10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008

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.

(Exact name of registrant as specified in its charter)

Pennsylvania	1-2116	23-0366390
(State or other jurisdiction of	Commission file	(I.R.S. Employer
incorporation or organization)	number	Identification No.)
P. O. Box 3001, Lancaster, Pennsylvania		17604
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (717) 397-0611

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

     Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

    Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

     Yes o No þ

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

     Yes þ No o

Number of shares of Armstrong World Industries, Inc.’s common stock outstanding as of July 24, 2008 – 57,117,637

TABLE OF CONTENTS

SECTION	PAGES
Uncertainties Affecting Forward-Looking Statements		3-4
PART I – FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements		5-22
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23-37
Item 3. Quantitative and Qualitative Disclosures about Market Risk		38
Item 4. Controls and Procedures		38
PART II – OTHER INFORMATION
Item 1. Legal Proceedings		39
Item 1A. Risk Factors		39
Item 4. Submission of Matters to a Vote of Security Holders		39
Item 6. Exhibits		40-43
Signatures		44
Exhibit 10.28
Exhibit 10.38
Exhibit 15
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

2

Uncertainties Affecting Forward-Looking Statements

Our disclosures here and in other public documents and comments contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Those statements provide our future expectations or forecasts, and can be identified by our use of words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “outlook,” etc. in discussions of future operating or financial performance or the outcome of contingencies such as liabilities or legal proceedings, or our ability to pay any dividends or take any particular corporate action.

Any of our forward-looking statements may turn out to be wrong. Our actual future results, or our ability to pay any dividend or take any particular corporate action, may differ materially. Forward-looking statements involve risks and uncertainties (such as those discussed in the Risk Factors section below) because they relate to events and depend on circumstances that may or may not occur in the future. We undertake no obligation beyond what is required under applicable securities law to update any forward-looking statement.

Risk Factors

Our business, operations and financial condition are subject to various risks. These risks should be taken into account in evaluating any investment decision involving Armstrong. It is not possible to predict or identify all factors that could cause actual results to differ materially from expected and historical results. The following discussion is a summary of what we believe to be our most significant risk factors and is not a complete list of all risks and uncertainties that might affect our future results. These and other factors could cause our actual results to differ materially from those in forward-looking statements made in this report.

We try to reduce both the likelihood that these risks will affect our businesses and their potential impact. But, no matter how accurate our foresight, how well we evaluate risks, and how effective we are at mitigating them, it is still possible that one of these problems or some other issue could have serious consequences for us, up to and including a materially adverse effect. See related discussions in this document and our other SEC filings for more details and subsequent disclosures.

Claims, litigation and regulatory actions

While we strive to ensure that our products comply with applicable government regulatory standards and internal requirements, and that our products perform effectively and safely, customers from time to time could claim that our products do not meet contractual requirements, and users could be harmed by use or misuse of our products. This could give rise to breach of contract, warranty or recall claims, or claims for negligence, product liability, strict liability, personal injury or property damage. The building materials industry has been subject to claims relating to silicates, mold, PVC, formaldehyde, toxic fumes, fire-retardant properties and other issues, as well as for incidents of catastrophic loss, such as building fires. Product liability insurance coverage may not be available or adequate in all circumstances. In addition, claims may arise related to patent infringement, environmental liabilities, distributor terminations, commercial contracts, antitrust or competition law, employment law and employee benefits issues, and other regulatory matters. While we have in place processes and policies to mitigate these risks and to investigate and address such claims as they arise, we cannot predict the costs to defend or resolve such claims.

Construction activity variability and the size of the market opportunity

Our businesses have greater sales opportunities when construction activity is strong and, conversely, have fewer opportunities when such activity declines. Construction activity tends to increase when economies are strong, interest rates are favorable, government spending is strong, and consumers are confident. Since most of our sales are in the U.S., its economy is the most important for our business, but conditions in Europe, Canada and Asia also are relevant.

3

Raw materials and sourced product issues

The cost and availability of raw materials, packaging materials, energy and sourced products are critical to our operations. For example, we use substantial quantities of natural gas, petroleum-based raw materials, hardwood lumber and mineral fiber in our manufacturing operations. The cost of some items has been volatile in recent years and availability has sometimes been tight. We source some materials from a limited number of suppliers, which, among other things, increases the risk of unavailability. Limited availability could cause us to reformulate products or to limit our production. The impact of increased costs is greatest where our ability to pass along increased costs through price increases on our products is limited, whether due to competitive pressures or other factors.

Consumer preference and competition

Our customers consider our products’ performance, product styling, customer service and price when deciding whether to purchase our products. Shifting consumer preference in our highly competitive markets, e.g. from residential vinyl products to other flooring products, styling preferences or inability to offer new competitive performance features could hurt our sales. For certain products, there is excess industry capacity in several geographic markets, which tends to increase price competition, as does competition from overseas competitors with lower cost structures.

International trade and operations

A significant portion of our products move in international trade, particularly among the U.S., Canada, Europe and Asia. Also, approximately 30% of our annual revenues are from operations outside the U.S. Our international trade is subject to currency exchange fluctuations, trade regulations, import duties, logistics costs and delays and other related risks. They are also subject to variable tax rates, credit risks in emerging markets, political risks, uncertain legal systems, restrictions on repatriating profits to the U.S. and loss of sales to local competitors following currency devaluations in countries where we import products for sale.

Challenges in executing operational restructuring actions

We look for ways to make our operations more efficient and effective. We reduce, move and expand our plants and operations as needed. Each action generally involves substantial planning and capital investment. We can err in planning and executing our actions, which could hurt our customer service and cause unplanned costs.

Labor contracts

Most of our manufacturing employees are represented by unions and are covered by collective bargaining or similar agreements that must be periodically renegotiated. Although we anticipate that we will reach new contracts as current ones expire, our negotiations may result in a significant increase in our costs. Failure to reach new contracts could lead to work stoppages, which could hurt production, revenues, profits and customer relations.

Dependence on key customers

Some of our businesses are dependent on a few key customers. For example, much of our North America revenue comes from sales to home center retailers including The Home Depot, Inc. and Lowe’s Companies, Inc. We do not have long-term contracts with them. The loss of sales to one of these major customers, or changes in our business relationship with them, could hurt both our revenues and profits.

4

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements
Armstrong World Industries, Inc., and Subsidiaries
Condensed Consolidated Statements of Earnings
(amounts in millions, except per share data)
Unaudited

	Three			Three
	Months			Months			Six Months			Six Months
	Ended June			Ended June			Ended June			Ended June
	30, 2008			30, 2007			30, 2008			30, 2007
Net sales	$	926.8		$	920.6		$	1,755.0		$	1,784.0
Cost of goods sold		701.6			687.2			1,343.9			1,349.0
Gross profit		225.2			233.4			411.1			435.0
Selling, general and administrative expenses		147.0			151.1			306.8			297.7
Restructuring charges, net		—			—			0.8			0.1
Equity earnings from joint ventures		(18.5	)		(11.9	)		(31.7	)		(22.5	)
Operating income		96.7			94.2			135.2			159.7
Interest expense		7.8			14.3			16.2			30.8
Other non-operating expense		0.1			0.3			0.4			0.8
Other non-operating (income)		(2.1	)		(5.0	)		(6.4	)		(8.0	)
Chapter 11 reorganization costs, net		—			0.1			—			0.1
Earnings from continuing operations before income taxes		90.9			84.5			125.0			136.0
Income tax expense		38.5			31.8			57.5			52.6
Earnings from continuing operations		52.4			52.7			67.5			83.4
(Loss) earnings from discontinued operations, net of income tax of $0.0, $0.0, $0.4 and $0.3		—			(1.1	)		0.1			(5.8	)
Net earnings	$	52.4		$	51.6		$	67.6		$	77.6
Earnings per share of common stock, continuing operations:
Basic	$	0.93		$	0.94		$	1.20		$	1.49
Diluted	$	0.91		$	0.93		$	1.18		$	1.48
(Loss) per share of common stock, discontinued operations:
Basic	$	—		$	(0.02	)	$	—		$	(0.10	)
Diluted	$	—		$	(0.02	)	$	—		$	(0.10	)
Net earnings per share of common stock:
Basic	$	0.93		$	0.92		$	1.20		$	1.39
Diluted	$	0.91		$	0.91		$	1.18		$	1.38
Average number of common shares outstanding:
Basic		56.4			55.9			56.3			55.8
Diluted		57.3			56.5			57.2			56.4

See accompanying notes to Condensed Consolidated Financial Statements beginning on page 9.

5

Armstrong World Industries, Inc., and Subsidiaries
Condensed Consolidated Balance Sheets
(amounts in millions, except share data)

	Unaudited
	June 30, 2008		December 31, 2007
Assets
Current assets:
Cash and cash equivalents	$	240.2	$	514.3
Accounts and notes receivable, net		364.9		300.7
Inventories, net		580.5		543.5
Deferred income taxes		43.5		43.5
Income tax receivable		25.3		25.3
Other current assets		79.9		63.2
Total current assets		1,334.3		1,490.5
Property, plant and equipment, less accumulated depreciation and amortization of $228.7 and $158.9, respectively		994.0		1,012.8
Prepaid pension costs		742.9		708.0
Investment in affiliates		237.3		232.6
Intangible assets, net		679.7		686.5
Deferred income taxes		384.2		424.5
Other noncurrent assets		88.0		84.5
Total assets	$	4,460.4	$	4,639.4
Liabilities and Shareholders’ Equity
Current liabilities:
Short-term debt	$	8.8	$	3.9
Current installments of long-term debt		30.0		24.7
Accounts payable and accrued expenses		380.3		428.2
Income tax payable		15.5		0.5
Deferred income taxes		29.5		29.5
Total current liabilities		464.1		486.8
Long-term debt, less current installments		477.2		485.8
Postretirement and postemployment benefit liabilities		314.6		318.6
Pension benefit liabilities		217.5		205.5
Other long-term liabilities		65.7		67.8
Income taxes payable		162.5		159.4
Deferred income taxes		470.0		471.4
Minority interest in subsidiaries		7.0		6.9
Total noncurrent liabilities		1,714.5		1,715.4
Shareholders’ equity:
Common stock, $0.01 par value per share, authorized 200 million shares; issued 57,122,028 shares and 56,828,754 shares, respectively		0.6		0.6
Capital in excess of par value		2,020.9		2,112.6
Retained earnings		53.3		147.5
Accumulated other comprehensive income		207.0		176.5
Total shareholders’ equity		2,281.8		2,437.2
Total liabilities and shareholders’ equity	$	4,460.4	$	4,639.4

See accompanying notes to Condensed Consolidated Financial Statements beginning on page 9.

6

Armstrong World Industries, Inc., and Subsidiaries
Condensed Consolidated Statements of Shareholders’ Equity
(amounts in millions)
Unaudited

	Six Months Ended					Six Months Ended
	June 30, 2008					June 30, 2007
Common stock:
Balance at beginning of year and June 30	$	0.6				$	0.6
Capital in excess of par value:
Balance at beginning of year	$	2,112.6				$	2,099.8
Share-based employee compensation		3.7					6.2
Dividends in excess of retained earnings		(95.4	)				—
Balance at June 30	$	2,020.9				$	2,106.0
Retained earnings:
Balance at beginning of year	$	147.5				$	2.2
Net earnings for period		67.6		$	67.6		77.6		$	77.6
Dividends		(161.8	)				—
Balance at June 30	$	53.3				$	79.8
Accumulated other comprehensive income:
Balance at beginning of year	$	176.5				$	62.1
Foreign currency translation adjustments		13.9					11.7
Derivative gain (loss), net		15.3					(3.7	)
Pension and postretirement adjustments		1.3					—
Total other comprehensive income		30.5			30.5		8.0			8.0
Balance at June 30	$	207.0				$	70.1
Comprehensive income				$	98.1				$	85.6
Total shareholders’ equity	$	2,281.8				$	2,256.5

See accompanying notes to Condensed Consolidated Financial Statements beginning on page 9.

7

Armstrong World Industries, Inc., and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(amounts in millions)
Unaudited

	Six Months Ended June 30,
	2008			2007
Cash flows from operating activities:
Net earnings	$	67.6		$	77.6
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		74.6			67.2
Deferred income taxes		29.5			45.2
Share-based compensation		3.7			6.2
Equity earnings from affiliates, net		(31.7	)		(22.5	)
Distributions from equity affiliates		27.0			90.5
Cash effect of hedging activities		(1.5	)		(1.5	)
Changes in operating assets and liabilities:
Receivables		(55.1	)		(56.9	)
Inventories		(26.4	)		0.3
Other current assets		1.9			(13.1	)
Other noncurrent assets		(33.0	)		(29.4	)
Accounts payable and accrued expenses		(49.2	)		7.7
Income taxes payable		17.8			21.0
Other long-term liabilities		(9.6	)		(15.0	)
Cash distributed under the POR		(2.6	)		(13.9	)
Other, net		1.3			0.2
Net cash provided by operating activities		14.3			163.6
Cash flow from investing activities:
Purchases of property, plant and equipment and computer software		(32.4	)		(39.4	)
Acquisitions		(0.8	)		—
Divestitures		—			53.4
Proceeds from the sale of assets		—			2.2
Net cash (used for) provided by investing activities		(33.2	)		16.2
Cash flows from financing activities:
Increase (decrease) in short-term debt, net		4.3			(1.2	)
Issuance of long-term debt		4.9			—
Payments of long-term debt		(8.9	)		(103.0	)
Financing costs		(2.6	)		—
Special dividend paid		(256.4	)		—
Net cash (used for) financing activities		(258.7	)		(104.2	)
Effect of exchange rate changes on cash and cash equivalents		3.5			7.1
Net (decrease) increase in cash and cash equivalents		(274.1	)		82.7
Cash and cash equivalents at beginning of year		514.3			263.8
Cash and cash equivalents at end of period	$	240.2		$	346.5

See accompanying notes to Condensed Consolidated Financial Statements beginning on page 9.

