Welcome to Armstrong World Industries’ first quarter 2008 earnings conference call. (Operator Instructions) I would now like to turn the conference over to your host, Beth Riley, Director of Investor Relations.

With me this morning are Mike Lockhart, our Chairman and CEO, and Nick Grasberger, our Senior Vice President and CFO. Hopefully, you’ve seen our press release this morning and both the release and the presentation Nick will reference during this call are posted on our website in the Investor Relations section. In keeping with SEC requirements, I advise that during this call, we will be making forward-looking statements that involve risks and uncertainties. Actual outcomes may differ materially from those expected or implied. For more detailed discussions of the risks and uncertainties that may affect Armstrong, please review our SEC filings including the 10-Q filed last night. In addition, our discussion of operative performance will include non-GAAP financial measures within the meaning of SEC Regulation G. A reconciliation of these measures with the most directly comparable GAAP measures is included in the press release and in the impending presentation. Again, those are available on our website. And with that, I’d like to turn the call over to Mike.

Thanks for participating in today’s earnings call. As we’ve expected, the first quarter was a challenge but we’re please that our results are at the high end of guidance. If we exclude the benefit of foreign exchange, sales declined 7%; adjusted operating income declined 30% to $46 million. We have modest improvements in price and mix but those were not enough to offset lower volume. The majority of the volume declines were in the businesses most dependent on housing, Wood Flooring and Cabinets. Another problem in the comparison is that we had great results in the first quarter of 2007. In 2007, the Wood Flooring had significant growth from a Big Box promotional [inaudible]. And Cabinets grew because of our lack of exposure to large builders and Big Box customers. Last year’s results also benefited from Floor Europe sharing costs with the Textile business that we sold in the second quarter of 2007. But the earnings decline was not all that mattered for the top comparison. It was also due to SG&A spending weighted to work the first quarter. We increased commercial spending and Wood Flooring to support special order sales growth later in 2008 and SG&A spending in European Flooring increased due to the normal tri-annual new products introduction cycle. During the first quarter, we returned nearly $260 million to shareholders through a special dividend. Building products, or Ceilings business, continues to perform well despite declines in the US commercial markets. European markets show growth and that helps sales and operating income to grow modestly. Product mix improved and price realization increased. We continue to see gains in the Ceilings business from increasing manufacturing efficiency. North American Resilience sales declined about 2% in the first quarter. Volumes were down high single digits. Improved product mix and commercial price realization…

Now the first triumph that I’ll refer to is Page 3 on the presentation that’s posted on the website. This is the operating income bridge for the first quarter from the reported figure of $39 million to the adjusted figure of $46 million. The reported figure of $39 million compares to the guidance we had provided of a range of $27 to $32 million, and the adjusted figure of $46 million compares to our guidance for the quarter of $40 to $45 million. And you can see on the chart, the components of the change between recorded and adjusted. We had $5 million of expenses related to corporate severance. We had about $1 million of fees related to our advisors and the strategic review process. We had an incremental $2 million of depreciation and amortization related to a Fresh Start adjustment and then we had about $1 million of benefits related mostly to the Chapter 11. Our next chart looks at the key financial metrics for the quarter and these are adjusted for non-recurring items and for foreign exchange. Starting with sales, sales on an adjusted basis were down about 7%. The reported figure was down 4%. The difference was foreign exchange. Year volume was down about 10%, price was up about 2% and mix was up about 1%. Looking at gross profits, down 9%. The margin was relatively unchanged at down 40 basis points. For manufacturing, our gross profit margins standpoint of the ABP businesses and the Wood business were up in the markets and the margins in the Resilience and Cabinets were down. SG&A expense for the quarter was up about 4%, really driven by the investments that Mike mentioned in the European Floor business as well as the Wood business. Collectively, the other businesses were flat to…

(Operator Instructions) Your first question comes from Keith Hughes - SunTrust. Keith Hughes – SunTrust Robinson Humphrey: On the payables, is that something that is going to correct itself as the year goes along? Is that going to be a timing issue like inventory?

