Armstrong Reports 1Q Results

Lancaster, PA, April 27, 2006--Armstrong Holdings, Inc., in the first quarter reported net sales of $876.6 million that were 4% higher than first quarter net sales of $840.7 million in 2005. Excluding the effects of unfavorable foreign exchange rates of $19.7 million, consolidated net sales increased by 7%. First quarter 2006 operating income of $48.2 million compared to $7.7 million in the first quarter of 2005, with improved operating income in every business segment. Operating income benefited from sales growth and from improved productivity, both in manufacturing efficiencies and in reduced selling, general and administrative ("SG&A") expenses. In addition, a higher pension credit, lower charges for cost reduction initiatives, and a favorable settlement of a patent infringement case contributed to the year-over-year improvement. Inflationary cost increases partially offset these benefits. Resilient Flooring net sales were $283.8 million in the first quarter of 2006 and $284.9 million in the first quarter of 2005. Excluding the unfavorable impact of foreign exchange rates, net sales increased 2%. The increase was primarily due to growth in sales of commercial vinyl and laminate products in the Americas and favorable price and product mix in Europe. An operating loss of $3.4 million in the quarter compared to a loss in the first quarter of 2005 of $9.6 million. The improvement is primarily attributable to benefits from previously implemented cost reduction efforts that more than offset raw material cost inflation. Wood Flooring net sales of $205.2 million in the first quarter of 2006 grew 8% from $190.1 million in the prior year on double-digit volume growth in both engineered and solid wood floors, which was partially offset by price declines. Operating income of $11.5 million in the first quarter of 2006 compared to $8.8 million in the first quarter of 2005. The growth in operating income was primarily attributable to the increased sales volume and production efficiencies, which more than offset price declines. Textiles and Sports Flooring net sales in the first quarter of 2006 increased to $64.8 million from $62.9 million. Excluding the effects of unfavorable foreign exchange rates of $6.2 million, sales grew 14% on higher volume in both carpet and sports flooring, combined with improved product mix. Operating income of $0.5 million in 2006 compared to an operating loss in 2005 of $5.9 million. The improvement was primarily due to the increased sales. Lower SG&A expenses also contributed to the positive change. Building Products net sales of $267.9 million in the first quarter of 2006 increased from $253.6 million in the prior year. Excluding the effects of unfavorable foreign exchange rates of $8.0 million, sales increased by 9%, primarily due to price increases made to offset inflationary pressures, and by increased volume in the strong U.S. Commercial markets. Operating income increased to $40.0 million from operating income of $35.3 million in the first quarter of 2005. Increased selling prices covered a majority of the inflationary cost pressures of wage and salary increases and increased raw material, energy, and transportation costs. Operating income benefited from volume growth and increased equity earnings from our WAVE joint venture. Price realization essentially offset inflationary pressure from raw materials, energy and freight. Cabinets net sales in the first quarter of 2006 of $54.9 million increased from $49.2 million in 2005 on higher selling prices and improved product mix, primarily related to new product introductions. The sales growth was the primary driver of improved profitability with modest operating income of $0.2 million compared to the prior year's $5.9 million operating loss. In addition, the 2005 operating loss included higher SG&A expense and costs related to the shutdown of the Morristown, Tennessee manufacturing plant which were not repeated in 2006.