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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 ARMSTRONG WORLD INDUSTRIES, INC.
  Pennsylvania
    
    1-2116
    
    23-0366390(State or other jurisdiction of
    
    Commission file
    
    (I.R.S. Employerincorporation or organization)
    
    number
    
    Identification No.)
 P. O. Box 3001, Lancaster, Pennsylvania
    
    17604(Address of principal executive offices)
    
    (Zip Code)
 (717) 397-0611
   Common Stock ($0.01 par value)
 þ o
 o þ
 þ o
 o o




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o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o
 o þ
 þ o
  Documents Incorporated by Reference
     2




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##### 



TABLE OF CONTENTS
 SECTION
    
    PAGESUncertainties Affecting Forward-Looking Statements
    
    
    4PART IItem 1. Business
    
    
    5Item 1A. Risk Factors
    
    
    14Item 1B. Unresolved Staff Comments
    
    
    16Item 2. Properties
    
    
    17Item 3. Legal Proceedings
    
    
    17Item 4. Submission of Matters to a Vote of Security Holders
    
    
    17Item 4A. Executive Officers of the Company
    
    
    18PART IIItem 5. Market for the Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
    
    
    19Item 6. Selected Financial Data
    
    
    20Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 7A. Quantitative and Qualitative Disclosures about Market Risk
    
    
    46Item 8. Financial Statements and Supplementary Data
    
    
    48Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    104Item 9A. Controls and Procedures
    
    
    104Item 9B. Other Information
    
    
    104PART IIIItem 10. Directors, Executive Officers and Corporate Governance
    
    
    105Item 11. Executive Compensation
    
    
    105Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
    
    
    105Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    105Item 14. Principal Accountant Fees and Services
    
    
    105PART IVItem 15. Exhibits and Financial Statement Schedules
    
    
    106Signatures
    
    
    110Exhibit 10.7Exhibit 10.8Exhibit 10.15Exhibit 10.28Exhibit 10.32Exhibit 11Exhibit 21Exhibit 23.1Exhibit 23.2Exhibit 24Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2Exhibit 99.1
   3




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Uncertainties Affecting Forward-Looking Statements
     4




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PART I
 
 ITEM 1.
    
    BUSINESS
       5




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Reportable Segments
 Resilient Flooring
 Wood Flooring ® ® ® ® ® ® ®
 Building Products
 Cabinets ®
 Unallocated Corporate
  6




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2009 Consolidated Net Sales by Segment
 
  Markets
  North American Residential.
  7




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North American Commercial.
 Outside of North America.
  North
    
    
    North
    
    
    Outside of(Estimated percentages of
    
    American
    
    
    American
    
    
    Northindividual segments sales)
    
    Residential
    
    
    Commercial
    
    
    America
    
    
    TotalResilient Flooring
    
    
    35
    %
    
    
    30
    %
    
    
    35
    %
    
    
    100
    %Wood Flooring
    
    
    95
    %
    
    
    5
    %
    
    
    
    
    
    
    100
    %Building Products
    
    
    10
    %
    
    
    50
    %
    
    
    40
    %
    
    
    100
    %Cabinets
    
    
    90
    %
    
    
    10
    %
    
    
    
    
    
    
    100
    %
  8




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Geographic Areas
  2009 Consolidated Net Sales by Geography
 
  Customers
   9




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2009 Americas Sales by Customer Type
 
 2009 Non-Americas Sales by Customer Type
 
  Product Array and Impact on Performance
   10




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Competition
     Raw Materials
  Business
    
    Principal Raw MaterialsResilient Flooring
    
    Polyvinylchloride (PVC) resins and films,
plasticizers, backings, limestone, pigments, linseed
oil, inks and stabilizersWood Flooring
    
    Hardwood lumber, veneer, coatings and stainsBuilding Products
    
    Mineral fibers, perlite, waste paper, clays, starches
and steel used in the production of metal ceilings and
for our WAVE joint ventures manufacturing of ceiling
gridCabinets
    
    Lumber, veneer, plywood, particleboard and components,
such as doors and hardware
     11




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Sourced Products
   Hedging
  Patent and Intellectual Property Rights
   ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ®
 Employees
   12




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Research & Development
  Environmental Matters
     13




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ITEM 1A.
    
    RISK FACTORS
   Our business is dependent on construction activity. Downturns in construction activity and global
economic conditions, such as weak consumer confidence and weak credit markets, adversely affect our
business and our profitability.
  We require a significant amount of liquidity to fund our operations.
  Our markets are highly competitive. Competition can reduce demand for our products or cause us to
lower prices. Failure to compete effectively by meeting consumer preferences and/or maintaining
market share would adversely affect our results.
  If the availability of raw materials and energy decreases, or the costs increase, and we are unable
to pass along increased costs, our operating results could be adversely affected.
   14




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Reduction in sales to key customers could have a material adverse effect on our revenues and
profits.
  Changes in the political, regulatory and business environments of our international markets,
including changes in trade regulations and currency exchange fluctuations, could have an adverse
effect on our business.
  Capital investments and restructuring actions may not achieve expected savings in our operating
costs.
  Labor disputes or work stoppages could hurt production and reduce sales and profits.
  Adverse judgments in regulatory actions, product claims and other litigation could be costly.
Insurance coverage may not be available or adequate in all circumstances.
   15




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Our principal shareholders could significantly influence our business and our affairs.
  
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
   16




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ITEM 2.
    
    PROPERTIES
   Business Segment
    
    Number of Plants
    
    Location of Principal FacilitiesResilient Flooring
    
    
    12
    
    
    U.S. (California, Illinois,
Mississippi, Oklahoma,
Pennsylvania), Australia,
Germany, Sweden and the U.K.Wood Flooring
    
    
    10
    
    
    U.S. (Arkansas, Kentucky,
Missouri, North Carolina,
Pennsylvania, Tennessee, Texas,
West Virginia)Building Products
    
    
    13
    
    
    U.S. (Florida, Georgia, Oregon,
Pennsylvania), China, France,
Germany and the U.K.Cabinets
    
    
    1
    
    
    U.S. (Pennsylvania)
    
 ITEM 3.
    
    LEGAL PROCEEDINGS
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   17




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ITEM 4A.
    
    EXECUTIVE OFFICERS OF THE COMPANY
 Executive Officer Information
  Michael D. Lockhart
  Thomas B. Mangas
  Stephen F. McNamara
  Jeffrey D. Nickel
  Frank J. Ready
   18




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PART II
 
 ITEM 5.
    
    MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
  First
    
    
    Second
    
    
    Third
    
    
    Fourth
    
    
    Total Year2009Price range of common stockhigh
    
    $
    23.74
    
    
    $
    21.80
    
    
    $
    35.50
    
    
    $
    45.45
    
    
    $
    45.45Price range of common stocklow
    
    $
    9.42
    
    
    $
    10.55
    
    
    $
    15.05
    
    
    $
    33.14
    
    
    $
    9.422008Price range of common stockhigh
    
    $
    40.98
    
    
    $
    39.44
    
    
    $
    40.19
    
    
    $
    28.94
    
    
    $
    40.98Price range of common stocklow
    
    $
    26.25
    
    
    $
    28.92
    
    
    $
    27.10
    
    
    $
    13.79
    
    
    $
    13.79
   Issuer Purchases of Equity Securities
 Total Number of
    
    
    MaximumShares
    
    
    Number ofPurchased as
    
    
    Shares that mayPart of Publicly
    
    
    yet beTotal Number
    
    
    Average Price
    
    
    Announced
    
    
    Purchased underof Shares
    
    
    Paid per
    
    
    Plans or
    
    
    the Plans orPeriod
    
    Purchased
    
    
    Share1
    
    
    Programs2
    
    
    ProgramsOctober 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    November 2009
    
    
    1,531
    
    
    $
    44.13
    
    
    
    
    
    
    
    December 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,531
    
    
    
    
    
    
    
    N/A
    
    
    
    N/A
 1
    
    Shares reacquired through the withholding of shares to pay employee tax obligations
upon the vesting of restricted shares previously granted under the 2006 Long Term Incentive Plan.2
    
    The Company does not have a share buy-back program.  19




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ITEM 6.
    
    SELECTED FINANCIAL DATA
 Successor Company
    
    
    
    Predecessor CompanyThree
    
    
    
    NineMonths
    
    
    
    MonthsEnded
    
    
    
    EndedYear
    
    
    Year
    
    
    Year
    
    
    December
    
    
    
    September
    
    
    Year(Dollars in millions except for per-share data)
    
    2009
    
    
    2008
    
    
    2007
    
    
    31, 2006
    
    
    
    30, 2006(1)
    
    
    2005Income statement dataNet sales
    
    $
    2,780.0
    
    
    $
    3,393.0
    
    
    $
    3,549.7
    
    
    $
    817.3
    
    
    
    $
    2,608.6
    
    
    $
    3,326.6Cost of goods sold
    
    
    2,159.0
    
    
    
    2,632.0
    
    
    
    2,687.5
    
    
    
    660.9
    
    
    
    
    2,030.2
    
    
    
    2,654.0Selling, general and administrative expenses
    
    
    552.4
    
    
    
    579.9
    
    
    
    611.3
    
    
    
    143.5
    
    
    
    
    415.5
    
    
    
    587.8Intangible asset impairment
    
    
    18.0
    
    
    
    25.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restructuring charges, net
    
    
    
    
    
    
    0.8
    
    
    
    0.2
    
    
    
    1.7
    
    
    
    
    10.0
    
    
    
    23.0Equity (earnings) from joint ventures
    
    
    (40.0
    )
    
    
    (56.0
    )
    
    
    (46.0
    )
    
    
    (5.3
    )
    
    
    
    (41.4
    )
    
    
    (39.3
    )Operating income
    
    
    90.6
    
    
    
    210.9
    
    
    
    296.7
    
    
    
    16.5
    
    
    
    
    194.3
    
    
    
    101.1Interest expense
    
    
    17.7
    
    
    
    30.8
    
    
    
    55.0
    
    
    
    13.4
    
    
    
    
    5.2
    
    
    
    7.7Other non-operating expense
    
    
    0.9
    
    
    
    1.3
    
    
    
    1.4
    
    
    
    0.3
    
    
    
    
    1.0
    
    
    
    1.5Other non-operating (income)
    
    
    (3.2
    )
    
    
    (10.6
    )
    
    
    (18.2
    )
    
    
    (4.3
    )
    
    
    
    (7.2
    )
    
    
    (11.8
    )Chapter 11 reorganization (income), net
    
    
    
    
    
    
    
    
    
    
    (0.7
    )
    
    
    
    
    
    
    
    (1,955.5
    )
    
    
    (1.2
    )Income tax (benefit) expense
    
    
    (2.5
    )
    
    
    109.0
    
    
    
    106.4
    
    
    
    3.8
    
    
    
    
    726.6
    
    
    
    (1.2
    )Earnings from continuing operations
    
    
    77.7
    
    
    
    80.4
    
    
    
    152.8
    
    
    
    3.3
    
    
    
    
    1,424.2
    
    
    
    106.1Per common share  basic (a)
    
    $
    1.36
    
    
    $
    1.41
    
    
    $
    2.69
    
    
    $
    0.06
    
    
    
    
    n/a
    
    
    
    n/aPer common share  diluted (a)
    
    $
    1.36
    
    
    $
    1.41
    
    
    $
    2.69
    
    
    $
    0.06
    
    
    
    
    n/a
    
    
    
    n/aEarnings (loss) from discontinued operations
    
    
    
    
    
    
    0.6
    
    
    
    (7.5
    )
    
    
    (1.1
    )
    
    
    
    (68.4
    )
    
    
    5.0Net earnings
    
    $
    77.7
    
    
    $
    81.0
    
    
    $
    145.3
    
    
    $
    2.2
    
    
    
    $
    1,355.8
    
    
    $
    111.1Per common share  basic (a)
    
    $
    1.36
    
    
    $
    1.42
    
    
    $
    2.56
    
    
    $
    0.04
    
    
    
    
    n/a
    
    
    
    n/aPer common share  diluted (a)
    
    $
    1.36
    
    
    $
    1.42
    
    
    $
    2.56
    
    
    $
    0.04
    
    
    
    
    n/a
    
    
    
    n/aDividends declared per share of common stock
    
    
    
    
    
    $
    4.50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Average number of common shares outstanding
(in millions)
    
    
    57.4
    
    
    
    57.1
    
    
    
    56.6
    
    
    
    55.0
    
    
    
    
    n/a
    
    
    
    n/aAverage number of employees
    
    
    11,400
    
    
    
    12,500
    
    
    
    13,500
    
    
    
    14,500
    
    
    
    
    14,700
    
    
    
    14,900Balance sheet data (end of period)Working capital
    
    $
    974.3
    
    
    $
    876.1
    
    
    $
    1,003.7
    
    
    $
    854.6
    
    
    
    
    
    
    
    $
    1,128.0Total assets
    
    
    3,302.6
    
    
    
    3,351.8
    
    
    
    4,639.4
    
    
    
    4,152.7
    
    
    
    
    
    
    
    
    4,602.1Liabilities subject to compromise
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    
    
    
    
    
    4,869.4Net long-term debt (b)
    
    
    432.5
    
    
    
    454.8
    
    
    
    485.8
    
    
    
    801.5
    
    
    
    
    
    
    
    
    21.5Total equity (deficit)
    
    
    1,907.9
    
    
    
    1,751.3
    
    
    
    2,444.1
    
    
    
    2,172.1
    
    
    
    
    
    
    
    
    (1,312.0
    )
 (1)
    
    Reflects the effects of the Plan of Reorganization and fresh-start reporting. AWI and its
subsidiaries adopted fresh-start reporting upon AWI emerging from Chapter 11. Consequently, the
impact of emergence, including the gain on settlement of liabilities subject to compromise and the
gain on fresh-start reporting, is reflected in the Predecessor Company for the nine months ended
September 30, 2006 and the results of operations beginning October 1, 2006 are reflected within the
Successor Company.Notes:(a)
    
    See definition of basic and diluted earnings per share in Note 2 to the Consolidated
Financial Statements. The common stock of the Predecessor Company was not publicly traded.(b)
    
    Net long-term debt excludes debt subject to compromise for 2005.   20




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ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
     OVERVIEW
     21




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Managements Discussion and Analysis of Financial Condition and Results of Operations
  
    
    Resilient Flooringsales declined across geographic regions on lower volumes. Despite
lower sales, operating income improved compared to the prior year due to input cost
deflation, lower manufacturing and SG&A expenses and fewer expenses related to cost
reduction actions.
 
    
    Wood Flooringsales continued to decline due to weak domestic residential housing
markets. Operating loss was greater than the prior year as the margin impact of lower
volumes more than offset raw material deflation, lower manufacturing costs and reduced SG&A
expenses. Both years included significant intangible asset impairment charges.
 
    
    Building Productssales declined due to lower activity in global commercial construction
markets. Operating income also declined as the margin impact of lower volumes more than
offset lower manufacturing costs and reduced SG&A expenses.
 
    
    Cabinetssales and operating income declined primarily due to weak domestic residential
housing markets. A reduction in manufacturing expense was offset by charges related to a
plant closure.
 
    
    Corporate Unallocatedexpense increased $38.3 million primarily due to a $31.6 million
non-cash charge from accelerated vesting of stock-based compensation due to a transaction
between TPG and the Asbestos PI Trust.
 Factors Affecting Revenues
  Markets.
 
    
    According to the U.S. Census Bureau, in 2009, housing starts of 0.55 million units in
the U.S. residential market declined 38.7% compared to 2008. Housing completions in the
U.S. decreased by 29.2% in 2009 with approximately 0.80 million units completed. The
National Association of Realtors indicated that sales of existing homes increased 5.5% to
5.16 million units in 2009 from a level of 4.89 million in 2008.According to the U.S. Census Bureau, U.S. retail sales through building materials, garden
equipment and supply stores (an indicator of home renovation activity) decreased 11.3% in
2009 compared 2008.
 
    
    According to the U.S. Census Bureau the rate of growth in the North American key
commercial market, in nominal dollar terms, was -14.7% in 2009. Construction activity in
the office, healthcare, and retail segments decreased 19.5%, 0.5%, and 31.3% respectively,
while activity in the education segment was up 0.3%. In the fourth quarter accelerating
rates of decline across these segments caused an overall rate of decline of 22.1%.
  22




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Managements Discussion and Analysis of Financial Condition and Results of Operations
 
    
    Markets in European countries experienced broad declines. The declines were particularly
acute in Eastern European markets.
 