8

Armstrong World Industries, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(dollar amounts in millions)

NOTE 1. BUSINESS AND BASIS OF PRESENTATION

Armstrong World Industries, Inc. (“AWI”) is a Pennsylvania corporation incorporated in 1891. When we refer to “we”, “our” and “us” in this report, we are referring to AWI and its subsidiaries.

The accounting policies used in preparing the Condensed Consolidated Financial Statements in this Form 10-Q are the same as those used in preparing the Consolidated Financial Statements for the year ended December 31, 2007. These statements should therefore be read in conjunction with the Consolidated Financial Statements and notes that are included in the Form 10-K for the fiscal year ended December 31, 2007. In the opinion of management, all adjustments of a normal recurring nature have been included to provide a fair statement of the results for the reporting periods presented. Quarterly results are not necessarily indicative of annual earnings, primarily due to the different level of sales in each quarter of the year and the possibility of changes in general economic conditions.

These Condensed Consolidated Financial Statements are prepared in accordance with U.S. generally accepted accounting principles. The statements include management estimates and judgments, where appropriate. Management utilizes estimates to record many items including asset values, allowances for bad debts, inventory obsolescence and lower of cost or market charges, pension assets and liabilities, stock compensation, warranty, workers’ compensation, general liability, income taxes and environmental claims. When preparing an estimate, management determines the amount based upon the consideration of relevant information. Management may confer with outside parties, including outside counsel. Actual results may differ from these estimates.

Our policy is to record distributions from equity investments using the equity in earnings method and report returns on investments as cash flows from operating activities. Accordingly, ”Distributions from equity affiliates” in the 2007 Condensed Consolidated Statements of Cash Flows was reclassified from cash flows from investing activities to cash flows from operating activities. The amount reclassified was $90.5 million in the six months ended June 30, 2007. In addition, certain amounts in the Condensed Consolidated Statements of Earnings were reclassified from selling, general and administrative expenses to cost of goods sold. The amount reclassified was $0.6 million in the three months ended June 30, 2007 and $1.1 million in the six months ended June 30, 2007. We also reclassified $10.5 million in the December 31, 2007 Condensed Consolidated Balance Sheet from “Accounts payable and accrued expenses” to “Accounts and notes, receivable, net.” This reclassification also resulted in a reclassification of $1.7 million in the 2007 Condensed Consolidated Statement of Cash Flows from changes in accounts payable and accrued expenses to changes in receivables.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”), which establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. FAS 157 is generally effective for fiscal years beginning after November 15, 2007. However, the effective date for certain non-financial assets and liabilities was deferred to fiscal years beginning after November 15, 2008. We adopted the required provisions of FAS 157 on January 1, 2008. There was no material impact from adopting FAS 157.

In March 2007, the FASB ratified Emerging Issues Task Force Issue No. 06-10 “Accounting for Collateral Assignment Split-Dollar Life Insurance Agreements” (“EITF 06-10”). EITF 06-10 provides guidance for determining a liability as well as recognition and measurement of the associated asset on the basis of the terms of the collateral assignment agreement. We adopted EITF 06-10 on January 1, 2008. There was no material impact from adopting EITF 06-10.

9

Armstrong World Industries, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(dollar amounts in millions)

Operating results for the second quarter and first six months of 2008 and the corresponding periods of 2007 included in this report are unaudited. However, these Condensed Consolidated Financial Statements have been reviewed by an independent registered public accounting firm in accordance with standards of the Public Company Accounting Oversight Board (United States) for a limited review of interim financial information.

NOTE 2. CHAPTER 11 REORGANIZATION

On December 6, 2000, AWI filed a voluntary petition for relief (the “Filing”) under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware in order to use the court-supervised reorganization process to achieve a resolution of AWI’s asbestos-related liability. Also filing under Chapter 11 were two of AWI’s wholly-owned subsidiaries, Nitram Liquidators, Inc. (“Nitram”) and Desseaux Corporation of North America, Inc. (“Desseaux”).

On October 2, 2006 (the “Effective Date”), AWI’s plan of reorganization (“POR”) became effective, and AWI emerged from Chapter 11. The POR excludes AWI’s Nitram and Desseaux subsidiaries, neither of which is material to Armstrong and which pursued separate resolutions of their Chapter 11 cases (see below).

Resolution of Disputed Claims

All claims in AWI’s Chapter 11 case that remained open as of the end of 2007 have been resolved and closed. In February 2008 AWI made a final distribution to general unsecured creditors of AWI under the POR. The only potential distributions remaining are for creditors who have not provided required information to AWI. Those claimants have until October 2008 to provide the needed information. AWI will seek Bankruptcy Court approval to close the estate and expects to close the estate in September 2008.

Resolution of Nitram and Desseaux Cases

In September 2007, Nitram and Desseaux proposed a joint plan of liquidation to the Bankruptcy Court. On December 17, 2007, the Bankruptcy Court approved the Joint Amended Plan of Liquidation (the “Joint Plan”). The Joint Plan became effective December 28, 2007. Armstrong contributed $0.2 million to the estate of Nitram and Desseaux in 2007. Armstrong and its subsidiaries subordinated their claims to those of other unsecured creditors under the Joint Plan and will receive no distribution from the bankruptcy estate in this case.

Claimants alleging personal injury claims under the Joint Plan are allowed to proceed only against the pre-existing insurance coverage assets of Nitram and will not share in any distribution of general assets.

Deadlines under the Joint Plan for claimants to file claims based on rejected executory contracts or unexpired leases, for administrative claims and for final fee applications passed in January 2008. Pending objections to certain claims are expected to be addressed by the Court in coming months. An initial distribution to unsecured creditors was made in the first quarter of 2008. A final distribution is expected in these cases in September 2008, and we will seek Bankruptcy Court approval to close both estates. After all assets in the bankruptcy estate (other than insurance assets available to personal injury claimants) have been distributed, Nitram and Desseaux will be dissolved.

Reversal of POR-Related Contingent Liability

The POR stipulated that any money received from insurance companies post-emergence for certain environmental matters was owed to the unsecured creditors, if the money was received prior to the final distribution being made to the general unsecured creditors. At emergence, we had a $2.1 million receivable for expected insurance recoveries. We also recorded a $2.1 million liability to reflect the POR’s requirement to pay any received money to the creditors. Since emergence, we have not received any environmental-related money from the insurance companies. With the final distribution made in the first quarter of 2008, we no longer owe any recoveries to the creditors. Accordingly, the $2.1 million

10

Armstrong World Industries, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(dollar amounts in millions)

liability was reversed in the first quarter of 2008 as a reduction of selling, general and administrative expense.

Review of Strategic Alternatives

On February 15, 2007, we announced that we had initiated a review of our strategic alternatives. On February 29, 2008, we announced that we have completed the strategic review process after extensive evaluation of alternatives, including a possible sale of our individual businesses and the entire company. The Board of Directors concluded that it is in the best interest of Armstrong and its shareholders to continue to execute our strategic operating plan under our current structure as a publicly traded company.

NOTE 3. SEGMENT RESULTS

	Three Months Ended				Six Months Ended
	June 30,				June 30,
Net sales to external customers	2008		2007		2008		2007
Resilient Flooring	$	343.9	$	322.9	$	636.6	$	613.5
Wood Flooring		168.8		211.7		329.1		410.9
Building Products		365.2		322.1		696.3		636.0
Cabinets		48.9		63.9		93.0		123.6
Total sales to external customers	$	926.8	$	920.6	$	1,755.0	$	1,784.0

	Three Months Ended						Six Months Ended
	June 30,						June 30,
Segment operating income (loss)	2008			2007			2008			2007
Resilient Flooring	$	14.6		$	20.9		$	7.4		$	31.7
Wood Flooring		12.4			21.7			14.9			30.1
Building Products		70.9			58.8			125.9			112.5
Cabinets		0.9			4.4			(2.8	)		5.3
Unallocated Corporate (expense)		(2.1	)		(11.6	)		(10.2	)		(19.9	)
Total consolidated operating income	$	96.7		$	94.2		$	135.2		$	159.7

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
Total consolidated operating income	$	96.7		$	94.2		$	135.2		$	159.7
Interest expense		7.8			14.3			16.2			30.8
Other non-operating expense		0.1			0.3			0.4			0.8
Other non-operating income		(2.1	)		(5.0	)		(6.4	)		(8.0	)
Chapter 11 reorganization costs, net		—			0.1			—			0.1
Earnings from continuing operations before income taxes	$	90.9		$	84.5		$	125.0		$	136.0

11

Armstrong World Industries, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(dollar amounts in millions)

	June 30,		December
Segment assets	2008		31, 2007
Resilient Flooring	$	778.0	$	734.8
Wood Flooring		527.4		509.7
Building Products		1,150.9		1,129.2
Cabinets		78.5		82.5
Total segment assets		2,534.8		2,456.2
Assets not assigned to segments		1,925.6		2,183.2
Total consolidated assets	$	4,460.4	$	4,639.4

NOTE 4. ACQUISITIONS

On February 18, 2008 we acquired the assets of Bowmans Australia Pty Ltd. to complement our Australian Building Products business for total consideration of $0.8 million. The allocation of the purchase price to the fair value of tangible and identifiable intangible assets acquired has been completed.

NOTE 5. DISCONTINUED OPERATIONS

In March 2008, we recorded a gain of $1.0 million ($0.6 million net of income tax) arising from the settlement of a legal dispute relating to our former Insulation Products segment. The segment was sold in 2000. In accordance with Financial Accounting Standards Board Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“FAS 144”), this gain was classified as discontinued operations since the original divestiture was reported as discontinued operations.

On March 27, 2007, we entered into an agreement to sell Tapijtfabriek H. Desseaux N.V. and its subsidiaries — the principal operating companies in our European Textile and Sports Flooring business. These companies were first classified as discontinued operations at October 2, 2006 when they met the criteria of FAS 144. The sale transaction was completed in April 2007 and total proceeds of $58.8 million have been received to-date. Certain additional post completion adjustments specified in the agreement are currently subject to dispute by the parties. We are claiming $8.1 million and, as such, have recorded a receivable related to the estimated amount of these adjustments that is classified in the June 30, 2008 Condensed Consolidated Balance Sheet as part of “Other current assets.” The matter has been referred to an independent expert for a final and binding determination. We expect a conclusion to this matter in the third quarter of 2008.

The segment results in Note 3 exclude the amounts related to discontinued operations. The Condensed Consolidated Statements of Cash Flows do not separately report the cash flows of the discontinued operations, as these cash flows were not material to any cash flow category.

12

Armstrong World Industries, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(dollar amounts in millions)

Net sales, pre-tax loss and net loss from discontinued operations of Tapijtfabriek H. Desseaux N.V. and its subsidiaries are as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2008		2007			2008			2007
Net sales	$	—	$	—		$	—		$	59.8
Pre-tax (loss) from discontinued operations		—		—			—		$	(1.4	)
(Loss) on expected disposal of discontinued operations		—	$	(1.1	)	$	(0.5	)		(4.1	)
Income tax (expense)		—		—			—			(0.3	)
Net (loss) from discontinued operations	$	—	$	(1.1	)	$	(0.5	)	$	(5.8	)

There were no net assets of the Tapijtfabriek H. Desseaux business held at either June 30, 2008 or December 31, 2007.

NOTE 6. ACCOUNTS AND NOTES RECEIVABLE

	June 30,			December
	2008			31, 2007
Customer receivables	$	407.4		$	331.8
Customer notes		7.9			7.6
Miscellaneous receivables		9.0			14.6
Less allowance for discounts and losses		(59.4	)		(53.3	)
Net accounts and notes receivable	$	364.9		$	300.7

Generally, we sell our products to select, pre-approved customers whose businesses are affected by changes in economic and market conditions. We consider these factors and the financial condition of each customer when establishing our allowance for losses from doubtful accounts.

