Good day ladies and gentlemen and welcome to the Q3 2009 Armstrong World Industries Incorporated earnings conference call. My name is Katelyn and I will be your operator for today. (Operator Instructions) I would now like to turn the conference over to your host for today’s call, Ms. Beth Riley, Vice President of Investor Relations, Communications and Diversity. Please proceed.

Thank you Katelyn. Good evening and welcome. Please note the members of the media have been invited to listen to this call, and the call is being broadcasted live on our website at www.armstrong.com. With me this afternoon are Michael D. Lockhart, our chairman and CEO, and Bill Rodruan, our Interim CFO. Hopefully you’ve seen our press release this evening and both the release and the presentation Bill will reference during the 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 a more detailed discussion of the risks and uncertainties that may affect Armstrong, please review our SEC filings including the 10-Q that will be filed tomorrow. We undertake no obligation to update any forward looking statements. In addition our discussion of operating 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 appendix of the presentation; again both are available on our website. And with that I would like to turn the call over to Mike.

Thanks Beth. Good afternoon everybody and thanks for participating in today’s call. Like most of the companies you are hearing from, our third quarter results were influenced by declining global commercial and residential volume, lower costs, and positive cash flow. AWI’s reported sales declined 19% for the quarter. Excluding the impact of foreign exchange, sales declined 17% driven entirely by lower volume. Lower costs significantly offset the margin impact of lower volume which was down 13%. Operating income benefited from lower flooring raw material costs; reduced manufacturing and SG&A expenses, and modest price realization. Third quarter cash flow of $117 million was nearly 30% better than it was in 2008 due to working capital reductions and lower cash taxes. Our liquidity and balance sheet remain notably strong. Let me now turn to segment results. Worldwide building products our ceilings business remains solidly profitable despite volume declines of nearly 22%. In the quarter, U.S. commercial volume was down about 19%. Western and Eastern European volumes dropped nearly 30% and Asian volumes were down about 24% in the aggregate. Manufacturing and SG&A expenses were reduced and the combination of price and mix was modestly positive. As expected WAVE’s income declined approximately 20% on lower volume. This had a negative impact on segment margin because we do not consolidate WAVE’s sales. Our global resilient flooring business increased operating income nearly 50% with lower costs more than offsetting reduced global volume and less profitable product mix. North American resilient sales declined 16% with residential volume down approximately 12% and commercial volume down about 14%. Nonetheless, operating income increased approximately 50% on the benefits of raw material, cost deflation, lower freight costs, reduced manufacturing costs, and lower SG&A spending. In constant dollars, European resilient third quarter sales declined just 6% due to lower volume and…

Thanks, Mike, and good afternoon. My comments will follow the slides that are posted on our website, so please refer to them. Before discussing our operating performance, I’ll review several significant items that impacted the income statement in this quarter. Slide 2 shows our results from adjusted operating income through net income. Within reported operating income, a $32 million non-cash charge was taken due to the accelerated vesting of stock compensation issued to employees and directors. The vesting occurred when TPG and the trust entered into a shareholder’s agreement in August of this year. This agreement triggered a change in control in our long term incentive program which in turn caused all the outstanding shares to vest. Next, we have a $25 million income tax benefit this quarter. $46 million of which relates to the IRS finalizing their audit of our $170 million 10-year carry back tax refund. The $46 million came from two items. First, we had accrued $10 million of interest which we would have owed the IRS if a portion of the refund was disallowed. The interest accrual was reported in prior periods as income tax expense. The IRS audit which was completed in July upheld the full refund which we received back in 2007. So the interest accrual was reversed in the third quarter. The remaining $36 million of IRS audit related tax benefits involved foreign tax credits. Until the IRs audit was finalized, we were uncertain as to how much of our foreign tax credits could be utilized; therefore we maintained a valuation allowance on our FTCs. The valuation allowance was necessary because a repayment of a portion of the refund would have prevented us from utilizing the FTCs within a reasonable time frame. Upon receiving IRS approval of the refund, we expect to be…

Thank you, Bill. All right, Caitlyn, I believe we're ready to take questions now.

(Operator Instructions) Your first question comes from Keith Hughes - SunTrust Robinson Humphrey.

