth Quarter       119,329       29,840        5,631      0.38 
 
 
<PAGE> 
NOTE 8 - ACQUISITION OF HARTCO FLOORING COMPANY: 
 
    On June 28, 1996, the Company acquired all of the outstanding shares of  
Hartco Flooring Company ("Hartco"), formerly a wholly-owned subsidiary of  
Premark International, Inc.  The total value of the acquisition was $63  
million, consisting of $36.1 million in cash and the balance representing the  
assumption of liabilities.   
 
    The acquisition has been accounted for using the purchase method of  
accounting, and accordingly, the purchase price has been allocated to the  
assets purchased and the liabilities assumed based upon the fair values at the  
date of acquisition.  The excess of the purchase price over the fair values of  
the net assets acquired was $17.5 million and has been recorded as goodwill,  
which is being amortized on a straight-line basis over 40 years.  The  
accompanying consolidated financial statements reflect the operations of  
Hartco for the period subsequent to June 28, 1996.   
 
    The net purchase price was allocated as follows:   
 
                                            (In thousands) 
         Net working capital                 $  13,589 
         Net property, plant and equipment      22,717 
         Other assets                              712 
         Goodwill                               17,530 
         Other non-current liabilities         (18,408) 
                                              -------- 
             Cash paid for Hartco            $  36,140 
                                              ======== 
 
     The unaudited pro forma results below assume the acquisition occurred at  
the beginning of the years ended January 3, 1997 and December 29, 1995, (In  
thousands, except per share amounts) 
 
                                                Fiscal Years Ended 
                                            --------------------------- 
                                            January 3,     December 29, 
                                               1997            1995 
                                            --------------------------- 
         Net sales                          $ 574,680      $ 529,657 
         Net income                            25,958         21,346 
         Net income per share               $    1.73      $    1.44 
 
    The above pro forma results include adjustments to give effect to  
amortization of goodwill, interest expense on acquisition debt and certain  
other adjustments, together with related income tax effects.  The pro forma  
results above are not necessarily indicative of the operating results that  
would have occurred had the acquisition been consummated as of the beginning  
of the periods presented, nor are they necessarily indicative of future  
operating results.   
 
NOTE 9 - POTENTIAL ACQUISITION: 
 
    The Company has entered into a letter of intent, subject to due diligence  
and the completion of a definitive agreement with Robbins Inc., and its  
affiliate, Searcy Flooring, Inc., to acquire the assets and to assume certain  
liabilities of the Residential Flooring Division of Robbins and of Searcy.   
 
 
<PAGE> 
                                    PART III 
 
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY 
 
    The section entitled "Election of Directors" appearing in the definitive  
proxy statement of the Registrant for the annual meeting of shareholders to be  
held on May 7, 1997 sets forth certain information regarding the directors and  
is incorporated herein by reference.  The section entitled "Executive  
Compensation-Compliance with Section 16(a) of the Exchange Act" appearing in  
the definitive proxy statement of the Registrant for the annual meeting of  
shareholders to be held on May 7, 1997 sets forth certain information  
regarding reporting under Section 16 of the Securities Exchange Act of 1934,  
as amended, and is incorporated herein by reference.  Certain information with  
respect to the executive officers of the Registrant is set forth in Part I of  
this Form 10-K under the caption "Executive Officers of the Company."   
 
ITEM 11.  EXECUTIVE COMPENSATION 
 
    Information regarding the compensation of management is contained in the  
definitive proxy statement of the Registrant for the annual meeting of  
shareholders to be held on May 7, 1997, under the caption "Executive  
Compensation" and, except for the report of the compensation committee of the  
Board of Directors and the information contained under the caption  
"Performance Graph," is incorporated herein by reference.   
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 
 
    Information regarding ownership of the Company's Common Stock is contained  
in the definitive proxy statement of the Registrant for the annual meeting of  
shareholders to be held on May 7, 1997, under the captions "Security Ownership  
of Certain Beneficial Owners" and "Security Ownership of Management" and is  
incorporated herein by reference.   
 
ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 
 
    None 
 
 
<PAGE> 
                                     PART IV 
 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K 
 
     (a)(1) Financial Statements 
 
            Included in Part II of this report. 
 
            -    Report of independent public accountants 
 
            -    Consolidated balance sheets as of January 3, 1997, and 
                 December 29, 1995. 
 
            -    Consolidated statements of operations for the fiscal  
                 years ended January 3, 1997, December 29, 1995, and  
                 December 30, 1994. 
 
            -    Consolidated statements of changes in shareholders'  
                 investment for the fiscal years ended January 3, 1997, 
                 December 29, 1995, and December 30, 1994.   
 
            -    Consolidated statements of cash flows for the fiscal  
                 years ended January 3, 1997, December 29, 1995, and  
                 December 30, 1994.   
 
            -    Notes to consolidated financial statements.   
 
     (a)(2) Financial Statement Schedules 
 
            Included in Part IV of this report:   
 
            For the fiscal years ended January 3, 1997, December 29, 1995,  
            and December 30, 1994. 
 
            -    Schedule II - Valuation and qualifying accounts  
                 and reserves.   
 
            Information required by other schedules called for under  
            Regulation S-X is either not applicable or is included in  
            the consolidated financial statements or notes thereto.   
 
     (a)(3) Exhibits 
            -------- 
 
            The information required by this Item 14(a)(3) is set forth  
            in the Index to Exhibits in item 14(c) of this annual report on  
            form 10-K.   
 
     (b)    Reports on Form 8-K 
            ------------------- 
 
            No reports on Form 8-K were filed during the fourth quarter  
            of the year ended January 3, 1997.   
 
 
     (c)    Exhibits 
            -------- 
 
      3.1     -    Restated Certificate of Incorporation of the 
                   Registrant (incorporated herein by reference to  
                   Exhibit 3.1 to the Registrant's Form 10-K for the  
                   fiscal year ended December 31, 1993).   
 
      3.2     -    Amended and Restated Bylaws of the Registrant  
                   (incorporated herein by reference to Exhibit 3.2 to  
                   the Registrant's Form 10-K for the fiscal year ended  
                   December 31, 1993).   
 
      4.1     -    Form of 10 1/2% Senior Notes due 2003 (incorporated  
                   herein by reference to Exhibit 4.2 to the  
                   Registrant's Form 10-K for the fiscal year ended  
                   December 31,1993).   
 
<PAGE> 
      4.2     -    Indenture governing 10 1/2% Senior Notes due 2003  
                   (incorporated herein by reference to Exhibit 4.2 to  
                   the Registrant's Form 10-K for the fiscal year ended  
                   December 31, 1993).   
 
      4.3     -    Credit Agreement dated as of August 4, 1993, as  
                   amended, among the Registrant, the Lenders listed  
                   therein and CitiCorp USA, Inc., as the Co-Agent for  
                   the Lenders, and the Bank of Nova Scotia, as the  
                   Agent for the Lenders (the "Credit Agreement")  
                   (incorporated herein by reference to Exhibit 4.4 to  
                   the Registrant's Registration Statement on Form S-1  
                   (Registration No. 33-64530)).   
 
      4.4     -    Amendment No. 4 to the Credit Agreement dated as of  
                   December 2, 1994.   
 
      4.5     -    Amendment No. 6 to the Credit Agreement dated as of  
                   December 21, 1995.   
 
      4.6     -    Amendment No. 7 to the Credit Agreement dated as of  
                   May 1, 1996.   
 
     10.1     -    Registration Rights Agreement, dated as of June 5,  
                   1992 by and among the Registrant and the Persons  
                   listed therein (incorporated herein by reference to  
                   Exhibit 10.1 to the Registrant's Registration  
                   Statement on Form S-1 (Registration No. 33-50724)).   
 
