Good day ladies and gentlemen and welcome to the third quarter 2011 Armstrong World Industries Earnings Conference Call. My name is Derrick and I will be your operator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of the conference. (Operator Instructions) As a reminder this conference is being recorded for replay purposes. I would now like to turn the conference over to Mr. Tom Waters, Vice President of Treasury and Investor Relations. Please proceed.

Thanks Derrick, good afternoon and welcome. Please note that members of the media have been invited to listen to this call and the call is being broadcast live on our website at www.armstrong.com. With me this afternoon are Matt Espe, our President and CEO; Tom Mangas, our CFO; Frank Ready, the CEO of our Worldwide Floor Business; and Vic Grizzle, CEO of our Worldwide Ceiling Business. Hopefully you have seen our press release this morning, and both the press release and the presentation Tom Mangas 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 a more detailed discussion of the risks and uncertainties that may affect Armstrong, please review our SEC filings including the 10-Q filed this morning. Forward-looking statements speak only as of the days they are made. We undertake no obligation to update any forward-looking statements beyond what is required by applicable Securities Law. 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. Both are available on our website. With that, I will turn the call over to Matt.

Thanks Tom. Good afternoon everyone, and thanks for participating in our call this afternoon. Although markets in most developed economies continue to present headwinds for us we delivered solid bottom-line results in the third quarter, reflecting our continued focus on managing the items in our control and achieving greater savings faster than previously planned. End market demand was clearly an area of concern coming out of the second quarter and while third quarter sales were disappointing relative to our expectations, there wasn’t an abrupt drop in sales or orders, rather markets continued to bounce along the bottom as recovery was further delayed. We had anticipated better demand in North American residential markets and improved sales versus last year when the new homebuyer tax credit pulled demand in the first half of 2010 but that didn’t materialize. Sales in the third quarter of 2011 of $774 million were up $34 million or 5% from the same period of 2010 largely driven by changes in foreign exchange rates. Stripping out foreign exchange sales were up just over $5 million almost 1% including the exit of our European residential business. Sales were below the low end of our guidance of $780 million due to the market factors I just mentioned. While we did see some volume improvement in our residentially exposed wood and cabinets businesses, we believe much of it were share gain rather than a rebound in overall demand. Sales in the Americas were up driven by gains in ceilings cabinets and wood. European sales were roughly flat after adjusting for exited businesses and Pacific Rim sales were down slightly due to declines in Australia, our largest market in the region. China and India on the other hand continue to grow. Globally, volumes are down 2% but after adjusting for the businesses…

Thanks Matt. Good afternoon everybody. Happy Halloween and thanks for participating on today’s call. In reviewing our third quarter results I will be referring to the slides available on our website starting with slide three, key metrics, as Tom Waters has already covered slide one and slide two is simply an explanation regarding our basis of presentation. Matt mentioned the 11% improvement in EBITDA despite flat sales when excluding foreign exchange. And as you would expect operating income and earnings per share results were also positive by 17% and 5% respectively. Third quarter free cash flow of $73 million is just behind last year by $6 million. I’ll address the drivers of EBITDA and free cash flow changes on the coming slides. Slide four details the adjustments we make to EBITDA and provides a reconciliation to reported net income. The most recent quarter was relatively clean with only minor charges for our previously announced planned closures and SG&A cost down programs and a modest write down of the European property. As you’ll recall in the third quarter of 2010 we have several charges impact comparability including $50 million related to restructuring actions primarily in European flooring, $20 million of accelerated depreciation and $7 million of cost reduction expenses related to the Beaver Falls, Montreal Centre and Oneida plant closures. And finally, we benefitted from $7 million of customs duty refunds. Interest expense in 2011 versus the prior year was higher due to our recapitalization in the fourth quarter of 2010. Moving to slide five, this provides our sales and adjusted EBITDA by segment. Resilient floor had a sales decline of 6% driven by the exit of our residential business and certain products in geographies in Europe. Otherwise, resilient price and mixed gains offset core volume losses resulting in essentially flat…

Thanks Tom. Well in closing, I want to mention that in October we successfully concluded labor contract negotiations with our Macon Georgia ceiling, our Lancaster Pennsylvania floor production unions. So for the year, we’ve concluded four labor contracts as we agree to terms in Beverly, West Virginia and Oneida Tennessee earlier this year. The Marietta Pennsylvania ceiling workers remain locked out. Looking forward we continue to expect soft markets for the remainder of the year, especially here in North American residential but we continue to make progress against the targets within our control creating a competitive cost structure fixing underperforming businesses, investing in plants and people in growing markets and building a globally aligned organization. With that, we’ll be happy to take any questions.