    
    Activity in Pacific Rim markets was generally slow.
 Quality and Customer Service Issues.
 Pricing Initiatives
 Mix.
 Factors Affecting Operating Costs
 Operating Expenses.
  Stock-based Compensation.
 Intangible Asset Impairments.
 Cost Reduction Initiatives.
   23




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Managements Discussion and Analysis of Financial Condition and Results of Operations
  On-going Cost Improvements.
  Factors Affecting Cash Flow
   Employees
    CRITICAL ACCOUNTING ESTIMATES
   Fresh-Start Reporting and Reorganization Value
  24




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Managements Discussion and Analysis of Financial Condition and Results of Operations
  U.S. Pension Credit and Postretirement Benefit Costs
       25




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Managements Discussion and Analysis of Financial Condition and Results of Operations
  Assumptions
    
    
    ActualPost 65
    
    
    Pre 65
    
    
    Overall
    
    
    Post 65
    
    
    Pre 65
    
    
    Overall2008
    
    
    11.0
    %
    
    
    10.5
    %
    
    
    10.8
    %
    
    
    (5
    )%
    
    
    12
    %
    
    
    0
    %2009
    
    
    10.0
    %
    
    
    9.5
    %
    
    
    9.8
    %
    
    
    (7
    )%
    
    
    (1
    )%
    
    
    (5
    )%2010
    
    
    9.0
    %
    
    
    8.5
    %
    
    
    8.8
    %
   Impairments of Long-Lived Tangible and Intangible Assets
   26




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Managements Discussion and Analysis of Financial Condition and Results of Operations
       Sales-related Accruals
  27




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Managements Discussion and Analysis of Financial Condition and Results of Operations
   Income Taxes
      28




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Managements Discussion and Analysis of Financial Condition and Results of Operations
 ACCOUNTING PRONOUNCEMENTS EFFECTIVE IN FUTURE PERIODS
 Consolidations
 Consolidations
 Fair Value
Measurements and Disclosures
  29




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Managements Discussion and Analysis of Financial Condition and Results of Operations
 RESULTS OF OPERATIONS
  2009 COMPARED TO 2008
 CONSOLIDATED RESULTS
 Change is (Unfavorable)ExcludingEffects ofForeignAs
    
    
    Exchange2009
    
    
    2008
    
    
    Reported
    
    
    Rates(1)Net sales:Americas
    
    $
    1,995.6
    
    
    $
    2,384.4
    
    
    
    (16.3
    )%
    
    
    (15.9
    )%Europe
    
    
    626.0
    
    
    
    826.0
    
    
    
    (24.2
    )%
    
    
    (16.8
    )%Pacific Rim
    
    
    158.4
    
    
    
    182.6
    
    
    
    (13.3
    )%
    
    
    (7.7
    )%Total consolidated net sales
    
    $
    2,780.0
    
    
    $
    3,393.0
    
    
    
    (18.1
    )%
    
    
    (15.6
    )%Cost of goods sold
    
    
    2,159.0
    
    
    
    2,632.0SG&A expenses
    
    
    552.4
    
    
    
    579.9Intangible asset impairment
    
    
    18.0
    
    
    
    25.4Restructuring charges, net
    
    
    
    
    
    
    0.8Equity earnings from joint ventures
    
    
    (40.0
    )
    
    
    (56.0
    )Operating income
    
    $
    90.6
    
    
    $
    210.9
    
    
    
    (57.0
    )%
    
    
    (55.7
    )%Interest expense
    
    
    17.7
    
    
    
    30.8Other non-operating expense
    
    
    0.9
    
    
    
    1.3Other non-operating (income)
    
    
    (3.2
    )
    
    
    (10.6
    )Income tax (benefit) expense
    
    
    (2.5
    )
    
    
    109.0(Gain) from discontinued operations
    
    
    
    
    
    
    (0.6
    )Net earnings
    
    $
    77.7
    
    
    $
    81.0
 (1)
    
    Excludes unfavorable foreign exchange rate effect in translation of $110.9
million on consolidated net sales and $8.4 million on operating income      30




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Managements Discussion and Analysis of Financial Condition and Results of Operations
  Increase / (Reduction) in ExpensesWhereItem
    
    Reported
    
    
    2009
    
    
    2008Cost reduction initiatives expenses (1)
    
    COGS
    
    $
    12.8
    
    
    $
    7.3Fixed asset impairment (2)
    
    COGS
    
    
    3.0
    
    
    
    2.9Cost reduction initiatives (income) expenses (1)
    
    SG&A
    
    
    (0.1
    )
    
    
    12.7Environmental insurance settlement (3)
    
    SG&A
    
    
    
    
    
    
    (6.9
    )Chapter 11 related post-emergence (income) (4)
    
    SG&A
    
    
    
    
    
    
    (1.3
    )Review of strategic alternatives (5)
    
    SG&A
    
    
    
    
    
    
    1.2Intangible asset impairment (6)
    
    Intangible asset 
impairment
    
    
    18.0
    
    
    
    25.4Cost reduction initiatives expenses (7)
    
    Restructuring
    
    
    
    
    
    
    0.8Accelerated stock-based compensation expense (8)
    
    SG&A
    
    
    31.6
    
    
    
    
 (1)
    
    See Factors Affecting Operating Costs for a discussion of the cost reduction
initiatives.(2)
    
    In 2009 and 2008 we recorded fixed asset impairment charges related to certain European
Resilient Flooring assets.(3)
    
    In 2008, we received an insurance settlement related to an environmental matter.(4)
    
    Represents the reversal of a contingent liability that was no longer owed to creditors
after our final Chapter 11 distribution.(5)
    
    These expenses were incurred, primarily from advisors, in conducting our review of
strategic alternatives which concluded in 2008.(6)
    
    During the fourth quarters of 2009 and 2008, we recorded non-cash impairment charges
of our Wood Flooring trademarks.(7)
    
    Represents an increase to a previously recorded reserve for a noncancelable U.K.
operating lease which extends through 2017.(8)
    
    Represents non-cash charges related to accelerated vesting of stock-based compensation
issued to employees and directors.       31




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
 REPORTABLE SEGMENT RESULTS
 Resilient Flooring
 Change is Favorable 
(Unfavorable)ExcludingEffects ofForeignAs
    
    
    Exchange2009
    
    
    2008
    
    
    Reported
    
    
    Rates(1)Net sales:Americas
    
    $
    673.1
    
    
    $
    786.2
    
    
    
    (14.4
    )%
    
    
    (13.8
    )%Europe
    
    
    294.3
    
    
    
    355.1
    
    
    
    (17.1
    )%
    
    
    (9.3
    )%Pacific Rim
    
    
    64.3
    
    
    
    78.8
    
    
    
    (18.4
    )%
    
    
    (11.9
    )%Total segment net sales
    
    $
    1,031.7
    
    
    $
    1,220.1
    
    
    
    (15.4
    )%
    
    
    (12.5
    )%Operating income (loss)
    
    $
    0.1
    
    
    $
    (16.8
    )
    
    Favorable
    
    
    Favorable
 (1)
    
    Excludes unfavorable foreign exchange rate effect in translation of $45.8
million on net sales and $1.3 million on operating income     Increase / (Reduction) in ExpensesItem
    
    2009
    
    
    2008Cost reduction initiatives expenses (1)
    
    $
    4.7
    
    
    $
    14.1Fixed asset impairments (2)
    
    
    3.0
    
    
    
    2.9
 (1)
    
    See Factors Affecting Operating Costs for a discussion of the cost reduction
initiatives.(2)
    
    Fixed asset impairment charges related to certain European Resilient Flooring assets. Wood Flooring
 Change is2009
    
    
    2008
    
    
    (Unfavorable)Total segment net sales (1)
    
    $
    510.4
    
    
    $
    624.6
    
    
    
    (18.3
    )%Operating (loss)
    
    $
    (5.9
    )
    
    $
    (2.4
    )
    
    Unfavorable
 (1)
    
    Virtually all Wood Flooring products are sold in the Americas, primarily
in the U.S.   32




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
  Increase / (Reduction) in ExpensesItem
    
    2009
    
    
    2008Cost reduction initiatives expenses (1)
    
    $
    1.9
    
    
    
    Intangible asset impairment (2)
    
    
    18.0
    
    
    $
    25.4
 (1)
    
    See Factors Affecting Operating Costs for a discussion of the cost reduction
initiatives.(2)
    
    During the fourth quarters of 2009 and 2008, we recorded non-cash impairment charges to
reduce the carrying amount of our Wood Flooring trademarks to their estimated fair value
based on the results of our annual impairment test. Building Products
 Change is (Unfavorable)ExcludingEffects ofForeignAs
    
    
    Exchange2009
    
    
    2008
    
    
    Reported
    
    
    Rates(1)Net sales:Americas
    
    $
    661.9
    
    
    $
    794.4
    
    
    
    (16.7
    )%
    
    
    (16.1
    )%Europe
    
    
    331.7
    
    
    
    470.9
    
    
    
    (29.6
    )%
    
    
    (22.4
    )%Pacific Rim
    
    
    94.1
    
    
    
    103.8
    
    
    
    (9.3
    )%
    
    
    (4.7
    )%Total segment net sales
    
    $
    1,087.7
    
    
    $
    1,369.1
    
    
    
    (20.6
    )%
    
    
    (17.2
    )%Operating income
    
    $
    155.9
    
    
    $
    239.7
    
    
    
    (35.0
    )%
    
    
    (32.7
    )%
 (1)
    
    Excludes unfavorable foreign exchange rate effect in translation of $62.3
million on net sales and $9.1 million on operating income      33




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
 Cabinets
 Change is2009
    
    
    2008
    
    
    (Unfavorable)Total segment net sales (1)
    
    $
    150.2
    
    
    $
    179.2
    
    
    
    (16.2
    )%Operating (loss)
    
    $
    (18.3
    )
    
    $
    (6.7
    )
    
    Unfavorable
 (1)
    
    All Cabinet products are sold in the U.S.   Increase / (Reduction) in ExpensesItem
    
    2009
    
    
    2008Cost reduction initiatives expense(1)
    
    $
    6.1
    
    
    
    
 (1)
    
    Costs due to Auburn plant closure. Unallocated Corporate
  Increase / (Reduction) in ExpensesItem
    
    2009
    
    
    2008Cost reduction initiatives expenses (1)
    
    
    
    
    
    $
    6.7Environmental insurance settlement (2)
    
    
    
    
    
    
    (6.9
    )Chapter 11 related post-emergence expenses (3)
    
    
    
    
    
    
    (1.3
    )Review of strategic alternatives (4)
    
    
    
    
    
    
    1.2Accelerated stock-based compensation expense (5)
    
    $
    31.6
    
    
    
    
 (1)
    
    Represents costs for corporate severances, partially offset by related reductions in
stock-based compensation expense, and restructuring costs.(2)
    
    Represents gain from an insurance settlement related to an environmental matter.(3)
    
    Represents the reversal of a contingent liability that was no longer owed to creditors
after our final Chapter 11 distribution.(4)
    
    These expenses were incurred, primarily from advisors, in conducting our review of
strategic alternatives which concluded during 2008.(5)
    
    Represents non-cash charges related to accelerated vesting of stock-based compensation
issued to employees and directors.  34




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
 FINANCIAL CONDITION AND LIQUIDITY
 Cash Flow
      Balance Sheet and Liquidity
  December 31,
    
    
    December 31,
    
    
    Increase2009
    
    
    2008
    
    
    (Decrease)Cash and cash equivalents
    
    $
    569.5
    
    
    $
    355.0
    
    
    $
    214.5Current assets, excluding
cash and cash equivalents
    
    
    762.1
    
    
    
    906.5
    
    
    
    (144.4
    )Current assets
    
    $
    1,331.6
    
    
    $
    1,261.5
    
    
    $
    70.1
  December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    DecreaseProperty, plant and
equipment, less accumulated
depreciation and amortization
(PP&E)
    
    $
    929.2
    
    
    $
    954.2
    
    
    $
    (25.0
    )
   35




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
 December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    IncreasePrepaid pension costs
    
    $
    114.3
    
    
    $
    0.3
    
    
    $
    114.0
  December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    DecreaseInvestment in joint venture
    
    $
    194.6
    
    
    $
    208.2
    
    
    $
    (13.6
    )
  December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    DecreaseCurrent installments of long-term debt
    
    $
    40.0
    
    
    $
    40.9
    
    
    $
    (0.9
    )Long-term debt, less current installments
    
    
    432.5
    
    
    
    454.8
    
    
    
    (22.3
    )Long-term debt
    
    $
    472.5
    
    
    $
    495.7
    
    
    $
    (23.2
    )
  Liquidity
       36




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Managements Discussion and Analysis of Financial Condition and Results of Operations
        37




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
 2008 COMPARED TO 2007
 CONSOLIDATED RESULTS
 Change is Favorable/ 
(Unfavorable)ExcludingEffects ofForeignAs
    
    
    Exchange2008
    
    
    2007
    
    
    Reported
    
    
    Rates(1)Net sales:Americas
    
    $
    2,384.4
    
    
    $
    2,614.7
    
    
    
    (8.8
    )%
    
    
    (9.1
    )%Europe
    
    
    826.0
    
    
    
    774.4
    
    
    
    6.7
    %
    
    
    0.7
    %Pacific Rim
    
    
    182.6
    
    
    
    160.6
    
    
    
    13.7
    %
    
    
    10.5
    %Total consolidated net sales
    
    $
    3,393.0
    
    
    $
    3,549.7
    
    
    
    (4.4
    )%
    
    
    (6.0
    )%Cost of goods sold
    
    
    2,632.0
    
    
    
    2,687.5SG&A expense
    
    
    579.9
    
    
    
    611.3Intangible asset impairment
    
    
    25.4
    
    
    
    Restructuring charges, net
    
    
    0.8
    
    
    
    0.2Equity earnings from joint ventures
    
    
    (56.0
    )
    
    
    (46.0
    )Operating income
    
    $
    210.9
    
    
    $
    296.7
    
    
    
    (28.9
    )%
    
    
    (29.7
    )%Interest expense
    
    
    30.8
    
    
    
    55.0Other non-operating expense
    
    
    1.3
    
    
    
    1.4Other non-operating (income)
    
    
    (10.6
    )
    
    
    (18.2
    )Chapter 11 reorganization (income), net
    
    
    
    
    
    
    (0.7
    )Income tax expense
    
    
    109.0
    
    
    
    106.4(Gain) loss from discontinued operations
    
    
    (0.6
    )
    
    
    7.5Net earnings
    
    $
    81.0
    
    
    $
    145.3
 (1)
    
    Excludes favorable foreign exchange rate effect in translation of $56.7 million
on consolidated net sales and $2.9 million on operating income      38




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
  Increase / (Reduction) in ExpensesWhereItem
    
    Reported
    
    
    2008
    
    
    2007Change in depreciation and amortization (1)
    
    COGS
    
    $
    7.9
    
    
    $
    2.1Impact on hedging-related activity (1)
    
    COGS
    
    
    
    
    
    
    (5.8
    )Change in depreciation and amortization (1)
    
    SG&A
    
    
    1.5
    
    
    
    0.6Cost reduction initiatives expenses (2)
    
    COGS
    
    
    7.3
    
    
    
    Fixed asset impairment (3)
    
    COGS
    
    
    2.9
    
    
    
    Cost reduction initiatives expenses (2)
    
    SG&A
    
    
    12.7
    
    
    
    Insurance settlements (4)
    
    SG&A
    
    
    (6.9
    )
    
    
    (5.0
    )Environmental accrual (5)
    
    SG&A
    
    
    
    
    
    
    1.1Chapter 11 related post-emergence (income) expenses (6)
    
    SG&A
    
    
    (1.3
    )
    
    
    7.1Review of strategic alternatives (7)
    
    SG&A
    
    
    1.2
    
    
    
    8.7Intangible asset impairment (8)
    
    Intangible asset impairment
    
    
    25.4
    
    
    
    Cost reduction initiatives expenses (2)
    
    Restructuring
    
    
    0.8
    
    
    
    0.2
 (1)
    
    Charges related to fresh-start reporting.(2)
    
    See Factors Affecting Operating Costs for a discussion of the cost reduction
initiatives impacting 2008. 2007 expenses related to the closure of a Building Products
plant in the Netherlands during 2005.(3)
    
    In 2008 we recorded a fixed asset impairment charge related to certain European
Resilient Flooring assets.(4)
    
    In 2008, we received an insurance settlement related to an environmental matter. In
2007, we received an insurance settlement related to a Cabinets warehouse fire.(5)
    
    We recorded an increase in the environmental accrual for a previously-owned property.(6)
    
    These costs represent professional and administrative fees incurred primarily to
resolve remaining claims related to AWIs Chapter 11 Case and distribute proceeds to
creditors, and expenses incurred by Armstrong Holdings, Inc., our former publicly held
parent holding company, as it completed its plan of dissolution. In addition, 2008
includes the impact of the reversal of a contingent liability that was no longer owed to
creditors after our final Chapter 11 distribution was made.(7)
    
    These expenses were incurred, primarily from advisors, in conducting our review of
strategic alternatives which concluded during 2008.(8)
    
    During the fourth quarter of 2008, we recorded a non-cash impairment charge of $25.4
million to reduce the carrying amount of our Wood Flooring trademarks to their estimated
fair value based on the results of our annual impairment test.      39




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
 REPORTABLE SEGMENT RESULTS
 Resilient Flooring
 Change is Favorable/(Unfavorable)ExcludingEffects ofForeignAs
    
    
    Exchange2008
    
    
    2007
    
    
    Reported
    
    
    Rates(1)Net sales:Americas
    
    $
    786.2
    
    
    $
    826.4
    
    
    
    (4.9
    )%
    
    
    (5.2
    )%Europe
    
    
    355.1
    
    
    
    331.9
    
    
    
    7.0
    %
    
    
    (0.2
    )%Pacific Rim
    
    
    78.8
    
    
    
    72.5
    
    
    
    8.7
    %
    
    
    5.9
    %Total segment net sales
    
    $
    1,220.1
    
    
    $
    1,230.8
    
    
    
    (0.9
    )%
    
    
    (3.1
    )%Operating (loss) income
    
    $
    (16.8
    )
    
    $
    40.4
    
    
    Unfavorable
    
    
    Unfavorable
 (1)
    
    Excludes favorable foreign exchange rate effect in translation of $28.4
million on net sales and $2.5 million on operating income     Increase / (Reduction) in ExpensesItem
    
