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 2, 1998                    
                         ----------------------------------------------   
[ ]   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.                          
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        (Exact name of registrant as specified in its charter)   
  
           Delaware                                  94-2998971           
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State or other jurisdiction of                    (I.R.S. Employer   
incorporation or organization                     Identification No.)   
  
           16803 Dallas Parkway, Dallas, Texas                  75248     
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       (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, 1998, the aggregate market value of the registrant's common  
stock held by non-affiliates was $515,223,972.     
  
    The number of shares outstanding of the registrant's Common Stock, par  
value $.01 per share, as of March 1, 1998:  Common Stock - 14,745,345 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 6, 1998.     
  
  
<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 and Holding was merged into the Company.     
  
    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  
(the "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 manufactures and sells hardwood flooring and other flooring and  
related products and 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 1997.    
<TABLE>  
<CAPTION>   
           1997      1996      1995      1994      1993      1992      1991   
          -------------------------------------------------------------------   
                                    (in millions)   
<S>       <C>       <C>       <C>       <C>       <C>       <C>       <C>  
Net Sales:   
   
Flooring  $ 469.1   $ 336.4   $ 261.8   $ 244.0   $ 202.0   $ 152.9   $ 117.2   
   
Cabinets    183.8     197.9     197.1     166.2     144.3     139.9     138.9   
           ------    ------    ------    ------    ------    ------    ------   
Total   
Net Sales $ 652.9   $ 534.3   $ 458.9   $ 410.2   $ 346.3   $ 292.8   $ 256.1   
           ======    ======    ======    ======    ======    ======    ======   
</TABLE>  
Bruce, Premier, Hartco, Robbins, 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.   
  
Industry Overview   
-----------------   
  
    The Company is a leading manufacturer of consumer wood products for both  
home and commercial use.  The Company is the largest and best known  
manufacturer of hardwood flooring in the world and one of the largest  
manufacturers of kitchen and bathroom cabinets.  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 five  
distinct flooring brand names: Bruce, Hartco, Robbins, Premier, and Traffic  
Zone.   The Company produces kitchen and bathroom cabinets under two brand  
names: IXL and Bruce.    
  
<PAGE>  
     The Company estimates that new construction accounts for approximately 30  
- 40% of sales, with remodeling or replacement generating the remaining  
portion.  Residential new construction activity is more cyclical than  
remodeling activity, which has historically been relatively stable.  
  
     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.     
  
     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 excess capacity.  In the late 1970's, new  
construction expanded to meet the demands of more than two million housing  
starts annually, plus remodeling.  U.S. housing starts have not exceeded 1.85  
million units since 1979.  Price competition is severe, due principally to the  
excess industry capacity.    
  
Products and Product Development   
--------------------------------   
  
    With both flooring and cabinet products, the Company continually addresses  
the changing consumer demands for products used in the home, including color  
trends in the furniture and home decorating industry, durability of the  
products and price points for competing products.    
  
     The Company offers approximately 1,200 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 engineered, 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 or stapled to a variety of  
surfaces, eliminating the need for a false floor.  The development of 3/8"  
thick engineered 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  
engineered flooring permits its installation in kitchens and basements where  
the presence of moisture had previously rendered hardwood flooring  
impractical.     
  
<PAGE>  
    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  
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 stone, ceramic tile, sheet vinyl,  
vinyl tile and carpet.    
  
     The Company manufactures kitchen and bathroom cabinets in approximately  
100 different styles and colors and 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 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 cabinet 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.  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 this popular line, available in maple and  
white finishes, at prices attractive to 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.    
  
    As of January 1996, the Company elected to discontinue the sale of lumber,  
which had remained a low-profit item, and to consolidate building products  
into its cabinet operations.  Beginning with the first quarter of 1996, the  
financial results of this operation have been combined with those of cabinets.  
  
    One of the benefits of the Hartco acquisition in 1996 was a sophisticated  
research and development center in Oneida, Tennessee, where the Company has  
consolidated its 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, Warren and Searcy, Arkansas,and Oneida,  
Tennessee.  The Beverly, West Virginia plant also produces 5/16" thick solid  
strip pre-finished flooring.  The Company manufactures its 3/8" thick  
engineered hardwood flooring products at its plants in Center, Texas, Port  
Gibson, Mississippi, Statesville, North Carolina, Warren, Arkansas 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 its own veneer requirements and 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  
engineered products.  The Company manufactures its 5/16" thick solid parquet  
products at its plants in Jackson and Oneida, Tennessee in addition to the  
production of 3/4" thick product at these locations.     
  
<PAGE>  
     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.     
  
    In 1997, the Company acquired the residential hardwood flooring operations  
of Robbins, Inc., all of which are in Arkansas.  This acquisition further  
added manufacturing capacity without incurring larger capital expenditures  
required for new construction.    
  
     Raw materials for the hardwood flooring products produced at the    
Nashville, Jackson, Beverly, West Plains, Oneida, Somerset, Warren and Searcy  
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 some  
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.    
  
    Raw materials for the engineered hardwood flooring products manufactured  
at the Company's plants in Center, Texas, Port Gibson, Mississippi and Warren,  
Arkansas 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 or under sprinklers until needed, and then  
debarked, soaked in hot water or steamed, cut to specific lengths, loaded into  
a lathe, and peeled to produce sheets of thin oak veneer.  The Company employs  
advanced veneer manufacturing processes which substantially increase material  
yields, thereby reducing costs.  The Company also purchases veneer from  
independent suppliers.  Layers of veneer are then pressed into plywood which  
is cut into strip, plank and parquet hardwood flooring and then pre-finished.   
The total conversion time for engineered products, from log to finished  
product, is approximately one week.     
  
     The Company also treats a portion of its 3/8" thick engineered 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 engineered products.  
  
     The Company operates four cabinet manufacturing plants.  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.  
  
     Cabinet 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  
manufacturing 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.    
  
<PAGE>  
     Sheet stock is a commodity product purchased from a variety of suppliers. 
The Company obtains a portion of its front frame parts from its manufacturing  
facility located at the hardwood flooring plant in Jackson, Tennessee.  The  
Company discontinued the production of cabinet doors and drawer fronts at its  
Jackson dimension plant at the end of February 1997.  Doors, drawer fronts,  
finishing materials and hardware are purchased from several suppliers.    
  
