Exhibit 99.1



LOGO



WORTHINGTON ARMSTRONG VENTURE



Consolidated Financial Statements



December 31, 2004, 2003, and 2002



(With Independent Auditors Report Thereon)



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WORTHINGTON ARMSTRONG VENTURE



Table of Contents



|                                                                                           |  |     
|------------------------------------------------------------------------------------------ |  | ----
|                                                                                           |  | Page
|Independent Auditors Report                                                               |  | 1   
|                                                                                           | 
|Consolidated Balance Sheets, December 31, 2004 and 2003                                    |  | 2   
|                                                                                           | 
|Consolidated Statements of Income, Years ended December 31, 2004, 2003, and 2002           |  | 3   
|                                                                                           | 
|Consolidated Statements of Partners Equity, Years ended December 31, 2004, 2003, and 2002 |  | 4   
|                                                                                           | 
|Consolidated Statements of Cash Flows, Years ended December 31, 2004, 2003, and 2002       |  | 5   
|                                                                                           | 
|Notes to Consolidated Financial Statements                                                 |  | 6   



---

LOGO



KPMG
LLP

1601 Market
Street

Philadelphia, PA
19103-2499



Independent Auditors Report



The Board of Directors

Worthington Armstrong
Venture:



We have audited the accompanying consolidated balance sheets of
Worthington Armstrong Venture as of December 31, 2004 and 2003, and the related consolidated statements of income, partners equity, and cash flows for each of the years in the three-year period ended December 31, 2004. These consolidated
financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.



We conducted our audits in accordance with generally accepted auditing standards as established by the Auditing Standards Board (United
States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Worthington Armstrong Venture
as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of
America.



KPMG LLP



February 25, 2005



KPMG LLP, a U.S. limited liability partnership, is the U.S.

member firm of KPMG International, a Swiss cooperative.



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WORTHINGTON ARMSTRONG VENTURE



Consolidated Balance Sheets



December 31, 2004 and 2003



(In thousands)



|                                       |  |      |         |      |        
|-------------------------------------- |  | ---- | ------- | ---- | -------
|                                       |  | 2004 |         | 2003
|Assets                                 |  |      |         |      |        
|Current assets:                        |  |      |         |      |        
|Cash and cash equivalents              |  | $    | 71,636  |      | 42,058 
|Accounts receivable, net               |  |      | 31,907  |      | 25,844 
|Inventory, net                         |  |      | 40,771  |      | 24,656 
|Other current assets                   |  |      | 739     |      | 500    
|                                       |  |      |         |      |        
|Total current assets                   |  |      | 145,053 |      | 93,058 
|                                       |  |     
|Property, plant, and equipment, net    |  |      | 30,190  |      | 26,278 
|Goodwill and other intangibles, net    |  |      | 2,181   |      | 2,094  
|Other assets                           |  |      | 1,498   |      | 3,942  
|                                       |  |      |         |      |        
|Total assets                           |  | $    | 178,922 |      | 125,372
|                                       |  |      |         |      |        
|Liabilities and Partners Equity       |  |      |         |      |        
|                                       |  |     
|Current liabilities:                   |  |      |         |      |        
|Current installments of long-term debt |  | $    | 50,000  |      | 50,000 
|Accounts payable                       |  |      | 14,581  |      | 10,229 
|Accrued expenses                       |  |      | 5,857   |      | 3,090  
|Taxes payable                          |  |      | 959     |      | 827    
|                                       |  |      |         |      |        
|Total current liabilities              |  |      | 71,397  |      | 64,146 
|                                       |  |      |         |      |        
|Long-term liabilities:                 |  |      |         |      |        
|Deferred income taxes                  |  |      | 587     |      | 870    
|Other long-term liabilities            |  |      | 4,496   |      | 3,060  
|                                       |  |      |         |      |        
|Total long-term liabilities            |  |      | 5,083   |      | 3,930  
|                                       |  |      |         |      |        
|Total liabilities                      |  |      | 76,480  |      | 68,076 
|                                       |  |      |         |      |        
|Partners equity:                      |  |      |         |      |        
|Contributed capital                    |  |      | 22,638  |      | 22,638 
|Retained earnings                      |  |      | 76,231  |      | 33,080 
|Accumulated other comprehensive income |  |      | 3,573   |      | 1,578  
|                                       |  |      |         |      |        
|Total partners equity                 |  |      | 102,442 |      | 57,296 
|                                       |  |      |         |      |        
|Total liabilities and partners equity |  | $    | 178,922 |      | 125,372
|                                       |  |      |         |      |        



See accompanying notes to consolidated
financial statements.