     10.2     -    Lenders' Equity Agreement dated as of June 5, 1992 by  
                   and among the Registrant and the Banks and other  
                   financial institutions listed herein (incorporated  
                   herein by reference to Exhibit 10.2 to the  
                   Registrant's Registration Statement on Form S-1  
                   (Registration No. 33-50724)).   
 
     10.3     -    ESJ Exchange Agreement dated as of June 5, 1992 by  
                   and among the Registrant, TPC Holding Corp. and the  
                   ESJ Entities (incorporated herein by reference to  
                   Exhibit 10.3 to the Registrant's Registration  
                   Statement on Form S-1 (Registration No. 33-50724)).   
 
     10.4*    -    Management Equity Agreement dated as of June 5, 1992  
                   by and among the Registrant and the individuals  
                   listed therein, and including a form of the Triangle  
                   Pacific Corp. Stock Option Plan (incorporated herein  
                   by reference to Exhibit 10.4 to the Registrant's  
                   Registration Statement on Form S-1 (Registration No.  
                   33-50724)).   
 
     10.5*    -    Form of Amended and Restated Employment Agreement  
                   dated as of March 8, 1995 between the Company and the  
                   individuals named on Schedule 1 thereto.   
 
     10.6*    -    Form of Employment Agreement dated as of March 8,  
                   1995 between the Company and the individuals named on  
                   Schedule 1 thereto.   
 
     10.7*    -    Salaried Employees Profit Sharing Plan (as restated  
                   January 1, 1993) of the Registrant 
 
     10.8*    -    Annual Cash Incentive Bonus System of the Registrant  
                   for Officers and Managers. 
 
 
 
<PAGE> 
     10.9*    -    Form of Stock Option Plan of the Registrant  
                   (incorporated herein by reference to Exhibit 10.12 to  
                   the Registrant's Registration Statement on Form S-1  
                   (Registration No. 33-64530)).   
 
     10.10*   -    Form of Stock Option Agreement of the Registrant  
                   (incorporated herein by reference to Exhibit 10.13 to  
                   the Registrant's Registration Statement on From S-1  
                   (Registration No. 33-64530)).   
 
     10.11    -    Lease dated as of June 1, 1988 by and between West  
                   Virginia Jobs and Development Corporation and  
                   Registrant (incorporated herein by reference to  
                   Exhibit 10.11 to the Registrant's Registration  
                   Statement on Form S-1 (Registration No. 33-50724)).   
 
     10.12    -    Amendment to lease effective as of April 14, 1989 by  
                   and between West Virginia Jobs and Development  
                   Corporation and the Registrant (incorporated herein  
                   by reference to Exhibit 10.15 to the Registrant's  
                   Registration Statement on Form S-1 (Registration No.  
                   33-64530)).   
 
     10.13    -    Second Amendment to lease effective as of November 1,  
                   1991 by and between West Virginia Economic  
                   Development Authority, as successor to West Virginia  
                   Jobs and Development Corporation, and the Registrant  
                   (incorporated herein by reference to Exhibit 10.16 to  
                   the Registrant's Registration Statement on Form S-1  
                   (Registration No. 33-64530)).   
 
     10.14    -    Third Amendment to lease effective as of March 10,  
                   1993 by and between West Virginia Economic  
                   Development Authority, as successor to West Virginia  
                   Jobs and Development Corporation, and the Registrant  
                   (incorporated herein by reference to Exhibit 10.17 to  
                   the Registrant's Registration Statement on Forms S-1  
                   (Registration No. 33-64530)).   
 
     10.15    -    Fourth amendment to lease effective as of September 22,  
                   1995 by and between West Virginia Economic Development  
                   Authority, as successor to West Virginia Jobs and  
                   Development Corporation, and the Registrant.   
 