NOTE 7. INVENTORIES

	June 30,			December 31,
	2008			2007
Finished goods	$	384.6		$	355.7
Goods in process		46.1			39.7
Raw materials and supplies		168.8			160.7
Less LIFO and other reserves		(19.0	)		(12.6	)
Total inventories, net	$	580.5		$	543.5

13

Armstrong World Industries, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(dollar amounts in millions)

NOTE 8. NATURAL GAS HEDGES

We purchase natural gas for use in the manufacture of ceiling tiles and other products and to heat many of our facilities. As a result, we are exposed to movements in the price of natural gas. We have a policy of reducing cost volatility by purchasing natural gas forward contracts, purchased call options, and zero-cost collars up to 15 months forward to reduce our overall exposure to natural gas price movements. The gains and losses on these transactions offset losses and gains on the transactions being hedged. These instruments are designated as cash flow hedges. The mark-to-market gain or loss on qualifying hedges is included in other comprehensive income to the extent effective, and reclassified into cost of goods sold in the period during which the underlying products are sold. The mark-to-market gains or losses on ineffective portions of hedges are recognized in cost of goods sold immediately. The fair value of these instruments at June 30, 2008 was an $18.3 million asset compared to a $1.5 million liability at December 31, 2007, due to the price of natural gas increasing during the year.

NOTE 9. EQUITY INVESTMENTS

Investment in affiliates of $237.3 million at June 30, 2008 reflected the equity interest in our 50% investment in our WAVE joint venture. We account for our WAVE joint venture using the equity method of accounting. Our recorded investment in WAVE was higher than our 50% share of the carrying values reported in WAVE’s consolidated financial statements. These differences are due to our adopting fresh-start reporting upon emerging from Chapter 11, while WAVE’s consolidated financial statements do not reflect fresh-start reporting. See Note 11 “Equity Investments” in our 2007 Form 10-K for more information. Condensed income statement data for WAVE is summarized below:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2008		2007		2008		2007
Net sales	$	126.2	$	97.4	$	224.1	$	190.5
Gross profit		49.6		35.2		87.5		66.9
Net earnings		40.5		27.5		70.1		52.5

NOTE 10. INTANGIBLE ASSETS

The following table details amounts related to our intangible assets as of June 30, 2008 and December 31, 2007.

		June 30, 2008					December 31, 2007
		Gross					Gross
	Estimated	Carrying		Accumulated			Carrying		Accumulated
	Useful Life	Amount		Amortization			Amount		Amortization
Amortizing intangible assets
Customer relationships	20 years	$	173.3	$	(14.8	)	$	173.3	$	(10.5	)
Developed technology	15 years		81.7		(9.3	)		81.7		(6.6	)
Other	Various		12.6		(1.3	)		12.4		(1.1	)
Total		$	267.6	$	(25.4	)	$	267.4	$	(18.2	)
Non-amortizing intangible assets
Trademarks and brand names	Indefinite		437.5					437.3
Total intangible assets		$	705.1				$	704.7
Aggregate Amortization Expense
For the six months ended June 30, 2008				$	7.2
For the six months ended June 30, 2007				$	7.5

14

Armstrong World Industries, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(dollar amounts in millions)

NOTE 11. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

	June 30,		December 31,
	2008		2007
Payables, trade and other	$	215.8	$	231.2
Employment costs		107.5		130.7
Other		57.0		66.3
Total accounts payable and accrued expenses	$	380.3	$	428.2

The decrease in accounts payable and accrued expenses is primarily due to the payment of employee incentives that were earned in 2007, a reduction in trade payables primarily due to lower activity and activity in other payables.

NOTE 12. SEVERANCES AND RELATED COSTS

In the first quarter of 2008, we recorded $6.1 million of severance and related expenses to reflect the termination costs for certain corporate employees. We also recorded a reduction of our stock compensation expense of $1.5 million in the first quarter of 2008 related to stock grants that will be forfeited by these employees. These costs were recorded as selling, general and administrative expenses.

NOTE 13. RESTRUCTURING AND OTHER ACTIONS

Net restructuring charges are summarized in the following table:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
Action Title	2008		2007			2008		2007			Segment
U.K. lease	$	—		—		$	0.8		—		Unallocated Corporate
Hoogezand		—	$	0.1			—	$	0.2		Building Products
Other initiatives		—		(0.1	)		—		(0.1	)	Various
Total	$	—	$	—		$	0.8	$	0.1

U.K. lease: The reserve related to a noncancelable operating lease in the U.K. was increased in the first quarter of 2008 as a result of a change in building tax rates. This lease extends through 2017.

Hoogezand: These charges are related to the first quarter 2004 decision to close the manufacturing facility. The plant closure was the result of our decision to restructure our European production capacity in light of excess capacity in the European mineral and soft fiber ceiling industry. The plant was closed in the first quarter of 2005. The production was transferred to the Münster, Germany plant. This reduced employment by approximately 72 positions. We have incurred project-to-date restructuring charges of $17.9 million and do not expect to incur any additional restructuring charges related to this initiative. In the fourth quarter of 2007, we sold this facility.

Other initiatives: In the second quarter of 2007, we recorded reductions to the reserves for several initiatives which totaled $0.1 million.

15

Armstrong World Industries, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(dollar amounts in millions)

The following tables summarize activity in the restructuring accruals for the first six months of 2008 and 2007.

	Severance and Related Costs								Leases
	Lancaster						Other		U.K.
	Plant		Nashville		Hoogezand		Initiatives		Lease			Total
December 31, 2007	$	—	$	—	$	0.1	$	—	$	4.5		$	4.6
Cash payments		—		—		—		—		(0.2	)		(0.2	)
Net charges		—		—		—		—		0.8			0.8
Other		—		—		—		—		—			—
June 30, 2008	$	—	$	—	$	0.1	$	—	$	5.1		$	5.2

	Severance and Related Costs												Leases
	Lancaster									Other			U.K.
	Plant			Nashville			Hoogezand			Initiatives			Lease			Total
December 31, 2006	$	0.4		$	1.4		$	0.2		$	0.1		$	4.9		$	7.0
Cash payments		(0.3	)		(1.2	)		(0.3	)		—			(0.1	)		(1.9	)
Net charges		—			—			0.2			(0.1	)		—			0.1
Other		—			—			—			—			0.1			0.1
June 30, 2007	$	0.1		$	0.2		$	0.1		$	—		$	4.9		$	5.3

The amounts in “Other” are related to the effects of foreign currency translation.

NOTE 14. INCOME TAX EXPENSE

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
Earnings from continuing operations before income taxes	$	90.9		$	84.5		$	125.0		$	136.0
Income tax expense		38.5			31.8			57.5			52.6
Effective tax rate		42.4	%		37.6	%		46.0	%		38.7	%

The effective tax rate for the second quarter of 2008 was higher than the comparable period of 2007 due to state income tax legislative changes that reduced the 2007 rate and interest on uncertain tax positions.

The effective tax rate for the first six months of 2008 was higher than the first six months of 2007 due to higher unbenefited foreign losses, interest on uncertain tax positions and state income tax legislative changes that reduced the 2007 rate. Offsetting these items was the tax benefit in 2008 for costs incurred in 2007 for the review of strategic alternatives (see Note 2 for more information on the review of strategic alternatives).

Except as noted below, we do not expect to record any material changes during 2008 to unrecognized tax benefits that were claimed on tax returns covering tax years ending on or before December 31, 2007. During the first and second quarters of 2008, we recognized $1.7 million and $1.5 million, respectively, of interest expense on unrecognized federal income tax benefits. During the remainder of 2008, we expect to recognize an additional $2.5 million of interest expense on unrecognized federal income tax benefits.

16

Armstrong World Industries, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(dollar amounts in millions)

NOTE 15. PENSIONS

Following are the components of net periodic benefit costs (credits):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
U.S. defined-benefit plans
Pension Benefits
Service cost of benefits earned during the period	$	4.4		$	4.2		$	8.7		$	8.4
Interest cost on projected benefit obligation		24.4			24.1			48.9			48.2
Expected return on plan assets		(43.8	)		(42.4	)		(87.6	)		(84.7	)
Amortization of prior service cost		0.1			—			0.2			—
Net periodic pension (credit)	$	(14.9	)	$	(14.1	)	$	(29.8	)	$	(28.1	)
Retiree Health and Life Insurance Benefits
Service cost of benefits earned during the period	$	0.5		$	0.5		$	0.9		$	0.9
Interest cost on projected benefit obligation		4.7			4.7			9.5			9.5
Amortization of net actuarial gain		(0.4	)		(0.2	)		(0.8	)		(0.4	)
Net periodic postretirement benefit cost	$	4.8		$	5.0		$	9.6		$	10.0

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
Non-U.S. defined-benefit plans
Pension Benefits
Service cost of benefits earned during the period	$	1.8		$	1.6		$	3.5		$	3.3
Interest cost on projected benefit obligation		5.3			4.8			10.5			9.4
Expected return on plan assets		(4.2	)		(3.8	)		(8.4	)		(7.5	)
Amortization of net actuarial gain		(0.2	)		—			(0.3	)		—
Net periodic pension cost	$	2.7		$	2.6		$	5.3		$	5.2

NOTE 16. PRODUCT WARRANTIES

We provide direct customer and end-user warranties for our products. These warranties cover manufacturing defects that would prevent the product from performing in line with its intended and marketed use. The terms of these warranties vary by product and generally provide for the repair or replacement of the defective product. We collect and analyze warranty claims data with a focus on the historic amount of claims, the products involved, the amount of time between the warranty claims and their respective sales and the amount of current sales. The following table summarizes the activity for the accrual of product warranties for the first six months of 2008 and 2007:

	2008			2007
Balance at January 1	$	17.6		$	21.2
Reductions for payments		(11.5	)		(12.5	)
Current year warranty accruals		11.9			13.7
Preexisting warranty accrual changes		(0.3	)		(0.8	)
Effects of foreign exchange translation		0.4			0.1
Balance at June 30	$	18.1		$	21.7

The warranty reserve is recorded as a reduction of sales and accounts receivable.

17

Armstrong World Industries, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(dollar amounts in millions)

NOTE 17. SUPPLEMENTAL CASH FLOW INFORMATION

	Six Months Ended June 30,
	2008		2007
Interest paid	$	12.9	$	28.3
Income taxes paid (refunded), net	$	10.6	$	(13.3	)

NOTE 18. LITIGATION AND RELATED MATTERS

ENVIRONMENTAL MATTERS

Environmental Expenditures

Our manufacturing and research facilities are affected by various federal, state and local environmental requirements relating to the discharge of materials or the protection of the environment. We make expenditures necessary for compliance with applicable environmental requirements at each of our operating facilities. Regulatory requirements continually change, therefore we cannot predict with certainty future expenditures associated with compliance with environmental requirements.

Environmental Remediation

Summary

We are actively involved in proceedings under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), and similar state “Superfund” laws at four off-site locations. We have also been investigating and/or remediating environmental contamination allegedly resulting from past industrial activity at five domestic and five international current or former plant sites. In most cases, we are one of many potentially responsible parties (“PRPs”) which have potential liability for the required investigation and remediation of each site. In some cases, we have agreed to jointly fund that required investigation and remediation, while at some sites, we dispute the liability, the proposed remedy or the proposed cost allocation among the PRPs. We may also have rights of contribution or reimbursement from other parties or coverage under applicable insurance policies.

Estimates of our future environmental liability at the Superfund sites and current or former plant sites are based on evaluations of currently available facts regarding each individual site and consider factors such as our activities in conjunction with the site, existing technology, presently enacted laws and regulations and prior company experience in remediating contaminated sites. Although current law imposes joint and several liability on all parties at Superfund sites, our contribution to the remediation of these sites is expected to be limited by the number of other companies potentially liable for site remediation. As a result, our estimated liability reflects only our expected share. In determining the probability of contribution, we consider the solvency of other parties, whether liability is being disputed, the terms of any existing agreements and experience with similar matters, and the impact of AWI’s emergence from Chapter 11 upon the validity of the claim.

Effects of Chapter 11

Upon AWI’s emergence from Chapter 11 on October 2, 2006, AWI’s environmental liabilities with respect to properties that AWI does not own or operate (such as formerly owned sites, or landfills to which AWI’s waste was taken) were discharged. Claims brought by a federal or state agency alleging that AWI should reimburse the claimant for money that it spent cleaning up a site which AWI does not own or operate, and claims by private parties, such as other PRPs with respect to sites with multiple PRPs, were discharged upon emergence. Now that it has emerged from Chapter 11, AWI does not have any responsibility for these claims. Environmental obligations with respect to AWI’s subsidiaries and to property that it currently owns or operates have not been discharged.

18

Armstrong World Industries, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(dollar amounts in millions)

In addition to the right to sue for reimbursement of the money it spends, however, CERCLA also gives the federal government the right to sue for an injunction compelling a defendant to perform a cleanup. Several state statutes give similar injunctive rights to those States. While we believe such rights against AWI were also discharged upon AWI’s emergence from Chapter 11, there does not appear to be controlling judicial precedent in that regard. Thus, according to some cases, while a governmental agency’s right to require AWI to reimburse it for the costs of cleaning up a site may be dischargeable, the same government agency’s right to compel us to spend our money cleaning up the same site may not be discharged even though the financial impact to AWI would have been the same in both instances if the liability had not been discharged.

Specific Events

Upon emergence, AWI resolved its environmental liabilities at 45 sites through its Chapter 11 Case. The liabilities at 38 sites were resolved through the global environmental settlement (“Global Settlement”) with the Department of Justice (“DOJ”) and the U.S. Environmental Protection Agency (“EPA”) with respect to CERCLA liability. The Global Settlement, which was approved by the Bankruptcy Court in October 2005 and further amended in July 2007, provided EPA an approved proof of claim in the amount of $9.2 million, which included $7.8 million with respect to the Peterson Puritan site. At one CERCLA site, however, AWI will continue to participate in the cleanup under a previously approved Consent Decree. In addition to the federal claims resolved by the Global Settlement, AWI’s emergence from Chapter 11 also resolved its environmental liabilities with respect to claims asserted by the state and/or private parties at 7 other sites.