    2008
    
    
    2007Change in depreciation and amortization (1)
    
    $
    3.3
    
    
    $
    0.8Impact on hedging-related activity (1)
    
    
    
    
    
    
    (1.5
    )Cost reduction initiatives expenses (2)
    
    
    14.1
    
    
    
    Fixed asset impairment (3)
    
    
    2.9
    
    
    
    Environmental accrual (4)
    
    
    
    
    
    
    1.1
 (1)
    
    Charges related to fresh-start reporting.(2)
    
    See Factors Affecting Operating Costs for a discussion of the cost reduction
initiatives.(3)
    
    In 2008 we recorded a fixed asset impairment charge related to certain European
Resilient Flooring assets.(4)
    
    We recorded an increase in the environmental accrual for a previously-owned property.  40




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
 Wood Flooring
 Change is2008
    
    
    2007
    
    
    (Unfavorable)Total segment net sales (1)
    
    $
    624.6
    
    
    $
    791.6
    
    
    
    (21.1
    )%Operating (loss) income
    
    $
    (2.4
    )
    
    $
    64.3
    
    
    Unfavorable
 (1)
    
    Virtually all Wood Flooring products are sold in the Americas, primarily
in the U.S.   Increase / (Reduction) in ExpensesItem
    
    2008
    
    
    2007Change in depreciation and amortization (1)
    
    $
    1.0
    
    
    $
    0.2Intangible asset impairment (2)
    
    
    25.4
    
    
    
    
 (1)
    
    Charges related to fresh-start reporting.(2)
    
    During the fourth quarter of 2008, we recorded a non-cash impairment charge of $25.4
million to reduce the carrying amount of our Wood Flooring trademarks to their estimated
fair value based on the results of our annual impairment test. Building Products
 Change is FavorableExcludingEffects ofForeignAs
    
    
    Exchange2008
    
    
    2007
    
    
    Reported
    
    
    Rates(1)Net sales:Americas
    
    $
    794.4
    
    
    $
    761.5
    
    
    
    4.3
    %
    
    
    4.0
    %Europe
    
    
    470.9
    
    
    
    442.5
    
    
    
    6.4
    %
    
    
    1.4
    %Pacific Rim
    
    
    103.8
    
    
    
    88.1
    
    
    
    17.8
    %
    
    
    14.4
    %Total segment net sales
    
    $
    1,369.1
    
    
    $
    1,292.1
    
    
    
    6.0
    %
    
    
    3.8
    %Operating income
    
    $
    239.7
    
    
    $
    221.4
    
    
    
    8.3
    %
    
    
    7.7
    %
 (1)
    
    Excludes favorable foreign exchange rate effect in translation of $27.4
million on net sales and $1.2 million on operating income    41




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
   Increase / (Reduction) in ExpensesItem
    
    2008
    
    
    2007Change in depreciation and amortization (1)
    
    $
    4.2
    
    
    $
    1.1Impact on hedging-related activity (1)
    
    
    
    
    
    
    (4.3
    )Cost reduction initiatives expenses (2)
    
    
    
    
    
    
    0.2
 (1)
    
    Charges related to fresh-start reporting.(2)
    
    These expenses relate to the closure of a Building Products plant in The Netherlands.
Production ceased at this plant in 2005. Cabinets
 Change is2008
    
    
    2007
    
    
    (Unfavorable)Total segment net sales (1)
    
    $
    179.2
    
    
    $
    235.2
    
    
    
    (23.8
    )%Operating (loss) income
    
    $
    (6.7
    )
    
    $
    10.5
    
    
    Unfavorable
 (1)
    
    All Cabinet products are sold in the U.S.   Increase / (Reduction) in ExpensesItem
    
    2008
    
    
    2007Insurance settlement (1)
    
    
    
    
    
    $
    (5.0
    )
 (1)
    
    We received an insurance settlement related to a warehouse fire.  42




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
 Unallocated Corporate
  Increase / (Reduction) in ExpensesItem
    
    2008
    
    
    2007Change in depreciation and amortization (1)
    
    $
    0.9
    
    
    $
    0.6Cost reduction initiatives expenses (2)
    
    
    6.7
    
    
    
    Environmental insurance settlement (3)
    
    
    (6.9
    )
    
    
    Chapter 11 related post-emergence expenses (4)
    
    
    (1.3
    )
    
    
    7.1Review of strategic alternatives (5)
    
    
    1.2
    
    
    
    8.7
 (1)
    
    Charges related to fresh-start reporting.(2)
    
    Represents costs for corporate severances, partially offset by related reductions in
stock-based compensation expense, and restructuring costs.(3)
    
    We received an insurance settlement related to an environmental matter.(4)
    
    These costs represent professional and administrative fees incurred primarily to
resolve remaining claims related to AWIs Chapter 11 Case and distribute proceeds to
creditors, and expenses incurred by Armstrong Holdings, Inc., our former publicly held
parent holding company, as it completed its plan of dissolution. In addition, 2008
includes the impact of the reversal of a contingent liability that was no longer owed to
creditors after our final Chapter 11 distribution was made.(5)
    
    These expenses were incurred, primarily from advisors, in conducting our review of
strategic alternatives which concluded during 2008. CASH FLOW
     OFF-BALANCE SHEET ARRANGEMENTS
   43




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
 CONTRACTUAL OBLIGATIONS
  2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    Thereafter
    
    
    TotalLong-term debt
    
    $
    40.1
    
    
    $
    234.8
    
    
    $
    3.5
    
    
    $
    184.1
    
    
    $
    0.1
    
    
    $
    10.0
    
    
    $
    472.6Scheduled interest payments (1)
    
    
    10.1
    
    
    
    16.6
    
    
    
    9.3
    
    
    
    8.3
    
    
    
    0.9
    
    
    
    
    
    
    
    45.2Operating lease obligations (2)
    
    
    12.2
    
    
    
    8.8
    
    
    
    5.7
    
    
    
    3.0
    
    
    
    1.4
    
    
    
    4.0
    
    
    
    35.1Unconditional purchase obligations (3)
    
    
    30.2
    
    
    
    6.8
    
    
    
    1.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38.8Other long-term obligations(4), (5)
    
    
    1.7
    
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.5Total contractual obligations
    
    $
    94.3
    
    
    $
    267.8
    
    
    $
    20.3
    
    
    $
    195.4
    
    
    $
    2.4
    
    
    $
    14.0
    
    
    $
    594.2
 (1)
    
    For debt with variable interest rates, we projected future interest payments based
on market based interest rate swap curves.(2)
    
    Lease obligations include the minimum payments due under existing agreements with
noncancelable lease terms in excess of one year.(3)
    
    Unconditional purchase obligations include (a) purchase contracts whereby we must
make guaranteed minimum payments of a specified amount regardless of how little material is
actually purchased (take or pay contracts) and (b) service agreements. Unconditional
purchase obligations exclude contracts entered into during the normal course of business that
are non-cancelable and have fixed per unit fees, but where the monthly commitment varies based
upon usage. Cellular phone contracts are an example.(4)
    
    Other long-term obligations include payments under severance agreements.(5)
    
    Other long-term obligations does not include $57.5 million of liabilities under ASC
740 Income Taxes. Due to the uncertainty relating to these positions, we are unable to
reasonably estimate the ultimate amount or timing of the settlement of these issues. See Note
15 to the Consolidated Financial Statements for more information.     44




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
  Total
    
    
    LessOther Commercial
    
    Amounts
    
    
    Than 1
    
    
    1 - 3
    
    
    4 - 5
    
    
    Over 5Commitments
    
    Committed
    
    
    Year
    
    
    Years
    
    
    Years
    
    
    YearsLetters of credit
    
    $
    41.8
    
    
    $
    41.8
    
    
    
    
    
    
    
    
    
    
    
    
   RELATED PARTIES
    45




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##### Table of Contents



ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Market Risk
  Counter Party Risk
  Interest Rate Sensitivity
   Scheduled maturity date
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    After($ millions)
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013
    
    
    2014
    
    
    2015
    
    
    TotalAs of December 31, 2009Long-term debt:Fixed rate
    
    $
    7.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    0.1
    
    
    
    
    
    
    $
    7.9Avg. interest rate
    
    
    5.28
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5.63
    %
    
    
    
    
    
    
    5.28
    %Variable rate
    
    $
    32.3
    
    
    $
    234.8
    
    
    $
    3.5
    
    
    $
    184.1
    
    
    $
    
    
    
    $
    10.0
    
    
    $
    464.7Avg. interest rate
    
    
    1.80
    %
    
    
    1.79
    %
    
    
    1.98
    %
    
    
    1.98
    %
    
    
    
    
    
    
    1.83
    %
    
    
    1.87
    %
  46




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##### Table of Contents



Managements Discussion and Analysis of Financial Condition and Results of Operations
 Exchange Rate Sensitivity
    On balance sheet foreign exchange related derivatives
    
    Maturing inAs of December 31, 2009
    
    2010Notional amounts (millions)
    
    $
    95.0(Liabilities) at fair value (millions)
    
    $
    (4.1
    )
 Natural Gas Price Sensitivity
  On balance sheet commodity related derivatives
    
    
    Maturing in:As of December 31, 2009
    
    
    2010
    
    
    
    2011
    
    
    
    TotalContract amounts (MMBtu)
    
    
    3,530,000
    
    
    
    1,040,000
    
    
    
    4,570,000Contract price range ($/MMBtu)
    
    
    $5.78 - $8.66
    
    
    
    $6.10 - $8.38
    
    
    
    $5.78 - $8.66(Liabilities) at fair value (millions)
    
    
    $(4.4)
    
    
    
    $(0.2)
    
    
    
    $(4.6)
  47




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##### Table of Contents



ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 SUPPLEMENTARY DATA
 Quarterly Financial Information for the Years Ended December 31, 2009 and 2008 (Unaudited)
    
    
    49The following consolidated financial statements are filed as part of this Annual Report on Form
10-K:Reports of Independent Registered Public Accounting Firm
    
    
    52Consolidated Statements of Earnings for the Years Ended December 31, 2009, 2008, and 2007
    
    
    54Consolidated Balance Sheets as of December 31, 2009 and 2008
    
    
    55Consolidated Statements of Equity for the Years Ended December 31, 2009, 2008 and 2007
    
    
    56Consolidated Statements of Cash Flows for the Years Ended December 31, 2009, 2008 and 2007
    
    
    57Notes to Consolidated Financial Statements
    
    
    58Schedule II for the Years Ended December 31, 2009, 2008, and 2007
  48




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##### Table of Contents



(millions except for per share data)
    
    First
    
    
    Second
    
    
    Third
    
    
    Fourth2009Net sales
    
    $
    668.3
    
    
    $
    705.7
    
    
    $
    753.0
    
    
    $
    653.0Gross profit
    
    
    131.4
    
    
    
    164.0
    
    
    
    188.0
    
    
    
    137.6Net earnings (loss) from continuing operations
    
    
    (11.2
    )
    
    
    28.3
    
    
    
    64.4
    
    
    
    (3.8
    )Per share of common stock:Basic
    
    $
    (0.20
    )
    
    $
    0.50
    
    
    $
    1.13
    
    
    $
    (0.07
    )Diluted
    
    $
    (0.20
    )
    
    $
    0.50
    
    
    $
    1.12
    
    
    $
    (0.07
    )Net earnings (loss)
    
    
    (11.2
    )
    
    
    28.3
    
    
    
    64.4
    
    
    
    (3.8
    )Per share of common stock:Basic
    
    $
    (0.20
    )
    
    $
    0.50
    
    
    $
    1.13
    
    
    $
    (0.07
    )Diluted
    
    $
    (0.20
    )
    
    $
    0.50
    
    
    $
    1.12
    
    
    $
    (0.07
    )Price range of common stockhigh
    
    $
    23.74
    
    
    $
    21.80
    
    
    $
    35.50
    
    
    $
    45.45Price range of common stocklow
    
    $
    9.42
    
    
    $
    10.55
    
    
    $
    15.05
    
    
    $
    33.14Dividends paid per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 First
    
    
    Second
    
    
    Third
    
    
    Fourth2008Net sales
    
    $
    828.2
    
    
    $
    926.8
    
    
    $
    929.6
    
    
    $
    708.4Gross profit
    
    
    185.9
    
    
    
    225.2
    
    
    
    211.7
    
    
    
    138.2Net earnings (loss) from continuing operations
    
    
    15.1
    
    
    
    52.4
    
    
    
    39.1
    
    
    
    (26.2
    )Per share of common stock:Basic
    
    $
    0.27
    
    
    $
    0.92
    
    
    $
    0.69
    
    
    $
    (0.46
    )Diluted
    
    $
    0.26
    
    
    $
    0.92
    
    
    $
    0.68
    
    
    $
    (0.46
    )Net earnings (loss)
    
    
    15.2
    
    
    
    52.4
    
    
    
    38.9
    
    
    
    (25.5
    )Per share of common stock:Basic
    
    $
    0.27
    
    
    $
    0.92
    
    
    $
    0.68
    
    
    $
    (0.45
    )Diluted
    
    $
    0.27
    
    
    $
    0.92
    
    
    $
    0.68
    
    
    $
    (0.45
    )Price range of common stockhigh
    
    $
    40.98
    
    
    $
    39.44
    
    
    $
    40.19
    
    
    $
    28.94Price range of common stocklow
    
    $
    26.25
    
    
    $
    28.92
    
    
    $
    27.10
    
    
    $
    13.79Dividends paid per share
    
    $
    4.50
    
    
    
    
    
    
    
    
    
    
    
    
   49




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##### Table of Contents



Fourth Quarter 2009 Compared With Fourth Quarter 2008
   Increase / (Reduction) in ExpensesWhereItem
    
    Reported
    
    
    2009
    
    
    2008Cost reduction initiatives expenses(1)
    
    COGS
    
    $
    6.8
    
    
    $
    4.8Fixed asset impairment(2)
    
    COGS
    
    
    3.0
    
    
    
    2.9Cost reduction initiatives expenses(1)
    
    SG&A
    
    
    (0.6
    )
    
    
    2.3Environmental insurance settlement(3)
    
    SG&A
    
    
    
    
    
    
    (6.9
    )Intangible asset impairment(4)
    
    Intangible asset impairment
    
    
    18.0
    
    
    
    25.4
 (1)
    
    See Factors Affecting Operating Costs for a discussion of the cost reduction expenses.(2)
    
    Impairment charges related to certain European Resilient Flooring assets.(3)
    
    Gain from an insurance settlement related to an environmental matter.(4)
    
    During the fourth quarter of 2009 and 2008, we recorded non-cash impairment charges of
our Wood Flooring trademarks.      50




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##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
  Internal Control-Integrated Framework
  /s/ Michael D. LockhartMichael D. LockhartChairman and Chief Executive Officer/s/ Thomas B. MangasThomas B. MangasSenior Vice President and Chief Financial Officer/s/ Stephen F. McNamaraStephen F. McNamaraVice President and Corporate ControllerFebruary 26, 2010
  51




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal
Control-Integrated Framework
    Internal Control-Integrated Framework
   
  52




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Internal Control-Integrated Framework
  
  53




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##### Table of Contents



Years Ended December 31,2009
    
    
    2008
    
    
    2007Net sales
    
    $
    2,780.0
    
    
    $
    3,393.0
    
    
    $
    3,549.7Cost of goods sold
    
    
    2,159.0
    
    
    
    2,632.0
    
    
    
    2,687.5Gross profit
    
    
    621.0
    
    
    
    761.0
    
    
    
    862.2Selling, general and administrative expenses
    
    
    552.4
    
    
    
    579.9
    
    
    
    611.3Intangible asset impairment
    
    
    18.0
    
    
    
    25.4
    
    
    
    Restructuring charges, net
    
    
    
    
    
    
    0.8
    
    
    
    0.2Equity earnings from joint ventures
    
    
    (40.0
    )
    
    
    (56.0
    )
    
    
    (46.0
    )Operating income
    
    
    90.6
    
    
    
    210.9
    
    
    
    296.7Interest expense
    
    
    17.7
    
    
    
    30.8
    
    
    
    55.0Other non-operating expense
    
    
    0.9
    
    
    
    1.3
    
    
    
    1.4Other non-operating (income)
    
    
    (3.2
    )
    
    
    (10.6
    )
    
    
    (18.2
    )Chapter 11 reorganization (income), net
    
    
    
    
    
    
    
    
    
    
    (0.7
    )Earnings from continuing operations before income taxes
    
    
    75.2
    
    
    
    189.4
    
    
    
    259.2Income tax (benefit) expense
    
    
    (2.5
    )
    
    
    109.0
    
    
    
    106.4Earnings from continuing operations
    
    
    77.7
    
    
    
    80.4
    
    
    
    152.8Gain (loss) from discontinued operations, net of tax of $0.0, $0.4, and $0.3, respectively
    
    
    
    
    
    
    0.6
    
    
    
    (7.5
    )Net earnings
    
    $
    77.7
    
    
    $
    81.0
    
    
    $
    145.3Earnings per share of common stock, continuing operations:Basic
    
    $
    1.36
    
    
    $
    1.41
    
    
    $
    2.69Diluted
    
    $
    1.36
    
    
    $
    1.41
    
    
    $
    2.69Gain (loss) per share of common stock, discontinued operations:Basic
    
    $
    
    
    
    $
    0.01
    
    
    $
    (0.13
    )Diluted
    
    $
    
    
    