(Operator Instructions) Ladies and gentlemen please limit yourself to one question and one follow-up question. Our first question is coming from the line of Bob Wetenhall from RBC. Please proceed. Bob Wetenhall – RBC: Hi, good afternoon. Thanks for taking the question. Just wanted to touch base, first question, ABI ticked up recently and I wanted to get your view on commercial repair and remodel demand, whether it's improving or it’s stable or what have you been seeing?

Well, we saw a tick up. I think we have just more recently saw it soften again. So our outlook that the ABI is kind of bouncing up and down a little bit. The answer to your question Bob is really in terms of outlook and what we are experiencing. No real change in commercial remodel, we haven’t seen it soften, we certainly haven’t seen it getting any stronger. Bob Wetenhall – RBC: Got it. And just as a follow-up, wood flooring put in some very-very strong margin performance this quarter. Can you just provide a little bit more granularity what went into that outperformance and whether that type of margin is sustainable going forward.

I think I’ll let Frank comment on it, but just a quick comment before that. I think Frank and the team have done a phenomenal job driving a more competitive cost structure and we have seen real productivity improvements. I’d also say that it’s this is an organization that is as focused on the channel of the customers there are and productivity. We refresh that product line pretty significantly last spring. I think it's evidence of share gains as we said not really a more robust markets. So I'm very proud of the team for the accomplishments that you just pointed out. And Frank any additional?

No, I think Matt hit key points. We got tremendous cost productivity from the lot of the restructuring we have done, and in spite of lower mix we did see top-line growth in the face of a weak market. So you hold that together and it gave us a pretty good result and pretty good margin position for the quarter. Bob Wetenhall – RBC: And just in terms of sustainability of that going forward given what you have done with the business.

Yeah. The cost we have taken out are structural so it’s permanent cost out. So we would expect it to continue to see the kind of margin improvement we have seen year-to-date.

One thing I would say Bob on that is certainly third quarter is a seasonal high business. So in fact we delivered a 16% EBITDA margin in the third quarter, you shouldn’t just straight line that out, we are going to have the seasonal variability with the nature of the market demand.

Your next question is coming from the line of Steven King from Barclays. Please proceed. John – Barclays: Hi guys, it’s actually John filling in for Steven. Just wanted to get an idea of sales trends throughout the quarter. Could you maybe just take us month by month rather than quarter and then how things are looking then in October thus far?

Okay, I would say that we did see July start off a little bit better then we saw September finish. So I think, July, when we had our last call we were feeling pretty good about general demand trends, and certainly first week of August quick clicked in and we did feel a deceleration that carried through September which is why we missed our sales guidance. We thought we’d be better off relative to the prior year comps and with what we saw in July. It did definitely soften and I would say that our October has stabilized, not getting worse, particularly in the residential business. I think we have seen them stabilize here. And I think lots of it’s reaction to the news, consumers, builders are all reacting to the external stimulus and as the budget debate, which is really beginning of the third quarter or some of the other European (inaudible) I think have had an impact on consumer customer sentiment that resulted in the softer demand trends. And certainly October is stabilized and certainly is factored into our fourth quarter guidance. John – Barclays: Thanks a lot. I just wanted to clarify so you were saying that you are actually seeing more weakness actually recently on the residential side than the commercial side?

Yeah, I would say it was relative to our expectations, and both businesses are generating relatively flattish volumes. I mean our guidance – we assume we’d do better. We would be seeing more of a consumer uptick given the week base period on residential. But as we said volumes and global AVP were essentially flat on the quarter which is largely drive our overall volume results. And, yeah, on the commercial side on flooring still relatively flat plus or minus 2%, but I think on the consumer residential oriented side again flat where we thought it would be better.

We thought, this is Matt, as Tom was pointing out, we thought that we would have a little bit more robust residential performance in the market second half over second half, third quarter, fourth quarter over same period last year just because of the tax benefit pro end. And to Tom’s point we are expecting a little bit of strength in the market. That strength isn’t there as a result what we are kind of seeing instead of sequential lift we are seeing sort of flattish. John – Barclays: Okay, great, thank a lot.

Just, just overall in the Americas for our commercial and flooring businesses we generated positive sales growth. It just wasn’t through unit volumes, it was through price and mix on AVP primarily.