    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 Company is not dependent on any single supplier for any of its raw  
materials or component parts.  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 raw materials and components, consist  
of wood veneer, laminated veneer door panels and certain hardware items.    
  
     The following table sets forth certain information concerning the  
manufacturing facilities operated by the Company.    
  
<TABLE>  
<CAPTION>  
                    Owned/                                    
Location            Leased             Product                
--------            ------      ------------------------      
<S>                  <C>        <C>  
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" and 1/4" thick engineered strip,  
                                plank and parquet; pre-finished,   
                                unfinished   
  
Port Gibson, MS (3)  Owned      3/8" thick engineered strip,        
                                plank and parquet; pre-finished,    
                                unfinished       
  
Statesville, NC      Owned      3/8" thick engineered 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 engineered strip,    
                                plank, pre-finished, unfinished   
  
Warren, AR           Owned      3/4" thick strip and plank;  
                                pre-finished, unfinished  
</TABLE>  
  
<PAGE>  
<TABLE>  
<CAPTION>  
                    Owned/                                    
Location            Leased             Product                
--------            ------      ------------------------      
<S>                  <C>        <C>  
Warren, AR           Owned      3/8", 1/2" and 9/16" thick   
                                engineered strip, plank and   
                                parquet; pre-finished, unfinished   
  
Searcy, AR           Owned      3/4" thick unfinished strip   
  
Auburn, NE           Owned      Kitchen and bathroom cabinets  
  
McKinney, TX         Owned      Kitchen and bathroom cabinets  
  
Morristown, TN       Owned      Kitchen and bathroom cabinets  
  
Thompsontown, PA     Owned      Kitchen and bathroom cabinets  
</TABLE>  
[FN]  
------------------   
(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 in cabinet production.    
  
(3)  The Center and Port Gibson plants also produce 1/8" thick veneer,    
     which is used in the manufacture of 3/8" thick engineered products at    
     these plants and at the Statesville, N.C. plant.     
  
Sales and Marketing  
-------------------  
  
    Flooring sales are made 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 flooring sales.    
  
     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 40% of total cabinet 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 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 and Robbins' distributors in  
1997 expanded our overall presence in the floorcovering marketplace.  This  
expanded access to the market is strengthened by our ability to offer five  
distinct brands - Bruce, Hartco, Robbins, 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.    
<PAGE>  
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 training facility at its Nashville plant to give  
its 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 flooring  
products and improve consumer satisfaction with the installed products.    
  
     Flooring salespersons 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.     
  
     The cabinet sales force is one of the largest in the cabinet industry,  
currently employing approximately 204 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 Company maintains a competitive salary base and provides performance  
incentives by compensating its sales force with bonuses tied to volume and  
profitability.    
  
Competition   
-----------   
  
     While the Company is currently the largest manufacturer of hardwood  
flooring in the world, it is a small part of the highly competitive  
floorcovering market.  The floorcovering market includes companies which are  
substantially larger in sales and financial resources than the Company.  Also  
the domestic floorcovering industry is facing greater competition from  
imported flooring products.    
  
     The floorcovering industry, which includes carpet, sheet vinyl, vinyl  
tile, hardwood, high pressure laminate, ceramic tile and natural stone 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 accouont 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.    
  
    The Company is one of the largest manufacturers of kitchen and bathroom  
cabinets in the U.S.  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,   
<PAGE>  
some of its larger competitors, to open regional manufacturing plants and  
distribution centers.  The Company's four regional manufacturing plants and 41  
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 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.    
  
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 2, 1998, the Company employed approximately 5,404 persons.   
The Company has entered into collective bargaining agreements with hourly  
employees at six of its plants, covering in the aggregate approximately 2,091  
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  
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  
"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, 1998 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 58 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 60 years old.     
  
    Robert J. Symon                Mr. Symon has served as Executive   
    Executive Vice President       Vice President, since February 1998.    
                                   Prior thereto, he served as Executive  
                                   Vice President, Treasurer and Chief    
                                   Financial Officer since November 1994.    
                                   Prior thereto, he served as Vice    
                                   President - Controller of the Company  
                                   since 1978.  Mr. Symon is 66 years old  
                                   and served as a Director of the Company  
                                   from December 1988 to June 1992.    
  
    E. Dwain Plaster               Mr. Plaster has served as a Vice   
    Vice President,                President, Treasurer and Chief Financial  
    Treasurer and Chief            Officer of the Company since February,  
    Financial Officer              1998.  Prior thereto, he served as Vice  
                                   President since November 1994 and had been  
                                   the Controller of Bruce Hardwood Floors   
                                   since 1977.  Mr. Plaster is 48 years old.    
  
    Paul L. Barrett                Mr. Barrett has served as Vice President  
    Vice President, Secretary      Secretary and General Counsel of the  
    and General Counsel            Company since November, 1997.  Prior   
                                   thereto for more than the past five years  
                                   he served as Vice President, Secretary and  
                                   General Counsel of Redman Industries Inc.  
                                   Mr. Barrett is 62 years old.    
  
    Charles A. Engle               Mr Engle has served as a Vice President of   
    Vice President                 the Company since 1979.  He has also served 
                                   as President of the Cabinet group since   
                                   January 1996.  Mr. Engle is 54 years old.    
  
<PAGE>  
    John W. Esch                   Mr. Esch has served as a Vice    
    Vice President                 President of the Company since   
                                   November, 1994.  He has been Controller  
                                   of the Cabinet group since 1977.    
                                   Mr. Esch is 53 years old.     
  
    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 55 years old.       
  
    Michael J. Kearins             Mr. Kearins has served as a Vice   
    Vice President                 President of the Company since 1985 and has  
                                   primary responsibility for sales and   
                                   marketing of flooring products.  Prior to   
                                   1983, he had been a Regional Sales Manager   
                                   of the Company.  Mr. Kearins is 51 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 flooring  
                                   products since March, 1993.  Prior thereto,  
                                   he was General Manager since 1984.  He had   
                                   been a Plant Manager of the Company since  
                                   1979.  Mr. Price is 55 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    
                                   Vice President of manufacturing of cabinet  
                                   products.  Mr. Silver is 58 years old.     
  
    Richard A. TerHaar             Mr. TerHaar has served as Vice President   
    Vice President                 of the Company since May, 1997.  He has   
                                   been Director of Management Information  
                                   Services since 1995.  Prior thereto he  
                                   served as Manager of Systems and   
                                   Programming since 1981.  Mr. TerHaar is   
                                   49 years old.    
  
