Armstrong 3Q Earnings Off

Lancaster, PA, October 30, 2006--Armstrong World Industries reported third quarter net earnings of $39.2 million, down from $46.1 million in the year-ago period. Net sales for the quarter were up 4% to $973.6 million compared to the $937.0 million posted in the third quarter of 2005, including a $13 million favorable impact from foreign exchange rates. For the first nine months of 2006, the company posted earnings of $107.4 million, nearly double the $60.2 million earned during the first nine months of 2005. For the first nine months of the year, the company reported net sales of $2.79 billion, up from $2.69 billion last year. Operating income for the quarter was $67.4 million, up slightly from $66.5 million a year ago. The company attributed improved operating income to price increases, improved product mix in its European businesses, improved direct manufacturing costs in all businesses, and lower manufacturing expenses in its flooring business. Resilient flooring net sales were $304.8 million in the third quarter of 2006 and $311.5 million in the same period of 2005. Excluding the favorable impact of foreign exchange rates, net sales decreased 4%. The decline was primarily due to decreased volume for vinyl products in North America. Wood flooring net sales of $217.2 million in the current quarter declined 1% from $220.2 million in the prior year as weakness in the U.S. housing markets drove volume declines in both engineered and solid wood floors. Building products net sales of $304.5 million in the current quarter increased from $268.2 million in the prior year. Excluding the effects of favorable foreign exchange rates of $5.0 million, sales increased by 12%, primarily due to price increases made to offset inflationary pressures, and improved product mix in both the U.S. and European markets. Volume increased in North America and the Pacific Rim. Cabinets net sales in the third quarter of 2006 of $60.8 million increased 6% from $57.4 million in 2005 on higher selling prices and improved product mix. Volume decreased slightly. The company said that for the fourth quarter, commercial markets are expected to remain strong, while the decline in the U.S. housing market will continue to reduce volumes in our residential businesses. It said on a consolidated basis, improved prices are anticipated to continue to offset cost inflation, and reductions in direct manufacturing costs are expected to be sustained.