LANCASTER, Pa., July 30 /PRNewswire-FirstCall/ -- Armstrong WorldIndustries, Inc. (NYSE: AWI) today reported second quarter 2007 net sales of$920.6 million, up 4 percent, from $884.1 million in the same period for 2006.The sales increase includes a $16 million benefit from foreign exchange.Reported operating income from continuing operations grew to $94.2 millionfrom $82.1 million in the second quarter of 2006. Adjusted operating incomefrom continuing operations of $93.8 million increased 18 percent compared to$79.2 million in the prior year quarter on the same basis.

The Company uses adjusted income from operations in managing the business,and believes the adjustments provide users of this financial information withmeaningful comparisons of operating performance between periods. Adjustedincome excludes the impact of fresh-start reporting, restructuring charges andrelated costs, and certain other gains and losses. As detailed in the attachedreconciliation to GAAP, these adjustments decreased operating income by $0.4million in the second quarter of 2007 and $2.9 million in the second quarterof 2006.

Performance in the second quarter of 2007 reflects a continuation of thetrends experienced in the first three months of the year. Both sales andoperating income sustained growth, with adjusted operating income increasing$15 million year-over-year, despite significant weakness in the U.S.residential markets. Growth in our commercial products and in ourinternational businesses combined with improved manufacturing performance tomore than offset downward pressure on sales of residential products.

Segment Highlights

Resilient Flooring net sales were $322.9 million in the second quarter of2007 and $315.4 million in the same period of 2006. Excluding the favorableimpact of foreign exchange rates, net sales were flat. Volume growth in Europe and improved product mix in North America offset lower volume of residentialvinyl products. Reported operating income was $20.9 million in the quarter, upfrom $17.7 million in the second quarter of 2006. Adjusted operating incomegrew to $18.7 million from $10.6 million on the same basis in the prior yearperiod as reduced manufacturing expense and lower SG&A leveraged flat sales.

Wood Flooring net sales of $211.7 million in the second quarter declined 5percent from $222.6 million in the prior year as volume declines related tothe residential housing market slowdown more than offset the benefit frompreviously announced acquisitions. Reported operating income was $21.7 millionin the quarter compared to income of $18.2 million reported in the secondquarter of 2006. Adjusted operating income of $18.3 million declined fromincome of $22.2 million on the same basis in the prior year period. Thereduction in operating income was due to the decline in sales volume,unfavorable product mix and higher lumber prices, which offset improvedmanufacturing productivity and reduced SG&A.