    $
    0.01
    
    
    $
    (0.13
    )Net earnings per share of common stock:Basic
    
    $
    1.36
    
    
    $
    1.42
    
    
    $
    2.56Diluted
    
    $
    1.36
    
    
    $
    1.42
    
    
    $
    2.56Average number of common shares outstanding:Basic
    
    
    56.8
    
    
    
    56.4
    
    
    
    56.1Diluted
    
    
    57.0
    
    
    
    56.4
    
    
    
    56.1
   54




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##### Table of Contents



December 31,
    
    
    December 31,2009
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    569.5
    
    
    $
    355.0Accounts and notes receivable, net
    
    
    229.1
    
    
    
    247.9Inventories, net
    
    
    445.0
    
    
    
    544.0Deferred income taxes
    
    
    16.3
    
    
    
    14.4Income tax receivable
    
    
    16.5
    
    
    
    22.0Other current assets
    
    
    55.2
    
    
    
    78.2Total current assets
    
    
    1,331.6
    
    
    
    1,261.5Property, plant and equipment, less accumulated depreciation and amortization of $390.0 and $278.9, respectively
    
    
    929.2
    
    
    
    954.2Prepaid pension costs
    
    
    114.3
    
    
    
    0.3Investment in joint venture
    
    
    194.6
    
    
    
    208.2Intangible assets, net
    
    
    592.8
    
    
    
    626.3Deferred income taxes
    
    
    58.2
    
    
    
    219.6Other noncurrent assets
    
    
    81.9
    
    
    
    81.7Total assets
    
    $
    3,302.6
    
    
    $
    3,351.8Liabilities and EquityCurrent liabilities:Short-term debt
    
    $
    0.1
    
    
    $
    1.3Current installments of long-term debt
    
    
    40.0
    
    
    
    40.9Accounts payable and accrued expenses
    
    
    311.0
    
    
    
    337.0Income tax payable
    
    
    3.1
    
    
    
    1.6Deferred income taxes
    
    
    3.1
    
    
    
    4.6Total current liabilities
    
    
    357.3
    
    
    
    385.4Long-term debt, less current installments
    
    
    432.5
    
    
    
    454.8Postretirement and postemployment benefit liabilities
    
    
    306.0
    
    
    
    312.8Pension benefit liabilities
    
    
    223.5
    
    
    
    211.4Other long-term liabilities
    
    
    58.0
    
    
    
    62.4Income taxes payable
    
    
    9.2
    
    
    
    164.7Deferred income taxes
    
    
    8.2
    
    
    
    9.0Total noncurrent liabilities
    
    
    1,037.4
    
    
    
    1,215.1Shareholders equity:Common stock, $0.01 par value per share, authorized 200 million shares; issued 57,433,503 shares in 2009 and
57,049,495 shares in 2008
    
    
    0.6
    
    
    
    0.6Capital in excess of par value
    
    
    2,052.1
    
    
    
    2,024.7Retained earnings
    
    
    144.4
    
    
    
    66.7Accumulated other comprehensive (loss)
    
    
    (297.8
    )
    
    
    (348.8
    )Total shareholders equity
    
    
    1,899.3
    
    
    
    1,743.2Non-controlling interest
    
    
    8.6
    
    
    
    8.1Total equity
    
    
    1,907.9
    
    
    
    1,751.3Total liabilities and equity
    
    $
    3,302.6
    
    
    $
    3,351.8
   55




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##### Table of Contents



Year 2009Total
    
    
    AWI Shareholders
    
    
    Non-Controlling InterestNon-Controlling Interest:Balance at beginning of year
    
    $
    8.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    8.1Common stock:Balance at beginning of year and December 31
    
    $
    0.6
    
    
    
    
    
    
    $
    0.6
    
    
    
    
    
    
    
    Capital in excess of par value:Balance at beginning of year
    
    $
    2,024.7
    
    
    
    
    
    
    $
    2,024.7
    
    
    
    
    
    
    
    Share-based employee compensation
    
    
    27.4
    
    
    
    
    
    
    
    27.4
    
    
    
    
    
    
    
    Balance at December 31
    
    $
    2,052.1
    
    
    
    
    
    
    $
    2,052.1
    
    
    
    
    
    
    
    Retained earnings:Balance at beginning of year
    
    $
    66.7
    
    
    
    
    
    
    $
    66.7
    
    
    
    
    
    
    
    Net earnings for period
    
    
    78.2
    
    
    $
    78.2
    
    
    
    77.7
    
    
    $
    77.7
    
    
    
    0.5
    
    
    $
    0.5Balance at December 31
    
    $
    144.9
    
    
    
    
    
    
    $
    144.4
    
    
    
    
    
    
    $
    0.5Accumulated other comprehensive income (loss):Balance at beginning of year
    
    $
    (348.8
    )
    
    
    
    
    
    $
    (348.8
    )
    
    
    
    
    
    
    Foreign currency translation adjustments
    
    
    34.4
    
    
    
    
    
    
    
    34.4
    
    
    
    
    
    
    
    Derivative (loss), net
    
    
    (2.2
    )
    
    
    
    
    
    
    (2.2
    )
    
    
    
    
    
    
    Pension and postretirement adjustments
    
    
    18.8
    
    
    
    
    
    
    
    18.8
    
    
    
    
    
    
    
    Total other comprehensive income
    
    
    51.0
    
    
    
    51.0
    
    
    
    51.0
    
    
    
    51.0
    
    
    
    
    
    
    
    Balance at December 31
    
    $
    (297.8
    )
    
    
    
    
    
    $
    (297.8
    )
    
    
    
    
    
    
    Comprehensive income
    
    
    
    
    
    $
    129.2
    
    
    
    
    
    
    $
    128.7
    
    
    
    
    
    
    $
    0.5Total equity
    
    $
    1,907.9
    
    
    
    
    
    
    $
    1,899.3
    
    
    
    
    
    
    $
    8.6
 Year 2008Total
    
    
    AWI Shareholders
    
    
    Non-Controlling InterestNon-Controlling Interest:Balance at beginning of year
    
    $
    7.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7.4Common stock:Balance at beginning of year and December 31
    
    $
    0.6
    
    
    
    
    
    
    $
    0.6
    
    
    
    
    
    
    
    Capital in excess of par value:Balance at beginning of year
    
    $
    2,112.6
    
    
    
    
    
    
    $
    2,112.6
    
    
    
    
    
    
    
    Share-based employee compensation
    
    
    7.2
    
    
    
    
    
    
    
    7.2
    
    
    
    
    
    
    
    Dividends in excess of retained earnings
    
    
    (95.1
    )
    
    
    
    
    
    
    (95.1
    )
    
    
    
    
    
    
    Balance at December 31
    
    $
    2,024.7
    
    
    
    
    
    
    $
    2,024.7
    
    
    
    
    
    
    
    Retained earnings:Balance at beginning of year
    
    $
    147.5
    
    
    
    
    
    
    $
    147.5
    
    
    
    
    
    
    
    Net earnings for period
    
    
    81.2
    
    
    $
    81.2
    
    
    
    81.0
    
    
    $
    81.0
    
    
    
    0.2
    
    
    $
    0.2Dividends
    
    
    (161.8
    )
    
    
    
    
    
    
    (161.8
    )
    
    
    
    
    
    
    Balance at December 31
    
    $
    66.9
    
    
    
    
    
    
    $
    66.7
    
    
    
    
    
    
    $
    0.2Accumulated other comprehensive (loss) income:Balance at beginning of year
    
    $
    176.0
    
    
    
    
    
    
    $
    176.0
    
    
    
    
    
    
    
    Foreign currency translation adjustments
    
    
    (42.2
    )
    
    
    
    
    
    
    (42.7
    )
    
    
    
    
    
    
    0.5Derivative gain, net
    
    
    1.4
    
    
    
    
    
    
    
    1.4
    
    
    
    
    
    
    
    Pension and postretirement adjustments
    
    
    (483.5
    )
    
    
    
    
    
    
    (483.5
    )
    
    
    
    
    
    
    Total other comprehensive (loss) income
    
    
    (524.3
    )
    
    
    (524.3
    )
    
    
    (524.8
    )
    
    
    (524.8
    )
    
    
    0.5
    
    
    
    0.5Balance at December 31
    
    $
    (348.3
    )
    
    
    
    
    
    $
    (348.8
    )
    
    
    
    
    
    
    0.5Comprehensive (loss) income
    
    
    
    
    
    $
    (443.1
    )
    
    
    
    
    
    $
    (443.8
    )
    
    
    
    
    
    $
    0.7Total equity
    
    $
    1,751.3
    
    
    
    
    
    
    $
    1,743.2
    
    
    
    
    
    
    $
    8.1
 Year 2007Total
    
    
    AWI Shareholders
    
    
    Non-Controlling InterestNon-Controlling Interest:Balance at beginning of year
    
    $
    7.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7.6Common stock:Balance at beginning of year and December 31
    
    $
    0.6
    
    
    
    
    
    
    $
    0.6
    
    
    
    
    
    
    
    Capital in excess of par value:Balance at beginning of year
    
    $
    2,099.8
    
    
    
    
    
    
    $
    2,099.8
    
    
    
    
    
    
    
    Share-based employee compensation
    
    
    12.8
    
    
    
    
    
    
    
    12.8
    
    
    
    
    
    
    
    Balance at December 31
    
    $
    2,112.6
    
    
    
    
    
    
    $
    2,112.6
    
    
    
    
    
    
    
    Retained earnings:Balance at beginning of year
    
    $
    2.2
    
    
    
    
    
    
    $
    2.2
    
    
    
    
    
    
    
    Net earnings for period
    
    
    145.9
    
    
    $
    145.9
    
    
    
    145.3
    
    
    $
    145.3
    
    
    
    0.6
    
    
    $
    0.6Dividends
    
    
    (1.3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.3
    )Balance at December 31
    
    $
    146.8
    
    
    
    
    
    
    $
    147.5
    
    
    
    
    
    
    $
    (0.7
    )Accumulated other comprehensive income:Balance at beginning of year
    
    $
    61.9
    
    
    
    
    
    
    $
    61.9
    
    
    
    
    
    
    
    Foreign currency translation adjustments
    
    
    30.8
    
    
    
    
    
    
    
    30.3
    
    
    
    
    
    
    
    0.5Derivative (loss), net
    
    
    (5.4
    )
    
    
    
    
    
    
    (5.4
    )
    
    
    
    
    
    
    Pension and postretirement adjustments
    
    
    89.2
    
    
    
    
    
    
    
    89.2
    
    
    
    
    
    
    
    Total other comprehensive income
    
    
    114.6
    
    
    
    114.6
    
    
    
    114.1
    
    
    
    114.1
    
    
    
    0.5
    
    
    
    0.5Balance at December 31
    
    $
    176.5
    
    
    
    
    
    
    $
    176.0
    
    
    
    
    
    
    
    0.5Comprehensive income
    
    
    
    
    
    $
    260.5
    
    
    
    
    
    
    $
    259.4
    
    
    
    
    
    
    $
    1.1Total equity
    
    $
    2,444.1
    
    
    
    
    
    
    $
    2,436.7
    
    
    
    
    
    
    $
    7.4
   56




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Year Ended December 31,2009
    
    
    2008
    
    
    2007Cash flows from operating activities:Net earnings
    
    $
    77.7
    
    
    $
    81.0
    
    
    $
    145.3Adjustments to reconcile net earnings to net cash provided by operating activities:Depreciation and amortization
    
    
    146.8
    
    
    
    149.8
    
    
    
    137.8Asset impairments
    
    
    21.0
    
    
    
    28.3
    
    
    
    Deferred income taxes
    
    
    135.6
    
    
    
    74.0
    
    
    
    79.6Stock-based compensation
    
    
    38.2
    
    
    
    7.5
    
    
    
    12.7Equity earnings from joint ventures, net
    
    
    (40.0
    )
    
    
    (56.0
    )
    
    
    (46.0
    )Distributions from equity affiliates
    
    
    
    
    
    
    61.0
    
    
    
    117.5U.S. pension credit
    
    
    (58.2
    )
    
    
    (63.0
    )
    
    
    (59.4
    )Insurance proceeds  environmental recovery
    
    
    
    
    
    
    10.0
    
    
    
    Changes in operating assets and liabilities:Receivables
    
    
    23.9
    
    
    
    42.8
    
    
    
    29.4Inventories
    
    
    105.9
    
    
    
    (16.1
    )
    
    
    (12.7
    )Other current assets
    
    
    7.0
    
    
    
    (7.2
    )
    
    
    (7.5
    )Other noncurrent assets
    
    
    2.1
    
    
    
    (2.6
    )
    
    
    1.2Accounts payable and accrued expenses
    
    
    (36.9
    )
    
    
    (88.2
    )
    
    
    0.9Income taxes payable
    
    
    (147.0
    )
    
    
    9.7
    
    
    
    208.6Other long-term liabilities
    
    
    (18.6
    )
    
    
    (10.2
    )
    
    
    (16.6
    )Cash distributed under the POR
    
    
    
    
    
    
    (3.1
    )
    
    
    (14.5
    )Other, net
    
    
    2.7
    
    
    
    (3.5
    )
    
    
    (1.1
    )Net cash provided by operating activities
    
    
    260.2
    
    
    
    214.2
    
    
    
    575.2Cash flows from investing activities:Purchases of property, plant and equipment and computer software
    
    
    (105.1
    )
    
    
    (95.0
    )
    
    
    (102.6
    )Divestitures (acquisitions)
    
    
    8.0
    
    
    
    (0.8
    )
    
    
    58.8Return of investment from equity affiliate
    
    
    53.5
    
    
    
    19.5
    
    
    
    Acquisition of equity affiliate
    
    
    
    
    
    
    
    
    
    
    (5.2
    )Proceeds from insurance
    
    
    1.3
    
    
    
    
    
    
    
    6.7Proceeds from the sale of assets
    
    
    1.3
    
    
    
    0.6
    
    
    
    5.6Net cash (used for) investing activities
    
    
    (41.0
    )
    
    
    (75.7
    )
    
    
    (36.7
    )Cash flows from financing activities:(Decrease) in short-term debt, net
    
    
    (1.2
    )
    
    
    (2.5
    )
    
    
    Issuance of long-term debt
    
    
    2.4
    
    
    
    5.4
    
    
    
    5.0Payments of long-term debt
    
    
    (25.6
    )
    
    
    (20.9
    )
    
    
    (309.2
    )Special dividend paid
    
    
    (1.3
    )
    
    
    (256.4
    )
    
    
    Proceeds from exercise of stock options
    
    
    2.3
    
    
    
    
    
    
    
    Advance payment for non-controlling interest
    
    
    (3.3
    )
    
    
    
    
    
    
    Other, net
    
    
    
    
    
    
    (2.6
    )
    
    
    (1.2
    )Net cash (used for) financing activities
    
    
    (26.7
    )
    
    
    (277.0
    )
    
    
    (305.4
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    22.0
    
    
    
    (20.8
    )
    
    
    17.4Net increase (decrease) in cash and cash equivalents
    
    $
    214.5
    
    
    $
    (159.3
    )
    
    $
    250.5Cash and cash equivalents at beginning of period
    
    $
    355.0
    
    
    $
    514.3
    
    
    $
    263.8Cash and cash equivalents at end of period
    
    $
    569.5
    
    
    $
    355.0
    
    
    $
    514.3
   57




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##### Table of Contents



NOTE 1. BUSINESS AND CHAPTER 11 REORGANIZATION
    Resolution of Disputed Claims
  Asbestos PI Trust
  Resolution of Nitram and Desseaux Cases
  Accounting Impact
 Restructuring
   58




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##### Table of Contents



Share Ownership
  NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Consolidation Policy
 Use of Estimates
 Reclassifications
 Revenue Recognition
 Sales Incentives
 Shipping and Handling Costs
 Advertising Costs
 Research and Development Costs
 Pension and Postretirement Benefits
  59




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##### Table of Contents



Taxes
  Earnings per Common Share
 Cash and Cash Equivalents
 Concentration of Credit
  Receivables
  Inventories
 Property and Depreciation
   60




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##### Table of Contents



Asset Retirement Obligations
 Intangible Assets
     61




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##### Table of Contents



Foreign Currency Transactions.
 Financial Instruments and Derivatives
 Stock-based Employee Compensation.
 Recently Adopted Accounting Standards
 Compensation  Retirement Benefits (
 Fair Value Measurements and Disclosures
 Business Combinations
  62




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##### Table of Contents



Consolidation
 Investments-Equity Method and
Joint Ventures
 Derivatives and Hedging.
 Earnings Per
Share.
 Compensation 
Retirement Benefits
 Subsequent Events.
 Generally Accepted
Accounting Principles.
  63




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Recently Issued Accounting Standards
 Consolidations
 Consolidations
 Fair Value
Measurements and Disclosures
  64




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##### Table of Contents



NOTE 3. NATURE OF OPERATIONS
 Resilient Flooring
 Wood Flooring ® ® ® ® ® ® ®
 Building Products
 Cabinets ®
 Unallocated Corporate
  65




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##### Table of Contents



Resilient
    
    
    Wood
    
    
    Building
    
    
    
    
    
    
    UnallocatedFor the year ended 2009
    
    Flooring
    
    
    Flooring
    
    
    Products
    
    
    Cabinets
    
    
    Corporate
    
    
    TotalNet sales to external customers
    
    $
    1,031.7
    
    
    $
    510.4
    
    
    $
    1,087.7
    
    
    $
    150.2
    
    
    
    
    
    
    $
    2,780.0Equity (earnings) from joint ventures
    
    
    