    Jennifer E. Wisdom             Ms. Wisdom has served as Vice President of  
    Vice President                 the Company since May, 1997.  She has been  
                                   Director of Human Resources since 1994.    
                                   Prior thereto, Ms. Wisdom was Director of   
                                   Human Resources at Varo, Inc. since 1986.    
                                   Ms. Wisdom is 51 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   
         1996                           High      Low   
         ----                          ------    ------   
         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   
  
         1997  
         ----  
         First Quarter                 29-3/4    23-1/16  
         Second Quarter                33        24-1/2  
         Third Quarter                 36-1/2    28-7/16  
         Fourth Quarter                35-1/2    30-1/4  
  
B)   Approximate number of equity security holders (As of January    
     2, 1998)   
  
         Class of Security             Number of Record Holders   
         -----------------             ------------------------   
  
         Common Stock ($.01 par value)     2,400  
  
    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 Company's 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 2, 1998 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>  
<CAPTION>  
                    Fiscal      Fiscal      Fiscal      Fiscal      Fiscal   
                    year        year        year        year        year     
                    ended       ended       ended       ended       ended    
INCOME              Jan.        Jan.        Dec.        Dec.        Dec.     
STATEMENT           2,          3,          29,         30,         31,      
DATA                1998        1997        1995        1994        1993     
                    --------------------------------------------------------  
<S>                 <C>         <C>         <C>         <C>         <C>  
Net sales           $652,866    $534,261    $458,868    $410,159    $346,296  
Cost of sales        495,256     402,759     342,348     300,160     269,360  
                    --------------------------------------------------------  
Gross profit         157,610     131,502     116,520     109,999      76,936  
Selling,   
 general and   
 admin-   
 istrative            80,503      68,611      60,841      57,928      44,213  
Amortization   
 of goodwill           2,638       1,739       1,520       1,520       1,613  
Interest              22,863      19,719      18,380      18,920      19,406  
                    --------------------------------------------------------  
Income  before  
 income  taxes  
 and  extra-   
 ordinary  item       51,606      41,433      35,779      31,631      11,704  
Provision    
 for  income taxes    19,847      15,809      13,774      12,829       4,501  
                    --------------------------------------------------------  
Income  before  
 extraordinary    
 item                 31,759      25,624      22,005      18,802       7,203  
Extraordinary    
 item - Loss from    
 repayment of    
 debt                      -           -           -           -     (11,307)  
                    ---------------------------------------------------------  
Net income (loss)   $ 31,759    $ 25,624    $ 22,005    $ 18,802    $ (4,104)  
                    =========================================================  
Per share   
 data:   
Net income before   
extraordinary item   
     Basic          $   2.16    $   1.75    $   1.50    $   1.28    $   0.74  
     Diluted        $   2.07    $   1.71    $   1.49    $   1.28    $   0.74  
  
Net income (loss)  
     Basic          $   2.16    $   1.75    $   1.50    $   1.28    $  (0.42)  
     Diluted        $   2.07    $   1.71    $   1.49    $   1.28    $  (0.42)  
  
Weighted common  
 shares out-   
 standing   
     Basic            14,716      14,670      14,663      14,660       9,714  
     Diluted          15,321      15,005      14,815      14,701       9,714  
</TABLE>  
<PAGE>  
<TABLE>  
<CAPTION>  
                    Jan.        Jan.        Dec.        Dec.        Dec.     
BALANCE             2,          3,          29,         30,         31,      
SHEET DATA          1998        1997        1995        1994        1993     
                 ---------------------------------------------------------   
<S>                 <C>         <C>         <C>         <C>         <C>  
Working   
 capital            $127,481    $114,509    $113,397    $ 94,354    $ 74,082  
Total assets         543,221     449,963     399,815     363,451     326,545  
Long-term    
 debt, net    
 of current    
 portion             232,241     190,604     183,044     168,388     162,897  
Common    
 shareholders'   
 investment          186,912     154,637     128,901     106,894      88,047  
</TABLE>  
  
<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 1997, 1996 and 1995.    
  
<TABLE>  
<CAPTION>  
                                              Fiscal Year  
                                    ------------------------------  
                                      1997        1996        1995   
                                    -------------------------------  
                                          (Dollars in millions)  
    <S>                             <C>         <C>         <C>  
    Net sales:  
         Flooring                   $ 469.1     $ 336.4     $ 261.8  
         Cabinets                     183.8       197.9       197.1  
                                     ------      ------      ------  
              Total net sales         652.9       534.3       458.9  
                                     ------      ------      ------  
  
    Gross profit                      157.6       131.5       116.5  
    Selling, general and  
         administrative  
         expenses                      80.5        68.6        60.8  
    Amortization  
         of goodwill                    2.6         1.7         1.5  
                                     ------      ------      ------  
    Operating income                $  74.5     $  61.2     $  54.2  
                                     ======      ======      ======  
  
    As a percent of net sales:  
         Gross profit                  24.1%       24.6%       25.4%  
         Selling, general and  
         administrative expenses       12.3        12.8        13.3  
         Operating income              11.4        11.4        11.8  
</TABLE>  
  
Fiscal year 1997 compared to fiscal year 1996  
---------------------------------------------  
  
    Net sales for fiscal 1997 were $652.9 million, an increase of 22.2% over  
1996 net sales of $534.3 million.    
  
    Net flooring sales increased 39.5% to $469.1 million from $336.4 million  
in the prior year.  Fiscal 1997 results include Hartco Flooring Company, which  
was acquired on June 28, 1996 and Robbins Hardwood Flooring, Inc., which  
acquired the Robbins Residential Flooring operations on March 28, 1997.  Unit  
sales of hardwood flooring increased 31.9%.  International sales were 12.0% of  
total flooring sales, which represented an increase of 51.8% over 1996  
international sales.    
  
    Net cabinet sales were $183.8 million in 1997 compared to $197.9 million  
in 1996.  Unit sales declined 13.9%, while the average unit selling price  
increased 7.9%.  The higher unit selling price is confirmation that the  
Company continues to be more selective in accepting orders.    
  