2



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WORTHINGTON ARMSTRONG VENTURE



Consolidated Statements of Income



Years ended December 31, 2004, 2003, and 2002



(In thousands)



|                                              |  |      |          |   |      |          |   |      |          |  
|--------------------------------------------- |  | ---- | -------- | - | ---- | -------- | - | ---- | -------- | -
|                                              |  | 2004 |          |   | 2003 |          |   | 2002 |         
|Net sales                                     |  | $    | 278,637  |   |      | 213,819  |   |      | 201,363  |  
|Cost of sales                                 |  |      | (192,304 | ) |      | (152,087 | ) |      | (142,181 | )
|                                              |  |      |          |   |      |          |   |      |          |  
|Gross margin                                  |  |      | 86,333   |   |      | 61,732   |   |      | 59,182   |  
|                                              |  |      |         
|Selling, general, and administrative expenses |  |      | (20,505  | ) |      | (17,952  | ) |      | (18,054  | )
|                                              |  |      |          |   |      |          |   |      |          |  
|                                              |  |      | 65,828   |   |      | 43,780   |   |      | 41,128   |  
|                                              |  |      |         
|Other income, net                             |  |      | 96       |   |      | 40       |   |      | 78       |  
|Interest expense, net                         |  |      | (444     | ) |      | (862     | ) |      | (1,060   | )
|                                              |  |      |          |   |      |          |   |      |          |  
|Income before income tax expense              |  |      | 65,480   |   |      | 42,958   |   |      | 40,146   |  
|                                              |  |      |         
|Income tax expense                            |  |      | (2,329   | ) |      | (1,217   | ) |      | (917     | )
|                                              |  |      |          |   |      |          |   |      |          |  
|Net income                                    |  | $    | 63,151   |   |      | 41,741   |   |      | 39,229   |  
|                                              |  |      |          |   |      |          |   |      |          |  



See accompanying notes to consolidated
financial statements.



3



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WORTHINGTON ARMSTRONG VENTURE



Consolidated Statements of Partners Equity



Years ended December 31, 2004, 2003, and 2002



(In thousands)