AWI is subject to a unilateral order by the Oregon Department of Environmental Quality (“DEQ”) to conduct a remedial investigation and feasibility study and any necessary remedial design and action at its St. Helens, Oregon facility, as well as the adjacent Scappoose Bay. AWI has denied liability for Scappoose Bay, but has cooperated with the DEQ regarding its owned property. Other PRPs who are not yet subject to orders by the DEQ include former property owners Owens Corning Fiberglass Corporation (“OC”) and Kaiser Gypsum Company, Inc. (“Kaiser”). AWI has entered into an agreement with Kaiser for the sharing of costs and responsibilities with respect to the remedial investigation, feasibility study and remedy selection at the Armstrong property. OC has entered into a settlement with the DEQ, pursuant to which, OC has made a lump sum payment to the DEQ in exchange for contribution protection (including protection against common law and statutory contribution claims by AWI against OC), and a covenant not to sue, all with respect to the Armstrong property. AWI has reached an agreement with the DEQ as to how these funds will be made available to reimburse AWI and Kaiser for a portion of their shared costs of investigation and remediation of the property. AWI has recorded an environmental liability with respect to the investigation and feasibility study for the property we own. During the second quarter of 2007, AWI received a written request from the DEQ to perform investigations in Scappoose Bay. During the third quarter of 2007, the DEQ extended a similar request to both Kaiser and OC. Kaiser has told the DEQ it will conduct the requested investigation. AWI and OC have tentatively indicated that they will cooperate with Kaiser and provide a portion of the funding for the investigation, without waiving any defenses to liability. AWI continues to deny all liability for any contamination of the adjacent bay. We are not currently able to estimate with reasonable certainty any amounts we may incur with respect to the bay, although it is possible that such amounts may be material.

During the first quarter of 2008, we received a Notice and Finding of Violation from the U.S. EPA, Region 6 and also a Notice of Enforcement from the Texas Commission on Environmental Quality, relating to air emissions from our Center, Texas hardwood flooring manufacturing facility. Both matters have been resolved with total settlement amounts under $0.1 million.

Summary of Financial Position

Liabilities of $7.4 million and $7.0 million at June 30, 2008 and December 31, 2007, respectively, were for potential environmental liabilities that we consider probable and for which a reasonable estimate of the probable liability could be made. Where existing data is sufficient to estimate the liability, that estimate

19

Armstrong World Industries, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(dollar amounts in millions)

has been used; where only a range of probable liabilities is available and no amount within that range is more likely than any other, the lower end of the range has been used. As assessments and remediation activities progress at each site, these liabilities are reviewed to reflect new information as it becomes available.

The estimated liabilities above do not take into account any claims for recoveries from insurance or third parties. We are presently negotiating claims with an insurance company. Such recoveries, where probable, have been recorded as an asset in the Condensed Consolidated Financial Statements and are either available through settlement or anticipated to be recovered through negotiation or litigation. The amount of the recorded asset for estimated recoveries was $2.1 million at June 30, 2008 and December 31, 2007.

Actual costs to be incurred at identified sites may vary from our estimates. Based on our current knowledge of the identified sites, we are not able to estimate with reasonable certainty future costs which may exceed amounts already recognized.

PATENT INFRINGEMENT CLAIMS

We are a defendant in a lawsuit claiming patent infringement related to some of our laminate flooring products. We are being defended and indemnified by our supplier for costs and potential damages related to the litigation. The jury verdict has held the asserted patent claims to be non-infringed and invalid for a number of reasons. The plaintiff has stated that it will appeal.

OTHER CLAIMS

Additionally, we are involved in various other claims and legal actions involving product liability, patent infringement, breach of contract, distributor termination, employment law issues and other actions arising in the ordinary course of business. While complete assurance cannot be given to the outcome of these claims, we do not believe there is a reasonable possibility that a loss exceeding amounts already recognized would be material.

NOTE 19. SPECIAL CASH DIVIDEND AND STOCK OPTION ADJUSTMENTS

On February 25, 2008, we executed an amendment to our senior credit facility. This amendment (a) permits us to make “Special Distributions,” including dividends (such as the special cash dividend described below) or other distributions (whether in cash, securities or other property) of up to an aggregate of $500 million at any time prior to February 28, 2009, (b) requires that we maintain minimum domestic liquidity of at least $100 million as of March 31, June 30, September 30 and December 31 of each year, which may be comprised of a combination of cash and cash equivalents and undrawn commitments under our revolving credit facility and (c) increases by 0.25% the borrowing margins in the pricing grid set forth in the facility for the revolving credit facility and Term Loan A.

On February 25, 2008, our Board of Directors declared a special cash dividend of $4.50 per common share, payable on March 31, 2008, to shareholders of record on March 11, 2008. This special cash dividend resulted in an aggregate cash payment to our shareholders of $256.4 million. The dividend was recorded as a reduction of retained earnings to the extent that retained earnings were available at the dividend declaration date. Dividends in excess of retained earnings were recorded as a reduction of capital in excess of par value.

Under the terms of the 2006 Long Term Incentive Plan (“the Plan”), the Management Development and Compensation Committee (“the Committee”) of our Board of Directors is required to make equitable adjustments to stock option grants if there is a change in our capital structure. The special cash dividend qualified as a change to our capital structure under the terms of the Plan. We used the Black-Scholes option pricing model to determine the fair value of the awards before and after the special cash dividend, using consistent assumptions for the risk free rate of return, expected term, expected volatility and expected dividend yield. The stock prices used in the before and after calculations were $35.10 (the

20

Armstrong World Industries, Inc., and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(dollar amounts in millions)

closing price on March 6, 2008, the day before the ex-dividend date) and $29.37 (the closing price on March 7, 2008, the ex-dividend date), respectively. For all option grants, the fair value of the award before and after the dividend remained the same. Therefore, in accordance with Statement of Financial Accounting Standards No. 123R, “Share-Based Payment”, there was no incremental cost recognized in our financial statements due to these award modifications. The following changes were made to the options outstanding as a result of this change:

	Original Grant Terms				Adjusted Grant Terms
	Number of		Exercise		Number of		Exercise
	Shares		Price		Shares		Price
Options granted in 2006		1,460,700	$	38.42		1,535,781	$	29.37
Options granted in 2007		64,100		52.38		64,100		39.88
Options granted in 2008		110,370		34.00		131,904		28.45

NOTE 20. EARNINGS PER SHARE

The difference between the average number of basic and diluted common shares outstanding is due to contingently issuable shares. Earnings per share components may not add due to rounding.

21

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders
Armstrong World Industries, Inc.:

We have reviewed the accompanying condensed consolidated balance sheet of Armstrong World Industries, Inc. and subsidiaries (“the Company”) as of June 30, 2008, the related condensed consolidated statements of earnings for the three-month and six-month periods ended June 30, 2008 and 2007, and the related condensed consolidated statements of cash flows and shareholders’ equity for the six-month periods ended June 30, 2008 and 2007. These condensed consolidated financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the financial position of Armstrong World Industries, Inc. and subsidiaries as of December 31, 2007, and the results of their operations, cash flows, and shareholders’ equity for the year then ended (not presented herein); and in our report dated February 28, 2008, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2007, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ KPMG LLP

Philadelphia, Pennsylvania
July 30, 2008

22

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Armstrong World Industries, Inc. (“AWI”) is a Pennsylvania corporation incorporated in 1891. When we refer to “we”, “our” and “us” in this report, we are referring to AWI and its subsidiaries.

This discussion should be read in conjunction with the financial statements and the accompanying notes included elsewhere in this Form 10-Q. This discussion contains forward-looking statements based on our current expectations, which are inherently subject to risks and uncertainties. Actual results and the timing of certain events may differ significantly from those referred to in such forward-looking statements. We undertake no obligation beyond what is required under applicable securities law to publicly update or revise any forward-looking statement to reflect current or future events or circumstances, including those set forth in the section entitled “Uncertainties Affecting Forward-Looking Statements” and elsewhere in this Form 10-Q.

Financial performance metrics excluding the translation effect of changes in foreign exchange rates are not in compliance with U.S. generally accepted accounting principles (“GAAP”). We believe that this information improves the comparability of business performance by excluding the impacts of changes in foreign exchange rates when translating comparable foreign currency amounts. We calculate the translation effect of foreign exchange rates by applying constant foreign exchange rates to the equivalent periods’ reported foreign currency amounts. We believe that this non-GAAP metric provides a clearer picture of our operating performance. Furthermore, management evaluates the performance of the businesses excluding the effects of foreign exchange rates.

We maintain a website at http://www.armstrong.com. Information contained on our website is not necessarily incorporated into this document. Annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, all amendments to those reports and other information about us are available free of charge through this website as soon as reasonably practicable after the reports are electronically filed with the Securities and Exchange Commission (“SEC”).

OVERVIEW

We are a leading global producer of flooring products and ceiling systems for use primarily in the construction and renovation of residential, commercial and institutional buildings. Through our United States (“U.S.”) operations and U.S. and international subsidiaries, we design, manufacture and sell flooring products (primarily resilient and wood) and ceiling systems (primarily mineral fiber, fiberglass and metal) around the world. We also design, manufacture and sell kitchen and bathroom cabinets in the U.S. As of June 30, 2008 we operated 40 manufacturing plants in 10 countries, including 25 plants located throughout the United States. Through WAVE, our joint venture with Worthington Industries, Inc., we also have an interest in 7 additional plants in 5 countries that produce suspension system (grid) products for our ceiling systems.

Our business strategy focuses on product innovation, product quality and customer service. In our businesses, these factors are the primary determinants of market share gain or loss. Our objective is to ensure that anyone buying a floor or ceiling can find an Armstrong product that meets his or her needs. Our cabinet strategy is more focused – on stock cabinets in select geographic markets. In these segments, we have the same objectives: high quality, good customer service and products that meet our customers’ needs. Our markets are very competitive, which limits our pricing flexibility. This requires that we increase our productivity each year – both in our plants and in our administration of the businesses.

On December 6, 2000, AWI filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) in order to use the court-supervised reorganization process to achieve a resolution of its asbestos liability. Also filing under Chapter 11 were two of AWI’s wholly-owned subsidiaries, Nitram Liquidators, Inc. and Desseaux Corporation of North America, Inc. On October 2, 2006, when all conditions precedent were met, AWI’s court-approved Plan of Reorganization became effective, and AWI emerged from Chapter 11.

23

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(dollar amounts in millions)

See Note 2 to the Condensed Consolidated Financial Statements for information on the Chapter 11 Case.

Reportable Segments

Resilient Flooring — produces and sources a broad range of floor coverings primarily for homes and commercial and institutional buildings. Manufactured products in this segment include vinyl sheet, vinyl tile, linoleum flooring, automotive carpeting and other specialized textile floor products. In addition, our Resilient Flooring segment sources and sells laminate flooring products, ceramic tile products, adhesives, installation and maintenance materials and accessories. Resilient Flooring products are offered in a wide variety of types, designs and colors. We sell these products to wholesalers, large home centers, retailers, contractors and to the manufactured homes industry.

Wood Flooring — produces and sources wood flooring products for use in new residential construction and renovation, with some commercial applications in stores, restaurants and high-end offices. The product offering includes pre-finished solid and engineered wood floors in various wood species, and related accessories. Virtually all of our Wood Flooring sales are in North America. Our Wood Flooring products are generally sold to independent wholesale flooring distributors and large home centers. Our products are principally sold under the brand names Bruce^®, Hartco^®, Robbins^®, Timberland^®, Armstrong^®, HomerWood^® and Capella^®.

Building Products — produces suspended mineral fiber, soft fiber and metal ceiling systems for use in commercial, institutional and residential settings. In addition, our Building Products segment sources complementary ceiling products. Our products are available in numerous colors, performance characteristics and designs, and offer attributes such as acoustical control, rated fire protection and aesthetic appeal. Commercial ceiling materials and accessories are sold to ceiling systems contractors and to resale distributors. Residential ceiling products are sold primarily in North America to wholesalers and retailers (including large home centers). Suspension system (grid) products manufactured by WAVE are sold by both Armstrong and our WAVE joint venture.

Cabinets — produces kitchen and bathroom cabinetry and related products, which are used primarily in the U.S. residential new construction and renovation markets. Through our system of Company-owned and independent distribution centers and through direct sales to builders, our Cabinets segment provides design, fabrication and installation services to single and multi-family homebuilders, remodelers and consumers under the brand names Armstrong^® and Bruce^®.

We also report an Unallocated Corporate segment, which includes assets and expenses that have not been allocated to the business units.

See Note 3 to the Condensed Consolidated Financial Statements for additional financial information on our reportable segments.