    Consolidated gross profit for 1997 was $157.6 million, or 24.1% of net  
sales, compared to $131.5 million, or 24.6% of net sales in 1996.  The  
decrease in gross profit percentage in 1997 was caused primarily by the cost  
of lumber, which greatly exceeded anticipated costs, partially offset by  
improved sales prices and manufacturing efficiencies.    
  
    Selling, general and administrative expenses were $80.5 million, or 12.3%  
of net sales in 1997, compared to $68.6 million, or 12.8% of net sales in  
1996.  The total spending increase of $11.9 million was primarily due to  
marketing, selling and advertising expenses required to support increased  
sales and to expenses related to recent flooring acquisitions.    
  
    Operating income was $74.5 million, or 11.4% of net sales in 1997,  
compared to $61.2 million, or 11.4% of net sales in 1996.    
  
<PAGE>  
    Interest expense was $22.9 million in 1997, compared to $19.7 million in  
1996.  The higher interest expense is primarily attributable to the cost of  
financing the acquisition of Robbins Hardwood Flooring in March, 1997.    
  
    Provision for income taxes of 38.5% of pretax income reflects increased  
rates over 1996, resulting from the full utilization of tax loss carry  
forwards, partially offset in the fourth quarter by a benefit from the  
restructuring of certain manufacturing operations.    
  
    Net income for 1997 was $31.8 million, compared to $25.6 million in 1996,  
an increase of 23.9% on a 22.2% increase in net sales.    
  
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 flooring sales 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 3/4" thick  
industry shipments increased 9.2%.  International sales were 11.5% of total  
flooring sales, which represented an increase of 55.6% over 1995.    
  
    Net cabinet 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 flooring which were down 1.1% for the year; expenses  
incurred in the first half of 1996 related to the closing of the Beltsville  
Building Products Unit; 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 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.    
  
Liquidity and Capital Resources  
-------------------------------  
  
    The Company has a Credit Facility which provides for up to $90.0 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 2, 1998, the Company  
had $39.4 million of borrowings under this facility.    
  
    For the year ended January 2, 1998, cash decreased by $15.8 million.  Cash  
of $55.6 million was used for the acquisition of Robbins Hardwood Flooring on  
March 28, 1997.  In addition, cash used for additions to property, plant and   
<PAGE>  
equipment was $29.1 million, cash used for the acquisition of Bruce Floor Care  
Products Trademark was $1.6 million and long-term debt payments were $4.4  
million.  Bank borrowings of $39.4 million and cash provided by operating  
activities of $34.8 million were used to offset these expenditures.    
  
    At January 2, 1998, the Company had working capital of $127.5 million, or  
23.5% of total assets, and $32.0 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.    
  
    The Company is in the process of completing the necessary updates for the  
Year 2000 compliance.  Based on its review to date, the Company does not  
expect the cost of compliance to be material to its financial position or  
results of operations.    
  
    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 2, 1998,  
and January 3, 1997, and the related consolidated statements of operations,  
changes in shareholders' investment, and cash flows for the fiscal years ended  
January 2, 1998, January 3, 1997, and December 29, 1995.  These financial  
statements are the responsibility of the Company's management.  Our  
responsibility is to express an opinion on these financial statements based on  
our audits.    
  
    We conducted our audits in accordance with generally accepted auditing  
standards.  Those standards require that we plan and perform the audit to  
obtain reasonable assurance about whether the financial statements are free of  
material misstatement.  An audit includes examining, on a test basis, evidence  
supporting the amounts and disclosures in the financial statements.  An audit  
also includes assessing the accounting principles used and significant  
estimates made by management, as well as evaluating the overall financial  
statement presentation.  We believe that our audits provide a reasonable basis  
for our opinion.    
  
    In our opinion, the consolidated financial statements referred to above  
present fairly, in all material respects, the financial position of Triangle  
Pacific Corp. and Subsidiaries as of January 2, 1998, and January 3, 1997 and  
the results of their operations and their cash flows for the fiscal years  
ended January 2, 1998, January 3, 1997, and December 29, 1995, in conformity  
with generally accepted accounting principles.    
  
  
                                            Arthur Andersen LLP  
  
Dallas, Texas,  
  February 2, 1998  
  
  
<PAGE>  
<TABLE>  
                     Triangle Pacific Corp. and Subsidiaries   
                          Consolidated Balance Sheets   
                                 (In thousands)   
<CAPTION>  
                                                 January 2,       January 3,  
                                                    1998             1997     
                                                ------------     -----------  
<S>                                             <C>              <C>  
ASSETS   
Current assets:   
    Cash and cash equivalents                   $   3,790        $  19,638   
    Receivables (net of allowance of   
         $3,662 and $3,053, respectively)          70,399           59,236   
    Inventories                                   128,988           95,096   
    Prepaid expenses                                4,561            3,713   
                                                 --------         --------   
         Total current assets                     207,738          177,683   
                                                 --------         --------   
   
Property, plant and equipment    
    Land                                           16,809           15,537   
    Buildings                                      65,050           56,274   
    Equipment, furniture and fixtures             161,076          133,197   
                                                 --------         --------   
                                                  242,935          205,008   
Less:  accumulated depreciation                    53,294           40,258   
                                                 --------         --------   
                                                  189,641          164,750   
Other assets:   
    Goodwill                                       97,375           70,986   
    Trademarks                                     38,876           28,333   
    Deferred financing costs                        4,437            5,290   
    Other                                           5,154            2,921   
                                                 --------         --------   
Total assets                                    $ 543,221        $ 449,963   
                                                 ========         ========   
   
LIABILITIES AND SHAREHOLDERS' INVESTMENT   
   
Current liabilities:     
    Current portion of long-term debt           $   3,957        $   2,437   
    Accounts payable                               28,831           18,520   
    Accrued liabilities                            45,970           40,226   
    Income taxes payable                            1,499            1,991   
                                                 --------         --------   
         Total current liabilities                 80,257           63,174   
                                                 --------         --------   
   