    
    
    
    
    
    
    
    (40.0
    )
    
    
    
    
    
    
    
    
    
    
    (40.0
    )Segment operating income  (loss)(1)
    
    
    0.1
    
    
    
    (5.9
    )
    
    
    155.9
    
    
    
    (18.3
    )
    
    
    (41.2
    )
    
    
    90.6Segment assets
    
    
    645.2
    
    
    
    410.3
    
    
    
    966.0
    
    
    
    53.2
    
    
    
    1,227.9
    
    
    
    3,302.6Depreciation and amortization
    
    
    45.2
    
    
    
    14.9
    
    
    
    61.5
    
    
    
    7.2
    
    
    
    18.0
    
    
    
    146.8Asset impairments
    
    
    3.0
    
    
    
    18.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21.0Investment in joint ventures
    
    
    0.1
    
    
    
    
    
    
    
    194.5
    
    
    
    
    
    
    
    
    
    
    
    194.6Capital additions
    
    
    50.5
    
    
    
    10.3
    
    
    
    31.8
    
    
    
    2.5
    
    
    
    10.0
    
    
    
    105.1
 Resilient
    
    
    Wood
    
    
    Building
    
    
    
    
    
    
    UnallocatedFor the year ended 2008
    
    Flooring
    
    
    Flooring
    
    
    Products
    
    
    Cabinets
    
    
    Corporate
    
    
    TotalNet sales to external customers
    
    $
    1,220.1
    
    
    $
    624.6
    
    
    $
    1,369.1
    
    
    $
    179.2
    
    
    
    
    
    
    $
    3,393.0Equity (earnings) from joint ventures
    
    
    
    
    
    
    
    
    
    
    (56.0
    )
    
    
    
    
    
    
    
    
    
    
    (56.0
    )Segment operating (loss) income(1)
    
    
    (16.8
    )
    
    
    (2.4
    )
    
    
    239.7
    
    
    
    (6.7
    )
    
    
    (2.9
    )
    
    
    210.9Restructuring charges, net of reversals
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.8
    
    
    
    0.8Segment assets
    
    
    670.2
    
    
    
    470.9
    
    
    
    1,049.6
    
    
    
    71.2
    
    
    
    1,089.9
    
    
    
    3,351.8Depreciation and amortization
    
    
    49.8
    
    
    
    12.6
    
    
    
    64.8
    
    
    
    2.4
    
    
    
    20.2
    
    
    
    149.8Asset impairments
    
    
    2.9
    
    
    
    25.4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28.3Investment in joint ventures
    
    
    0.1
    
    
    
    
    
    
    
    208.1
    
    
    
    
    
    
    
    
    
    
    
    208.2Capital additions
    
    
    26.4
    
    
    
    11.8
    
    
    
    41.1
    
    
    
    3.7
    
    
    
    12.0
    
    
    
    95.0
 Resilient
    
    
    Wood
    
    
    Building
    
    
    
    
    
    
    UnallocatedFor the year ended 2007
    
    Flooring
    
    
    Flooring
    
    
    Products
    
    
    Cabinets
    
    
    Corporate
    
    
    TotalNet sales to external customers
    
    $
    1,230.8
    
    
    $
    791.6
    
    
    $
    1,292.1
    
    
    $
    235.2
    
    
    
    
    
    
    $
    3,549.7Equity loss (earnings) from joint ventures
    
    
    
    
    
    
    0.6
    
    
    
    (46.6
    )
    
    
    
    
    
    
    
    
    
    
    (46.0
    )Segment operating income (loss)(1)
    
    
    40.4
    
    
    
    64.3
    
    
    
    221.4
    
    
    
    10.5
    
    
    
    (39.9
    )
    
    
    296.7Restructuring charges, net of reversals
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.2Segment assets
    
    
    734.8
    
    
    
    509.7
    
    
    
    1,129.2
    
    
    
    82.5
    
    
    
    2,183.2
    
    
    
    4,639.4Depreciation and amortization
    
    
    44.0
    
    
    
    10.9
    
    
    
    59.3
    
    
    
    2.6
    
    
    
    21.0
    
    
    
    137.8Investment in joint ventures
    
    
    0.1
    
    
    
    
    
    
    
    232.5
    
    
    
    
    
    
    
    
    
    
    
    232.6Capital additions
    
    
    29.9
    
    
    
    17.8
    
    
    
    37.7
    
    
    
    4.4
    
    
    
    11.8
    
    
    
    101.6
  (1)
    
    Segment operating income (loss) is the measure of segment profit or loss
reviewed by the chief operating decision maker. The sum of the segments operating income (loss)
equals the total consolidated operating income as reported on our income statement. The following
reconciles our total consolidated operating income to earnings from continuing operations before
income taxes. These items are only measured and managed on a consolidated basis: 2009
    
    
    2008
    
    
    2007Segment operating income
    
    $
    90.6
    
    
    $
    210.9
    
    
    $
    296.7Interest expense
    
    
    17.7
    
    
    
    30.8
    
    
    
    55.0Other non-operating expense
    
    
    0.9
    
    
    
    1.3
    
    
    
    1.4Other non-operating (income)
    
    
    (3.2
    )
    
    
    (10.6
    )
    
    
    (18.2
    )Chapter 11 reorganization (income), net
    
    
    
    
    
    
    
    
    
    
    (0.7
    )Earnings from continuing operations
before income taxes
    
    $
    75.2
    
    
    $
    189.4
    
    
    $
    259.2
   66




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Geographic Areas Net trade sales
    
    2009
    
    
    2008
    
    
    2007Americas:United States
    
    $
    1,810.5
    
    
    $
    2,177.4
    
    
    $
    2,409.7Canada
    
    
    152.0
    
    
    
    166.0
    
    
    
    167.1Other Americas
    
    
    30.1
    
    
    
    43.4
    
    
    
    38.5Total Americas
    
    $
    1,992.6
    
    
    $
    2,386.8
    
    
    $
    2,615.3Europe:Germany
    
    $
    154.7
    
    
    $
    185.7
    
    
    $
    164.6United Kingdom
    
    
    94.1
    
    
    
    134.7
    
    
    
    140.4Other Europe
    
    
    347.3
    
    
    
    464.1
    
    
    
    422.2Total Europe
    
    $
    596.1
    
    
    $
    784.5
    
    
    $
    727.2Total Pacific Rim
    
    $
    191.3
    
    
    $
    221.7
    
    
    $
    207.2Total net trade sales
    
    $
    2,780.0
    
    
    $
    3,393.0
    
    
    $
    3,549.7
 Property, plant and equipment, net at December 31
    
    2009
    
    
    2008Americas:United States
    
    $
    678.1
    
    
    $
    709.9Other Americas
    
    
    14.1
    
    
    
    14.7Total Americas
    
    $
    692.2
    
    
    $
    724.6Europe:Germany
    
    $
    123.1
    
    
    $
    112.0Other Europe
    
    
    63.6
    
    
    
    68.6Total Europe
    
    $
    186.7
    
    
    $
    180.6Total Pacific Rim
    
    $
    50.3
    
    
    $
    49.0Total property, plant and equipment, net
    
    $
    929.2
    
    
    $
    954.2
     67




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NOTE 4. ACQUISITIONS
   NOTE 5. DISCONTINUED OPERATIONS
    2007Net sales
    
    $
    59.8Pre-tax loss from discontinued operations
    
    $
    (1.4
    )Loss on expected disposal of discontinued operations
    
    
    (5.8
    )Income tax expense
    
    
    (0.3
    )Net loss from discontinued operations
    
    $
    (7.5
    )
   68




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NOTE 6. ACCOUNTS AND NOTES RECEIVABLE
 December 31,
    
    
    December 31,2009
    
    
    2008Customer receivables
    
    $
    269.3
    
    
    $
    287.1Customer notes
    
    
    2.5
    
    
    
    6.7Miscellaneous receivables
    
    
    5.6
    
    
    
    8.6Less allowance for discounts and losses
    
    
    (48.3
    )
    
    
    (54.5
    )Net accounts and notes receivable
    
    $
    229.1
    
    
    $
    247.9
   NOTE 7. INVENTORIES
 December 31,
    
    
    December 31,2009
    
    
    2008Finished goods
    
    $
    281.0
    
    
    $
    371.2Goods in process
    
    
    36.2
    
    
    
    39.6Raw materials and supplies
    
    
    134.4
    
    
    
    152.7Less LIFO and other reserves
    
    
    (6.6
    )
    
    
    (19.5
    )Total inventories, net
    
    $
    445.0
    
    
    $
    544.0
   December 31,
    
    
    December 31,2009
    
    
    2008International locations
    
    $
    147.0
    
    
    $
    171.3Cabinets
    
    
    13.7
    
    
    
    22.3Wood flooring
    
    
    0.6
    
    
    
    1.3Resilient flooring
    
    
    1.2
    
    
    
    1.0U.S. sourced products
    
    
    3.2
    
    
    
    3.4Total
    
    $
    165.7
    
    
    $
    199.3
    69




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NOTE 8. OTHER CURRENT ASSETS
 December 31,
    
    
    December 31,2009
    
    
    2008Prepaid expenses
    
    $
    36.0
    
    
    $
    34.5Fair value of derivative assets
    
    
    0.2
    
    
    
    11.7Receivable related to discontinued operations
    
    
    
    
    
    
    8.0Assets held for sale
    
    
    7.8
    
    
    
    7.8Other
    
    
    11.2
    
    
    
    16.2Total other current assets
    
    $
    55.2
    
    
    $
    78.2
  NOTE 9. PROPERTY, PLANT AND EQUIPMENT
 December 31,
    
    
    December 31,2009
    
    
    2008Land
    
    $
    131.5
    
    
    $
    129.0Buildings
    
    
    303.8
    
    
    
    296.5Machinery and equipment
    
    
    787.5
    
    
    
    722.8Computer software
    
    
    30.6
    
    
    
    36.2Construction in progress
    
    
    65.8
    
    
    
    48.6Less accumulated depreciation and amortization
    
    
    (390.0
    )
    
    
    (278.9
    )Net property, plant and equipment
    
    $
    929.2
    
    
    $
    954.2
  NOTE 10. EQUITY INVESTMENTS
    Affiliate
    
    Income Statement Classification

    
    2009
    
    
    2008
    
    
    2007WAVE
    
    Equity earnings from joint venture
    
    $
    40.0
    
    
    $
    56.0
    
    
    $
    46.6Kunshan
    
    Equity earnings from joint venture
    
    
    
    
    
    
    
    
    
    
    (0.6
    )
  70




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December 31,
    
    
    December 31,2009
    
    
    2008Property, plant and equipment
    
    $
    1.8
    
    
    $
    2.8Other intangibles
    
    
    174.3
    
    
    
    179.7Goodwill
    
    
    30.5
    
    
    
    30.5Total
    
    $
    206.6
    
    
    $
    213.0
   December 31,
    
    
    December 31,2009
    
    
    2008Current assets
    
    $
    110.0
    
    
    $
    132.5Non-current assets
    
    
    36.2
    
    
    
    32.8Current liabilities
    
    
    17.3
    
    
    
    21.8Other non-current liabilities
    
    
    154.6
    
    
    
    156.6
 2009
    
    
    2008
    
    
    2007Net sales
    
    $
    307.9
    
    
    $
    421.8
    
    
    $
    380.0Gross profit
    
    
    118.9
    
    
    
    160.2
    
    
    
    134.9Net earnings
    
    
    92.8
    
    
    
    125.4
    
    
    
    107.0
  NOTE 11. INTANGIBLE ASSETS
   71




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December 31, 2009
    
    
    December 31, 2008Gross
    
    
    
    
    
    
    GrossEstimated
    
    
    Carrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedUseful Life
    
    
    Amount
    
    
    Amortization
    
    
    Amount
    
    
    AmortizationAmortizing intangible assetsCustomer relationships
    
    20 years
    
    $
    171.0
    
    
    $
    27.7
    
    
    $
    171.4
    
    
    $
    19.2Developed technology
    
    15 years
    
    
    80.9
    
    
    
    17.5
    
    
    
    81.0
    
    
    
    12.0Other
    
    Various
    
    
    10.8
    
    
    
    0.5
    
    
    
    9.5
    
    
    
    0.3Total
    
    
    
    
    
    $
    262.7
    
    
    $
    45.7
    
    
    $
    261.9
    
    
    $
    31.5Non-amortizing intangible assetsTrademarks and brand names
    
    Indefinite
    
    
    375.8
    
    
    
    
    
    
    
    395.9Total other intangible assets
    
    
    
    
    
    $
    638.5
    
    
    
    
    
    
    $
    657.8
 2009
    
    
    
    2008Amortization
    
    $
    14.2
    
    
    $
    14.3Intangible asset impairment
    
    
    18.0
    
    
    
    25.4Total amortization expense and impairment charges
    
    $
    32.2
    
    
    $
    39.7
  NOTE 12. OTHER NON-CURRENT ASSETS
 December 31,
    
    
    December 31,2009
    
    
    2008Cash surrender value of Company owned life insurance policies
    
    $
    56.5
    
    
    $
    53.5Other
    
    
    25.4
    
    
    
    28.2Total other non-current assets
    
    $
    81.9
    
    
    $
    81.7
 NOTE 13. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
 December 31,
    
    
    December 31,2009
    
    
    2008Payables, trade and other
    
    $
    159.6
    
    
    $
    179.3Employment costs
    
    
    107.2
    
    
    
    107.1Other
    
    
    44.2
    
    
    
    50.6Total accounts payable and accrued expenses
    
    $
    311.0
    
    
    $
    337.0
   72




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NOTE 14. SEVERANCE AND RELATED COSTS
    NOTE 15. INCOME TAXES
     73




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##### Table of Contents



December 31,
    
    
    December 31,Deferred income tax assets (liabilities)
    
    2009
    
    
    2008Postretirement and postemployment benefits
    
    $
    165.1
    
    
    $
    170.4Pension benefit liabilities
    
    
    19.3
    
    
    
    32.2Net operating losses
    
    
    354.4
    
    
    
    529.8Foreign tax credit carryforwards
    
    
    88.6
    
    
    
    70.7Capital losses
    
    
    3.3
    
    
    
    15.2Other
    
    
    97.2
    
    
    
    82.3Total deferred income tax assets
    
    
    727.9
    
    
    
    900.6Valuation allowances
    
    
    (155.4
    )
    
    
    (208.7
    )Net deferred income tax assets
    
    
    572.5
    
    
    
    691.9Intangibles
    
    
    (275.8
    )
    
    
    (289.7
    )Accumulated depreciation
    
    
    (94.6
    )
    
    
    (102.2
    )Prepaid pension costs
    
    
    (28.3
    )
    
    
    Tax on unremitted earnings
    
    
    (87.0
    )
    
    
    (48.7
    )Inventories
    
    
    (18.3
    )
    
    
    (18.9
    )Other
    
    
    (5.3
    )
    
    
    (12.0
    )Total deferred income tax liabilities
    
    
    (509.3
    )
    
    
    (471.5
    )Net deferred income tax assets
    
    $
    63.2
    
    
    $
    220.4Deferred income taxes have been classified in the Consolidated
Balance Sheet as:Deferred income tax assets  current
    
    $
    16.3
    
    
    $
    14.4Deferred income tax assets  noncurrent
    
    
    58.2
    
    
    
    219.6Deferred income tax liabilities  current
    
    
    (3.1
    )
    
    
    (4.6
    )Deferred income tax liabilities  noncurrent
    
    
    (8.2
    )
    
    
    (9.0
    )Net deferred income tax assets
    
    $
    63.2
    
    
    $
    220.4
 Details of taxes
    
    2009
    
    
    2008
    
    
    2007Earnings (loss) from continuing
operations before income taxes:Domestic
    
    $
    75.5
    
    
    $
    171.0
    
    
    $
    221.4Foreign
    
    
    (0.3
    )
    
    
    18.4
    
    
    
    42.1Eliminations
    
    
    
    
    
    
    
    
    
    
    (4.3
    )Total
    
    $
    75.2
    
    
    $
    189.4
    
    
    $
    259.2Income tax (benefit) provision:Current:Federal
    
    $
    (153.4
    )
    
    $
    8.3
    
    
    $
    4.8Foreign
    
    
    13.9
    
    
    
    21.3
    
    
    
    17.4State
    
    
    1.4
    
    
    
    5.4
    
    
    
    4.6Total current
    
    
    (138.1
    )
    
    
    35.0
    
    
    
    26.8Deferred:Federal
    
    
    134.9
    
    
    
    46.5
    
    
    
    72.5Foreign
    
    
    
    
    
    
    (1.1
    )
    
    
    1.5State
    
    
    0.7
    
    
    
    28.6
    
    
    
    5.6Total deferred
    
    
    135.6
    
    
    
    74.0
    
    
    
    79.6Total income tax (benefit) expense
    
    $
    (2.5
    )
    
    $
    109.0
    
    
    $
    106.4
   74




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Reconciliation to U.S. statutory tax rate
    
    2009
    
    
    2008
    
    
    2007Continuing operations tax at statutory rate
    
    $
    26.3
    
    
    $
    66.3
    
    
    $
    90.7State income tax expense, net of federal benefit
    
    
    2.2
    
    
    
    8.1
    
    
    
    6.7(Decrease)/increase in valuation allowances on
deferred state income tax assets
    
    
    (0.8
    )
    
    
    13.9
    
    
    
    Increases in valuation allowances on deferred foreign
income tax assets
    
    
    17.3
    
    
    