Your next question is coming from the line of Rodny Nacier from KeyBanc Capital Markets. Please proceed. Rodny Nacier – KeyBanc Capital Markets: Hello everyone. My first question is probably for Frank. It appears the European margins in the resilient business are closing the gap with the U.S. Would that be related solely to the restructurings or would higher commodity inflation the US or better price and mix realization in Europe also be a factor?

Yeah. The primary driver Rodny, is all the structural changes we’ve made and the price mix dynamics – excuse me price inflation dynamics. They are pretty similar across regions. So the primary driver of the improved margins would be the restricting in the cost down. Rodny Nacier – KeyBanc Capital Markets: Thanks. And how long does it take for a pricing to flow through the business to realize the price?

On commercial the non-specified work, you’ll get within one to two months. Jobs that are being specified that are three to six out you have that kind of lag where you see the price comes through. Rodny Nacier – KeyBanc Capital Markets: And what’s the approximate mix versus the near-term business versus the three to six month contract?

It’s roughly in the flooring business 35% short-term, 65% long-term. Rodny Nacier – KeyBanc Capital Markets: Thank you. And with the CapEx – thanks for providing the update on the capacity expansion programs. How much has been spent so far in terms of CapEx for those four plants that you’re building?

Yeah, I don’t think we are prepared to disclose that specific run rate Rodny. Rodny Nacier – KeyBanc Capital Markets: Okay. And so into 2012, I know you haven’t provided guidance. But with some of that anticipated CapEx in the first half of next year, would the CapEx for 2012 look like 2011?

Yeah, we haven’t provided guidance. But you got to remember two of the plants will not open until 2013. So we have two opening next year, the mineral wool plant in the first half, the homogeneous flooring in the second half. So, there will be continued spent to open both of those next year with those completion dates. But clearly bulk of the CapEx on the second two plants in China that open in 2013 is going to be 2012 spent and partially 2013.

Your next question is comes from the line of Kathryn Thompson from Thompson Research Group. Please proceed. Kathryn Thompson – Thompson Research Group: Just one thing just to make sure I’m clear on something. Last quarter when you raised guidance when the primary drivers were favorable comps of residential that you talked about earlier today, was residential the primary driver for lowering your guidance in the current quarter?

Yes.

Yeah. I think like we said it just didn’t come to the way we anticipated. And we don’t see a precipitous drop as I think we said in the remarks, we just didn’t see it. So what we’re experiencing is flattish versus something that guide significantly softer. So think about it more as a lift we expected to see that we didn’t versus softness that we didn’t expect to see. Kathryn Thompson – Thompson Research Group: Okay. Europe was cited as a weak spot, not surprisingly particularly for resilient flooring. How much of your resilient flooring doesn’t since in Europe and how much is it for your other divisions?

Europe for total flooring is roughly 25%, the total flooring business is in Europe and focused on Western Europe.

Yeah, and the building parts business is same ratio about 25%.

Your next question is coming from the line of Keith Hughes from SunTrust. Please proceed. Keith Hughes – Suntrust Robinson Humphrey: Thank you. On the $165 million restructuring plan, do we have 30 less, if it stays at $165 million coming next year that’s the first question. And the second question on Resilient, given kind of your views into the fourth quarter specifically on the residential side we see profit margins roughly similar to what we saw on the fourth quarter of last year?

This is Matt. I guess that way to think about the - we are really not going to comment on 2012 yet, but as Tom said, we are not giving up or running through the tape this year. We are clearly not finished. So when we talk 2012 the next call will be more explicit on the savings for next year.

Your question Keith was on, should we see comparable margins to last year, is that what you were asking? Keith Hughes – Suntrust Robinson Humphrey: Yeah. On Resilient.

Yeah, so certainly we are still fighting the inflation headwind. I think we will get it covered with price. So I think – as you model out I think a margin expectation consistent with last year on Worldwide we say it would be a fair assumption. Keith Hughes – SunTrust: Okay .And one other thing too, just on LVT and Resilient in the United States, is that becoming a substantial part of the business? Just (inaudible) there would be helpful Frank.

Keith, LVT, there is probably – a different answer is commercial versus residential. Commercial, we continue to see nice growth organically. So it's becoming a bigger piece of the business, but off a pretty small base. If you look at total demand and you look at LVT’s role within that total demand in the market it’s only about 5% of the opportunity, but it is growing. Where we are seeing significant change is on the residential site where it’s gone from nothing three years ago to a very substantial piece of the business today both in terms of traditional installation with a glue down as well as floating. So that’s where the real growth is coming from right now is the residential and the floating segment of the business.