Long-term debt, net of current portion            232,241          190,604   
Other long-term liabilities                         3,565            2,331   
Deferred income taxes                              40,246           39,217   
                                                 --------         --------   
         Total liabilities                        356,309          295,326   
                                                 --------         --------   
Shareholders' investment:   
    Common stock - $.01 par value,   
      authorized shares - 30,000,000   
      issued and outstanding shares -   
      14,740,538 at January 2, 1998 and   
      14,686,558 at January 3, 1997                   147              147   
    Additional paid-in capital                     93,728           93,212   
    Retained earnings                              93,037           61,278   
                                                 --------         --------   
Total shareholders' investment                    186,912          154,637   
                                                 --------         --------   
Total liabilities and shareholders' investment  $ 543,221        $ 449,963   
                                                 ========         ========   
</TABLE>  
[FN]  
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)   
<CAPTION>  
                                             Fiscal Years Ended   
                                ----------------------------------------------   
                                  January 2,     January 3,       December 29,   
                                     1998           1997              1995   
                                -------------    ------------     ------------   
<S>                             <C>              <C>              <C>  
Net sales                       $ 652,866        $ 534,261        $ 458,868   
                                 ---------        ---------        ---------   
Costs and expenses:   
    Cost of sales                 495,256          402,759          342,348   
    Selling, general and    
       administrative              80,503           68,611           60,841   
    Amortization of goodwill        2,638            1,739            1,520   
    Interest                       22,863           19,719           18,380   
                                 --------         --------         --------   
                                  601,260          492,828          423,089   
                                 --------         --------         --------   
Income before income taxes         51,606           41,433           35,779   
Provision for income taxes         19,847           15,809           13,774   
                                 --------         --------         --------   
Net income                      $  31,759        $  25,624        $  22,005   
                                 ========         ========         ========   
   
Net income per share  
    Basic                       $    2.16        $    1.75        $    1.50   
    Diluted                     $    2.07        $    1.71        $    1.49   
Weighted common shares   
    outstanding  
    Basic                          14,716           14,670           14,663   
    Diluted                        15,321           15,005           14,815   
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
</TABLE>  
[FN]  
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)   
<CAPTION>  
                                      Additional   
                            Common      Paid-In      Retained   
                            Stock       Capital      Earnings          Total  
----------------------------------------------------------------------------   
<S>                         <C>        <C>           <C>            <C>  
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   
Net income                      -             -        31,759         31,759   
Stock incentive bonus    
   shares issued                -           386             -            386   
Exercise of stock options       -           130             -            130   
----------------------------------------------------------------------------   
Balance, January 2, 1998    $ 147      $ 93,728      $ 93,037       $186,912   
============================================================================   
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
</TABLE>  
[FN]  
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)   
<CAPTION>  
                                              Fiscal Years Ended   
                                    ------------------------------------------   
                                    January 2,    January 3,      December 29,   
                                       1998          1997             1995   
------------------------------------------------------------------------------   
<S>                               <C>             <C>             <C>  
Cash flows from operating   
 activities:    
    Net income                    $  31,759       $  25,624       $  22,005   
    Adjustments:   
      Depreciation                   14,699          11,946           9,439   
      Deferred income taxes           1,029            (313)           (507)  
      Amortization of goodwill    
         and trademarks               3,645           2,539           2,320   
      Amortization of deferred    
         financing costs                941             898           1,432   
      Provision for doubtful    
         accounts                       850             422             435   
    Changes in assets and    
     liabilities:   
      Receivables                    (5,548)         (1,562)         (7,538)   
      Inventories                   (20,629)         (6,306)         (3,672)   
      Prepaid expenses                 (805)          1,291            (801)   
      Accounts payable                8,417            (365)           (637)   
      Accrued liabilities -    
        other                         2,353           5.107            (197)   
      Accrued liabilities -    
        interest                        173            (204)           (641)   
      Income taxes payable             (493)          1,991               -   
      Other                          (1,614)           (575)            348   
------------------------------------------------------------------------------   
Net cash provided by operating    
  activities                         34,777          40,493          21,986   
------------------------------------------------------------------------------   
Cash flows from investing activities:   
  Proceeds from sale of property,    
    plant and equipment                 199           4,341              10   
  Additions to property, plant    
    and equipment                   (29,147)        (13,506)        (11,624)   
  Acquisition of Hartco Flooring          -         (36,140)              -   
  Acquisition of KREDA Bonds              -          (5,012)              -   
  Acquisition of Robbins Flooring   (55,627)              -               -   
  Acquisition of Bruce Floor Care  
    Products Trademark               (1,550)              -               -   
------------------------------------------------------------------------------   
Net cash (used) in investing    
  activities                        (86,125)        (50,317)        (11,614)   
------------------------------------------------------------------------------   
Cash flows from financing activities:   
  Long-term debt borrowings          39,400               -               -   
  Long-term debt payments            (4,416)         (3,213)         (3,767)   
  Refinancing costs                       -               -            (712)   
  Exercise of stock options             130              94               2   
  Stock incentive bonus shares issued   386               -               -   
  Reimbursement of construction    
    deposits                              -               -           1,780   
------------------------------------------------------------------------------   
Net cash provided by (used in)    
  financing activities               35,500          (3,119)         (2,697)   
------------------------------------------------------------------------------   
Net (decrease) increase in cash   $ (15,848)      $ (12,943)      $   7,675   
Cash and cash equivalents,    
  beginning of period                19,638          32,581          24,906   
------------------------------------------------------------------------------   
Cash and cash equivalents,    
  end of period                   $   3,790       $  19,638       $  32,581   
==============================================================================   
</TABLE>  
<PAGE>  
                   Triangle Pacific Corp. and Subsidiaries   
                 Consolidated Statements of Cash Flows (cont'd)   
                                 (In thousands)   
<TABLE>
<CAPTION>  
                                                Fiscal Years Ended   
                                    ------------------------------------------  
                                    January 2,    January 3,      December 29,  
                                       1998          1997             1995   
------------------------------------------------------------------------------   
<S>                               <C>             <C>             <C>  
Supplemental disclosures of cash    
 flow information:   
   
  Cash paid during the period for:   
    Interest                      $  20,706       $  18,352       $  18,603   
    Income taxes                     16,084          13,391          17,831   
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
</TABLE>  
[FN]  
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  
hardwood flooring products and kitchen and bathroom cabinets.  The Company's  
products are used primarily in residential new construction and remodeling.   
Flooring products accounted for approximately 72% and kitchen cabinets 28%, of  
the Company's revenues during 1997.  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.    
  
Net Income Per Share:    
---------------------  
  
    Net income per share is computed using the weighted-average number of  
common shares and common stock equivalents outstanding during each period.   
Common stock equivalents represent the dilutive effect of outstanding stock  
options and warrants.    
  
