Armstrong Wood Products is strong on products, innovation, style and service. It is our fastest growing business segment, with 30 percent of total sales and 28 percent of operating profits.

Wood Products comprises the wood flooring and cabinet businesses of Triangle Pacific, which we acquired in 1998. In 2000, sales grew by 7.9 percent, led by growth of flooring sales in the home center channel. Construction of higher-end homes and residential remodeling helped drive demand for hardwood floors; at the same time, the business faced higher energy and raw material costs.

Armstrong Wood Products has a strong, results-oriented and entrepreneurial culture. Still, with consumer demand for hardwood flooring as strong as it is, competitive pressures are intensifying as more suppliers enter the market. The impact is particularly felt in raw material costs, which are rising, and pricing pressures, which are driving prices down.

In the year ahead, the business is focusing on strategies to ensure its continued leadership position.

One way to be more successful is to help everyone in the supply chain be more successful. This was the thinking behind e-power floor solutions™, a program to create free Web sites for key retailers of our flooring products.

JGSullivan Interactive, an independent marketing solutions company, pioneered this Web-based dealer program and is developing these showroom and business-to-business Web sites.

Designed for simplicity and flexibility, these sites make for a stronger business. They connect consumers, retailers, distributors, and manufacturers, and they help make the entire buying process more effective and efficient.

Retailers get the direct advantage of customer leads generated from our many flooring Web sites - sites that average 10,000 visitors daily. They also have complete control of their Web sites, managing the content and product offerings (including competitive brands) displayed on the site.

Armstrong is delivering e-power to our thousands of retailers, helping them be more successful in selling our brands.

	Bruce introduced American Originals™, a line of rustic solid and engineered oak flooring with a distressed look reminiscent of a century of wear. Greenwich™ plank is an engineered floor made of pecan wood, and the Coastal Woodlands™ Pine Collection is made from exotic pines from around the world. Salado™ and Adventure™ are engineered oak planks, while the Dundee™ strip is solid oak. Northshore™ is an engineered oak plank in several widths.
	Hartco introduced Pecan plank, a five-ply engineered floor, and Handley plank, a solid-oak wide-width offering.
	Robbins added the Warren solid oak strip, extending its prefinished line; the East Winds Collection™, the brand's first floating floor and exotic-species line; and the XL Collection™, which includes longer strips for faster installations.
	Fast-growing Bruce laminates introduced a number of new designs that recreate hardwood, ceramic and stone patterns in planks, tiles and ceramic and stone patterns in planks, tiles and blocks. Its products are known by the brand names Traffic Zone®, Value Zone® and Carnival™, with Carnival being recognized as a Best Buy in Consumer Digest magazine.

Wood Products' full offering of floors can be viewed, and mapped into realistic settings, from the Residential Products link at the company's Web site, www.armstrong.com. Product innovations in the works for 2001 include a glueless or locking laminate for the independent retail channel; new wood species for Natural Reflections, the proprietary 3/8" product for the builder market; and broader color ranges overall.

The manufacturing process, will become more automated as Wood Products employs technology to make production more efficient, with lower costs and more predictable yields of lumber. Plans for capital investments are expected to increase yields, a significant improvement, especially considering that the business already has the highest yields in the industry. Pilot trials to test the new technology are currently underway.

Continued leadership also involves developing strategies across Armstrong and Triangle Pacific that optimize the strength of our brands and distribution channels in the independent retail market. These efforts include launching a credit-card program and a major effort in establishing Web sites for independent retailers. The e-power floor solutions™ program, introduced in 2001, creates free Web sites for key retailers of Bruce, Harco, Robbins and Armstrong brands. Participating retailers gain a sophisticated Web presence coupled with a business-to-business communications tool that makes it easier for them to do business with us. We expect more than 10,000 U.S. retailers to sign up for the program.

Wood Products brings strength to the Armstrong product line...and bolsters our ability to stay at the forefront of consumer trends.