Next question is coming from the line of Dennis McGill from Zelman & Associates. Please proceed. Dennis McGill – Zelman & Associates: Thank you. Just a quick question on the cost base. Can you just revisit, I know you touched on this a couple of different times. But what’s the absolute number for 2011 that you expect to net and is that equal to the gross number or is there something in between?

Okay, Dennis this is Tom. So when we first put out the cost saving goal 150, now 165, we always said it was a gross goal not a net goal that we would be spending some back. Fortunately, to-date it's all been net falling to the bottom line. And so we are continuing to strive to that level of delivery although we haven’t promised it for that last tranche. So our goal, we delivered $35 million in net last year. We have delivered year-to-date just shy of a $100 million in net and as we push forward, as Matt said, we are looking to do more particularly as the economy continues to bounce around here. So just wear the time back. We never promised it would be net and so far we are delivering it as net. Dennis McGill – Zelman & Associates: Well, based on examples of things that would have been reinvestments that didn’t have to occur?

Well, all the market investment in China as we are doing it we are adding substantial headcount in – in emerging markets like China, Russia, Middle East that have been incremental spent that we have executed. You just haven’t seen them pop on the bridge because we have done more on our program. Dennis McGill – Zelman & Associates: So you are saying that growth is coming ahead of the original net to offset the investments?

That’s correct, yeah. Dennis McGill – Zelman & Associates: Okay, got it. And then just thinking about profitability within ceilings, I think you mentioned the flow through being consistent with what you would expect. I think that might have been including WAVE, I’m not sure, but for the quarter it seems like ex-WAVE margins were down year-over-year so just wanted some color there. And then as we think about fourth quarter I guess we will typically see a sequential decline, if you look at the last couple of years is that a good way of thinking about the profitability this year?

Okay. So I think certainly WAVE is embedded in our numbers, and they are always embedded in our numbers. So we talk about typical flow through. I mean we are considering the impact of WAVE. And, yeah, WAVE has had a good quarter this last period. Dennis McGill – Zelman & Associates: I guess my question was – so if we (inaudible) just to understand the foul side of the business year-over-year I think margins were down just trying to understand the puts and takes there.

Okay. So first I would say that we have continued to be under pressure in Europe and on commodity cost. So what we have experienced good pricing capability in North America we continue to be fighting a commodity headwind battle in Western Europe and a soft volume environment. So we are over relying on the North America business to deliver our margin progress.

Your next question is coming from the line of Gerard Rupogee (ph) from Longbow. Please proceed.

Hi guys, good afternoon. Back to the wood segment. With the fixed cost reductions that we have taken today, what's you capacity utilization within that segment and then why you are on that just kind of across the other segments as well?

We don’t typically publicly state what our utilization is. What I can tell you is we are very comfortable with that, we are in a position where we can support the anticipated demand easily over the next two or three years. So, we have some flex capacity that we can crew up and crew down, but feel very comfortable where we are today and our ability to go with the market.

Okay, any – maybe having start guidance that potentially you get up to at the current capacity? Any way to frame that?

Yeah. I don’t think we would want to try and frame that other than what I said earlier. I feel very comfortable over the next two or three years we are in a very good position.

The next question is coming from the line of John Baugh from Stifel Nicolaus. Please proceed. John Baugh – Stifel Nicolaus & Company: Thank you, goof afternoon. Australia, can you relate the size of that market, what you see going on there, maybe the prospects for ’12 and then you did a lot of – I think sales people in China in particular, I can't remember about India, but if you could just update us on sales trends on those three markets, thank you.

Yeah. It’s just – I think I’ll frame it a little bit. But, so Australia – because we have been in China and India for 20 years, but arguably maybe under resourced it, so when we talk a lot about the Pacific Rim then we focus on China and India because that’s where – to your point we are investing resources. And the way to think about that by the way is we have invested about a little over a 100 heads in emerging markets that would be China, India and Russia in general. I don’t think it would have been more transparent than that. So those investments are in place. And they are driving what we think are very attractive revenue progress in China and India. Australia is a mature market for us, we have a relatively large share position there. We have a manufacturing facility there. So, our presence is a little bit bigger. The Australian economy has been very similar to that we have experienced here, they are soft. There was stimulus package in 2010 that didn’t repeat in 2011, they have had significant weather issues and floods and things like that. So, we have seen a very-very soft market in Australia really throughout 2011. And that’s bit of an overhang on the broader Pacific Rim performance. As we are – we don’t really want to comment on 2012. Like we said a couple of times we are in the middle of putting together the operating plans including those for Australia, but as we think about Australia we are not expecting significant recovery in 2012. I don’t think anybody wants to comment further on India or China.

