ARMSTRONG WORLD INDUSTRIES, INC.2010 ANNUAL REPORTArmstrong World Industries, Inc.P. O. Box 3001Lancaster, PA

SHARE PERFORMANCE GRAPHThe following graph shows the cumulative total shareholder return for Armstrong World Industries, Inc.Common Shares (symbol “AWI”) during the period from October 12, 2006 to December 31, 2010. Thestock was first issued and traded on the New York Stock Exchange (“NYSE”) in October 2006. Thegraph also shows the cumulative returns of the NYSE Market Index and a building materials peer groupcomprised of the companies listed below the chart. The comparison assumes 100 was invested onOctober 12, 2006 and that all dividends paid were reinvested. The performance shown should not beconsidered indicative of future performance.COMPARISON OF CUMULATIVE TOTAL RETURNAMONG ARMSTRONG WORLD INDUSTRIES, INC.,NYSE MARKET INDEX AND PEER GROUP INDEXASSUMES 100 INVESTED ON OCT 12, 2006ASSUMES DIVIDEND REINVESTEDFISCAL YEAR ENDING DEC. 31, 2010Company/IndexArmstrongPeer Group IndexFormer Peer Group IndexNYSE Market Index12/29/2006103.64105.07104.29107.20FISCAL YEAR /31/2010162.0193.5286.06102.01Note: The former Peer Group Index is comprised of the common stock of the following companies:American Woodmark Corp., Black and Decker Corp., Leggett & Platt, Inc., Masco Corp., MohawkIndustries, Inc., Owens Corning, Inc., The Stanley Works, USG Corp. and Weyerhaeuser.After a review of peers used for performance comparisons, management has made the followingadjustments: removed Leggett & Platt, Inc. and Weyerhaeuser Company; added Interface Inc., andSherwin-Williams Company. Management believes these new peers better match Armstrong in terms ofproducts, end markets and size. In addition, our peer group is now better aligned with that mostcommonly used by external parties when evaluating Armstrong.

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-K(Mark One)[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934For the fiscal year ended December 31, 2010OR[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934For the transition period from toARMSTRONG WORLD INDUSTRIES, INC.(Exact name of registrant as specified in its charter)Pennsylvania(State or other jurisdiction ofincorporation or organization)1-2116Commission filenumberP. O. Box 3001, Lancaster, Pennsylvania(Address of principal executive offices)23-0366390(I.R.S. EmployerIdentification No.)17604(Zip Code)Registrant’s telephone number, including area code(717) 397-0611Securities registered pursuant to Section 12(b) of the Act: NoneSecurities registered pursuant to Section 12(g) of the Act:Title of each classCommon Stock ( 0.01 par value)Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of theSecurities Act.YesXNoIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section15(d) of the Act.YesNo XIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subjectto such filing requirements for the past 90 days.YesXNoIndicate by check mark whether the registrant has submitted electronically and posted on its corporateWeb site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter time periodthat the registrant was required to submit and post such files).YesNo1

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is notcontained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form 10-K or any amendment to thisForm 10-K. [ X ]Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a nonaccelerated 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 (Check one):Large accelerated filerAccelerated filerXNon-accelerated filerSmaller reporting companyIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).YesNo XIndicate by check mark whether the registrant has filed all documents and reports required to be filed bySection 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securitiesunder a plan confirmed by a court.YesXNoThe aggregate market value of the Common Stock of Armstrong World Industries, Inc. held by nonaffiliates based on the closing price ( 30.18 per share) on the New York Stock Exchange (trading symbolAWI) on June 30, 2010 was approximately 612 million. As of February 22, 2011, the number of sharesoutstanding of registrant's Common Stock was 58,097,649.Documents Incorporated by ReferenceCertain sections of Armstrong World Industries, Inc.’s definitive Proxy Statement for use in connectionwith its 2011 annual meeting of stockholders, to be filed subsequently, are incorporated by reference intoPart III of this Form 10-K Report where indicated.2