24

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(dollar amounts in millions)

Financial highlights for the second quarter and first six months:

						Change is Favorable/
						(Unfavorable)
									Excluding
									Effects of
									Foreign
									Exchange
	2008			2007		As Reported			Rates
Three months ended June 30
Total Consolidated Net Sales	$	926.8		$	920.6		0.7	%		(2.9	)%
Operating Income	$	96.7		$	94.2		2.7	%		0.9	%
Net increase in cash and cash equivalents	$	80.2		$	87.4	Unfavorable			Unfavorable
Six months ended June 30
Total Consolidated Net Sales	$	1,755.0		$	1,784.0		(1.6	)%		(5.0	)%
Operating Income	$	135.2		$	159.7		(15.3	)%		(16.8	)%
Net (decrease) increase in cash and cash equivalents	$	(274.1	)	$	82.7	Unfavorable			Unfavorable

Excluding the translation effect of changes in foreign exchange rates, second quarter sales declined modestly and operating income increased slightly compared to the prior year. Growth in commercial products and in international businesses combined with improved manufacturing performance and lower selling, general and administrative (“SG&A”) expenses to largely offset the impact of lower sales of residential products and raw material inflation.

• Resilient Flooring sales grew modestly as price and product mix improvements across geographies and international volume growth offset volume declines in the Americas. Despite the improvement in sales, operating income declined primarily due to inflation and lower U.S. volume.

• Wood Flooring sales continued to decline in weak new residential housing and renovation markets. Operating income declined significantly as the impact from lower sales volume more than offset reduced SG&A expenses and favorable manufacturing costs.

• Building Products delivered strong sales and earnings growth despite declining volume in U.S. commercial markets. Sales and earnings grew due to higher international sales, improved price realization and product mix in the Americas and increased income from WAVE.

• Cabinets had significant declines in sales and operating income due to lower unit volume. Similar to Wood Flooring, the declines reflect a significant exposure to residential housing activity.

In the first six months of 2008, cash balances were reduced due to a special cash dividend to shareholders and increased investment in working capital. In the first six months of 2007, cash balances benefited from proceeds from a divestiture, a federal income tax refund and special distributions from WAVE. These were partially offset by a voluntary debt prepayment.

25

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(dollar amounts in millions)

Factors Affecting Revenues

Markets. We compete in building material markets around the world. The majority of our sales are in North America and Europe. During the second quarter of 2008, these markets experienced the following:

•

According to the U.S. Census Bureau, in the second quarter of 2008, housing starts in the U.S. residential market of 1.02 million units declined 30.4% compared to the second quarter of 2007, at seasonally adjusted and annualized rates (SAAR). Housing completions in the U.S. decreased by 26.7% year over year in the second quarter of 2008 with approximately 1.12 million units completed (SAAR). The National Association of Realtors indicated that sales of existing homes continued to fall during the second quarter of 2008 and registered a 16.3% decrease compared to the same time period of 2007, to 4.91 million (SAAR).

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) increased by 2.8% in the second quarter of 2008 compared to the first quarter of 2008, but decreased 2.4% compared to the second quarter of 2007.

• According to the U.S. Census Bureau, in nominal dollar terms the rate of growth in the North American commercial market slowed in the second quarter of 2008. Construction completions in the office, healthcare, retail and education segments increased 8.2% in the second quarter, down from 10.6% in the first quarter of 2008 and down from 14.9% a year ago. Increasing inflation in construction materials would further depress these comparisons in real terms.

• Performance in Western European markets was mixed, with some markets declining while others grew. Eastern European markets continued to grow.

• Growth continued across Pacific Rim markets.

Quality and Customer Service Issues. Our quality and customer service are critical components of our total value proposition. In the first six months of 2008, we experienced no significant quality or customer service issues.

Pricing Initiatives. We periodically modify prices in response to changes in costs for raw materials and energy, and to market conditions and the competitive environment. The net impact of these pricing initiatives improved sales in the first six months of 2008 compared to the first six months of 2007. The most significant pricing actions were:

• Resilient Flooring implemented price increases on selected products in March 2008 and July 2008.

• Wood Flooring had no significant pricing actions in the first half of 2008.

• Building Products announced price increases across geographies in both the first and second quarters of 2008 due to continuing significant inflation.

• Cabinets implemented a February 2008 price increase.

In certain cases, realized price increases are less than the announced price increases because of competitive reactions and changing market conditions.

We estimate pricing actions increased our total consolidated net sales in the second quarter of 2008 by approximately $22 million and in the first six months of 2008 by approximately $38 million, when compared to the same periods of 2007.

26

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(dollar amounts in millions)

Mix. Each of our businesses offers a wide assortment of products that are differentiated by style/design and by performance attributes. Pricing for products within the assortment varies according to the level of value they provide. Changes in the relative quantity of products purchased at the different value points can impact year-to-year comparisons of net sales and operating income. We estimate mix changes increased our total consolidated net sales in the second quarter of 2008 by approximately $13 million and in the first six months of 2008 by approximately $25 million, when compared to the same periods of 2007.

Factors Affecting Operating Costs

Operating Expenses. Our operating expenses consist of direct production costs (principally raw materials, labor and energy) and manufacturing overhead costs, costs to purchase sourced products and SG&A expenses.

Our largest individual raw material expenditures are for lumber and veneers, PVC resins and plasticizers. Natural gas is also a significant input cost. Fluctuations in the prices of these inputs are generally beyond our control and have a direct impact on our financial results. In the first half of 2008 the net impact of these factors on earnings was approximately $36 million higher than in the same period of 2007.

Fresh-Start Reporting. In connection with its emergence from bankruptcy on October 2, 2006, AWI adopted fresh-start reporting. For administrative convenience, we selected September 30, 2006, following the close of business, as the date to adopt fresh-start reporting. See Note 3 to the Consolidated Financial Statements in our 2007 Form 10-K for more information.

Adopting fresh-start reporting resulted in material adjustments to the historical carrying amount of reorganized Armstrong’s assets and liabilities. Certain of these adjustments impacted our statements of earnings for the periods following emergence, through changes in depreciation and amortization, costs for benefit plans, costs for hedging-related activity, inventory-related costs and WAVE expenses. Fresh-start reporting impacted the first six months of 2008 and all periods in 2007, with the fourth quarter of 2007 and the first six months of 2008’s impacts being different from the first three quarters of 2007 due to the revisions made to the fresh-start balance sheet based upon filing our federal income tax return in September 2007 (see Note 3 to the Consolidated Financial Statements in our 2007 Form 10-K for more information). Please see “Results of Operations” below for the dollar impact of fresh-start reporting by operating expense type for each period.

Review of Strategic Alternatives. On February 15, 2007, we announced that we had initiated a review of our strategic alternatives. On February 29, 2008, we announced that we have completed the strategic review process after extensive evaluation of alternatives, including a possible sale of our individual businesses and the entire company. The Board of Directors concluded that it is in the best interest of Armstrong and its shareholders to continue to execute our strategic operating plan under our current structure as a publicly traded company. We incurred costs in conjunction with this conclusion of $1.2 million in 2008.

27

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(dollar amounts in millions)

Factors Affecting Cash Flow

Typically, we generate cash in our operating activities. The amount of cash generated in a period is dependent on a number of factors, including the amount of operating profit generated, changes in the amount of working capital (such as inventory, receivables and payables) required to operate our businesses and investments in property, plant & equipment and computer software (“PP&E”).

During the first six months of 2008, our cash and cash equivalents decreased by $274.1 million. This was primarily due to a special cash dividend to shareholders and increased investment in working capital. Cash and cash equivalents increased $82.7 million for the first six months of 2007. This was primarily due to proceeds from a divestiture, a federal income tax refund and special distributions from WAVE. These were partially offset by a voluntary debt prepayment. See Financial Condition and Liquidity for further discussion.

Employee Relations

As of June 30, 2008, we had approximately 12,700 full-time and part-time employees worldwide, compared to approximately 12,900 employees as of December 31, 2007.

On December 31, 2007 the labor contract covering approximately 140 production employees at our Montreal resilient flooring plant expired. A new contract was negotiated for that location in the second quarter of 2008.

During the fourth quarter of 2008, collective bargaining agreements covering certain employees at five domestic plants will expire. Employees at these five plants are represented by the same international union. As of the date of this filing, no employees are working under expired contracts.

28

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(dollar amounts in millions)

RESULTS OF OPERATIONS

Unless otherwise indicated, net sales in these results of operations are reported based upon the location where the sale was made. Certain prior year amounts have been reclassified to conform to the current year presentation. Please refer to Note 3 to the Condensed Consolidated Financial Statements for a reconciliation of operating income to consolidated earnings from continuing operations before income taxes.

2008 COMPARED TO 2007

CONSOLIDATED RESULTS

					Change is Favorable/
					(Unfavorable)
								Excluding Effects of
					As			Foreign Exchange
	2008		2007		Reported			Rates(1)
Three months ended June 30
Net Sales:
Americas	$	647.0	$	691.0		(6.4	)%		(7.1	)%
Europe		229.6		190.2		20.7	%		7.1	%
Pacific Rim		50.2		39.4		27.4	%		18.0	%
Total Consolidated Net Sales	$	926.8	$	920.6		0.7	%		(2.9	)%
Operating Income	$	96.7	$	94.2		2.7	%		0.9	%
Six months ended June 30
Net Sales:
Americas	$	1,234.7	$	1,336.1		(7.6	)%		(8.4	)%
Europe		431.8		374.5		15.3	%		3.5	%
Pacific Rim		88.5		73.4		20.6	%		10.7	%
Total Consolidated Net Sales	$	1,755.0	$	1,784.0		(1.6	)%		(5.0	)%
Operating Income	$	135.2	$	159.7		(15.3	)%		(16.8	)%

⁽¹⁾ Excludes favorable foreign exchange effect in translation on net sales of $33.5 million for three months and $61.5 million for six months. Excludes favorable foreign exchange effect in translation on operating income of $1.6 million for three months and $2.6 million for six months.

Consolidated net sales, excluding the translation effect of changes in foreign exchange rates, declined 3% in the second quarter and 5% for the first six months. For both periods, significant volume declines more than offset modest improvements in price realization (as described previously in “Pricing Initiatives”) and an improved mix of higher value products.

Net sales in the Americas decreased 7% in the second quarter and 8% in the first six months as volume declines in the Flooring segments and Cabinets offset sales growth in the Building Products segment.

Excluding the translation effect of changes in foreign exchange rates, net sales in the European markets grew by $14 million for both the quarter and the first six months. Building Products had volume growth and improved price realization in both periods while Resilient Flooring grew volume in the second quarter and had modest price realization in both periods.

Excluding the translation effect of changes in foreign exchange rates, net sales in the Pacific Rim increased $7 million for the quarter and $8 million for the first six months on volume growth in both periods.

29

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(dollar amounts in millions)

2008 and 2007 operating expenses were impacted by several significant items. The significant items, which impacted cost of goods sold (“COGS”), SG&A and restructuring charges, include:

Increase / (Reduction) in Expenses

		Three Months Ended					Six Months Ended
	Where	June 30					June 30
Item	Reported	2008		2007			2008			2007
Fresh-Start:
Impact on hedging-related activity	COGS		—	$	(1.2	)		—		$	(3.4	)
Change in depreciation and amortization	COGS	$	2.0		—		$	4.0			—
Change in depreciation and amortization	SG&A		0.3		—			0.7			—
Other Significant Items:
Cost reduction initiatives expenses (1)	SG&A		—		—			4.6			—
Chapter 11 related post-emergence expenses (income), net	SG&A		—		3.3			(1.3	)		5.7
Review of strategic alternatives	SG&A		—		1.9			1.2			2.2
Cost reduction initiatives expenses	Restructuring		—		—			0.8			0.1

⁽¹⁾ Represents costs for corporate severances, partially offset by related reductions in stock compensation expense.

Cost of goods sold in the second quarter of 2008 was 75.7% of net sales, compared to 74.6% in the same period of 2007. Cost of goods sold in the first six months of 2008 was 76.6% of net sales, compared to 75.6% in the same period of 2007. For both periods, the increase was the result of lower volumes (in the Americas) and higher raw material inflation (in the Building Products and Resilient Flooring businesses). These factors more than offset higher selling prices and better manufacturing performance across most segments and geographies. In addition, cost of goods sold in 2008 and 2007 were impacted by the items detailed in the above table.

SG&A expenses in the second quarter of 2008 were $147.0 million (15.9% of net sales), and in the first six months of 2008 were $306.8 million (17.5% of net sales), compared to $151.1 million (16.4% of net sales) and $297.7 million (16.7% of net sales) for the corresponding 2007 periods. Both periods had lower incentive compensation expenses in unallocated corporate expense. For the second quarter, spending also declined in Wood Flooring and was approximately flat in each of the other segments. For the six month period, the lower incentive compensation was offset by an increase related to the timing of promotional spending for Wood Flooring and product introduction expense and increases to the sales force in European Resilient Flooring. In addition, 2008 and 2007 SG&A expenses were impacted by the items detailed in the above table.

Equity earnings, primarily from our WAVE joint venture, were $18.5 million in the second quarter of 2008 compared to $11.9 million in the second quarter of 2007, and $31.7 million in the first six months of 2008 compared to $22.5 million in the first six months of 2007. See Note 9 for further information.

We recorded operating income of $96.7 million in the second quarter of 2008, compared to operating income of $94.2 million in the second quarter of 2007. We recorded operating income of $135.2 million in the first six months of 2008, compared to operating income of $159.7 million in the first six months of 2007.