Yes, it should. Certainly will have probably not to the same degree but a further negative on payables in the second quarter but then as we begin to lapse the weakness in our businesses in the second half of the year, it should level. Keith Hughes – SunTrust Robinson Humphrey: Within the revenues in the Hardwood, you talked about the macro stuff going on. That’s what’s going on most of last year though and your results have been pretty impressive. Was there anything specific in the quarter, a program you were getting out of that you had to sell at a discount or anything along those lines that made it specifically worse in the first quarter in Hardwoods?

First quarter of last year or just first quarter? Keith Hughes – SunTrust Robinson Humphrey: First quarter of this year.

The one thing we had this year is we’ve been investing in putting our displays with more than Big Box customers, special order displays, and we’re continuing that process. Otherwise, the business performs as you would expect. I think the North American Floor business suffered both Resilient and Wood from inventory adjustments by our customers. So both our distributors and our retailers have adjusted inventory and that had a significant impact in the first quarter which we would expect to lessen. You listen to the calls by the Big Box guys, they’re all pushing on inventory and so we would expect to see that continue to push on ours but there’s a couple of mid-single digit effect on sales from inventory declines in both Resilience and Domestic Resilience and the Wood business. Keith Hughes – SunTrust Robinson Humphrey: Are you taking some pricing actions in Vinyl and Laminate in the second quarter in response to the Raw Materials we discussed earlier?

Yes, we’re seeing some higher prices in the Vinyl businesses and the Laminate business are average on its values up substantially due to mix. And so if you look at the break down of our business, we actually see substantially higher sales of Laminate in the first quarter this year than we did last year. We will see some pricing actions. On the other hand on Wood, we have the opposite of that. One of the advantages we have in the Flooring business and in the Ceilings business too, we have several different facilities and as a result, as we lose volume we can take out plants and maintain a relatively high level of capacity [utilization]. Some of our competitors have one or maybe two facilities and as this comes down, they wind up trying to keep the plant [all] through price reduction. So we expect to see some price pressures, particularly in the Wood business, and throughout the rest of the year. Hopefully offset by somewhat better Raw Material prices. We’re finally beginning to see some better lumpier prices in those businesses.

So Keith, for the full year we expect to offset in the North American Resilience business about 80% of the inflation, a little more in commercial. A little less in residential and actually less than that in the European businesses. If you look at one of the issues we have in the Resilient business, we’re having a difficult time offsetting inflations prices.

Your next question comes from Jim [Barrettson] - CLT Associates. Jim [Barrettson] – CLT Associates: Could you talk about the preliminary announcement relating to the second special dividend and is the assumption that that will be paid for earning and cash flows fall within the stated guidance range? Or how should investors probably look at that?

I think what we said the last time, it was to be the same thing we’d say today, is that we broke it into two pieces because we say it was imprudent to put that much pressure on a cash situation in the first half of the year given the uncertainties that if our performance is within the range of what we think it’s going to be where the Board is going to consider the dividend and we wouldn’t have said it if we didn’t think they would do it. So rewording our guidance I would expect the Board to favorably do that. Saying that, it’s up to the Board and all [inaudible] to be contingent with that but we’re sticking with our view that our performance in the first quarter was a little better than we thought it was going to be. Performance in the second, third quarter, we think they’re going to be over our expectations and with that dividend. Keith Hughes – SunTrust Robinson Humphrey: Where do you see pricing in the Cabinet business for the remainder of the year?

We expect to see no change. Maybe in the first quarter, I think we picked up about $1 million in price. So I would see prices declining but nor do we expect to see much by the way it increases.

Your next question comes from Ben Wanger - Telec Investment. Ben Wanger – Telec Investment: Could you just remind us on your cash flow guidance for the year, the $175 to $200 million is that pre-dividend?

Yes, that is pre-dividend. Ben Wanger – Telec Investment: With regard to the dividend guide itself, cash flow come in meaningful lower than that, but we see a rationally down of the dividend or reduction of it all together. How should we think about that?