TABLE OF CONTENTSSECTIONPAGESUncertainties Affecting Forward-Looking Statements . 4PART IItem 1.Business . 5Item 1A. Risk Factors . 10Item 1B. Unresolved Staff Comments . 14Item 2.Properties . 15Item 3.Legal Proceedings . 15PART IIItem 5.Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchasesof Equity Securities . 16Item 6.Selected Financial Data. 18Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations . 19Item 7A. Quantitative and Qualitative Disclosures about Market Risk . 36Item 8.Financial Statements and Supplementary Data . 38Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . 96Item 9A. Controls and Procedures . 96PART IIIItem 10. Directors, Executive Officers and Corporate Governance . 97Item 11. Executive Compensation . 97Item 12. Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters . 97Item 13. Certain Relationships and Related Transactions, and Director Independence . 97Item 14. Principal Accountant Fees and Services . 97PART IVItem 15. Exhibits and Financial Statement Schedules . 98Signatures . 1033

Uncertainties Affecting Forward-Looking StatementsOur disclosures in this document and in other public documents and comments may contain forward-lookingstatements within the meaning of the Private Securities Litigation Reform Act. Those statements provide ourexpectations or forecasts of future events, and can be identified by our use of words such as "anticipate,""estimate," "expect," "project," "intend," "plan," "believe," "outlook," etc. in discussions of futureoperating or financial performance or the outcome of contingencies such as liabilities or legal proceedings.Any of our forward-looking statements may turn out to be wrong. Actual results may differ materially fromour expected results. Forward-looking statements involve risks and uncertainties because they relate toevents and depend on circumstances that may or may not occur in the future. We undertake no obligation toupdate any forward-looking statement beyond what is required under applicable securities law.Risks and uncertainties that affect our business, operations and financial condition should be taken intoaccount in evaluating any investment decision involving Armstrong World Industries, Inc. It is not possibleto predict or identify all factors that could cause actual results to differ materially from expected andhistorical results. The discussion in the “Risk Factors” section within Item 1A is a summary of what wecurrently believe to be our most significant risk factors. Related disclosures in subsequent 10-K, 10-Q and 8K reports should also be consulted.4

PART IITEM 1. BUSINESSArmstrong World Industries, Inc. (“AWI” or “the Company”) is a Pennsylvania corporation incorporated in1891. We are a leading global producer of flooring products and ceiling systems for use primarily in theconstruction and renovation of residential, commercial and institutional buildings. We design,manufacture and sell flooring products (primarily resilient and wood) and ceiling systems (primarilymineral fiber, fiberglass and metal) around the world. We also design, manufacture and sell kitchen andbathroom cabinets in the U.S.We maintain a website at Information contained on our website is notincorporated into this document. Annual reports on Form 10-K, quarterly reports on Form 10-Q, currentreports on Form 8-K, all amendments to those reports and other information about us are available free ofcharge through this website as soon as reasonably practicable after the reports are electronically filedwith the Securities and Exchange Commission (“SEC”). These materials are also available from theSEC’s website at December 2000, AWI filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Codein order to use the court-supervised reorganization process to achieve a resolution of our asbestosliability. In October 2006, AWI’s plan of reorganization (“POR”) became effective, and AWI emerged fromChapter 11. See Note 1 to the Consolidated Financial Statements for additional information about AWI’sChapter 11 case.The Armstrong World Industries, Inc. Asbestos Personal Injury Settlement Trust (“Asbestos PI Trust”) andArmor TPG Holdings LLC (“TPG”) together hold more than 60% of AWI’s outstanding shares and haveentered into a shareholders’ agreement pursuant to which the Asbestos PI Trust and TPG have agreed tovote their shares together on certain matters.Reportable SegmentsWe operate five business segments - Resilient Flooring, Wood Flooring, Building Products, Cabinets, andUnallocated Corporate. See Note 3 to the Consolidated Financial Statements and Item 7 Management’sDiscussion and Analysis of Financial Condition and Results of Operations of this Form 10-K for additionalfinancial information on our reportable segments.MarketsWe are well positioned in the industry segments and markets in which we operate—often holding aleadership or significant market share position. The major markets in which we compete are:North American Residential. Our Resilient Flooring, Wood Flooring, Building Products and Cabinetssegments sell products for use in the home. Homeowners can choose from our vinyl and wood flooringproducts, for which we are North America’s largest provider, or from our laminate and ceramic flooringproducts. We compete directly with other domestic and international suppliers of these products. Ourflooring products also compete with carpet, which we do not offer. Our ceiling products compete againstmineral fiber and fiberglass products from other manufacturers, as well as drywall. In the kitchen andbath areas, we compete with thousands of other cabinet manufacturers that include large diversifiedcorporations as well as small local craftsmen.Our products are used in new home construction and existing home renovation work. Industry estimatesare that existing home renovation (also known as replacement / remodel) work represents approximatelytwo-thirds of the total North American residential market opportunity. Key U.S. statistics that indicate5