|                                         |  |                       |        |                         |       |  |                                             |   |  |                      |   |  |                            |   |  |        |  
|---------------------------------------- |  | --------------------- | ------ | ----------------------- | ----- |  | ------------------------------------------- | - |  | -------------------- | - |  | -------------------------- | - |  | ------ | -
|                                         |  | Contributed capital   |        | Retainedearnings        |       |  | Accumulated othercomprehensiveincome/(loss) |   |  | Totalpartnersequity |   |  | Comprehensiveincome/(loss) |  
|                                         |  | ArmstrongVenturesInc. |        | WorthingtonVenturesInc. |       |  |                                             |  
|Balance, December 31, 2001               |  | $                     | 12,925 |                         | 9,713 |  | 19,110                                      |   |  | (3,209               | ) |  | 38,539                     |   |  |       |  
|Net income                               |  |                       |       |                         |      |  | 39,229                                      |   |  |                     |   |  | 39,229                     |   |  | 39,229 |  
|Distributions                            |  |                       |       |                         |      |  | (35,000                                     | ) |  |                     |   |  | (35,000                    | ) |  |       |  
|Additional minimum pension liability     |  |                       |       |                         |      |  |                                            |   |  | (1,367               | ) |  | (1,367                     | ) |  | (1,367 | )
|Foreign currency translation adjustments |  |                       |       |                         |      |  |                                            |   |  | 3,382                |   |  | 3,382                      |   |  | 3,382  |  
|                                         |  |                       |        |                         |       |  |                                             |   |  |                      |   |  |                            |   |  |        |  
|Balance, December 31, 2002               |  |                       | 12,925 |                         | 9,713 |  | 23,339                                      |   |  | (1,194               | ) |  | 44,783                     |   |  | 41,244 |  
|                                         |  |                       |        |                         |       |  |                                             |   |  |                      |   |  |                            |   |  |        |  
|Net income                               |  |                       |       |                         |      |  | 41,741                                      |   |  |                     |   |  | 41,741                     |   |  | 41,741 |  
|Distributions                            |  |                       |       |                         |      |  | (32,000                                     | ) |  |                     |   |  | (32,000                    | ) |  |       |  
|Additional minimum pension liability     |  |                       |       |                         |      |  |                                            |   |  | (233                 | ) |  | (233                       | ) |  | (233   | )
|Foreign currency translation adjustments |  |                       |       |                         |      |  |                                            |   |  | 3,005                |   |  | 3,005                      |   |  | 3,005  |  
|                                         |  |                       |        |                         |       |  |                                             |   |  |                      |   |  |                            |   |  |        |  
|Balance, December 31, 2003               |  |                       | 12,925 |                         | 9,713 |  | 33,080                                      |   |  | 1,578                |   |  | 57,296                     |   |  | 44,513 |  
|                                         |  |                       |        |                         |       |  |                                             |   |  |                      |   |  |                            |   |  |        |  
|Net income                               |  |                       |       |                         |      |  | 63,151                                      |   |  |                     |   |  | 63,151                     |   |  | 63,151 |  
|Distributions                            |  |                       |       |                         |      |  | (20,000                                     | ) |  |                     |   |  | (20,000                    | ) |  |       |  
|Additional minimum pension liability     |  |                       |       |                         |      |  |                                            |   |  | (564                 | ) |  | (564                       | ) |  | (564   | )
|Foreign currency translation adjustments |  |                       |       |                         |      |  |                                            |   |  | 2,559                |   |  | 2,559                      |   |  | 2,559  |  
|                                         |  |                       |        |                         |       |  |                                             |   |  |                      |   |  |                            |   |  |        |  
|Balance, December 31, 2004               |  | $                     | 12,925 |                         | 9,713 |  | 76,231                                      |   |  | 3,573                |   |  | 102,442                    |   |  | 65,146 |  
|                                         |  |                       |        |                         |       |  |                                             |   |  |                      |   |  |                            |   |  |        |  



See accompanying notes to consolidated
financial statements.



4



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WORTHINGTON ARMSTRONG VENTURE



Consolidated Statements of Cash Flows



Years ended December 31, 2004, 2003, and 2002



(In thousands)