    The Company adopted Statement of Financial Accounting Standards No. 128  
(SFAS 128) "Earnings Per Share" in the fourth quarter of 1997.  Under SFAS  
128, the Company has reported two net income per share amounts.  Basic net  
income per share is calculated based on income available to common  
shareholders and the weighted-average number of shares outstanding during the  
period.  Diluted net income per share includes additional dilution  
attributable to stock options and warrants.  For comparative purposes, both  
basic and diluted net income per share are presented for the three fiscal  
years ended January 2, 1998, January 3, 1997 and December 29, 1995.  Diluted  
net income per share in each of these three years are approximately the same  
as the previously reported net income per share.    
  
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 $65,407,000 at  
January 2, 1998 and $35,311,000 at January 3,1997.  Had all inventories been  
valued by the FIFO method, which approximates current cost, inventories would  
have increased by $9,463,000 at January 2, 1998 and $2,851,000 at January 3,  
1997.  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:    
  
<TABLE>  
<CAPTION>  
                                     January 2,       January 3,  
                                        1998             1997     
                                    ----------------------------  
                                           (in thousands)  
         <S>                        <C>               <C>  
         Raw materials              $  64,808         $  50,873  
         Work-in-process               13,747             7,259  
         Finished goods                50,433            36,964  
                                     --------          --------  
             Total                  $ 128,988         $  95,096  
                                     ========          ========  
</TABLE>  
<PAGE>  
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:    
  
         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 trademarks 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.   
Deferred financing costs are being amortized on the straight-line method over  
the lives of the related debt.  Trademarks and goodwill are being amortized  
over 40 years.  Accumulated amortization of trademarks and goodwill is  
$4,674,000 and $9,919,000, respectively, at January 2, 1998 and $3,667,000 and  
$7,281,000, respectively, at January 3, 1997.    
  
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 2, 1998.    
  
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:    
  
<TABLE>  
<CAPTION>  
                                    January 2,        January 3,  
                                      1998              1997      
                                    ----------------------------  
                                           (In thousands)  
    <S>                             <C>               <C>  
    Senior Notes, 10 1/2%  
         due 8-1-2003               $ 160,000         $ 160,000  
    Revolving note - bank              39,400                 -  
    Capitalized lease  
         obligations                   15,088            16,996  
    Industrial revenue  
         bonds                         21,710            16,045  
                                     --------          --------  
                                      236,198           193,041  
    Less:  Current portion  
         of long-term debt             (3,957)           (2,437)  
                                     --------          --------  
                                    $ 232,241         $ 190,604  
                                     ========          ========  
</TABLE>  
<PAGE>  
    Letters of credit outstanding were $18.6 million at January 2, 1998 and  
$15.0 million at January 3, 1997, 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  
"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 2, 1998, the amount of  
Restricted Payments that the Company could make under the Indenture was  
$55,134,000.    
  
    The Indenture specifies a number of events of default including, among  
others, the failure to make timely principal and interest payments or to  meet  
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 2, 1998, the Company had $39.4  
million of borrowings under the Credit Facility and had an additional $32.0  
million of borrowing capacity under this facility.  Borrowings under the  
Credit Facility bear interest at the agent's prime rate plus 0.375% (8.875% at  
January 2, 1998) 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.    
  
<PAGE>  
    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  
related 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, 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.    
  
    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 2, 1998, 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 warrants 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 the 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%  
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, in 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 2,  
1998, the various Industrial Revenue Bond (IRB) notes have interest rates that  
ranged up to 8.25% and at January 3, 1997, the interest rates ranged up to  
7.87%.    
  
    These IRB notes are payable through 2009 and are collateralized by the  
related underlying assets.    
  
  
<PAGE>  
    Maturities for all long-term debt are as follows:    
  
                                           (In thousands)  
                   1998                       $    3,957  
                   1999                            4,111  
                   2000                           45,011  
                   2001                            4,800  
                   2002                            1,198  
                   Thereafter                    177,121  
                                               ---------  
                        Total                 $  236,198  
                                               =========  
  
NOTE 3 - INCOME TAXES:    
  
    The components of the deferred tax liability and asset are as follows:    
  
<TABLE>  
<CAPTION>  
                                          January 2,        January 3,  
                                             1998              1997     
                                          ----------------------------  
                                                 (In thousands)  
<S>                                       <C>               <C>  
Deferred Tax Liability:  
    Property, plant and equipment         $  26,925         $  27,824  
    Trademarks                               10,108            11,022  
    Other                                     7,856             7,338  
                                           --------          --------  
    Total                                 $  44,889         $  46,184  
                                           --------          --------  
  
Deferred Tax Asset:  
    Other                                 $   4,643         $   6,967  
                                           --------          --------  
    Total                                 $   4,643         $   6,967  
                                           --------          --------  
Net Deferred Tax Liability                $  40,246         $  39,217  
                                           ========          ========  
</TABLE>  
  
    The provision for income taxes consists of the following:    
  
<TABLE>  
<CAPTION>  
                                            Fiscal Years Ended  
                                    ------------------------------------  
                                    January 2,  January 3,  December 29,  
                                       1998        1997         1995     
                                    ------------------------------------  
                                             (In thousands)  
<S>                                 <C>         <C>         <C>  
Current:  
    Federal                         $ 13,097    $ 12,338    $ 12,006  
    State and local                    2,736       2,625       1,689  
                                     -------     -------     -------  
                                    $ 15,833    $ 14,963    $ 13,695  
                                     -------     -------     -------  
Deferred:  
    Federal                         $  3,687    $    722    $     22  
    State and local                      327         124          57  
                                    --------     -------     -------  
                                    $  4,014    $    846    $     79  
                                     -------     -------     -------  
Total                               $ 19,847    $ 15,809    $ 13,774  
                                     =======     =======     =======  
</TABLE>  
  
<PAGE>  
    The tax provision for the fiscal years ended January 2, 1998, January 3,  
1997 and December 29, 1995 was 38.5%, 38.2% and 38.5% of pre-tax income,  
respectively.  The factors causing the rate to vary from the U.S. Federal  
Statutory rate are as follows:    
  
<TABLE>  
<CAPTION>  
                                            Fiscal Years Ended  
                                    ------------------------------------  
                                    January 2,  January 3,  December 29,  
                                       1998        1997         1995     
                                    ------------------------------------  
                                             (In thousands)  
<S>                                 <C>         <C>         <C>  
Computed (expected)   
    tax provision                   $ 18,062    $ 14,502    $ 12,522  
  