Well, I’d just like to say one more thing about Australia. Because it is a long term and strong developed market its margins are disproportionate to the region. So when Australia has a heck up we feel it pretty significantly. I mean they are experiencing those soft turns as Matt described and it takes a lot of volume in China and India to offset it profit wise. John Baugh – Stifel Nicolaus & Company: And then a quick follow up if I could on raw-materials. I don’t have it in front of me, but it just seems like we’ve been battling inflating raw-material for a long time now. Is there a very recent flattening in your incoming input cost, and if we saw that flattening continue into ’012 would you take some level of pricing regardless where you think you may be get some margin expansion as opposed to a negative that seems to be happening between price and raws. Thank you.

Well, we are not saying a lot of relief on the incoming, at least not to the extent that we are changing our look for 2011 on inflation. I mean again we are not going to comment on 2012, we’re in the process of going through that now. In some cases you have supply constraints, in some cases you have as we said oil based increases. The raw-material suppliers have done a very good job balancing demand and supply extremely effectively. We are pleased with our progress in pricing, as we said I mean year-to-date at a company level we are pricing to offset inflation. Again I think the teams have done a great job leading and executing our price increases we’re getting historical yields and both of the business. So we’re comfortable with our position on performing there. I don’t know if there's anything else we want to add in terms of the fourth quarter 2012. So when we – when we sit-down and talk about 2012 we’ll have a view on what we think the outlook can be inflation.

Your next question is coming from the line of Jim Barrett from CL King. Please proceed. Jim Barrett – CL King & Associates: Hi, everyone. Tom, I had a question for you. You did indicate $100 million of cost saves or close to it I think year-to-date. Should that give us reasonably that you should exceed your $100 million target by the end of Q4 or how should we look at that?

Well, I would – first I would stay with the guys we gave. Yeah, our past track record is we’ve done better than we said we’re going to do the last couple of quarters. Part of the way we got there in the third quarter is we saw the market softening in early August as I said. And so we – we make some choices to not go after some discretionary items that you know hopefully we’ll get through in the fourth quarter. So I wouldn’t assume that there is a kind of upside there but sure we’re going to continue to push hard and accelerated as much as we can to deliver you know for the earnings progress that we need. Jim Barrett – CL King & Associates: Okay. And Matt, one question for you. With the Marietta plant on lockout, if that continues well into 2012, is there any impact on product availability. I understand that plant is running in any case. I mean how should we look at that in terms of what risk that might represent?

We don’t foresee any issue or challenge in maintaining customer demand or supply. There has been no significant disruption at all, and so we are very pleased with the way plants are running. Proud of the team that’s in there running the plant. The output is terrific. So, we’re not concerned at all about that. Jim Barrett – CL King & Associates: I see. Okay thank you

Your next question is coming from the line of Jack Kasprzak from BB&T. Please proceed. Jack Kasprzak – BB&T: Thanks, good afternoon everyone. We look on to the wood floor and cabinets business where I think you guys said your improvement there was due to market share gains, could you talk about what’s going on, has that been consorted effort to take share here lately, the shift in the market more toward your products, is the competitors falling away, could you elaborate a little?

I think – this is Frank. I think the primary driver is as we introduced a series of new products earlier this year in the hand scraped and exotics category, I’ve used that to really leverage our position and take shelf space and share from the competition. So, what I would tell you is big driver of it is new products. There is also a piece very honestly with a stronger position on the cost side, we could be more aggressive than those more competitive segments to enhance our share position as well. So, primarily driven by new products, by the constant step on our part to go after that market. Jack Kasprzak – BB&T: Okay, great. Second question is, you guys also mentioned your various pricing initiatives that you’ve detailed recently. Could you just talk about how they’re being excepted into the market right now how you are feeling about getting most or all of those pricing initiatives.

Well I just would say, Jack it's Matt. As I said earlier we’re pleased with the team’s execution on pricing both in flooring and our ceilings business globally. We’re getting historical yields, we’re leading most of the increases, we feel pretty good about where we’re, I think the teams are doing a great job. Jack Kasprzak – BB&T: Okay, great. Thank you.

At this time, I’m showing no further questions in queue. I would like to turn the call back over to Mr. Matthew Espe for any closing remarks.

Thank you very much. Listen everybody, we appreciate your attention and questions and we wish you all a very good afternoon. Take care.

Ladies and gentlemen that concludes today’s conference. We thank you for your participation. You may now disconnect. Have a great day.