I think if it was meaningfully lower, we would have to look at that. We obviously don’t think that’s the case or we wouldn’t have been so positive in our statements with respect to the dividend. We believe that if we achieve what we’re looking at in terms of range that we should be able to pay that dividend as sufficient debt capacity and cash to do everything we want to do in 2009. In part because we think we’re going to generate a bunch of cash in 2009. So, we think its okay now or say that we have a $200 million swing in cash for some reason. We obviously have to look at it. That’ll be a pretty unusual thing in our world, to get that swing in cash. Ben Wanger – Telec Investment: And the dividend is predicated on the capital markets being one way or the other. Is that right?

Right. We will always pay the dividend out of cash. Ben Wanger – Telec Investment: And if you see any improvements in the capital markets, would that change your views on leverage?

Not short term.

Your last question comes from John Baugh - Stifel Nicolaus. John Baugh – Stifel Nicolaus: On the cash flow again, was this first quarter performance in line with your thinking in terms of the use of that many and if not, you have a change of guidance for the year, what areas do you expect to see it jump to come back?

We did a little better in the first quarter than we thought largely around slower spending on capital in the plants. Did a little bit better in cash earnings and working capitals a little bit better, but not in the significant way that would prompt us to change in fully our guidance. It was actually a little better than our plan. Yes. But the balance of the year it’s really more seasonality that’s going to lead to a pick up than working capital. We typically have a significant use of cash in the first quarter. Q’s 2, 3, and actually 4 as well are then quite strong so we will be looking for cash flow roughly in each of the remaining three quarters to be about $100 million.

I don’t want to leave you with the impression though that we’re going to under spend our targeted CapEx as we were a little slower in the first quarter. Our forecast do anticipate spending the targeted amount of CapEx. John Baugh – Stifel Nicolaus: Great. And then Mike, help us with the mix. We’ve been feeling…we’ve seen that get better and better and now we’re facing declining unit demand. Typically, in the environment that we’re in, you see a big trade down. So to speak to what you’re doing and what’s going on and how sustainable that is for the balance of the year.

We haven’t seen anything. We haven’t seen the value engineering that you’re talking about. Now if you go back to 2001, 2002 and 2003, we saw some negative mix as a result of value engineering. People were doing rehabs. They took a look at it. Stretch was down other stuff and so they trade it down from our high end products to medium or low end products. We haven’t seen that yet. Our strategy has all been around introducing higher products and so some of our mix is coming from products you can’t do an easy trade down from. So we’ve architectural specialties where we’re selling metal ceilings, wooden ceilings, and other types of non-fiber materials. People aren’t going trade from that to a mineral fiber mix. So that’s going to help us. And that business continues to be pretty strong. The other part of it is in our product innovations has always been a target towards that end of it. And to some extent, our pricing strategy has been towards that end of it and that’s one of the reasons that we said that we expected to see slightly maybe some small share losses towards the bottom end of the segment of our Ceilings market because of that strategy. So, we think it’s going to hold up. We haven’t seen anything that suggests it won’t. Now when you see a real downturn in the Office market, particular in high mix area like New York City and places like that, you might see that. We just haven’t seen that happen quite yet. John Baugh – Stifel Nicolaus: On the European Flooring, I know you’re working on that, I believe you talked about a $20 million, give or take, swing in EBITDA all on that’s adjusted from whatever it is you decide to do. Is that still on the plan, and the timing of that, has that changed?

I think that when we look at that, we hesitate to predict how much of a swing there’s going to be when we get it done. But obviously, it hurts us by a lot today. I don’t think there’s any change in the timing. However, as we talk about structural change in Europe, it’s going to take some time. And so we wouldn’t expect to see real significant benefits from that until 2010 because of the time it takes to close plans. The good thing about Europe is it’s very integrated into our worldwide Commercial Flooring flow. More like Flooring strategy. We take a fair amount of residential products and an awful lot of commercial products out of there and so as the United States. So we got to figure out what we’re going to do to replace that source if we were to eliminate the source in Europe. So I don’t think so but nobody should look for substantial results out of that until 2010 because of the lengthy transition. And I said we know some of the things we need to do but we’re actively engaged in outsourcing SG&A and so we’ve got some things underway. The structural stuff, we haven’t thought of it and decided yet.

And it appears there are no further questions today.

Thanks everybody for joining us this morning and I’ll be available all day for your follow up questions. Thank you.