My question was on European flooring, some very, very good performance, the modest profit you talked about in the quarter. Is that a number that you could repeat in the near future? Was there anything unusually positive during this period of time?

No, the single biggest contributor to that is better sales. And amazingly enough we see year-over-year increases in sales in several of our large markets in Europe. There's an interesting contrast between floor Europe and ceilings Europe and market mix. Floor Europe is very much focused in Central Europe, Germany, Switzerland, Austria and Scandinavia whereas the ceilings business is in the UK and Russia. So we're seeing very different market dynamics. And the Central European market has been strong and so we expect the results to continue to be better than we had expected.

You've been talking a lot about restructuring in that business. I think you had a break even run rate goal by the end of next year. Will the restructuring activity still continue?

Yes, sir. Yes, we haven't changed our mind on the business. It's a difficult business. I think what we're seeing is the benefits of some of the European stimulus spending which has been very helpful to us.

Within ceilings you had discussed kind of your revenue view for 2010. I guess that was for the whole company. But within ceilings will you have more restructuring activity in that business over the next couple quarters to prepare for difficult 2010?

Well, I think we will certainly be taking cost down. When we think about restructuring the big question for us is when do we close another plant and what are the mechanics of that? There are some difficulties associated with that in terms of having a plant where all of the products they make are made somewhere else but clearly if volume really is down in the mid teens we're going to be in a situation where we can think about closing another plant and that's the thing that would give us the biggest chunk of MPE costs. But we're not at a point yet where we can make that decision.

Final question, with you net cash positive, that's a number that's only going to grow most likely in the future. What is the Board's feeling particularly with TPG's involvement now on the use of cash moving forward?

Well, again, we start with a question of, the point that we're here to make value, to create value for the shareholders. The discussion with TPG has been as focused on growth as it is on cost reduction. And anyway we're clearly in a situation in our strategic discussion where we couldn't fund all of the growth opportunities because of the potential of having to pay a large dividend to shareholders. And I think we're now in a situation where we can look at funding our growth. But even with funding our growth we would expect to generate significant cash over the next three years. And we're not here to pile up cash. We think $500 million, it was certainly a comfortable level of debt. We're perfectly happy with that. We'd be happy with a little bit more. If we continue to pile up cash in excess of what we need to invest, we'll dividend it by share buyback or find a creative way to return it to the shareholders.

Your next question comes from Jim Barrett - C.L. King and Associates.

Mike, could you take us through the current pricing outlook in each of your key businesses domestically?

In the vinyl business, in commercial vinyl we tend to recover roughly when inflation is like. We tend not to recover much in the way of price in the residential vinyl business. In the wood business we have seen prices come down at about the same rate or a little slower than raw materials. And so there has been a slight benefit from prices coming down a little less than raw materials. But we look at that as they move together. In the ceilings business we have not done a price increase this year despite seeing somewhat higher raw material costs. And historically we've been able to recover more than inflation. We're in a situation now where we would happily recover inflation in that business and we're going to continue down a path of trying to do that.

A competitor indicated that he foresaw the remodeling market in the US as bottoming to appearing to stabilize. Is that a view you share when you look at your businesses that play to that market?

Are you talking about residential remodeling?

Yes.

Yes. I guess we would say that. We don't see things getting worse and so we don't - but it's at an uncomfortably low level.

Correct.

But, yes, no, we don’t see things getting worse at this point. When we talk to our distributors or our retailers or we look wholesale to retail the year-over-year comps are going to change a lot because we hit a brick wall last year in the fourth quarter. So as we get through we'll see some more favorable comparison. But I think we're sort of like everybody else in that we're hoping that we're seeing a bottom on what we're hoping is it's not the edge of the drain. We'll slip over the edge and be gone.

Your next question comes from John Baugh - Stifel Associates.

A couple of questions, first on wood - I think you indicated unit's down 18%. Housing completions year-over-year for the quarter are down a lot worse than that. Is that laminate performing better? Are you taking share? Is remodeling picking up? Help me understand that.