market opportunity include existing home sales (a key indicator for renovation opportunity), housingstarts, housing completions, interest rates and consumer confidence. For our Resilient Flooring andWood Flooring products, we believe there is some longer-term correlation between these statistics andour revenue after reflecting a lag period between change in construction activity and our operating resultsof several months. However, we believe that consumers’ preferences for product type, style, color,availability and affordability also significantly affect our revenue. Further, changes in inventory levels andproduct focus at national home centers, which are our largest customers, can also significantly affect ourrevenue. Sales of our ceiling products for residential use appear to follow the trend of existing homesales, with a several month lag period between the change in existing home sales and our relatedoperating results.North American Commercial. Many of our products, primarily ceilings and Resilient Flooring, are used incommercial and institutional buildings. Our revenue opportunities come from new construction as well asrenovation of existing buildings. Renovation work is estimated to represent approximately two-thirds ofthe total North American commercial market opportunity. Most of our revenue comes from four majorsegments of commercial building – office, education, retail and healthcare. We monitor U.S. constructionstarts and follow new projects. We have found that our revenue from new construction can lag behindconstruction starts by as much as one year. We also monitor office vacancy rates, gross domesticproduct (“GDP”) and general employment levels, which can indicate movement in renovation and newconstruction opportunities. We believe that these statistics, taking into account the time-lag effect,provide a reasonable indication of our future revenue opportunity from commercial renovation and newconstruction.Outside of North America. Most of our revenues generated outside of North America are in Europe andare commercial in nature. For the countries in which we have significant revenue, we monitor variousnational statistics (such as GDP) as well as known new projects. Revenues come primarily from newconstruction and renovation work.The following table provides an estimate of our segments’ 2010 net sales, by major markets.(Estimatedpercentages ofindividualsegment’s sales)Resilient FlooringWood FlooringBuilding ProductsCabinetsNorth 5%North de of %100%100%Geographic AreasWe sell our products in more than 80 countries. The breakdown of our consolidated net sales for the yearended December 31, 2010 based on the geographic region in which the sale was made was:AmericasEuropePacific Rim71%20%9%See Note 3 to the Consolidated Financial Statements and Item 7 Management’s Discussion and Analysisof Financial Condition and Results of Operations of this Form 10-K for additional financial information bygeographic areas.6

CustomersWe use our reputation, capabilities, service and brand recognition to develop long-standing relationshipswith our customers. We principally sell products through building materials distributors, who re-sell ourproducts to retailers, builders, contractors, installers and others. In the commercial sector, we also sell toseveral contractors and to subcontractors’ alliances. In the North American retail channel, which sells toend-users in the residential and light commercial segments, we have important relationships with nationalhome centers such as The Home Depot, Inc. and Lowe’s Companies, Inc. In the North Americanresidential sector, we have important relationships with major home builders and buying groups.Approximately two-thirds of our consolidated net sales are to distributors. Sales to large home centersaccount for approximately 15% of our sales in the Americas. The remainder of our sales are tocontractors and retailers.No customer accounted for 10% or more of our total consolidated net sales during the last three years.CompetitionWe face strong competition in all of our businesses. Principal attributes of competition include productperformance, product styling, service and price. Competition in North America comes from both domesticand international manufacturers. Additionally, some of our products compete with alternative products orfinishing solutions. Our resilient, laminate and wood flooring products compete with carpet and ceramicproducts, and our ceiling products compete with drywall and exposed structure (also known as openplenum). There is excess industry capacity for certain products in some geographies, which tends toincrease price competition. The following companies are our primary competitors:Flooring segments – Amtico International, Inc., Beaulieu International Group, N.V., Boa-Franc, Inc.,Congoleum Corporation, Faus, Inc., Forbo Holding AG, Gerflor Group, Interface, Inc., IVC Group, KronoHolding AG, Mannington Mills, Inc., Metroflor Corporation, Mullican Flooring, L.P., Mohawk Industries,Inc., Pfleiderer AG, Shaw Industries, Inc., Somerset Hardwood Flooring, Tarkett AG and WilsonartInternational.Building Products – CertainTeed, Chicago Metallic Corporation, Georgia-Pacific Corporation, Knauf AMFGmbH & Co. KG, Lafarge SA, Odenwald Faserplattenwerk GmbH, Rockfon A/S, Saint-Gobain and USGCorporation.Cabinets – American Woodmark Corporation, Fortune Brands, Inc. and Masco Corporation.Raw MaterialsRaw materials are purchased worldwide in the ordinary course of business from numerous suppliers. Theprincipal raw materials used in each business include the following:BusinessPrincipal Raw MaterialsResilient FlooringPolyvinylchloride (“PVC”) resins and films, plasticizers, backings,limestone, pigments, linseed oil, inks and stabilizersWood FlooringHardwood lumber, veneer, coatings and stainsBuilding ProductsMineral fibers, fiberglass, perlite, waste paper, clays, starches andsteel used in the production of metal ceilings and for our WAVEjoint venture’s manufacturing of ceiling gridCabinetsLumber, veneer, plywood, particleboard and components, such asdoors and hardwareWe also purchase significant amounts of packaging materials and consume substantial amounts ofenergy, such as electricity and natural gas, and water.7

