Armstrong Making Changes in Europe

Lancaster, PA, May 9. 2008--Armstrong World Industries intends to make sweeping changes to its underachieving European resilient flooring business, according to a story at Lancaster Online.

The overhaul, which is likely to include plant closings, was disclosed by Armstrong CEO Michael D. Lockhart in a conference call with Wall Street analysts.

Lockhart said the business "had a difficult first quarter and will likely continue to be challenged through the year. We're not happy. ..."

Though he acknowledged that "some market issues" are contributing to the downturn, Lockhart said "...our poor performance is largely the result of structural problems."

The problems include production costs and selling, and general and administrative expenses.

Lockhart said that although Armstrong is "actively evaluating many different options," the plan is likely to include plant closures, plant investment, outsourcing administrative work and having products made for Armstrong by other manufacturers, he told the analysts.

That last step could help Armstrong replace the residential and commercial production of sites that get closed

Lockhart did not estimate the cost of the plan or how many workers might be affected.

He did say it would take until 2010 for the "real significant benefits" to take hold "because of the time it takes to close plants."

Armstrong has five resilient flooring plants in Europe, according to its Web site: two in England, two in Germany and one in Sweden. The number of workers in those plants was not available.

Lockhart made his comments during a conference call to discuss Armstrong's first quarter financial results, which were released a week ago.

Armstrong's net profits overall fell 41.5 percent in the quarter. Its resilient flooring division, including its European business, posted an operating loss of $7.2 million, compared to an operating profit of $10.8 million in the 2007 quarter.