S&P affirms Armstrong World

Standard & Poor's said it affirmed Armstrong World Industries Inc.'s BB corporate credit rating and revised the outlook to stable from developing.

The outlook change reflects Armstrong's announcement that it has completed its strategic review process and plans to return $500 million to shareholders during 2008, the agency said. A $260 million special cash dividend will be paid on March 31, leaving $240 million available to be returned to shareholders later in the year if the company performs as expected.

S&P said the affirmation of the corporate credit rating considers the company's sizable liquidity to fund these payments, including over $500 million of cash balances at the end of 2007, which leads the agency to believe the impact on existing credit metrics will be minimal.

Despite the ongoing challenging residential construction market, Armstrong's good cash flow characteristics and position in the ceilings segment should enable it to maintain a combination of adequate liquidity and credit measures consistent with the current rating, S&P predicted.

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