In general, adequate supplies of raw materials are available to all of our businesses. However,availability can change for a number of reasons, including environmental conditions, laws and regulations,shifts in demand by other industries competing for the same materials, transportation disruptions and/orbusiness decisions made by, or events that affect, our suppliers. There is no assurance that a significantshortage of raw materials will not occur.Prices for certain high usage raw materials can fluctuate dramatically. Cost increases for these materialscan have a significant adverse impact on our manufacturing costs. Given the competitiveness of ourmarkets, we may not be able to recover the increased manufacturing costs through increasing sellingprices to our customers.Sourced ProductsSome of the products that we sell are sourced from third parties. Our primary sourced products includevarious flooring products (laminate, wood, vinyl sheet and tile and ceramic), specialized ceiling products,and installation-related products and accessories for some of our manufactured products. We purchasesome of our sourced products from suppliers that are located outside of the U.S., primarily from Asia andEurope. Sales of sourced products represented approximately 10% to 15% of our total consolidatedrevenue in 2010, 2009, and 2008.In general, we believe we have adequate supplies of sourced products. However, we cannot guaranteethat a significant shortage will not occur.Patent and Intellectual Property RightsPatent protection is important to our business. Our competitive position has been enhanced by U.S. andforeign patents on products and processes developed or perfected within AWI or obtained throughacquisitions and licenses. In addition, we benefit from our trade secrets for certain products andprocesses.Patent protection extends for varying periods according to the date of patent filing or grant and the legalterm of a patent in the various countries where patent protection is obtained. The actual protectionafforded by a patent, which can vary from country to country, depends upon the type of patent, the scopeof its coverage, and the availability of legal remedies. Although we consider that, in the aggregate, ourpatents, licenses and trade secrets constitute a valuable asset of material importance to our business, wedo not regard any of our businesses as being materially dependent upon any single patent or tradesecret, or any group of related patents or trade secrets.Certain of our trademarks, including without limitation,, Armstrong , Allwood , Alterna ,Arborcrest , Axiom , Bruce , Calibra , Caruth , Cirrus , Coronet , Cortega , CushionStep ,Designer Solarian , DLW , Dune , Excelon , Fine Fissured , Fundamentals , Grand Illusions ,Luxe Plank , Medintech , Medintone , Mesa , Metalworks , Natural Creations , NaturalInspirations , Nature’s Gallery , Optima , Park Avenue , Sahara , Scala , Second Look ,Solarian , SoundSoak , StrataMax , Timberland , ToughGuard , Town&Country , Ultima ,Waverly , and Woodworks are important to our business because of their significant brand namerecognition. Trademark protection continues in some countries as long as the mark is used, andcontinues in other countries as long as the mark is registered. Registrations are generally for fixed, butrenewable, terms.We review trademarks annually for potential impairment. See the Critical Accounting Estimates section ofItem 7. Management’s Discussion and Analysis of Financial Condition and Liquidity for furtherinformation.EmployeesAs of December 31, 2010, we had approximately 9,800 full-time and part-time employees worldwide.Approximately 59% of the production and maintenance employees in the U.S. are represented by laborunions. This percentage includes all production and maintenance employees at our plants and8

