Stock Price, Market Condition, Halt Armstrong Plan

Lancaster, PA, March 3, 2008--Armstrong World Industries Inc. has quit shopping the company because the company's stock is undervalued and the housing and credit market conditions aren't conducive to a favorable deal.

CEO Michael D. Lockhart revealed the new strategy during a Friday morning conference. The company's fourth-quarter 2007 earnings soared to $19.6 million, or 34 cents a share, compared to $2.2 million, or 4 cents a share, a year earlier.

Armstrong has declared a special cash dividend of $4.50 per share payable on March 31 to shareholders of record on March 11.

That cash dividend represents a total payment of about $260 million. Lockhart said another $240 million in dividends would distributed this year if Armstrong's business performs as expected.

"We've always said there is no reason to pile up cash if we don't see a strategic need for it," Lockhart said. "I think the only reason we're waffling a little bit about it is we're in a pretty uncertain world."

Armstrong's share price soared more than 11 percent Friday and closed up 8.7 percent at $36 per share on a day when the market dropped more than 315 points.

According to Armstrong's fourth-quarter earnings report, the wood-flooring division prospered, with profits rising to $14.1 million from $10.2 million on the strength of improved manufacturing productivity and a more profitable mix of products sold.

But like the cabinet-sales division, the resilient-flooring division fared worse in the quarter.

Resilient flooring posted a loss of $7.3 million, versus a profit of $300,000 in the 2006 quarter, due to a slump in Europe.