Well, the first thing is laminate, we conclude laminate sales in the resilient segment, not wood. So the wood thing there is really wood. So the second element that is, we've seen as new housing has come down… We went back three years ago we just said that new was 55% of the total in wood. It's come down to the point we're probably 45% today. And I think what we're seeing is that the remodeling is a little better and we're picking up a little share. And if we look at what we're hearing from other people we believe we're picking up a little share.

Good. And is there anything - two questions on the resilient side of the world. Number one, it was referenced earlier, the restructuring. So that's still on course and my recollection was we were talking about the impact of that being more 2011 in terms of favorable EBIT than 2010 and that number being at least a $20 million delta from sort of where we were in '09. Is that correct and is that going to be on top of now breaking even?

That's the right comparison or the right recollection. And we're on track. It's like everything you do in Europe that the negotiation with union's going to take longer than you think it's going to. But we had some of that built into our plans so we feel like we're still on track to do that.

And then on domestic resilient, is there anything happening with any of your three primary competitors? Is that landscape changing?

You know the only not substantially, the only thing that we’re sitting and we’re curious about is that [Congo] will be filing a revised plan of organization next week and so well be interested to see what that says but other than that, we don’t see a lot. We feel like we’re probably doing more than the average competitor in terms of new product introduction and having just worked on it yesterday, I know we’re spending more on advertising than our competitors are. So it’s very quiet out there right now. It’s an uncomfortable place to be. I think what people are doing is working very hard to retrench from a cross point of view and we’re seeing one of the things that’s happening is we’re seeing customers… The big box guys are doing okay. We’re seeing some small retailers who have obviously been kind of benefited from local builders and stuff. We’re seeing some small builders go out of business in places like Florida and Arizona and stuff where they just don’t have… They’ve seen too much of a downturn, they can’t make it. So that’s obviously putting pressure on some of our competitors more than us.

The last question, Michael, your commercial… you mentioned wanting to maintain more than an 80% utilization rate in ceilings. Are we sequentially still going down in that business? Obviously year-over-year the comparisons start to get easier but they’ll still be pretty negative in the first half of ’10 at least. Is there almost a certainty we have to close another facility there or is that more a question mark at this point?

Still a question mark.

(Operator Instructions) Your first question comes from [Don Wolper] – Longbow Research. [Don Wolper] – Longbow Research: When we sort of look at WAVE earnings being down and we start to think about lag between trough and non-res commercial construction and the trough between WAVE earnings, is that something we should be worried about in 2010 or what are your thoughts on non-res construction through that year?

I don’t think you should worry about it any more than you worry about ceilings. They are moving pretty much together. What we’re going to be planning on is kind of a low double digit decline in the business because of the… Our sales are only 20% to 30% to the new construction. The thing that we don’t know about for sure is renovation. But I’m not worried about grid independently of the ceiling business. They’ll perform comparably to one another. [Don Wolper] – Longbow Research: You mentioned some benefit from raw materials with petroleum and wood beginning to rise again. What are your thoughts on when that starts to reach the P&L through 2010?

The wood stuff will kind of wander through. It will get the P&L in the first quarter. We’re seeing slightly higher prices now. We went from over $500 per thousand board feet to $400 and we’re up to $415 or $420 now. Think of it taking about three months to work its way through sort of the green lumber inventory and so we’ll see some of it in the first quarter. The question will be, as it hits everybody, will the wood industry be able to generate some price increases?

Your next question comes from Ivy Zelman – Zelman and Associates. Analyst for Ivy Zelman – Zelman and Associates: It’s actually Dennis.

Ivy’s here too, I’m letting Dennis ask though. Analyst for Ivy Zelman – Zelman and Associates: I was just going to say because it’s 5:30 at night. The first question, the comment you made Mike about the TPG investment on the positive side, the phrase you used was you expect considerable costs to come out and you’ll be forced to do it faster and I would think that the results kind of show that you guys have been pretty proactive, so can you just elaborate on that as far as the pressure you’re feeling or the discussions you’ve had to take more costs out and do it more aggressively.