Interest expense was $7.8 million in the second quarter of 2008, compared to $14.3 million in the second quarter of 2007. Interest expense was $16.2 million in the first six months of 2008, compared to $30.8 

30

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(dollar amounts in millions)

million in the first six months of 2007. The reduction for both periods was primarily due to lower debt balances.

Income tax expense was $38.5 million and $31.8 million for the second quarter of 2008 and 2007, respectively. The effective tax rate for the second quarter of 2008 was 42.4% as compared to a rate of 37.6% for 2007. The effective tax rate for 2008 was higher than 2007 due to state income tax legislative changes that reduced the 2007 rate and interest on uncertain tax positions. Income tax expense was $57.5 million and $52.6 million for the first six months of 2008 and 2007, respectively. The effective tax rate for the first six months of 2008 was 46.0% versus 38.7% for 2007. The effective tax rate for 2008 was higher than 2007 due to higher unbenefited foreign losses, interest on uncertain tax positions and state income tax legislative changes that reduced the 2007 rate. Offsetting these items was the tax benefit in 2008 for costs incurred in 2007 for the review of strategic alternatives.

Net earnings of $52.4 million for the second quarter of 2008 compared to net earnings of $51.6 million in the second quarter of 2007. Net earnings of $67.6 million for the first six months of 2008 compared to net earnings of $77.6 million in the first six months of 2007.

REPORTABLE SEGMENT RESULTS

Resilient Flooring

					Change is Favorable/
					(Unfavorable)
								Excluding Effects
								of Foreign
	2008		2007		As Reported			Exchange Rates(1)
Three months ended June 30
Net Sales:
Americas	$	222.5	$	223.0		(0.2	)%		(1.2	)%
Europe		100.7		82.5		22.1	%		7.2	%
Pacific Rim		20.7		17.4		19.0	%		9.3	%
Total Consolidated Net Sales	$	343.9	$	322.9		6.5	%		1.6	%
Operating Income	$	14.6	$	20.9		(30.1	)%		(34.9	)%
Six months ended June 30
Net Sales:
Americas	$	416.0	$	420.1		(1.0	)%		(2.1	)%
Europe		183.7		160.5		14.5	%		1.7	%
Pacific Rim		36.9		32.9		12.2	%		2.6	%
Total Consolidated Net Sales	$	636.6	$	613.5		3.8	%		(0.8	)%
Operating Income	$	7.4	$	31.7		(76.7	)%		(78.5	)%

⁽¹⁾ Excludes favorable foreign exchange effect in translation on net sales of $15.8 million for three months and $28.1 million for six months. Excludes favorable foreign exchange effect in translation on operating income of $1.1 million for three months and $0.9 million for six months.

Net sales in the Americas declined $0.5 million for the second quarter and $4.1 million during the first half. For both periods, volume declines, particularly in residential products, offset price realization and product mix improvement.

Excluding the translation effect of changes in foreign exchange rates, net sales in the European markets grew $6.2 million for the quarter and $2.9 million for the first half due to improved price and product mix for both periods, and higher volume in the second quarter.

31

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(dollar amounts in millions)

Excluding the translation effect of changes in foreign exchange rates, net sales in the Pacific Rim grew $1.7 million for the quarter and $0.9 million during the first half primarily due to higher volume.

Operating income for both periods decreased significantly due to global raw material inflation and lower volume in the Americas. In addition, both 2008 and 2007 operating profit were impacted by previously described items as detailed in the following table.

Increase / (Reduction) in Expenses

	Three Months Ended					Six Months Ended
	June 30					June 30
Item	2008		2007			2008		2007
Fresh-Start:
Impact on hedging-related activity		—	$	(0.3	)		—	$	(0.8	)
Change in depreciation and amortization	$	0.8		—		$	1.7		—

Wood Flooring

					Change is
	2008		2007		(Unfavorable)
Three months ended June 30
Total Segment Net Sales(1)	$	168.8	$	211.7		(20.3	)%
Operating Income	$	12.4	$	21.7		(42.9	)%
Six months ended June 30
Total Segment Net Sales(1)	$	329.1	$	410.9		(19.9	)%
Operating Income	$	14.9	$	30.1		(50.5	)%

⁽¹⁾ Virtually all Wood Flooring products are sold in the Americas, primarily in the U.S.

Net sales decreased by $42.9 million for the quarter and $81.8 million for the first half due to lower volume driven by continued declines in residential housing markets.

Operating income declined by $9.3 million for the second quarter and $15.2 million for the first half, primarily due to lower sales volume. Reduced manufacturing and SG&A costs and modest raw material deflation partially offset the decline in sales. In addition, 2008 operating profit was impacted by previously described items as detailed in the following table.

Increase / (Reduction) in Expenses

	Three Months Ended				Six Months Ended
	June 30				June 30
Item	2008		2007		2008		2007
Fresh-Start:
Change in depreciation and amortization	$	0.3	$	—	$	0.5	$	—

32

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(dollar amounts in millions)

Building Products

					Change is Favorable
								Excluding Effects of
					As			Foreign Exchange
	2008		2007		Reported			Rates(1)
Three months ended June 30
Net Sales:
Americas	$	206.8	$	192.4		7.5	%		6.5	%
Europe		128.9		107.7		19.7	%		7.1	%
Pacific Rim		29.5		22.0		34.1	%		24.9	%
Total Consolidated Net Sales	$	365.2	$	322.1		13.4	%		8.0	%
Operating Income	$	70.9	$	58.8		20.6	%		19.1	%
Six months ended June 30
Net Sales:
Americas	$	396.6	$	381.5		4.0	%		2.7	%
Europe		248.1		214.0		15.9	%		4.9	%
Pacific Rim		51.6		40.5		27.4	%		17.3	%
Total Consolidated Net Sales	$	696.3	$	636.0		9.5	%		4.4	%
Operating Income	$	125.9	$	112.5		11.9	%		9.9	%

⁽¹⁾ Excludes favorable foreign exchange effect in translation on net sales of $16.8 million for three months and $31.4 million for six months. Excludes favorable foreign exchange effect in translation on operating income of $0.8 million for three months and $2.1 million for six months.

Net sales in the Americas increased $14.4 million for the quarter and $15.1 million for the first six months despite a modest decline in unit volume. The improved sales income was driven by price increases put in place to offset inflationary pressure and an improved product mix. The improved product mix reflects a continued focus on developing and marketing high value products which satisfies today’s design trends and higher acoustical performance needs.

Excluding the translation effect of changes in foreign exchange rates, net sales in Europe grew by $8.0 million for the quarter and $11.0 million for the first six months. The sales improvement was primarily due to volume growth in the emerging markets of Eastern Europe and improved pricing across both Western and Eastern Europe.

Excluding the translation effect of changes in foreign exchange rates, net sales in the Pacific Rim grew $5.7 million for the quarter and $7.4 million for the half on strong volume growth in India, China and Australia.

33

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(dollar amounts in millions)

Operating income grew by $12.1 million for the quarter and $13.4 million for the first half. Sales growth and higher income from WAVE more than offset inflation in input costs. In addition, 2008 and 2007 operating profit were impacted by previously described items as detailed in the following table.

Increase / (Reduction) in Expenses

	Three Months Ended					Six Months Ended
	June 30					June 30
Item	2008		2007			2008		2007
Fresh-Start:
Impact on hedging-related activity		—	$	(0.9	)		—	$	(2.6	)
Change in depreciation and amortization	$	1.0		—		$	2.1		—
Other Significant Items:
Cost reduction initiatives expenses		—		0.1			—		0.2

Cabinets

						Change is
	2008			2007		(Unfavorable)
Three months ended June 30
Total Segment Net Sales(1)	$	48.9		$	63.9		(23.5	)%
Operating Income	$	0.9		$	4.4		(79.5	)%
Six months ended June 30
Total Segment Net Sales(1)	$	93.0		$	123.6		(24.8	)%
Operating (Loss) Income	$	(2.8	)	$	5.3	Unfavorable

⁽¹⁾ All Cabinets products are sold in the Americas, primarily in the U.S.

Net sales declined $15.0 million for the quarter and $30.6 million for the first six months on significant volume declines related to further deterioration in the U.S. housing market.

Operating income decreased by $3.5 million for the quarter and an operating loss for the first half was $8.1 million below the prior year, primarily due to the decline in sales.

34

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(dollar amounts in millions)

Unallocated Corporate

Unallocated corporate expense of $2.1 million in the second quarter of 2008 decreased from $11.6 million in the prior year. For the first half of 2008, expense of $10.2 million was lower than expense of $19.9 million in 2007. Lower incentive compensation expense more than offset previously described items as detailed in the following table.

Increase / (Reduction) in Expenses

	Three Months Ended				Six Months Ended
	June 30				June 30
Item	2008		2007		2008			2007
Fresh-Start:
Change in depreciation and amortization	$	0.2		—	$	0.4			—
Other Significant Items:
Cost reduction initiatives expenses (1)		—		—		5.4			—
Chapter 11 related post-emergence (income) expenses, net		—	$	3.3		(1.3	)	$	5.7
Review of strategic alternatives		—		1.9		1.2			2.2

⁽¹⁾ Represents costs for corporate severances, partially offset by related reductions in stock compensation expense, and restructuring costs.

FINANCIAL CONDITION AND LIQUIDITY

Cash Flow

As shown on the Condensed Consolidated Statements of Cash Flows, our cash and cash equivalents balance decreased by $274.1 million in the first six months of 2008, compared to an $82.7 million increase in the first six months of 2007.

Operating activities in the first six months of 2008 provided $14.3 million of cash. This was due to cash earnings plus distributions from WAVE of $27.0 million. This was mostly offset by increases in accounts receivable of $55.1 million due to higher sales in June 2008 compared to sales in December 2007. In addition, trade payables decreased due to lower activity and accrued expenses decreased primarily due to the payment of incentive accruals during the first quarter. Operating activities in the first six months of 2007 provided $163.6 million of cash. This was primarily due to special distributions from WAVE of $90.5 million and a federal tax refund of $46.8 million.

Net cash used for investing activities was $33.2 million for the first six months of 2008, compared to $16.2 million provided in 2007. The change was primarily due to proceeds of $53.4 million being received in the first six months of 2007 from divesting the European Textile and Sports Flooring business.

Net cash used for financing activities was $258.7 million for the first six months of 2008, compared to $104.2 million used during the first six months of 2007. The change was primarily due to a special cash dividend payment of $256.4 million made in the first quarter of 2008 partially offset by a second quarter 2007 voluntary prepayment of $100 million of the $500 million Term Loan B, which was part of the senior credit facility that was executed on October 2, 2006.

35

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(dollar amounts in millions)

Balance Sheet and Liquidity

Changes in significant balance sheet accounts and groups of accounts from December 31, 2007 to June 30, 2008 are as follows:

			December 31,		(Decrease)/
	June 30, 2008		2007		Increase
Cash and cash equivalents	$	240.2	$	514.3	$	(274.1	)
Current assets, excluding cash and cash equivalents		1,094.1		976.2		117.9
Total current assets	$	1,334.3	$	1,490.5	$	(156.2	)

Cash and cash equivalents decreased by $274.1 million during the first six months of 2008 (see “Cash Flow”). The increase in current assets, excluding cash and cash equivalents, was due to higher accounts receivable because of greater sales in June 2008 than in December 2007, and higher inventory levels at both Resilient Flooring and Wood Flooring.

			December 31,
	June 30, 2008		2007		(Decrease)
Property, plant and equipment, net	$	994.0	$	1,012.8	$	(18.8	)

The change was primarily due to depreciation of $67.4 million, partially offset by capital expenditures of $32.4 million and the effects of foreign currency translation of approximately $16 million.

Liquidity

Our liquidity needs for operations vary throughout the year. We retain lines of credit to facilitate our seasonal needs. On October 2, 2006, Armstrong executed a $1.1 billion senior credit facility with Bank of America, N.A., JPMorgan Chase Bank, N.A. and Barclays Bank PLC. This facility was made up of a $300 million revolving credit facility (with a $150 million sublimit for letters of credit), a $300 million Term Loan A, and a $500 million Term Loan B. There were no outstanding borrowings under the revolving credit facility, but $51.4 million in letters of credit were outstanding as of June 30, 2008 and, as a result, availability under the revolving credit facility was $248.6 million. Letters of credit are issued to third party suppliers, insurance and financial institutions and typically can only be drawn upon in the event of AWI’s failure to pay its obligations to the beneficiary. We also have several commercial letters of credit whereby vendors are paid directly via the letter of credit.

On February 25, 2008, we executed an amendment to our senior credit facility. This amendment (a) permits us to make “Special Distributions,” including dividends (such as the special cash dividend described below) or other distributions (whether in cash, securities or other property) of up to an aggregate of $500 million at any time prior to February 28, 2009, (b) requires that we maintain minimum domestic liquidity of at least $100 million as of March 31, June 30, September 30 and December 31 of each year, which may be comprised of a combination of cash and cash equivalents and undrawn commitments under our revolving credit facility and (c) increases by 0.25% the borrowing margins in the pricing grid set forth in the facility for the revolving credit facility and Term Loan A.