     10.16*   -    Triangle Pacific Corp. 1993 Long-Term Incentive  
                   Compensation Plan (incorporated herein by reference  
                   to Exhibit 10.18 to the Registrant's Registration  
                   Statement on Form S-1 (Registration No. 33-64530)).   
 
     10.17*   -    Triangle Pacific Corp. Nonemployee Director Stock  
                   Option Plan (incorporated herein by reference to  
                   Exhibit 10.19 to the Registrant's Registration  
                   Statement on Form S-1 (Registration No. 33-64530)).   
 
     10.18    -    Form of Indemnity Agreement between the Registrant  
                   and each of its directors and executive officers  
                   (incorporated herein by reference to Exhibit 10.20 to  
                   the Registrant's Registration Statement on Form S-1  
                   (Registration No. 33-64530)).   
 
     10.19*   -    Supplemental Profit Sharing and Deferred Compensation  
                   Plan of the Registrant.   
 
     10.20    -    Stock Purchase Agreement dated as of June 28, 1996 between  
                   the Company and Premark International Inc. (incorporated  
                   herein by reference to Exhibit 2.1 to the Registrant's Form  
                   8-K dated June 28, 1996).   
 
<PAGE> 
     11.1     -    Statement re computation of per share earnings 
 
     23.1     -    Consent of Arthur Andersen LLP 
 
     27.1     -    Financial Data Schedule. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-------------- 
*    Management contract or compensatory plan or arrangement required to  
be filed as an exhibit hereto.   
 
 
<PAGE> 
                               SIGNATURES 
 
     Pursuant to the requirements of Section 13 or 15(d) of the  
Securities Exchange Act of 1934, the Registrant has duly caused this  
report to be signed on its behalf by the undersigned, thereto duly  
authorized.   
 
                                          TRIANGLE PACIFIC CORP. 
 
                                    By:   /s/ Floyd F. Sherman      
                                        --------------------------- 
                                          Floyd F. Sherman 
                                          Chairman of the Board and 
                                          Chief Executive Officer 
 
     Pursuant to the requirements of the Securities Exchange Act of  
1934, this report signed below by the following persons on behalf of the  
registrant and in the capacities and on the dates indicated.   
 
 
 /s/ Floyd F. Sherman         Chairman of the Board     March 31, 1997 
----------------------------  and Chief Executive Officer 
   Floyd F. Sherman           (Principal Executive Officer) 
 
 
 /s/ M. Joseph McHugh         Director and President    March 31, 1997 
---------------------------- 
   M. Joseph McHugh 
 
 
 /s/ Robert J. Symon          Executive Vice President  March 31, 1997 
----------------------------  Treasurer and Chief  
   Robert J. Symon            Financial Officer 
                             (Principal Financial & Accounting Officer) 
 
 /s/ B. William Bonnivier     Director                  March 31, 1997 
---------------------------- 
   B. William Bonnivier 
 
 
                              Director                  March   , 1997 
---------------------------- 
   Charles M. Hansen, Jr. 
 
 
 /s/ David R. Henkel          Director                  March 31, 1997 
---------------------------- 
   David R. Henkel 
 
 
                             Director                  March   , 1997 
---------------------------- 
   Bruce A. Karsh 
 
 
 /s/ Jack L. McDonald         Director                  March 31, 1997 
---------------------------- 
   Jack L. McDonald 
 
 
                              Director                  March   , 1997 
---------------------------- 
   Carson R. McKissick 
 
 
 /s/ Karen Gordon Mills       Director                  March 31, 1997 
---------------------------- 
   Karen Gordon Mills 
 
<PAGE> 
                                                             SCHEDULE II 
                                                             ----------- 
 
<TABLE> 
              TRIANGLE PACIFIC CORP. AND SUBSIDIARIES 
              --------------------------------------- 
                     VALUATION AND QUALIFYING 
                     ------------------------ 
                      ACCOUNTS AND RESERVES 
                      --------------------- 
                         (in thousands) 
 