I wouldn’t use such dramatic language about it. What I would say is that they’re very interested in us telling them what we can do given the relaxation of the constraints we’ve had on ourselves, what can we do over the next three years? As I said, they’re as vigorous in their discussions about the growth side of the equation as they are about the cost but when you look at our company, we have a lot of SG&A. We’ve taken a bunch of SG&A and we’re going to take out a bunch more of SG&A for next year as a hedge against what we’re doing. So that’s going to be the one area that they do believe and I don’t think they believe it about us, I think they believe it about everybody, that we underinvest in plant level process improvement resources and we’ve done some initial work which suggests that there may be some truth in that and so we’re going to run some tests and you actually may see us spending a little more in MPE but getting it out in terms of direct cost productivity in the business. So that’s an area where hopefully the stuff will pay for itself in the same year it’s scheduled to, and we’ll see how that works. On the growth side, we have been incremental in our approach in China. We don’t need to be incremental. If we have the money to build plants we can do that and we’ll continue to do that and look at adjacencies that we previously didn’t have the money to chase. So I think I look at it as a balanced thing. But I wouldn’t describe it as pressure so much as look, put this stuff together. You guys no longer have cash constraints because before, to be honest with you, we were putting five pounds of stuff in a three pound bag and it didn’t fit. So now we don’t have that problem. We can look at stuff and we’re pretty excited about it. Analyst for Ivy Zelman – Zelman and Associates: I think that makes sense. If you combine the $50 million or so of SG&A costs that you guys are expecting for this year and the raw material energy inflation, you’re a little over $100 million combined. How much of that would be hitting in the second half of the year versus the first half of the year?

We’re grimacing here while we think whether or not we can answer that right now. I think the answer is we’re going to have to get back to you on that. We’ll have to get back to you. Analyst for Ivy Zelman – Zelman and Associates: Two questions on the revenue side. On the wood business you mentioned taking some share. I think you guys had some product introductions during the month, sorry, during the quarter. Can you maybe talk about whether that ate at the results, whether there was any sort of benefit to the quarter that wouldn’t be sustainable as you loaded the channel and on the residential side, on vinyl, I hear a lot of vinyl taking share from other categories as builders move down price points. Can you talk about what you’re benefit in from there if anything and what your expectations are for that as you move forward.

On the wood side there’s no hot product which contributes to the results in wood. I think wood, what we’re benefiting from is times are tough, we have a lot of people who deal with small wood competitors, and given a choice, they’d rather be with somebody they’re confident is going to be in business. In addition of course, we’ve spent a lot of time making sure we have a better assortment of wood. So those things come together to help us. On the resilient side, there’s no question that while we don’t report the residential vinyl order numbers and sales numbers, they are surprisingly strong. So if you think about the decline in residential sheet, our orders are down, sales are down in the mid-single digits and so it’s much better than the business overall. I think it’s exactly what you say. Builders are trying to hold a price point. People who are doing remodeling are not sitting there saying, “I can recapture anything I put in the house” and as a result they’re making what I think of as more intelligent investment decisions. If you’ve been out looking at houses at all, there was a period of time a couple of years ago where people would buy one of these 1950s ranch houses, tart it up with ceramic floors and granite countertops, then try to sell it for twice what they made. You’re not seeing that. You’re seeing people who say, “Gee. I’m not sure what my house is worth. I’m going to put vinyl in” because in truth we’ve never made better products. It’s functionally very good, and it’s extremely affordable in today’s market. Analyst for Ivy Zelman – Zelman and Associates: You expect that’s a business that could grow even if housing starts to kind of languish at the levels they’re at then?

If housing starts don’t go down, we have a potential to grow that business if we don’t see something different. We’re certainly planning… one of the things we’re just finishing up is a conversion of our Lancaster floor plant to make fiberglass backed products which… and orders for that in the United States are up a couple digits this year. Sales are up well into the double digits because it’s a better mouse trap, it lays flat, doesn’t have to be full bonded, can be perimeter bonded. AS a result it’s easier to install and is a far better DIY product than felt sheet is. It actually probably makes sheet vinyl a viable DIY item.

You have no further questions at this time. I would now like to turn the call back over to Ms. Beth Riley.

Thank you everybody again for joining us. We certainly appreciate you accommodating our unusual schedule this quarter and as always I will be available for follow up calls. Have a good evening. Operator Ladies and gentlemen, that concludes today’s conference. Thank you for your participation and you may now disconnect. Have a great day.