In addition to the minimum domestic liquidity covenant, our credit facility contains two other financial covenants: minimum Interest Coverage and maximum Indebtedness to EBITDA (Earnings Before Interest Taxes and Depreciation). Management believes that the likelihood of default under these covenants is remote. Fully borrowing under our revolving credit facility, provided we maintain minimum domestic liquidity of $100 million, would not violate these covenants.

On February 25, 2008, our Board of Directors declared a special cash dividend of $4.50 per common share, payable on March 31, 2008, to shareholders of record on March 11, 2008. This special cash dividend resulted in an aggregate payment to our shareholders of $256.4 million.

36

Management’s Discussion and Analysis of Financial Condition and Results of Operations
(dollar amounts in millions)

Our foreign subsidiaries had available lines of credit totaling $42.4 million, of which $12.8 million was used as of June 30, 2008, leaving $29.6 million of unused lines of credit available for foreign borrowings. However, these lines of credit are uncommitted, and poor operating results or credit concerns at the related foreign subsidiaries could result in the lines being withdrawn by the lenders. We have been able to maintain and, as needed, replace credit facilities to support our foreign operations.

We believe that cash on hand and generated from operations, together with lines of credit and the availability under the $300 million revolving credit facility, will be adequate to address our foreseeable liquidity needs in the normal course of business operations and for scheduled payments of debt obligations.

37

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For information regarding our exposure to certain market risks, see Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in our 2007 Form 10-K filing. There have been no significant changes in our financial instruments or market risk exposures from the amounts and descriptions disclosed therein.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Based on the evaluation of the effectiveness of our disclosure controls and procedures by our management, with the participation of our chief executive officer and our chief financial officer, as of the end of the period covered by this report, our chief executive officer and our chief financial officer have concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.

(b) Changes in Internal Control Over Financial Reporting. No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended June 30, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

38

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

See Note 18 to the Condensed Consolidated Financial Statements for a full description of our legal proceedings.

Item 1A. Risk Factors

See page 3 for our “Risk Factors” discussion. There have been no material changes to the risk factors as previously disclosed in Part I, Item 1A of our 2007 Form 10-K.

Item 4. Submission of Matters to a Vote of Security Holders

(a)
The Annual Meeting of Shareholders of the Company was held June 23, 2008, for the purpose of electing as Directors the nine nominees named in the Proxy Statement; to ratify the Company’s appointment of KPMG LLP as independent auditors of the Company and its subsidiaries for 2008; and to approve the 2008 Directors Stock Unit Plan. The results of the vote are as follows:

(b) and (c)
1. Proposal to elect nine directors to serve on the Company’s Board of Directors until the next Annual Meeting and until their successors have been elected and qualified.

	For		Withhold
James J. Gaffney		54,327,744		40,505
Robert C. Garland		54,317,853		50,396
Judith R. Haberkorn		54,326,685		41,564
Michael D. Lockhart		54,218,375		149,874
James J. O’Connor		54,327,287		40,962
Russell F. Peppet		54,327,548		40,701
Arthur J. Pergament		54,322,547		45,702
John J. Roberts		54,327,854		40,395
Alexander M. Sanders, Jr.		54,317,199		51,050

2. Ratification of the selection of KPMG, LLP as the Company’s independent auditor for 2008.

For	Against	Abstain
54,310,124	51,403	6,722

3. Approval of the 2008 Directors Stock Unit Plan.

For	Against	Abstain	Broker Non-Votes
48,885,303	457,721	35,916	4,989,309

39

Item 6. Exhibits

The following exhibits are filed as part of this Quarterly Report on Form 10-Q:

Exhibit No.	Description
No. 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	Armstrong World Industries, Inc.’s Bylaws are incorporated by reference from the Current Report on Form 8-K dated October 2, 2006, wherein they appeared as Exhibit 3.2.
No. 4	Armstrong World Industries, Inc.’s Retirement Savings and Stock Ownership Plan effective as of October 1, 1996, as amended April 12, 2001 is incorporated by reference from the Quarterly Report on Form 10-Q for the quarter ended June 30, 2001, wherein it appeared as Exhibit 4. * (SEC File No. 1-2116)
No. 10.1	Directors’ Retirement Income Plan, as amended, is incorporated by reference from the 1996 Annual Report on Form 10-K wherein it appeared as Exhibit 10(iii)(c). * (SEC File No. 1-2116)
No. 10.2	Management Achievement Plan for Key Executives, effective as of November 28, 1983, as amended April 30, 2007, is incorporated by reference from the 2007 Annual Report on Form 10-K wherein it appeared as Exhibit 10.2.*
No. 10.3	Retirement Benefit Equity Plan, effective January 1, 2005, as amended October 29, 2007, is incorporated by reference from the 2007 Annual Report on Form 10-K wherein it appeared as Exhibit 10.3.*
No. 10.4	Form of Change in Control Agreement with certain officers is incorporated by reference from the 2000 Annual Report on Form 10-K wherein it appears as Exhibit 10(iii)(k). * (SEC File No. 1-2116)
No. 10.5	Change in Control Agreement with Michael D. Lockhart, dated August 7, 2000 is incorporated by reference from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2000, wherein it appeared as Exhibit 10(e). * (SEC File No. 000-50408)
No. 10.6	Form of Indemnification Agreement among Armstrong Holdings, Inc., Armstrong World Industries, Inc. and certain directors and officers is incorporated by reference from the Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, wherein it appeared as Exhibit 10(iii)(a). * (SEC File No. 000-50408)
No. 10.7	Form of Indemnification Agreement among Armstrong Holdings, Inc., Armstrong World Industries, Inc. and certain directors is incorporated by reference from the 2003 Annual Report on Form 10-K wherein it appeared as Exhibit 10(iii)(q). * (SEC File No. 000-50408)

40

Exhibit No.	Description
No. 10.8	Form of Indemnification Agreement among Armstrong Holdings, Inc., Armstrong World Industries, Inc. and certain directors is incorporated by reference from the 2001 Annual Report on Form 10-K wherein it appeared as Exhibit 10(iii)(s). * (SEC File No. 000-50406)
No. 10.9	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. 10.10	Employment Agreement with Michael D. Lockhart dated August 7, 2000 is incorporated by reference from the Quarterly Report on Form 10-Q for the quarter ended September 30, 2000 wherein it appeared as Exhibit 10(a). * (SEC File No. 000-50408)
No. 10.11	Amendment to August 7, 2000 Employment Agreement with Michael D. Lockhart is incorporated by reference from the Quarterly Report on Form 10-Q for the quarter ended March 31, 2001, wherein it appeared as Exhibit 10. * (SEC File No. 000-50408)
No. 10.12	Hiring Agreement with F. Nicholas Grasberger III dated January 6, 2005 is incorporated by reference from the Current Report filed on Form 8-K on January 6, 2005, wherein it appeared as Exhibit 10.1. *
No. 10.13	Change in Control Agreement with F. Nicholas Grasberger III dated January 6, 2005 is incorporated by reference from the Current Report filed on Form 8-K on January 6, 2005, wherein it appeared as Exhibit 10.2. *
No. 10.14	Indemnification Agreement with F. Nicholas Grasberger III dated January 6, 2005 is incorporated by reference from the Current Report filed on Form 8-K on January 6, 2005, wherein it appeared as Exhibit 10.3. *
No. 10.15	Armstrong World Industries, Inc.’s 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. 10.16	Schedule of Armstrong World Industries, Inc. Nonemployee Director Compensation is incorporated by reference from the 2006 Annual Report on Form 10-K wherein it appeared as Exhibit 10.19. *
No. 10.17	Order of the U.S. District Court dated January 26, 2006, and related Armstrong World Industries, Inc.’s Motion for an Order Authorizing and Approving Continued Cash Retention Program for Key Employees, is incorporated by reference from the Current Report filed on Form 8-K/A on February 2, 2006, wherein it appeared as Exhibit 99.1 *
No. 10.18	Form of Long-Term Incentive Plan 2006 award letter regarding executive participation in the 1999 Long-Term Incentive Plan is incorporated by reference from the 2005 Annual Report on Form 10-K wherein it appeared as Exhibit 10.37. *
No. 10.19	Change in Control Agreement with Donald A. McCunniff dated March 13, 2006 is incorporated by reference from the Current Report filed on Form 8-K on March 14, 2006, wherein it appeared as Exhibit 10.1. *
No. 10.20	Indemnification Agreement with Donald A. McCunniff dated March 13, 2006 is incorporated by reference from the Current Report filed on Form 8-K on March 14, 2006, wherein it appeared as Exhibit 10.2. *

41

Exhibit No.	Description
No. 10.21	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 incorporated by reference from the Current Report on Form 8-K dated October 2, 2006, wherein it appeared as Exhibit 10.1.
No. 10.22	The Armstrong World Industries, Inc. Asbestos Personal Injury Settlement Trust Agreement dated as of October 2, 2006, by and among Armstrong World Industries, Inc. and, as trustees, Anne M. Ferazzi, Harry Huge, Paul A. Knuti, Lewis R. Sifford and Thomas M. Tully is incorporated by reference from the Current Report on Form 8-K dated October 2, 2006, wherein it appeared as Exhibit 10.2.
No. 10.23	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 Asbestos 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. 10.24	Armstrong World Industries, Inc. 2006 Long-Term Incentive Plan is incorporated by reference from the Current Report on Form 8-K dated October 2, 2006, wherein it appeared as Exhibit 10.4.*
No. 10.25	Form of Armstrong World Industries, Inc. 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. 10.26	Form of Armstrong World Industries, Inc. 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. 10.27	Form of Armstrong World Industries, Inc. 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. 10.28	Form of Indemnification Agreement for directors and officers 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 Directors and Officers is filed with this Report.
No. 10.29	2006 Director Phantom Stock Unit Plan is incorporated by reference from the Current Report on Form 8-K dated October 23, 2006, wherein it appeared as Exhibit 10.1. *
No. 10.30	2006 Director 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. *
No. 10.31	2007 Award under the 2006 Director 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. *

42

Exhibit No.	Description
No. 10.32	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. 10.33	Share Purchase Agreement dated March 27, 2007, between the Company and NPM Capital N.V. and Flagstone Beheer B.V. for the sale of Tapijtfabriek H. Desseaux N.V. and its subsidiaries is incorporated by reference from the 2006 Annual Report on Form 10-K wherein it appeared as Exhibit 10.38.
No. 10.34	Form of Armstrong World Industries, Inc. 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. 10.35	Form of Armstrong World Industries, Inc. 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. 10.36	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 incorporated by reference from the 2007 Annual Report on Form 10-K wherein it appeared as Exhibit 10.36.
No. 10.37	Form of Armstrong World Industries, Inc. 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 wherein it appeared as Exhibit 10.37. *
No. 10.38	2008 Directors Stock Unit Plan is filed with this Report. *
No. 15	Awareness Letter from Independent Registered Public Accounting Firm.
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).

* Management Contract or Compensatory Plan.

43

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Armstrong World Industries, Inc.
By:	/s/ F. Nicholas Grasberger III
	F. Nicholas Grasberger III, Senior Vice President
	and Chief Financial Officer
By:	/s/ John N. Rigas
	John N. Rigas, Senior Vice President and
	General Counsel
By:	/s/ Stephen F. McNamara
	Stephen F. McNamara, Vice President and
	Controller (Principal Accounting Officer)

Date: July 30, 2008

44

EXHIBIT INDEX

No. 10.28	Schedule of Participating Directors and Officers
No. 10.38	2008 Directors Stock Unit Plan
No. 15	Awareness Letter from Independent Registered Public Accounting Firm.
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).

EX-10.28

Exhibit No. 10.28

SCHEDULE OF PARTICIPATING DIRECTORS AND OFFICERS

Armstrong World Industries, Inc. has entered into indemnification agreements with certain of its directors and officers, including Michael D. Lockhart, James J. Gaffney, Robert C. Garland, Judith R. Haberkorn, James J. O’Connor, Russell F. Peppet, Arthur J. Pergament, John J. Roberts, Alexander M. Sanders, Jr., F. Nicholas Grasberger, III, Stephen J. Senkowski, John N. Rigas, Frank J. Ready, Donald A. McCunniff, William C. Rodruan, Stephen F. McNamara and Jeffrey D. Nickel.

EX-10.38

Exhibit No. 10.38

Armstrong World Industries Inc. 2008 Directors Stock Unit Plan

Adopted by Armstrong World Industries, Inc. Board of Directors on April 11, 2008

I. Purpose

The purposes of this 2008 Directors Stock Unit Plan (the “Plan”) are to promote the growth and profitability of Armstrong World Industries, Inc. (the “Corporation”) by increasing the mutuality of interests between directors and the shareholders of the Corporation.