    14.2
    
    
    
    6.0Decrease in valuation allowance for foreign tax credits
    
    
    (31.3
    )
    
    
    
    
    
    
    Tax on foreign and foreign-source income
    
    
    (3.7
    )
    
    
    (0.9
    )
    
    
    (1.7
    )Interest on uncertain tax positions
    
    
    
    
    
    
    5.9
    
    
    
    1.8Permanent book/tax differences
    
    
    4.7
    
    
    
    (2.4
    )
    
    
    IRS audit settlement
    
    
    (12.9
    )
    
    
    
    
    
    
    Recharacterization of stock loss
    
    
    (7.6
    )
    
    
    
    
    
    
    Tax on unremitted earnings
    
    
    3.3
    
    
    
    3.9
    
    
    
    2.9Tax (benefit) expense at effective rate
    
    $
    (2.5
    )
    
    $
    109.0
    
    
    $
    106.4
       75




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2009
    
    
    2008
    
    
    2007Unrecognized tax benefits balance at
January 1
    
    $
    174.4
    
    
    $
    180.7
    
    
    $
    37.0Gross change for current year positions
    
    
    6.1
    
    
    
    0.8
    
    
    
    1.4Increases for prior period positions
    
    
    29.1
    
    
    
    3.4
    
    
    
    162.4Decrease for prior period positions
    
    
    (149.8
    )
    
    
    (8.0
    )
    
    
    (19.7
    )Decrease due to settlements and payments
    
    
    (1.9
    )
    
    
    (0.9
    )
    
    
    (0.1
    )Decrease due to statute expirations
    
    
    (0.4
    )
    
    
    (1.6
    )
    
    
    (0.3
    )Unrecognized tax benefits balance at
December 31
    
    $
    57.5
    
    
    $
    174.4
    
    
    $
    180.7
 Other taxes
    
    2009
    
    
    2008
    
    
    2007Payroll taxes
    
    $
    69.7
    
    
    $
    75.7
    
    
    $
    77.2Property, franchise and capital stock taxes
    
    
    16.0
    
    
    
    15.4
    
    
    
    18.3
  76




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NOTE 16. DEBT
 Average
    
    
    
    
    
    
    Averageyear-end
    
    
    
    
    
    
    year-end2009
    
    
    interest rate
    
    
    2008
    
    
    interest rateTerm loan A due 2011
    
    $
    262.5
    
    
    
    1.78
    %
    
    $
    281.3
    
    
    
    2.01
    %Term loan B due 2013
    
    
    191.6
    
    
    
    1.98
    %
    
    
    193.5
    
    
    
    2.26
    %Foreign bank loans due 2010
    
    
    0.1
    
    
    
    1.00
    %
    
    
    1.3
    
    
    
    4.75
    %Bank loans due through 2016
    
    
    8.3
    
    
    
    5.05
    %
    
    
    10.8
    
    
    
    6.02
    %Industrial revenue bonds due 2025
    
    
    10.0
    
    
    
    1.83
    %
    
    
    10.0
    
    
    
    1.60
    %Capital lease obligations due through 2018
    
    
    0.1
    
    
    
    4.37
    %
    
    
    0.1
    
    
    
    5.03
    %Subtotal
    
    
    472.6
    
    
    
    1.92
    %
    
    
    497.0
    
    
    
    2.19
    %Less current portion and short-term debt
    
    
    40.1
    
    
    
    2.47
    %
    
    
    42.2
    
    
    
    3.00
    %Total long-term debt, less current portion
    
    $
    432.5
    
    
    
    1.87
    %
    
    $
    454.8
    
    
    
    2.12
    %
        77




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2010
    
    $
    40.12011
    
    $
    234.82012
    
    $
    3.52013
    
    $
    184.12014
    
    $
    0.12015 and later
    
    $
    10.0
   NOTE 17. PENSION AND OTHER BENEFIT PROGRAMS
  UNITED STATES PLANS
   78




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##### Table of Contents



U.S. defined-benefit pension plans
    
    2009
    
    
    2008Change in benefit obligation:Benefit obligation as of beginning of period
    
    $
    1,755.7
    
    
    $
    1,712.6Service cost
    
    
    18.0
    
    
    
    17.4Interest cost
    
    
    96.0
    
    
    
    97.8Plan amendments
    
    
    12.9
    
    
    
    3.4Special termination benefits
    
    
    0.2
    
    
    
    Actuarial loss
    
    
    11.1
    
    
    
    36.2Benefits paid
    
    
    (113.8
    )
    
    
    (111.7
    )Benefit obligation as of end of period
    
    $
    1,780.1
    
    
    $
    1,755.7Change in plan assets:Fair value of plan assets as of beginning of period
    
    $
    1,701.6
    
    
    $
    2,355.7Actual return on plan assets  gain (loss)
    
    
    259.2
    
    
    
    (545.6
    )Employer contribution
    
    
    3.3
    
    
    
    3.2Benefits paid
    
    
    (113.8
    )
    
    
    (111.7
    )Fair value of plan assets as of end of period
    
    $
    1,850.3
    
    
    $
    1,701.6Funded status of the plans
    
    $
    70.2
    
    
    $
    (54.1
    )
 U.S. defined-benefit pension plans
    
    2009
    
    
    2008Weighted-average assumptions used to
determine benefit obligations
at end of period:Discount rate
    
    
    5.60
    %
    
    
    5.60
    %Rate of compensation increase
    
    
    4.00
    %
    
    
    4.00
    %Weighted-average assumptions used to
determine net periodic benefit cost for
the period:Discount rate
    
    
    5.60
    %
    
    
    5.85
    %Expected return on plan assets
    
    
    8.00
    %
    
    
    8.00
    %Rate of compensation increase
    
    
    4.00
    %
    
    
    4.00
    %
  79




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U.S. defined-benefit retiree health and life insurance plans
    
    2009
    
    
    2008Change in benefit obligation:Benefit obligation as of beginning of period
    
    $
    334.3
    
    
    $
    337.0Service cost
    
    
    1.9
    
    
    
    1.7Interest cost
    
    
    16.7
    
    
    
    18.9Plan participants contributions
    
    
    6.0
    
    
    
    6.2Plan amendments
    
    
    0.1
    
    
    
    Effect of curtailment
    
    
    (0.2
    )
    
    
    Actuarial (gain) loss
    
    
    (3.9
    )
    
    
    1.4Benefits paid, gross
    
    
    (30.2
    )
    
    
    (32.6
    )Medicare subsidy receipts
    
    
    2.8
    
    
    
    1.7Benefit obligation as of end of period
    
    $
    327.5
    
    
    $
    334.3Change in plan assets:Fair value of plan assets as of beginning of period
    
    
    
    
    
    
    Employer contribution
    
    $
    21.4
    
    
    $
    24.7Plan participants contributions
    
    
    6.0
    
    
    
    6.2Benefits paid, gross
    
    
    (30.2
    )
    
    
    (32.6
    )Medicare subsidy receipts
    
    
    2.8
    
    
    
    1.7Fair value of plan assets as of end of period
    
    $
    
    
    
    $
    Funded status of the plans
    
    $
    (327.5
    )
    
    $
    (334.3
    )
 U.S. defined-benefit retiree health and life insurance plans
    
    2009
    
    
    2008Weighted-average discount rate used to
determine benefit obligations
at end of period
    
    
    5.30
    %
    
    
    5.60
    %Weighted-average discount rate used to
determine net periodic benefit cost for
the period
    
    
    5.60
    %
    
    
    5.85
    %
 Investment Policies
   Target Weight at
    
    
    Position at December 31,Asset Class
    
    December 31, 2009
    
    
    2009
    
    
    2008Domestic equity
    
    
    40
    %
    
    
    38
    %
    
    
    30
    %International equity
    
    
    22
    %
    
    
    22
    %
    
    
    17
    %High yield bonds
    
    
    5
    %
    
    
    6
    %
    
    
    4
    %Long duration bonds
    
    
    26
    %
    
    
    30
    %
    
    
    40
    %Real estate
    
    
    7
    %
    
    
    4
    %
    
    
    7
    %Other fixed income
    
    
    0
    %
    
    
    0
    %
    
    
    2
    %
  80




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##### Table of Contents



Description
    
    Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalLong duration bonds
    
    
    
    
    
    $
    541.2
    
    
    
    
    
    
    $
    541.2Domestic equity
    
    $
    683.4
    
    
    
    2.9
    
    
    
    
    
    
    
    686.3International equity
    
    
    145.2
    
    
    
    260.6
    
    
    
    
    
    
    
    405.8High yield bonds
    
    
    
    
    
    
    98.1
    
    
    
    
    
    
    
    98.1Real estate
    
    
    
    
    
    
    
    
    
    $
    84.6
    
    
    
    84.6Other investments
    
    
    
    
    
    
    
    
    
    
    8.4
    
    
    
    8.4Money market investments
    
    
    24.9
    
    
    
    
    
    
    
    
    
    
    
    24.9Cash and other short
term investments
    
    
    1.0
    
    
    
    
    
    
    
    
    
    
    
    1.0Net assets
    
    $
    854.5
    
    
    $
    902.8
    
    
    $
    93.0
    
    
    $
    1,850.3
  81




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##### Table of Contents



Level 3 Assets Gains and Losses for the Year Ended December 31, 2009GroupInsuranceVenture
    
    
    AnnuityReal Estate
    
    
    Capital
    
    
    Contract
    
    
    TotalBalance, December 31, 2008
    
    $
    116.1
    
    
    $
    6.2
    
    
    $
    4.0
    
    
    $
    126.3Realized (loss) gain
    
    
    (0.5
    )
    
    
    0.2
    
    
    
    0.1
    
    
    
    (0.2
    )Unrealized (loss) gain
    
    
    (30.8
    )
    
    
    (1.9
    )
    
    
    0.5
    
    
    
    (32.2
    )Purchases, (sales),
issuances, (settlements),
net
    
    
    (0.2
    )
    
    
    (0.3
    )
    
    
    (0.4
    )
    
    
    (0.9
    )Balance, December 31, 2009
    
    $
    84.6
    
    
    $
    4.2
    
    
    $
    4.2
    
    
    $
    93.0
  Long Duration Bonds:
 Domestic and International equity securities:
 High Yield Bonds:
 Real Estate:
 Other Investments: ,
  82




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##### Table of Contents



Money Market Investments:
 Cash and Other Short Term Investments:
  Basis of Rate-of-Return Assumption
  Amounts recognized in assets and (liabilities) at year end consist of
 Retiree Health and LifePension Benefits
    
    
    Insurance Benefits2009
    
    
    2008
    
    
    2009
    
    
    2008Prepaid pension costs
    
    $
    114.1
    
    
    
    
    
    
    
    
    
    
    
    Accounts payable and
accrued expenses
    
    
    (3.3
    )
    
    $
    (3.3
    )
    
    $
    (30.6
    )
    
    $
    (31.7
    )Postretirement and
postemployment benefit
liabilities
    
    
    
    
    
    
    
    
    
    
    (296.9
    )
    
    
    (302.6
    )Pension benefit liabilities
    
    
    (40.6
    )
    
    
    (50.8
    )
    
    
    
    
    
    
    Net amount recognized
    
    $
    70.2
    
    
    $
    (54.1
    )
    
    $
    (327.5
    )
    
    $
    (334.3
    )
  83




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##### Table of Contents



Pre-tax amounts recognized in accumulated other comprehensive income at year end consist of
 Retiree Health and LifePension Benefits
    
    
    Insurance Benefits2009
    
    
    2008
    
    
    2009
    
    
    2008Net actuarial loss (gain)
    
    $
    550.2
    
    
    $
    627.2
    
    
    $
    (46.9
    )
    
    $
    (46.2
    )Prior service cost
    
    
    14.2
    
    
    
    3.1
    
    
    
    0.1
    
    
    
    Accumulated other
comprehensive loss
(income)
    
    $
    564.4
    
    
    $
    630.3
    
    
    $
    (46.8
    )
    
    $
    (46.2
    )
   U.S. pension plans with benefit obligations in excess of assets
    
    2009
    
    
    2008Projected benefit obligation, December 31
    
    $
    43.9
    
    
    $
    1,755.7Accumulated benefit obligation, December 31
    
    
    42.8
    
    
    
    1,734.2Fair value of plan assets, December 31
    
    
    
    
    
    
    1,701.6
   U.S. defined-benefit pension plans
    
    2009
    
    
    2008
    
    
    2007Service cost of benefits earned during the period
    
    $
    18.0
    
    
    $
    17.4
    
    
    $
    16.9Interest cost on projected benefit obligation
    
    
    96.0
    
    
    
    97.8
    
    
    
    96.3Expected return on plan assets
    
    
    (171.2
    )
    
    
    (175.3
    )
    
    
    (169.4
    )Amortization of prior service cost
    
    
    1.8
    
    
    
    0.3
    
    
    
    Net periodic pension credit
    
    $
    (55.4
    )
    
    $
    (59.8
    )
    
    $
    (56.2
    )
  U.S. defined-benefit retiree health and life insurance plans
    
    2009
    
    
    2008
    
    
    2007Service cost of benefits earned during the period
    
    $
    1.9
    
    
    $
    1.7
    
    
    $
    1.8Interest cost on accumulated postretirement
benefit obligation
    
    
    16.7
    
    
    
    18.9
    
    
    
    19.1Amortization of net actuarial (gain) loss
    
    
    (4.4
    )
    
    
    (1.5
    )
    
    
    (0.9
    )Net periodic postretirement benefit cost
    
    $
    14.2
    
    
    $
    19.1
    
    
    $
    20.0
  84




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##### Table of Contents



One percentage pointU.S. retiree health and life insurance benefit plans
    
    Increase
    
    
    DecreaseEffect on total service and interest cost components
    
    $
    0.4
    
    
    $
    (0.4
    )Effect on postretirement benefit obligation
    
    
    7.8
    
    
    
    (7.4
    )
   Retiree Health and
    
    
    Retiree HealthLife Insurance
    
    
    Medicare SubsidyPension Benefits
    
    
    Benefits, Gross
    
    
    Receipts2010
    
    $
    119.3
    
    
    $
    32.2
    
    
    $
    (1.7
    )2011
    
    
    122.6
    
    
    
    32.9
    
    
    
    (1.8
    )2012
    
    
    122.4
    
    
    
    32.7
    
    
    
    (2.0
    )2013
    
    
    125.0
    
    
    
    32.1
    
    
    
    (2.1
    )2014
    
    
    126.8
    
    
    
    31.2
    
    
    
    (2.2
    )2015-2019
    
    
    654.2
    
    
    
    139.7
    
    
    
    (13.4
    )
   85




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##### Table of Contents



NON-U.S. PLANS
   Non-U.S. defined-benefit plans
    
    2009
    
    
    2008Change in benefit obligation:Benefit obligation as of beginning of period
    
    $
    329.2
    
    
    $
    403.0Service cost
    
    
    5.1
    
    
    
    5.6Interest cost
    
    
    19.3
    
    
    
    21.3Plan participants contributions
    
    
    2.0
    
    
    
    2.1Foreign currency translation adjustment
    
    
    18.7
    
    
    
    (50.2
    )Effect of plan curtailment
    
    
    (0.2
    )
    
    
    Actuarial loss (gain)
    
    
    36.2
    
    
    
    (28.1
    )Benefits paid
    
    
    (24.5
    )
    
    
    (24.5
    )Benefit obligation as of end of period
    
    $
    385.8
    
    
    $
    329.2Change in plan assets:Fair value of plan assets as of beginning of period
    
    $
    156.1
    
    
    $
    246.0Actual return on plan assets  gain (loss)
    
    
    23.2
    
    
    
    (39.8
    )Employer contributions
    
    
    17.7
    
    
    
    18.9Plan participants contributions
    
    
    2.0
    
    
    
    2.1Foreign currency translation adjustment
    
    
    15.8
    
    
    
    (46.6
    )Benefits paid
    
    
    (24.5
    )
    
    
    (24.5
    )Fair value of plan assets as of end of period
    
    $
    190.3
    
    
    $
    156.1Funded status of the plans
    
    $
    (195.5
    )
    
    $
    (173.1
    )
 Non-U.S. defined-benefit plans
    
    2009
    
    
    2008Weighted-average assumptions used to determine
benefit obligations at end of period:Discount rate
    
    
    5.1
    %
    
    
    5.9
    %Rate of compensation increase
    
    
    3.3
    %
    
    
    3.4
    %Weighted-average assumptions used to determine
net periodic benefit cost for the period:Discount rate
    
    
    5.8
    %
    
    
    5.5
    %Expected return on plan assets
    
    
    6.5
    %
    
    
    6.7
    %Rate of compensation increase
    
    
    3.4
    %
    
    
    3.5
    %
 Investment Policies
   86




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##### Table of Contents



Target Weight at
    
    
    Position at December 31,Asset Class
    
    December 31, 2009
    
    
    2009
    
    
    2008Equities
    
    
    54
    %
    
    
    60
    %
    
    
    56
    %Long duration bonds
    
    
    27
    %
    
    
    26
    %
    
    
    26
    %Other fixed income
    
    
    9
    %
    
    
    8
    %
    
    
    12
    %Real estate
    
    
    10
    %
    
    
    6
    %
    
    
    6
    %
  Description
    
    Level 1
    
    
    Level 2
    
    
    TotalBonds
    
    
    
    
    
    $
    64.4
    
    
    $
    64.4Equities
    
    $
    4.3
    
    
    
    110.0
    
    
    