warehouses where labor unions exist. Outside the U.S., most of our production employees are coveredby either industry-sponsored and/or state-sponsored collective bargaining mechanisms.Research & DevelopmentResearch and development (“R&D”) activities are important and necessary in helping us improve ourproducts’ competitiveness. Principal R&D functions include the development and improvement ofproducts and manufacturing processes. We spent 32.9 million in 2010, 38.0 million in 2009 and 38.8million in 2008 on R&D activities worldwide.Sustainability and Environmental MattersThe adoption of environmentally responsible building codes and standards such as the Leadership inEnergy and Environmental Design, or LEED, rating system established by the U.S. Green BuildingCouncil, has the potential to increase demand for products, systems and services that contribute tobuilding sustainable spaces. Many of our products meet the requirements for the award of LEED credits,and we are continuing to develop new products, systems and services to address market demand forproducts that enable construction of buildings that require fewer natural resources to build, operate andmaintain. Our competitors also have developed and introduced to the market more environmentallyresponsible products.We expect that there will be increased demand over time for products, systems and services that meetregulatory and customer sustainability standards and preferences and decreased demand for productsthat produce significant greenhouse gas emissions. We also believe that our ability to continue to providethese products, systems and services to our customers will be necessary to maintain our competitiveposition in the marketplace.We are committed to complying with all environmental laws and regulations that are applicable to ouroperations. Regulatory activities of particular importance to our operations include proceedings under theComprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), and similar state“Superfund” laws. Significant activities include investigating and/or remediating environmentalcontamination allegedly resulting from past industrial activity at several current or former plant sites. In afew cases, we are one of several potentially responsible parties ("PRPs") which have potential liability forthe required investigation and remediation of each site. In those cases, we have agreed to jointly fundthat required investigation and remediation, while preserving our defenses to the liability. We may alsohave rights of contribution or reimbursement from other parties or coverage under applicable insurancepolicies. Most of our manufacturing and certain of our research facilities are affected by various federal,state and local environmental requirements relating to the discharge of materials or the protection of theenvironment. We make expenditures necessary for compliance with applicable environmentalrequirements at each of our operating facilities.We have not experienced a material adverse effect upon our capital expenditures or competitive positionas a result of environmental control legislation and regulations. Liabilities of 8.3 million and 6.3 millionat December 31, 2010 and December 31, 2009, respectively, were recorded for environmental liabilitiesthat we consider probable and for which a reasonable estimate of the probable liability could be made.See Note 31 to the Consolidated Financial Statements and Item 1A, Risk Factors, for informationregarding the possible effects that compliance with environmental laws and regulations and climatechange may have on our businesses and operating results.9

ITEM 1A. RISK FACTORSAs noted in the introductory section titled “Uncertainties Affecting Forward-Looking Statements,” ourbusiness, operations and financial condition are subject to various risks. These risks should be taken intoaccount in evaluating any investment decision involving AWI. It is not possible to predict or identify allfactors that could cause actual results to differ materially from expected and historical results. Thefollowing discussion is a summary of what we believe to be our most significant risk factors. These andother factors could cause our actual results to differ materially from those in forward-looking statementsmade in this report.We try to reduce both the likelihood that these risks will affect our businesses and their potential impact.However, no matter how accurate our foresight, how well we evaluate risks, and how effective we are atmitigating them, it is still possible that one of these risks or some other risks we have not identified couldhave serious consequences for us, and could cause a material adverse effect on our business. Seerelated discussions in this document and our other SEC filings and our other public documents for moredetails and subsequent disclosures.Our November 23, 2010 refinancing, which was part of a leveraged recapitalization plan, resultedin a substantial amount of indebtedness which may adversely affect our cash flow and our abilityto operate our business, comply with debt covenants, make payments on our indebtedness anddeclare dividends on our capital stock. The refinancing is described in more detail in the financialcondition and liquidity section of management’s discussion and analysis (“MD&A”).This indebtedness, combined with our other financial obligations and contractual commitments, could:make it more difficult for us to satisfy our obligations with respect to our indebtedness, andany failure to comply with the obligations of any of our debt instruments, including restrictivecovenants and borrowing conditions, could result in an event of default under the agreementsgoverning such indebtedness;make us more vulnerable to adverse changes in general economic, industry and competitiveconditions and adverse changes in government regulation;limit our flexibility in planning for, or reacting to, changes in our business and the industry inwhich we operate;place us at a competitive disadvantage compared

The Armstrong World Industries, Inc. Asbestos Personal Injury Settlement Trust (“Asbestos PI Trust”) and Armor TPG Holdings LLC (“TPG”) together hold more than 60% of AWI’s outstanding shares and have entered into a shareholders’ agreement pursuant to which the Asbestos