II. Definitions

The following terms shall have the meanings shown:

2.1	“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
2.2	“Board” shall mean the Board of Directors of the Corporation.
2.3	“Change in Control Event” shall mean the occurrence of the event set forth in any one of the following paragraphs with respect to the Corporation:

(a)	Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation (not including in the securities beneficially owned by such Person any securities acquired directly from the Corporation or its affiliates) representing 20% or more of either the then outstanding shares of common stock of the Corporation or the combined voting power of the Corporation’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (c) below; or
(b)	The following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Corporation) whose appointment or election by the Board or nomination for election by the Corporation’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved; or
(c)	There is consummated a merger or consolidation of the Corporation (including a triangular merger to which the Corporation is a party) with any other corporation other than (i) a merger or consolidation which would result in the voting securities of the Corporation outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 66 2/3% of the combined voting power of the voting securities of the Corporation or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Corporation (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Corporation (not including in the securities Beneficially Owned by such Person any securities acquired directly from the Corporation or its subsidiaries) representing 20% or more of either the then outstanding shares of common stock of the Corporation or the combined voting power of the Corporation’s then outstanding securities; or
(d)	The shareholders of the Corporation approve a plan of complete liquidation or dissolution of the Corporation or there is consummated an agreement for the sale or disposition by the Corporation of all or substantially all of the Corporation’s assets, other than a sale or disposition by the Corporation of all or substantially all of the Corporation’s assets to an entity, at least 75% of the combined voting power of the voting securities of which are owned by shareholders of the Corporation in substantially the same proportions as their ownership of the Corporation immediately prior to such sale. Notwithstanding the foregoing, no “Change in Control” shall be deemed to have occurred if

there is consummated any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Corporation immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Corporation immediately following such transaction or series of transactions.

2.4	“Committee” shall mean the Nominating and Governance Committee of the Board, or any successor committee.
2.5	“Common Stock” shall mean Common Stock of the Corporation.
2.6	“Delivery Date” shall have the meaning set forth in Section 4.4(b).
2.7	“Fair Market Value” shall mean the closing price of the Common Stock on the stock exchange on which the Common Stock is listed on the relevant date, or, if no sale shall have been made on such exchange on that date, the closing price on the following day on which there was a sale.
2.8	“Participant” shall mean a non-employee director to whom Units are granted under the Plan.
2.9	“Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Corporation or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Corporation or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the shareholders of the Corporation in substantially the same proportions as their ownership of stock of the Corporation, or (v) an entity or entities which are eligible to file and have filed a Schedule 13G under Rule 13d-1(b) of the Exchange Act, which Schedule indicates beneficial ownership of 15% or more of the outstanding shares of common stock of the Corporation or the combined voting power of the Corporation’s then outstanding securities.
2.10	“Unit” shall mean a right granted by the Committee pursuant to Section 4.1 to receive one share of Common Stock as of a specified date, which right may be made conditional upon the occurrence or nonoccurrence of other specified events as herein provided.

III. General

3.1 Administration. The Plan may be administered by the Board or, if delegated, to the Committee. Administration shall be delegable to the extent provided by law. If authority is delegated to the Committee, the following provisions would apply:

(a)	Each member of the Committee shall at the time of any action under the Plan be a “disinterested person” as then defined under Rule 16b-3 under the Exchange Act or any successor rule.
(b)	The Committee shall have the authority in its sole discretion from time to time: (i) to make discretionary grants of Units to eligible directors as provided herein; (ii) to prescribe such terms, conditions, limitations and restrictions, not inconsistent with the Plan, applicable to any grant as deemed appropriate; and (iii) to interpret the Plan, to adopt, amend and rescind rules and regulations relating to the Plan, and to make all other determinations and take all other action necessary or advisable for the implementation and administration of the Plan. A majority of the Committee shall constitute a quorum, and the action of a majority of the members of the Committee present at any meeting at which a quorum is present, or acts unanimously adopted in writing without the holding of a meeting, shall be the acts of the Committee.
(c)	All such actions shall be final, conclusive and binding upon the Participant. No member of the Committee shall be liable for any action taken or decision made in good faith relating to the Plan or any grant thereunder.

3.2	Eligibility. A grant of Units under the Plan may be made to any non-employee director of the Corporation.
3.3	Aggregate Limit on Grants. The aggregate number of shares of Common Stock which may be issued in connection with Units granted under the Plan shall not exceed 300,000 shares, subject to adjustments pursuant to Sections 5.4 and 5.5. Shares subject to grants under this Plan may either be authorized but unissued shares or previously issued shares that have been reacquired by the Corporation. Shares

authorized under the Plan may be used to satisfy obligations of the Corporation for units granted under the 2006 Phantom Stock Unit Plan based upon election by Participants holding such units.

3.4

Election to Satisfy Units under the 2006 Plan. Participants who hold units granted under the 2006 Phantom Stock Unit Plan may elect to have the Corporation satisfy its payment obligations in respect of such units in the same manner in which the Corporation satisfies its payment obligations for units granted under this Plan, e.g., by delivering one share of common stock for each unit granted under that plan out of the reserve for shares authorized for issuance under this Plan. Payments to Participants who have made such election in respect of units under that 2006 Plan will be made according to the terms of this Plan.

3.5

Term. Grants under this Plan may be made through October 2017. No further grants may be made after that date unless shareholders have approved an extension of the Plan.

IV. Units

4.1 Grant of Units. Each non-employee director of the Corporation shall be granted the number of Units set forth below, contingent upon their service on the Board in such capacity on the date of grant:

(a)

Annual Grants. On the first business day following the regular meeting of the Board each October (or if there is no regular meeting scheduled in that month, then the last business day of that month), each non-employee director shall be granted a number of Units equal to (i) 55% of the total compensation payable to the non-employee director as an annual retainer divided by (ii) the Fair Market Value of a share of Common Stock on that date, rounded to the next highest whole number.

(b)

Discretionary Grants. Units may also be granted at such times, and in amounts to such eligible non-employee directors, upon such terms and conditions as are deemed appropriate.

4.2	Grant Agreements. The grant of any Units shall be evidenced by a written agreement executed by the Corporation and the Participant, stating the number of Units granted and such other terms and conditions of the grant as the Board or the Committee may from time to time determine. The Plan has been written with the intent of complying with Section 409A of the U.S. Internal Revenue Code. However, if any grant shall be deemed to constitute a deferral of compensation subject to said section, in the discretion of the Committee, the grant may be unilaterally modified to comply with the requirements of said section or cancelled.
4.3	Optional Terms and Conditions of Units. To the extent not inconsistent with the Plan, the Board or the Committee may prescribe such terms and conditions applicable to any grant of Units as it may in its discretion determine.
4.4	Standard Terms and Conditions of Units. Unless otherwise determined by the Board or the Committee pursuant to Section 4.3, each grant of Units shall be made on the following terms and conditions, in addition to such other terms, conditions, limitations and restrictions as the Board or Committee, in its discretion, may determine to prescribe:

(a) Vesting. The date on which each Unit shall vest, contingent upon the Participant’s continued service as a director of the Corporation on such date, shall be the earlier of:

(i)	the one-year anniversary of the grant;
(ii)	the death or total and permanent disability of the Participant; or
(iii)	the date of any Change in Control Event.

(b) Delivery Date. The date on which each vested Unit shall be paid (“Delivery Date”) shall be the earlier of:

(i)	the six-month anniversary of the director’s separation from service from the Corporation for any reason other than a removal for cause; or
(ii)	the date of any Change in Control Event, provided that Participant is a director of the Corporation on such date and that such Change in Control Event also qualifies as a change in ownership or effective control of the Corporation or a change in ownership of a substantial portion of the Corporation’s assets, within the meaning of Section 409A of the Internal Revenue Code.

Upon the Delivery Date, the Corporation shall deliver to the Participant shares of Common Stock in payment for the vested Units, with one share of Common Stock delivered for each vested Unit.

(c)

Forfeiture of Units. Upon the effective date of a separation of the Participant’s service as a director with the Corporation for cause, as determined by the Board or the Committee, all Units for which the Delivery Date has not occurred, whether or not vested, shall immediately be forfeited to the Corporation without consideration or further action being required of the Corporation. Upon the effective date of a separation of the Participant’s service as a director with the Corporation for any reason other than cause, as determined by the Board or the Committee, all unvested Units shall immediately be forfeited to the Corporation without consideration or further action being required of the Corporation. For purposes of the two immediately preceding sentences, the effective date of the Participant’s separation shall be the date on which the Participant ceases to perform services as a director of the Corporation as determined under Section 409A of the Code.

(d)

Dividend Equivalents. If an award of Units is outstanding as of the record date for determination of the shareholders of the Corporation entitled to receive a cash dividend on its outstanding shares of Common Stock, the awardee shall be entitled to a cash payment in an amount equal to (a) the per share amount of such dividend, multiplied by (b) the number of outstanding Units awarded to be paid on the payment date for such dividend, provided the Participant is serving as a director of the Corporation on such date.

4.5 Transfer Restriction. No Unit shall be assignable or transferable by another than by will, or if the Participant dies intestate, by the laws of descent and distribution of the state of domicile of at the time of death.

V. Miscellaneous

5.1	No Right to Continued Service. Nothing in the Plan or in any agreement entered into pursuant to the Plan shall confer upon any Participant the right to continue in the service as a director of the Corporation or affect any right which the Corporation or its shareholders may have to elect or remove directors.
5.2	Non-Uniform Determinations. The Board’s or Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, grants under the Plan, whether or not such persons are similarly situated.
5.3	No Rights as Shareholders. Recipients of grants under the Plan shall have no rights as shareholders of the Corporation with respect thereto until shares of Common Stock are delivered in payment therefor.
5.4	Adjustments of Stock. In the event of any change or changes in the outstanding Common Stock, the Committee shall in its discretion appropriately adjust the number of Units which may be granted under the Plan, the number of Units subject to grants made under the Plan and any and all other matters deemed appropriate by the Committee.
5.5	Reorganization. In the event that the outstanding Common Stock shall be changed in number, class or character by reason of any split-up, change of par value, stock dividend, combination or reclassification of shares, merger, consolidation or other corporate change, or shall be changed in value by reason of any spin-off, dividend in partial liquidation or other special distribution, the Board or the Committee shall make such changes as it may deem equitable in outstanding Units granted pursuant to the Plan and the number and character of Units available for future grants.
5.6	Amendment or Termination of the Plan. The Board may at any time terminate the Plan and may from time to time amend the Plan as it may deem advisable; provided, however, that approval of the shareholders of the Corporation will be required for any amendment:

(a)	To increase the total number of shares issuable under the Plan under Section 3.3 (except for adjustments under Section 5.4 or 5.5); or
(b)	That would otherwise constitute a “material revision” within the meaning of applicable rules of the

New York Stock Exchange in effect at that time.

An amendment of this Plan will, unless the amendment provides otherwise, be immediately and automatically effective for all outstanding grants. The Board may also amend any outstanding grants under this Plan, provided the grants, as amended, contain only such terms and conditions as would be permitted or required for a new grant under this Plan.

5.7 Governing Law. This Plan will be governed by the laws of the Commonwealth of Pennsylvania, without regard to any conflict of law rules.

EX-15

Exhibit No. 15

Awareness Letter from Independent Registered Public Accounting Firm

July 30, 2008

Armstrong World Industries, Inc.
Lancaster, Pennsylvania

Re: Registration Statement No. 333-138034

With respect to the subject registration statement, we acknowledge our awareness of the use therein of our report dated July 30, 2008 related to our review of the interim condensed consolidated financial information of Armstrong World Industries, Inc.

Pursuant to Rule 436 under the Securities Act of 1933 (the “Act”), such report is not considered part of a registration statement prepared or certified by an independent registered public accounting firm, or a report prepared or certified by an independent registered public accounting firm within the meaning of Sections 7 and 11 of the Act.

/s/ KPMG LLP

Philadelphia, Pennsylvania

EX-31.1

Exhibit 31.1

I, Michael D. Lockhart, certify that:

1)	I have reviewed this quarterly report on Form 10-Q of Armstrong World Industries, Inc.;
2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4)	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: July 30, 2008

/s/ Michael D. Lockhart  

Michael D. Lockhart 

Chairman and Chief Executive Officer 

EX-31.2

Exhibit 31.2

I, F. Nicholas Grasberger III, certify that:

1)	I have reviewed this quarterly report on Form 10-Q of Armstrong World Industries, Inc.;
2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4)	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: July 30, 2008

/s/ F. Nicholas Grasberger III  

F. Nicholas Grasberger III 

Senior Vice President and Chief Financial Officer 

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.

Armstrong World Industries, Inc.
(the “Company”)

Written Statement by Chief Executive Officer
Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

I certify to the best of my knowledge and belief that the Company’s Form 10-Q periodic report containing its financial statements for the fiscal quarter ended June 30, 2008 fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, and that information contained in that report fairly presents, in all material respects, the financial condition and results of operations of the Company as of that date.

/s/ Michael D. Lockhart  

Michael D. Lockhart 

Chairman and Chief Executive Officer
Armstrong World Industries, Inc. 

Dated: July 30, 2008

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, furnished herewith.

Armstrong World Industries, Inc.
(the “Company”)

Written Statement by Chief Financial Officer
Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

I certify to the best of my knowledge and belief that the Company’s Form 10-Q periodic report containing its financial statements for the fiscal quarter ended June 30, 2008 fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, and that information contained in that report fairly presents, in all material respects, the financial condition and results of operations of the Company as of that date.

/s/ F. Nicholas Grasberger III  

F. Nicholas Grasberger III 

Senior Vice President and Chief Financial Officer
Armstrong World Industries, Inc. 

Dated: July 30, 2008

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.