Increase (decrease) from:  
    State and local taxes              2,023       1,830       1,155  
    Amortization of goodwill             685         609         532  
    Foreign sales                       (463)       (394)       (292)  
    Other book to tax   
      differences, net                  (460)       (738)       (143)  
                                     -------     -------     -------  
         Total                      $ 19,847    $ 15,809    $ 13,774  
                                     =======     =======     =======  
</TABLE>  
  
NOTE 4 - OPERATING LEASE COMMITMENTS:    
  
    The Company rents certain real estate and equipment under operating 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)  
              1998                            $    1,928  
              1999                                 1,143  
              2000                                   670  
              2001                                   236  
              2002                                   118  
              Thereafter                             122  
                                               ---------  
                   Total                      $    4,217  
                                               =========  
  
    Rental expense for operating leases amounted to $7,062,000, $6,682,000 and  
$8,335,000 for the fiscal years ended January 2, 1998, January 3, 1997 and  
December 29, 1995, 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 $1,268,000, $1,169,000 and $1,114,000 for the fiscal  
years ended January 2, 1998, January 3, 1997 and December 29, 1995,  
respectively, including $647,000, $517,000 and $538,000, 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' funded  
status at January 2, 1998 and January 3, 1997.    
  
<TABLE>  
<CAPTION>  
                                                January 2,        January 3,  
                                                   1998              1997     
                                                ----------------------------  
                                                       (In thousands)  
    <S>                                        <C>                <C>  
    Actuarial present value of  
       benefit obligation:  
         Vested                                $  10,566          $  10,519  
         Non-vested                                  695                566  
                                                --------           --------  
    Accumulated and projected  
       benefit obligation                         11,261             11,085  
    Plan assets at fair value                     11,066             10,538  
                                                --------           --------  
    Projected benefit obligation  
       in excess of plan assets                     (195)              (547)  
    Unrecognized prior service costs                 842                598  
    Unrecognized net loss from past  
       experience different from that  
       assumed and effects of changes  
       in assumptions                                724              1,235  
    Adjustment to recognize  
       minimum liability                          (1,071)            (1,761)  
                                                 -------           --------  
    Prepaid (accrued) pension expense          $     300          $    (475)  
                                                ========           ========  
</TABLE>  
  
    Net periodic pension costs for defined benefit pension plans for the  
fiscal years ended January 2, 1998, January 3, 1997, and December 29, 1995,  
include the following components:    
  
<TABLE>  
<CAPTION>  
                                                  Fiscal Years Ended    
                                         ------------------------------------  
                                         January 2,  January 3,  December 29,  
                                            1998       1997         1995       
                                         ------------------------------------  
                                                  (In thousands)  
     <S>                                 <C>         <C>         <C>  
     Service cost-benefits  
         earned during the period        $     317   $     277   $     271  
     Interest cost on projected  
         benefit obligation                    897         818         779  
     Actual return on plan assets           (1,483)     (1,129)       (825)  
     Net amortization and deferral             916         551         313  
                                          --------    --------    --------  
     Net periodic pension cost           $     647   $     517   $     538  
                                          ========    ========    ========  
</TABLE>  
  
    A weighted average discount rate of 8.5% was used in 1997, 1996 and 1995  
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  
1997, 1996 and 1995.    
  
    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 year 1997, 1996 and  
1995 contributions were $1,250,000, $1,250,000 and $1,245,450, respectively.    
  
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   
<PAGE>  
authorized for issue under this plan.  In February 1994, March 1994, February  
1996, April 1996 and May 1997 stock options were granted for an aggregate of  
1,072,700 shares at 100% of fair market value at the respective dates of  
grant.    
  
    The following summarizes the Company's stock option activity:  
  
  
<TABLE>  
<CAPTION>  
                                                            Weighted  
                               Number                        Average  
                                 of     Exercise Price    Exercise Price  
                               Shares     Per Share         Per Share  
    --------------------------------------------------------------------  
    <S>                        <C>       <C>                  <C>  
    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          $16.38  
         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  
    1997  
         Granted               277,500        $28.38          $28.38  
         Exercised             (28,455)   $ 2.99 - $14.44     $ 4.58  
         Forfeited              (8,750)   $14.44 - $28.38     $16.38  
    --------------------------------------------------------------------  
    Outstanding,  
         January 2, 1998     1,171,951    $ 2.99 - $28.38     $16.68  
    ====================================================================  
</TABLE>  
  
    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 1997 was $28.38.   
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 2, 1998, was  
601,376 shares.  These stock options have a weighted average exercise price of  
$11.98 per share and a weighted average contractual life of 6.0 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 1997, 1996 and 1995 would not 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.    
  
    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 1997 grants: risk free interest rate of 6.88%,  
expected dividend yield of 0%; expected life of ten years; and expected  
volatility of 29.06%.    
  
    The Company has 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 under  
this plan was $3,743,000, $3,282,000, and $2,287,000 in 1997, 1996 and 1995,  
respectively.    
  
  
<PAGE>  
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 48,000 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 2, 1998, 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:    
  
<TABLE>  
<CAPTION>  
                                    January 2,        January 3,  
                                       1998              1997     
                                    ----------------------------  
                                            (In thousands)  
    <S>                             <C>               <C>  
    Payroll                         $  9,874          $  8,187  
    Pension and profit sharing         1,766             1,919  
    Taxes                              3,780             3,311  
    Insurance                          8,911             9,340  
    Interest                           7,202             7,029  
    Marketing                          9,232             5,363  
    Other                              5,205             5,077  
                                     -------           -------  
         Total                      $ 45,970          $ 40,226  
                                     =======           =======  
</TABLE>  
  
NOTE 7 - SUPPLEMENTARY QUARTERLY FINANCIAL DATA (unaudited):  
         (In thousands, except per share amounts)  
  
<TABLE>  
<CAPTION>  
                                                           Net Income  
                                                           Per Share  
                  Net         Gross       Net         --------------------  
Quarters          Sales       Profit      Income       Basic      Diluted   
--------------------------------------------------------------------------  
<S>               <C>         <C>        <C>          <C>         <C>  
1997  
First Quarter     $145,205    $ 36,237   $  5,859     $ 0.40      $ 0.38  
Second Quarter     175,249      41,738      9,058       0.62        0.59  
Third Quarter      165,795      40,485      8,415       0.57        0.55  
Fourth Quarter     166,617      39,150      8,427       0.57        0.55  
  
1996  
First Quarter     $110,525    $ 25,926   $  3,904     $ 0.27      $ 0.26  
Second Quarter     131,471      34,364      7,433       0.51        0.50  
Third Quarter      142,941      34,755      6,762       0.46        0.45  
Fourth Quarter     149,324      36,457      7,525       0.51        0.50  
</TABLE>  
  
NOTE 8 - ACQUISITION OF RESIDENTIAL FLOORING DIVISION OF  
         ROBBINS, INC. AND SEARCY FLOORING, INC.    
  