Column A            Column B      Column C      Column D      Column E  
--------            --------      --------      --------      -------- 
 
                                  Additions                             
                    Balance at    charged to                  Balance   
                    beginning     costs and                   at end of 
Classifications      of period    expenses    Deductions (1)  period    
----------------------------------------------------------------------- 
<S>                 <C>           <C>         <C>             <C> 
Fiscal Year ended                                                      
 December 30, 1994:                                                    
  Reserve for    
   doubtful accounts                                                   
   and returns and 
   allowances        $   3,323    $   884      $   1,716    $   2,491  
                     ================================================= 
Fiscal Year ended                                                      
 December 29, 1995:                                                    
  Reserve for    
   doubtful accounts                                                   
   and returns and 
   allowances        $   2,491    $   435      $     338    $   2,588  
                     ================================================= 
Fiscal Year ended                                                      
  January 3, 1997:                                                     
  Reserve for    
   doubtful accounts                                                   
   and returns and 
   allowances        $   2,588    $   672 (2)  $     207    $   3,053  
                     ================================================= 
 
</TABLE> 
[FN] 
(1)  Write-offs of specific accounts, net of recoveries.   
(2)  Includes Hartco balance of $250 at June 28, 1996, acquisition date.   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
<PAGE> 
 
                                                            Exhibit 11.1 
                                                            ------------ 
<TABLE> 
                           TRIANGLE PACIFIC CORP. 
                    COMPUTATION OF NET INCOME PER SHARE 
 
                                          Fiscal Years Ended 
                            ---------------------------------------------- 
                             January 3,      December 29,     December 30, 
                               1997             1995             1994 
                            ------------     ------------     ------------ 
<S>                         <C>              <C>              <C> 
Net Income                  $ 25,624,000     $ 22,005,000     $ 18,802,000 
                            ============     ============     ============ 
 
Shares outstanding 
 beginning of period          14,663,365       14,662,609       14,647,607 
 
Weighted average number 
 of shares issued from 
 incentive bonus shares            1,008                -                - 
 
Weighted average number 
 of shares issued from 
 exercise of stock options         5,248              567           12,182 
                             -----------     ------------     ------------ 
Weighted average number 
 of shares outstanding        14,669,621       14,663,176       14,659,789 
 
Shares issuable from assumed 
 exercise of stock options, 
 reduced by the number of 
 shares which could have 
 been purchased with the 
 proceeds from exercise of 
 such options                    334,904          151,884                - 
                            ------------     ------------     ------------ 
 
Weighted average number 
 of shares outstanding as 
 adjusted                     15,004,525       14,815,060       14,659,789 
                            ============     ============     ============ 
 
Primary income per common 
 and common equivalent 
 share                      $       1.71     $       1.49     $       1.28 
                            ============     ============     ============ 
 
Assuming full dilution: 
 
Weighted average number 
 of shares outstanding        14,669,621       14,663,176       14,659,789 
 
Shares issuable from 
 assumed exercise of  
 stock options reduced 
 by the number of shares 
 which could have been 
 purchased with the 
 proceeds from exercise 
 of such options                 447,169          215,817                - 
                             -----------      -----------      ----------- 
 
Weighted average number 
 of shares outstanding as 
 adjusted                     15,116,790       14,878,993       14,659,789 
                            ============     ============     ============ 
 
Fully diluted income per 
 common and common 
 equivalent share           $      1.70      $       1.48     $       1.28 
                            ============     ============     ============ 
</TABLE> 
<PAGE> 
                                                            Exhibit 23.1 
                                                            ------------ 
 
 
 
 
              CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS 
 
     As independent public accountants, we hereby consent to the  
incorporation of our report included in this Form 10-K into the  
Company's previously filed Registration Statement Files Nos. 33-69682,  
33-69684 and 33-50724.   
 
 
 
 
                                     ARTHUR ANDERSEN LLP 
 
Dallas, Texas 
 March 31, 1997