    114.3Real estate
    
    
    
    
    
    
    11.1
    
    
    
    11.1Cash and other short term
investments
    
    
    0.5
    
    
    
    
    
    
    
    0.5Net assets
    
    $
    4.8
    
    
    $
    185.5
    
    
    $
    190.3
  Bonds:
 Equities:
 Real Estate:
 Cash and other Short Term Investments:
   87




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##### Table of Contents



Basis of Rate-of-Return Assumption
  Amounts recognized in the consolidated balance sheets consist of
 2009
    
    
    2008Prepaid pension costs
    
    $
    0.1
    
    
    $
    0.3Accounts payable and accrued expenses
    
    
    (12.8
    )
    
    
    (12.8
    )Pension benefit liabilities
    
    
    (182.8
    )
    
    
    (160.6
    )Net amount recognized
    
    $
    (195.5
    )
    
    $
    (173.1
    )
 Pre-tax amounts recognized in accumulated other comprehensive income at year end consist of
 2009
    
    
    2008Net actuarial loss (gain)
    
    $
    14.4
    
    
    $
    (14.1
    )Accumulated other comprehensive loss (income)
    
    $
    14.4
    
    
    $
    (14.1
    )
   Non-U.S. pension plans with benefit obligations in excess of assets
    
    2009
    
    
    2008Projected benefit obligation, December 31
    
    $
    384.6
    
    
    $
    328.3Accumulated benefit obligation, December 31
    
    
    359.1
    
    
    
    308.1Fair value of plan assets, December 31
    
    
    189.0
    
    
    
    154.9
  Non-U.S. defined-benefit plans
    
    2009
    
    
    2008
    
    
    2007Service cost of benefits earned during the period
    
    $
    5.1
    
    
    $
    5.6
    
    
    $
    6.9Interest cost on projected benefit obligation
    
    
    19.3
    
    
    
    21.3
    
    
    
    19.2Expected return on plan assets
    
    
    (12.8
    )
    
    
    (16.0
    )
    
    
    (15.4
    )Amortization of net actuarial gain
    
    
    (0.9
    )
    
    
    (0.5
    )
    
    
    Net periodic pension cost
    
    $
    10.7
    
    
    $
    10.4
    
    
    $
    10.7
   88




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##### Table of Contents



Pension Benefits2010
    
    $
    22.22011
    
    
    22.52012
    
    
    21.42013
    
    
    23.02014
    
    
    24.52015-2019
    
    
    125.6
  NOTE 18. FINANCIAL INSTRUMENTS
  December 31, 2009
    
    
    December 31, 2008Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    Estimatedamount
    
    
    Fair Value
    
    
    amount
    
    
    Fair ValueAssets/(Liabilities):Money market investments
    
    $
    250.1
    
    
    $
    250.1
    
    
    $
    192.1
    
    
    $
    192.1Long-term debt, including current portion
    
    
    (472.5
    )
    
    
    (462.1
    )
    
    
    (495.7
    )
    
    
    (405.0
    )Foreign currency contract obligations
    
    
    (4.1
    )
    
    
    (4.1
    )
    
    
    7.4
    
    
    
    7.4Natural gas contracts
    
    
    (4.6
    )
    
    
    (4.6
    )
    
    
    (13.5
    )
    
    
    (13.5
    )
   December 31, 2009
    
    
    December 31, 2008Fair value based on
    
    
    Fair value based onQuoted,
    
    
    Other
    
    
    Quoted,
    
    
    Otheractive
    
    
    observable
    
    
    active
    
    
    observablemarkets
    
    
    inputs
    
    
    markets
    
    
    inputsLevel 1
    
    
    Level 2
    
    
    Level 1
    
    
    Level 2Assets/(Liabilities):Money market investments
    
    $
    250.1
    
    
    
    
    
    
    $
    192.1
    
    
    
    Foreign currency contract obligations
    
    
    (4.1
    )
    
    
    
    
    
    
    7.4
    
    
    
    Natural gas contracts
    
    
    
    
    
    $
    (4.6
    )
    
    
    
    
    
    $
    (13.5
    )
   89




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##### Table of Contents



NOTE 19. DERIVATIVE FINANCIAL INSTRUMENTS
  Counter Party Risk
  Commodity Price Risk
   90




---



##### Table of Contents



Currency Rate Risk
 Sales and Purchases
  Intercompany Loan Hedges
 Interest Rate Risk
  91




---



##### Table of Contents



Financial Statement Impacts
  Asset DerivativesBalance Sheet
    
    
    FairLocation
    
    ValueDerivatives designated as hedging instrumentsForeign exchange contracts  purchases and sales
    
    Other current assets
    
    $
    0.2Total derivative assets designated as hedging instruments
    
    
    
    
    
    $
    0.2Derivatives not designated as hedging instrumentsForeign exchange contracts  intercompany loans
    
    Other current assets
    
    $
    0.1Total derivative assets not designated as hedging instruments
    
    
    
    
    
    $
    0.1Liability DerivativesBalance Sheet
    
    
    FairDerivatives designated as hedging instruments
    
    Location
    
    ValueNatural gas commodity contracts
    
    Accounts payable and accrued expenses
    
    $
    3.6Natural gas commodity contracts
    
    Other long-term liabilities
    
    
    0.2Foreign exchange contracts  purchases and sales
    
    Accounts payable and accrued expenses
    
    
    4.3Total derivative liabilities designated as hedging instruments
    
    
    
    
    
    $
    8.1Liability DerivativesBalance Sheet
    
    
    FairDerivatives not designated as hedging instruments
    
    Location
    
    ValueNatural gas commodity contracts
    
    Accounts payable and accrued expenses
    
    $
    0.8Foreign exchange contracts  intercompany loans
    
    Accounts payable and accrued expenses
    
    
    0.1Total derivative liabilities not designated as hedging instruments
    
    
    
    
    
    $
    0.9
 Amount of Gain/(Loss)Recognized in OtherComprehensiveIncome (OCI)Derivatives in Cash Flow Hedging Relationships
    
    (Effective Portion)Natural gas commodity contracts
    
    $
    (4.3
    )Foreign exchange contracts  purchases and sales
    
    
    (4.1
    )Total
    
    $
    (8.4
    )
  92




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##### Table of Contents



Gain/(Loss) Reclassified from AccumulatedOCI into Income (Effective Portion) (a)Year EndedDecember 31, 2009Derivatives in Cash Flow Hedging Relationships
    
    Location
    
    
    AmountNatural gas commodity contracts
    
    Cost of goods sold
    
    $
    (22.4
    )Foreign exchange contracts 
purchases and sales
    
    Cost of goods sold
    
    
    1.4Total
    
    
    
    
    
    $
    (21.0
    )
 (a)
    
    As of December 31, 2009 the amount of existing (losses) in AOCI expected to be
recognized in earnings over the next twelve months is $(8.2) million. Location ofGain/(Loss)Recognized in Incomeon Derivative(Ineffective Portion)Derivatives in Cash Flow Hedging Relationships
    
    (b)Natural gas commodity contracts
    
    Cost of goods soldForeign exchange contracts  purchases and sales
    
    SG&A expenseInterest rate swap contracts
    
    Interest expense
 (b)
    
    The loss recognized in income for the year ended December 31, 2009 of $0.9 million
related to the ineffective portion of the hedging relationships. No gains or losses are
excluded from the assessment of hedge effectiveness.  NOTE 20. GUARANTEES
   93




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##### Table of Contents



NOTE 21. PRODUCT WARRANTIES
  2009
    
    
    2008Balance at beginning of year
    
    $
    16.3
    
    
    $
    17.6Reductions for payments
    
    
    (20.4
    )
    
    
    (25.2
    )Current period warranty accruals
    
    
    18.7
    
    
    
    25.4Preexisting warranty accrual changes
    
    
    (0.5
    )
    
    
    (1.2
    )Effects of foreign exchange translation
    
    
    
    
    
    
    (0.3
    )Balance at end of year
    
    $
    14.1
    
    
    $
    16.3
  NOTE 22. OTHER LONG-TERM LIABILITIES
 December 31,
    
    
    December 31,2009
    
    
    2008Long-term deferred compensation arrangements
    
    $
    29.8
    
    
    $
    30.4U.S. workers compensation
    
    
    11.9
    
    
    
    13.4Environmental liabilities
    
    
    6.3
    
    
    
    6.5Other
    
    
    10.0
    
    
    
    12.1Total other long-term liabilities
    
    $
    58.0
    
    
    $
    62.4
 NOTE 23. STOCK-BASED COMPENSATION PLANS
    94




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##### Table of Contents



Year Ended December 31, 2009Weighted-Weighted-
    
    
    average
    
    
    AggregateNumber of
    
    
    average
    
    
    remaining
    
    
    intrinsicshares
    
    
    exercise
    
    
    contractual
    
    
    value(thousands)
    
    
    price
    
    
    term (years)
    
    
    (millions)Option shares outstanding at beginning of period
    
    
    1,532.9
    
    
    $
    29.85Options granted
    
    
    434.9
    
    
    
    13.46Option shares exercised
    
    
    (79.3
    )
    
    
    (29.37
    )
    
    
    
    
    
    $
    1.0Options forfeited
    
    
    (261.0
    )
    
    
    (27.37
    )Option shares outstanding at end of period
    
    
    1,627.5
    
    
    $
    25.87
    
    
    
    7.3
    
    
    $
    21.3Option shares exercisable at end of period
    
    
    1,627.5
    
    
    
    25.87
    
    
    
    7.3
    
    
    $
    21.3Option shares expected to vest
    
    
    
    
    
    
    
 Year Ended December 31, 2008Weighted-Weighted-
    
    
    average
    
    
    AggregateNumber of
    
    
    average
    
    
    remaining
    
    
    intrinsicshares
    
    
    exercise
    
    
    contractual
    
    
    value(thousands)
    
    
    price
    
    
    term (years)
    
    
    (millions)Option shares outstanding at beginning of period
    
    
    1,569.8
    
    
    $
    38.99Options granted
    
    
    195.7
    
    
    
    29.73Option adjustment for March dividend (see below)
    
    
    95.8
    
    
    
    29.16Option shares exercised
    
    
    
    
    
    
    Options forfeited
    
    
    (328.4
    )
    
    
    (31.02
    )Option shares outstanding at end of period
    
    
    1,532.9
    
    
    $
    29.85
    
    
    
    7.9
    
    
    
    Option shares exercisable at end of period
    
    
    505.8
    
    
    
    29.85
    
    
    
    7.9
    
    
    
    Option shares expected to vest
    
    
    936.6
    
    
    
    30.17
    
    
    
    
    
    
    
    
   95




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##### Table of Contents



2009
    
    
    2008
    
    
    2007Weighted-average grant date fair value of
options granted (dollars per option)
    
    $
    4.77
    
    
    $
    12.21
    
    
    $
    20.64AssumptionsRisk free rate of return
    
    
    2.1
    %
    
    
    3.2
    %
    
    
    4.8
    %Expected volatility
    
    
    32.7
    %
    
    
    29.8
    %
    
    
    30.2
    %Expected term (in years)
    
    
    6.0
    
    
    
    6.0
    
    
    
    6.0Expected dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
   Original Grant Terms
    
    
    Adjusted Grant TermsNumber of
    
    
    Exercise
    
    
    Number of
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOptions granted in 2006
    
    
    1,445,700
    
    
    $
    38.42
    
    
    
    1,520,024
    
    
    $
    29.37Options granted in 2007
    
    
    64,100
    
    
    
    52.38
    
    
    
    64,100
    
    
    
    39.88Options granted in 2008
    
    
    110,370
    
    
    
    34.00
    
    
    
    131,904
    
    
    
    28.45
  96




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##### Table of Contents



Non-Vested Stock AwardsWeighted-average fairNumber of
    
    
    value at grantShares
    
    
    dateJanuary 1, 2008
    
    
    590,934
    
    
    $
    39.24Granted
    
    
    307,866
    
    
    
    32.61Vested
    
    
    (152,945
    )
    
    
    (36.89
    )Forfeited
    
    
    (138,369
    )
    
    
    (37.54
    )December 31, 2008
    
    
    607,486
    
    
    $
    36.86Granted
    
    
    445,183
    
    
    
    13.46Vested
    
    
    (947,459
    )
    
    
    (26.53
    )Forfeited
    
    
    (105,210
    )
    
    
    (34.23
    )December 31, 2009
    
    
    0
    
    
    $
    0.00
      97




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##### Table of Contents



NOTE 24. EMPLOYEE COMPENSATION
  Employee compensation cost
    
    2009
    
    
    2008
    
    
    2007Wages, salaries and incentive compensation
    
    $
    635.6
    
    
    $
    710.8
    
    
    $
    742.7Payroll taxes
    
    
    69.7
    
    
    
    75.7
    
    
    
    77.2Pension expense (credits), net
    
    
    (31.4
    )
    
    
    (34.6
    )
    
    
    (30.3
    )Insurance and other benefit costs
    
    
    69.1
    
    
    
    77.5
    
    
    
    84.0Stock-based compensation
    
    
    38.3
    
    
    
    8.1
    
    
    
    13.6Total
    
    $
    781.3
    
    
    $
    837.5
    
    
    $
    887.2
 NOTE 25. LEASES
  2009
    
    
    2008
    
    
    2007Rent expense
    
    $
    25.8
    
    
    $
    25.0
    
    
    $
    23.8Sublease (income)
    
    
    (3.1
    )
    
    
    (2.0
    )
    
    
    (1.5
    )Net rent expense
    
    $
    22.7
    
    
    $
    23.0
    
    
    $
    22.3
  Total Minimum
    
    
    Sublease
    
    
    Net MinimumScheduled minimum lease payments
    
    Lease Payments
    
    
    (Income)
    
    
    Lease Payments2010
    
    $
    14.4
    
    
    $
    (2.2
    )
    
    $
    12.22011
    
    
    10.6
    
    
    
    (1.8
    )
    
    
    8.82012
    
    
    6.7
    
    
    
    (1.0
    )
    
    
    5.72013
    
    
    3.6
    
    
    
    (0.6
    )
    
    
    3.02014
    
    
    1.9
    
    
    
    (0.5
    )
    
    
    1.4Thereafter
    
    
    6.3
    
    
    
    (2.3
    )
    
    
    4.0Total
    
    $
    43.5
    
    
    $
    (8.4
    )
    
    $
    35.1
  Assets under capital leases
    
    2009
    
    
    2008Land
    
    $
    1.6
    
    
    $
    1.6Building
    
    
    3.2
    
    
    
    3.2Machinery
    
    
    3.0
    
    
    
    3.0Less accumulated amortization
    
    
    (2.7
    )
    
    
    (2.0
    )Net assets
    
    $
    5.1
    
    
    $
    5.8
  98




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##### Table of Contents



NOTE 26. SHAREHOLDERS EQUITY
   December 31,
    
    
    December 31,2009
    
    
    2008Foreign currency translation adjustments
    
    $
    23.9
    
    
    $
    (10.5
    )Derivative (loss), net
    
    
    (5.5
    )
    
    
    (3.3
    )Pension and postretirement adjustments
    
    
    (316.2
    )
    
    
    (335.0
    )Accumulated other comprehensive (loss)
    
    $
    (297.8
    )
    
    $
    (348.8
    )
  Pre-tax
    
    
    
    
    
    
    After taxAmount
    
    
    Tax (Expense)
    
    
    AmountForeign currency translation adjustments
    
    $
    38.3
    
    
    $
    (3.9
    )
    
    $
    34.4Derivative (loss), net
    
    
    (1.6
    )
    
    
    (0.6
    )
    
    
    (2.2
    )Pension and postretirement adjustments
    
    
    37.9
    
    
    
    (19.1
    )
    
    
    18.8Total other comprehensive income (loss)
    
    $
    74.6
    
    
    $
    (23.6
    )
    
    $
    51.0
 NOTE 27. SUPPLEMENTAL FINANCIAL INFORMATION
 2009
    
    
    2008
    
    
    2007Selected operating expensesMaintenance and repair costs
    
    $
    103.5
    
    
    $
    111.3
    
    
    $
    116.9Research and development costs
    
    
    38.0
    
    
    
    38.8
    
    
    
    44.0Advertising costs
    
    
    28.8
    
    
    
    29.6
    
    
    
    36.2Other non-operating expenseForeign currency translation loss, net of hedging activity
    
    $
    0.3
    
    
    $
    1.1
    
    
    $
    0.7Other
    
    
    0.6
    
    
    
    0.2
    
    
    
    0.7Total
    
    $
    0.9
    
    
    $
    1.3
    
    
    $
    1.4Other non-operating incomeInterest income
    
    $
    3.1
    
    
    $
    10.5
    
    
    $
    15.3Foreign currency translation gain, net of hedging activity
    
    
    0.1
    
    
    
    0.1
    
    
    
    2.5Other
    
    
    
    
    
    
    
    
    
    
    0.4Total
    
    $
    3.2
    
    
    $
    10.6
    
    
    $
    18.2
 NOTE 28. SUPPLEMENTAL CASH FLOW INFORMATION
 2009
    
    
    2008
    
    
    2007Interest paid
    
    $
    10.4
    
    
    $
    24.2
    
    
    $
    47.8Income taxes paid (refunded), net
    
    
    8.9
    
    
    
    25.7
    
    
    
    (181.4
    )
  99




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##### Table of Contents



NOTE 29. RELATED PARTIES
   NOTE 30. LITIGATION AND RELATED MATTERS
 ENVIRONMENTAL MATTERS
 Environmental Expenditures
  Environmental Remediation
 Summary
    100




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##### Table of Contents



Effects of Chapter 11
   Specific Events
    Summary of Financial Position
   101




---



##### Table of Contents



PATENT INFRINGEMENT CLAIMS
  ®
 OTHER CLAIMS
   102




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##### Table of Contents



NOTE 31. EARNINGS PER SHARE
   2009
    
    
    2008
    
    
    2007Net earnings
    
    $
    77.7
    
    
    $
    81.0
    
    
    $
    145.3Net earnings allocated to non-vested share
awards
    
    
    (0.4
    )
    
    
    (0.6
    )
    
    
    (1.6
    )Net earnings attributable to common shares
    
    $
    77.3
    
    
    $
    80.4
    
    
    $
    143.7
  millions of shares
    
    2009
    
    
    2008
    
    
    2007Basic shares outstanding
    
    
    56.8
    
    
    
    56.4
    
    
    
    56.1Dilutive effect of stock option awards
    
    
    0.2
    
    
    
    
    
    
    
    Diluted shares outstanding
    
    
    57.0
    
    
    
    56.4
    
    
    
    56.1
 NOTE 32. SUBSEQUENT EVENT
   103




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ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
    
 ITEM 9B.
    