    On March 28, 1997, Robbins Hardwood Flooring Inc., a newly formed wholly- 
owned subsidiary of Triangle Pacific Corp., acquired from Robbins Inc. and its  
affiliate Searcy Flooring, Inc., substantially all the assets and assumed  
certain liabilities (primarily IRB financing and trade payables) associated  
with their residential flooring operations.  The purchase price was $64.2  
million consisting of $55.6 in cash and the balance in assumed 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  
<PAGE>  
the net assets acquired was $36.9 million and has been recorded as goodwill,  
which is being amortized on a straight-line basis over 40 years.  Sales and  
earnings for the residential flooring operations acquired by Robbins Hardwood  
Flooring Inc., are included in the reported results for the period since the  
acquisition on March 28, 1997.    
  
    The net purchase price was allocated as follows:    
  
                                                    (in thousands)  
    Net working capital                               $  14,661  
    Net property, plant and equipment                    11,295  
    Other assets                                          2,923  
    Goodwill                                             36,941  
    Other non-current liabilities                       (10,193)  
                                                       --------  
         Cash paid for Robbins Hardwood Flooring      $  55,627  
                                                       ========  
  
NOTE 9 - 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)  
  
<TABLE>  
<CAPTION>  
                                             Fiscal Years Ended  
                                          ------------------------  
                                          January 3,  December 29,  
                                             1997        1995       
                                          ------------------------  
    <S>                                   <C>         <C>  
    Net sales                             $ 574,680   $ 529,657  
    Net income                               25,958      21,346  
    Net income per share                  $    1.73   $    1.44  
</TABLE>  
  
    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.    
  
  
<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 5, 1998 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 5, 1998 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 5, 1998, 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 5, 1998, 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 2, 1998 and  
                 January 3, 1997.  
  
            -    Consolidated statements of operations for the fiscal    
                 years ended January 2, 1998, January 3, 1997, and  
                 December 29, 1995.  
  
            -    Consolidated statements of changes in shareholders'    
                 investment for the fiscal years ended January 2, 1998,   
                 January 3, 1997, and December 29, 1995.     
  
            -    Consolidated statements of cash flows for the fiscal    
                 years ended January 2, 1998, January 3, 1997, and    
                 December 29, 1995.     
  
            -    Notes to consolidated financial statements.     
  
     (a)(2) Financial Statement Schedules   
  
            Included in Part IV of this report:     
  
            For the fiscal years ended January 2, 1998, January 3, 1997,  
            and December 29, 1995.   
  
            -    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 2, 1998.     
  
     (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).     
  
  
<PAGE>  
      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).     
  
      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.     
  
      4.7     -    Amendment No. 10 to The Credit Agreement dated as of   
                   March 19, 1997.    
  
      4.8     -    Amendment No. 11 to the Credit Agreement dated as of   
                   September 30, 1997.    
  
     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.     
  
<PAGE>  
     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.   
  
     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.     
  
<PAGE>  
     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).     
  
     10.21    -    Asset Purchase Agreement dated as of March 28, 1997 between  
                   the Company and Robbins, Inc. And Searcy Flooring, Inc.    
  
     11.1     -    Statement re computation of per share earnings   
  
     21.1     -    Subsidiaries of the Registrant  
  
     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, 1998  
----------------------------  and Chief Executive Officer   
   Floyd F. Sherman           (Principal Executive Officer)   
  
  
 /s/ M. Joseph McHugh         Director and President    March 31, 1998   
----------------------------   
   M. Joseph McHugh   
  
  
 /s/ E. Dwain Plaster         Vice President,           March 31, 1998  
----------------------------  Treasurer and Chief   
   E. Dwain Plaster           Financial Officer  
                              (Principal Financial & Accounting Officer)   
  
  
 /s/ B. William Bonnivier     Director                  March 31, 1998   
----------------------------   
   B. William Bonnivier   
  
  
 /s/ Charles M. Hansen, Jr.   Director                  March 31, 1998   
----------------------------   
   Charles M. Hansen, Jr.   
  
  
 /s/ David R. Henkel          Director                  March 31, 1998   
----------------------------   
   David R. Henkel   
  
  
 /s/ Bruce A. Karsh           Director                  March 31, 1998  
----------------------------   
   Bruce A. Karsh   
  
  
 /s/ Jack L. McDonald         Director                  March 31, 1998   
----------------------------   
   Jack L. McDonald   
  
  
 /s/ Carson R. McKissick      Director                  March 31, 1998   
----------------------------   
   Carson R. McKissick   
  
  
 /s/Karen Gordon Mills                Director                  March 31, 1998  
----------------------------   
   Karen Gordon Mills   
  
<PAGE>  
                                                               SCHEDULE II  
                                                               -----------  
<TABLE>  
                        TRIANGLE PACIFIC CORP. AND SUBSIDIARIES  
                        ---------------------------------------  
                            VALUATION AND QUALIFYING  
                            ------------------------  
                             ACCOUNTS AND RESERVES  
                             ---------------------  
                               (in thousands)  
<CAPTION>  
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 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  
                     =====================================================  
Fiscal Year ended  
 January 2, 1998:  
  Reserve for   
   doubtful accounts  
   and returns and  
   allowances        $   3,053     $     850(3)   $     241      $   3,662  
                     =====================================================  
</TABLE>  
[FN]  
(1)  Write-offs of specific accounts, net of recoveries.    
(2)  Includes Hartco balance of $250 at June 28, 1996, acquisition date.    
(3)  Includes Robbins balance of $431 at March 28, 1997, acquisition date.