    OTHER INFORMATION
   104




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##### Table of Contents



PART III
 
 ITEM 10.
    
    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  
 ITEM 11.
    
    EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
  
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
   105




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##### Table of Contents



PART IV
 
 ITEM 15.
    
    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
  1.
    
    The financial statements and schedule of Armstrong World Industries, Inc. filed as a part
of this 2009 Annual Report on Form 10-K is listed in the Index to Financial Statements and
Schedules on Page 48.2.
    
    The financial statements required to be filed pursuant to Item 15 of Form 10-K are:Worthington Armstrong Venture consolidated financial statements for the years ended
December 31, 2009, 2008, and 2007 (filed herewith as Exhibit 99.1)3.
    
    The following exhibits are filed as part of this 2009 Annual Report on Form 10-K:
 Exhibit No.
    
    DescriptionNo. 2
    
    Armstrong World Industries, Inc.s Fourth Amended Plan of Reorganization, as amended by
modifications through May 23, 2006, is incorporated by reference from the 2005 Annual Report
on Form 10-K, wherein it appeared as Exhibit 2.3.No. 3.1
    
    Amended and Restated Certificate of Incorporation of Armstrong World Industries, Inc.
is incorporated by reference from the Current Report on Form 8-K dated October 2, 2006,
wherein it appeared as Exhibit 3.1.No. 3.2
    
    Bylaws of Armstrong World Industries, Inc. are incorporated by reference from the
Current Report on Form 8-K dated October 2, 2006, wherein they appeared as Exhibit 3.2.No. 10.1
    
    Management Achievement Plan for Key Executives, effective as of November 28, 1983, as
amended April 30, 2007 and December 8, 2008, is incorporated by reference from the 2008
Annual Report on Form 10-K, wherein it appeared as Exhibit 10.1. *No. 10.2
    
    Retirement Benefit Equity Plan, effective January 1, 2005, as amended October 29, 2007
and December 8, 2008, is incorporated by reference from the 2008 Annual Report on Form 10-K,
wherein it appeared as Exhibit 10.2. *No. 10.3
    
    Bonus Replacement Retirement Plan, effective as of January 1, 1998, as amended January
1, 2007, is incorporated by reference from the 2007 Annual Report on Form 10-K, wherein it
appeared as Exhibit 10.9.*No. 10.4
    
    Employment Agreement with Michael D. Lockhart, as amended, is incorporated by
reference from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2008,
wherein it appeared as Exhibit 10.8. *No. 10.5
    
    Nonqualified Deferred Compensation Plan effective January 2005 is incorporated by
reference from the 2005 Annual Report on Form 10-K, wherein it appeared as Exhibit 10.29. *No. 10.6
    
    Schedule of Armstrong World Industries, Inc. Nonemployee Directors Compensation is
incorporated by reference from the Quarterly Report filed on Form 10-Q for the quarter ended
September 30, 2009, wherein it appeared as Exhibit 10.8.*
  106




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Exhibit No.
    
    DescriptionNo. 10.7
    
    Credit Agreement, dated as of October 2, 2006, by and among the Company, certain
subsidiaries of the Company as guarantors, Bank of America, N.A., as Administrative Agent,
the other lenders party thereto, JP Morgan Chase Bank, N.A. and Barclays Bank PLC, as
Co-Syndication Agents and LaSalle Bank National Association and the Bank of Nova Scotia, as
Co-Documentation Agents, is filed with this Report.No. 10.8
    
    Amendment No. 1, dated February 25, 2008, to the Credit Agreement, dated October 2,
2006, by and among the Company, certain subsidiaries of the Company as guarantors, Bank of
America, N.A., as Administrative Agent, the other lenders party thereto, JP Morgan Chase
Bank, N.A. and Barclays Bank PLC, as Co-Syndication Agents and LaSalle Bank National
Association and the Bank of Nova Scotia, as Co-Documentation Agents, is filed with this
Report.No. 10.9
    
    Armstrong World Industries, Inc. Asbestos Personal Injury Settlement Trust Agreement
dated as of October 2, 2006, by and among Armstrong World Industries, Inc. and trustees, is
incorporated by reference from the Current Report on Form 8-K dated October 2, 2006, wherein
it appeared as Exhibit 10.2.No. 10.10
    
    Stockholder and Registration Rights Agreement, dated as of October 2, 2006, by and
between Armstrong World Industries, Inc. and the Armstrong World Industries, Inc. Asbestos
Personal Injury Settlement Trust is incorporated by reference from the Current Report on Form
8-K dated October 2, 2006, wherein it appeared as Exhibit 10.3.No. 10.11
    
    2006 Long-Term Incentive Plan, as amended February 23, 2009, is incorporated by
reference from the 2008 Annual Report on Form 10-K, wherein it appeared as Exhibit 10.13. *No. 10.12
    
    Form of 2006 Long-Term Incentive Plan Stock Option Agreement is incorporated by
reference from the Current Report on Form 8-K dated October 2, 2006, wherein it appeared as
Exhibit 10.5. *No. 10.13
    
    Form of 2006 Long-Term Incentive Plan Restricted Stock Award Agreement is
incorporated by reference from the Current Report on Form 8-K dated October 2, 2006, wherein
it appeared as Exhibit 10.6. *No. 10.14
    
    Form of 2006 Long-Term Incentive Plan notice of restricted stock and/or option award
is incorporated by reference from the Current Report on Form 8-K dated October 2, 2006,
wherein it appeared as Exhibit 10.7. *No. 10.15
    
    Form of Indemnification Agreement for Officers and Directors of Armstrong World
Industries, Inc. is incorporated by reference from the Current Report on Form 8-K dated
October 2, 2006, wherein it appeared as Exhibit 10.8. A Schedule of Participating Officers
and Directors is filed with this Report. *No. 10.16
    
    2006 Phantom Stock Unit Plan, as amended December 8, 2008, is incorporated by
reference from the 2008 Annual Report on Form 10-K, wherein it appeared as Exhibit 10.18. *No. 10.17
    
    2006 Phantom Stock Unit Agreement is incorporated by reference from the Current
Report on Form 8-K dated October 23, 2006, wherein it appeared as Exhibit 10.3. A Schedule
of Participating Directors is incorporated by reference from the 2006 Annual Report on Form
10-K, wherein it appeared as Exhibit 10.36. *
  107




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##### Table of Contents



Exhibit No.
    
    DescriptionNo. 10.18
    
    2007 Award under the 2006 Phantom Stock Unit Agreement and the Schedule of
Participating Directors are incorporated by reference from the Current Report on Form 8-K
dated October 22, 2007, wherein they appeared as Exhibits 10.1 and 10.2, respectively. *No. 10.19
    
    Stipulation and Agreement with Respect to Claims of Armstrong Holdings, Inc. and
Armstrong Worldwide, Inc.; and Motion for Order Approving Stipulation and Agreement are
incorporated by reference from the Current Report on Form 8-K dated February 26, 2007,
wherein they appeared as Exhibits 99.2 and 99.3, respectively.No. 10.20
    
    Form of grant letter used in connection with the equity grant of stock options and
performance restricted shares under the 2006 Long-Term Incentive Plan to Michael D. Lockhart
is incorporated by reference from the 2007 Annual Report on Form 10-K, wherein it appeared as
Exhibit 10.34.*No. 10.21
    
    Form of grant letter used in connection with awards of restricted stock under the
2006 Long-Term Incentive Plan is incorporated by reference from the 2007 Annual Report on
Form 10-K, wherein it appeared as Exhibit 10.35.*No. 10.22
    
    Form of grant letter used in connection with award of stock options under the 2006
Long-Term Incentive Plan is incorporated by reference from the Quarterly Report on Form 10-Q
for the quarter ended March 31, 2008, wherein it appeared as Exhibit 10.37. *No. 10.23
    
    2008 Directors Stock Unit Plan, as amended December 8, 2008 is incorporated by
reference from the 2008 Annual Report on Form 10-K, wherein it appeared as Exhibit 10.27. *No. 10.24
    
    Form of Service Commencement Award to each of James C. Melville and Edward E. Steiner
is incorporated by reference from the Quarterly Report on Form 10-Q for the quarter ended
September 30, 2009, wherein it appeared as Exhibit 10.26. *No. 10.25
    
    Form of 2009 Award under the 2008 Director Stock Unit Plan is incorporated by
reference from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2009,
wherein it appeared as Exhibit 10.27. *No. 10.26
    
    Schedule of Participating Directors to the 2009 Award under the 2008 Directors Stock
Unit Plan is incorporated by reference from the Quarterly Report on Form 10-Q for the quarter
ended September 30, 2009, wherein it appeared as Exhibit 10.28. *No. 10.27
    
    Form of Change in Control Agreement with Michael D. Lockhart is incorporated by
reference from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2008,
wherein it appeared as Exhibit 10.39. *No. 10.28
    
    Form of Indemnification Agreement for Officers and Directors of Armstrong World
Industries, Inc. is incorporated by reference from the Quarterly Report on Form 10-Q for the
quarter ended September 30, 2009, wherein it appeared as Exhibit 10.32. A Schedule of
Participating Officers and Directors is filed with this Report. *No. 10.29
    
    Non-Disclosure Agreement, dated July 30, 2009, between Armstrong World Industries,
Inc. and TPG Capital, L.P. (incorporated by reference to Exhibit 3 to the Schedule 13D filed
by TPG Advisors VI, Inc., TPG Advisors V, Inc., David Bonderman and James G. Coulter with the
SEC on August 11, 2009).
  108




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##### Table of Contents



Exhibit No.
    
    DescriptionNo. 10.30
    
    Undertaking Letter from TPG Capital L.P., dated August 10, 2009, to Armstrong World
Industries, Inc. (incorporated by reference to Exhibit (e)(4) to the Schedule 14D-9 filed by
Armstrong World Industries, Inc. with the SEC on September 15, 2009).No. 10.31
    
    Offer Letter to Thomas B. Mangas dated December 23, 2009, is incorporated by
reference from the Current Report on Form 8-K dated January 8, 2010, wherein it appeared as
Exhibit 99.2. *No. 10.32
    
    Letter to Frank J. Ready dated January 8, 2010 is filed with this Report. *No. 11
    
    Computation of Earnings Per Share.No. 21
    
    Armstrong World Industries, Inc.s Subsidiaries.No. 23.1
    
    Consent of Independent Registered Public Accounting Firm.No. 23.2
    
    Consent of Independent Registered Public Accounting Firm.No. 24
    
    Power of Attorney and Authorizing Resolution.No. 31.1
    
    Certification of Principal Executive Officer required by Rule 13a-15(e) or 15d-15(e)
of the Securities Exchange Act.No. 31.2
    
    Certification of Principal Financial Officer required by Rule 13a-15(e) or 15d-15(e)
of the Securities Exchange Act.No. 32.1
    
    Certification of Chief Executive Officer required by Rule 13a and 18 U.S.C. Section
1350 (furnished herewith).No. 32.2
    
    Certification of Chief Financial Officer required by Rule 13a and 18 U.S.C. Section
1350 (furnished herewith).No. 99.1
    
    Worthington Armstrong Venture consolidated financial statements as of December 31,
2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007.No. 99.2
    
    Shareholders Agreement, dated as of August 28, 2009, by and among Armor TPG Holdings
LLC and Armstrong World Industries, Inc. Asbestos Personal Injury Settlement Trust
(incorporated by reference to Exhibit (d)(3) of the Schedule TO filed on September 3, 2009,
by TPG Advisors VI, Inc., Armor TPG Holdings LLC and others with respect to Armstrong World
Industries, Inc.).
 *
    
    Management Contract or Compensatory Plan.  109




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##### Table of Contents



ARMSTRONG WORLD INDUSTRIES, INC.
(Registrant)By:
    /s/ Michael D. LockhartChairman and Chief Executive OfficerDate: February 26, 2010   Name
    
    TitleMichael D. Lockhart
    
    Chairman and Chief Executive Officer
(Principal Executive Officer)Thomas B. Mangas
    
    Senior Vice President and Chief Financial Officer
(Principal Financial Officer)Stephen F. McNamara
    
    Vice President and Controller
(Chief Accounting Officer)Stanley A. Askren
    
    DirectorDavid Bonderman
    
    DirectorJon A. Boscia
    
    DirectorKevin Burns
    
    DirectorJames J. Gaffney
    
    DirectorJudith R. Haberkorn
    
    DirectorJames C. Melville
    
    DirectorJames J. OConnor
    
    DirectorJohn J. Roberts
    
    DirectorEdward E. Steiner
    
    Director
 By:
    /s/ Michael D. Lockhart(Michael D. Lockhart, as attorney-in-factfor AWI directors and on his own behalf)
As of February 26, 2010By:
    /s/ Thomas B. Mangas(Thomas B. Mangas)As of February 26, 2010By:
    /s/ Stephen F. McNamara(Stephen F. McNamara)As of February 26, 2010  110




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SCHEDULE II
 Valuation and Qualifying Reserves of Accounts Receivable
 2009
    
    
    2008
    
    
    2007Provision for LossesBalance at beginning of year
    
    $
    10.8
    
    
    $
    11.8
    
    
    $
    10.6Additions charged to earnings
    
    
    7.8
    
    
    
    8.6
    
    
    
    10.3Deductions
    
    
    (8.1
    )
    
    
    (9.6
    )
    
    
    (9.1
    )Balance at end of year
    
    $
    10.5
    
    
    $
    10.8
    
    
    $
    11.8Provision for Discounts and WarrantiesBalance at beginning of year
    
    $
    43.7
    
    
    $
    51.9
    
    
    $
    56.2Additions charged to earnings
    
    
    182.0
    
    
    
    225.6
    
    
    
    228.6Deductions
    
    
    (187.9
    )
    
    
    (233.8
    )
    
    
    (232.9
    )Balance at end of year
    
    $
    37.8
    
    
    $
    43.7
    
    
    $
    51.9




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##### Table of Contents



Exhibit Index
 Exhibit No.No. 10.7
    
    Credit Agreement, dated as of October 2, 2006, by and among the
Company, certain subsidiaries of the Company as guarantors, Bank
of America, N.A., as Administrative Agent, the other lenders
party thereto, JP Morgan Chase Bank, N.A. and Barclays Bank PLC,
as Co-Syndication Agents and LaSalle Bank National Association
and the Bank of Nova Scotia, as Co-Documentation Agents.No. 10.8
    
    Amendment No. 1, dated February 25, 2008, to the Credit
Agreement, dated October 2, 2006, by and among the Company,
certain subsidiaries of the Company as guarantors, Bank of
America, N.A. and Barclays Bank PLC, as Co-Syndication Agents
and LaSalle Bank National Association and the Bank of Nova
Scotia, as Co-Documentation Agents.No. 10.15
    
    Schedule of Participating Officers and Directors to form of
Indemnification Agreement for Officers and Directors
incorporated by reference from the Current Report on Form 8-K
dated October 2, 2006, wherein it appeared as Exhibit 10.8.No. 10.28
    
    Schedule of Participating Officers and Directors to form of
Indemnification Agreement for Officers and Directors
incorporated by reference from the Quarterly Report on Form 10-Q
for the quarter ended September 30, 2009, wherein it appeared as
Exhibit 10.32.No. 10.32
    
    Letter to Frank J. Ready dated January 8, 2010.No. 11
    
    Computation of Earnings Per Share.No. 21
    
    Armstrong World Industries, Inc.s Subsidiaries.No. 23.1
    
    Consent of Independent Registered Public Accounting Firm.No. 23.2
    
    Consent of Independent Registered Public Accounting Firm.No. 24
    
    Power of Attorney and Authorizing Resolution.No. 31.1
    
    Certification of Principal Executive Officer required by Rule
13a-15(e) or 15d-15(e) of the Exchange Act.No. 31.2
    
    Certification of Principal Financial Officer required by Rule
13a-15(e) or 15d-15(e) of the Exchange Act.No. 32.1
    
    Certification of Chief Executive Officer required by Rule 13a
and 18 U.S.C. Section 1350.No. 32.2
    
    Certification of Chief Financial Officer required by Rule 13a
and 18 U.S.C. Section 1350.No. 99.1
    
    Worthington Armstrong Venture consolidated financial statements
as of December 31, 2009 and 2008 and for the years ended
December 31, 2009, 2008 and 2007.