|                                                                                  |  |      |         |   |      |         |   |      |         |  
|--------------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | ------- | - | ---- | ------- | -
|                                                                                  |  | 2004 |         |   | 2003 |         |   | 2002 |        
|Cash flows from operating activities:                                             |  |      |         |   |      |         |   |      |         |  
|Net income                                                                        |  | $    | 63,151  |   |      | 41,741  |   |      | 39,229  |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |      |         |   |      |         |   |      |         |  
|Depreciation and amortization                                                     |  |      | 5,177   |   |      | 5,244   |   |      | 5,046   |  
|Deferred income taxes                                                             |  |      | (171    | ) |      | 314     |   |      | (417    | )
|Change in accounts receivable                                                     |  |      | (5,335  | ) |      | (3,284  | ) |      | (306    | )
|Change in inventory                                                               |  |      | (15,317 | ) |      | 5,057   |   |      | (5,240  | )
|Change in accounts payable and accrued expenses                                   |  |      | 5,841   |   |      | (1,248  | ) |      | 1,339   |  
|Other                                                                             |  |      | 3,811   |   |      | (3,487  | ) |      | 1,188   |  
|                                                                                  |  |      |         |   |      |         |   |      |         |  
|Net cash provided by operating activities                                         |  |      | 57,157  |   |      | 44,337  |   |      | 40,839  |  
|                                                                                  |  |      |         |   |      |         |   |      |         |  
|Cash flows from investing activities:                                             |  |      |         |   |      |         |   |      |         |  
|Purchases of property, plant, and equipment                                       |  |      | (8,663  | ) |      | (2,167  | ) |      | (3,021  | )
|Sale of property, plant, and equipment                                            |  |      | 23      |   |      | 30      |   |      | 6       |  
|                                                                                  |  |      |         |   |      |         |   |      |         |  
|Net cash used in investing activities                                             |  |      | (8,640  | ) |      | (2,137  | ) |      | (3,015  | )
|                                                                                  |  |      |         |   |      |         |   |      |         |  
|Cash flows from financing activities:                                             |  |      |         |   |      |         |   |      |         |  
|Change in short-term borrowings, net                                              |  |      |        |   |      |        |   |      | (903    | )
|Reduction of long-term debt                                                       |  |      |        |   |      |        |   |      | (841    | )
|Distributions paid                                                                |  |      | (20,000 | ) |      | (32,000 | ) |      | (35,000 | )
|                                                                                  |  |      |         |   |      |         |   |      |         |  
|Net cash used in financing activities                                             |  |      | (20,000 | ) |      | (32,000 | ) |      | (36,744 | )
|                                                                                  |  |      |         |   |      |         |   |      |         |  
|Effect of exchange rate changes on cash and cash equivalents                      |  |      | 1,061   |   |      | 1,025   |   |      | 1,138   |  
|                                                                                  |  |      |         |   |      |         |   |      |         |  
|Net increase in cash and cash equivalents                                         |  |      | 29,578  |   |      | 11,225  |   |      | 2,218   |  
|                                                                                  |  |      |        
|Cash and cash equivalents at beginning of year                                    |  |      | 42,058  |   |      | 30,833  |   |      | 28,615  |  
|                                                                                  |  |      |         |   |      |         |   |      |         |  
|Cash and cash equivalents at end of year                                          |  | $    | 71,636  |   |      | 42,058  |   |      | 30,833  |  
|                                                                                  |  |      |         |   |      |         |   |      |         |  
|Supplemental disclosures:                                                         |  |      |         |   |      |         |   |      |         |  
|Cash and cash equivalents paid for interest                                       |  | $    | 1,088   |   |      | 1,212   |   |      | 1,604   |  
|Cash and cash equivalents paid for income taxes                                   |  |      | 2,124   |   |      | 1,115   |   |      | 1,139   |  



See accompanying notes to consolidated
financial statements.



5



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WORTHINGTON ARMSTRONG VENTURE



Notes to Consolidated Financial Statements



December 31, 2004, 2003, and 2002



|(1) | Description of Business
|--- | -----------------------



Worthington Armstrong Venture (the Company or WAVE) is a general partnership, formed in June 1992, between Armstrong Ventures, Inc., a subsidiary of
Armstrong Holdings, Inc. and Worthington Ventures, Inc., a subsidiary of Worthington Industries, Inc. Its business is to manufacture and market suspension systems for commercial and residential ceiling markets throughout the world. The Company has
manufacturing plants located in the United States, France, Spain, the United Kingdom, and the Peoples Republic of China.



|(2) | Summary of Significant Accounting Policies
|--- | ------------------------------------------



| | (a) | Use of Estimates
| | --- | ----------------



These financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and include management
estimates and judgments, where appropriate. Actual results could differ from those estimates.



| | (b) | Consolidation Policy
| | --- | --------------------



The consolidated financial statements include the accounts of the Worthington Armstrong Venture and its subsidiaries. All significant intercompany
transactions have been eliminated.



| | (c) | Revenue Recognition
| | --- | -------------------



The Company recognizes revenue from the sale of products and the related accounts receivable when title transfers, generally on the date of shipment.
Provision is made for estimated applicable discounts and losses. Sales with independent U.S. distributors of certain products to major home center retailers are recorded when the products are shipped from the distributors locations to these
retailers.



| | (d) | Advertising Costs
| | --- | -----------------



The Company recognizes advertising expenses as they are incurred. Advertising expense was $837,000, $897,000, and $1,002,000 for the years ended December
31, 2004, 2003, and 2002, respectively.



| | (e) | Research and Development Expenditures
| | --- | -------------------------------------



The Company recognizes research and development expense as expenditures are incurred. Total research and development expense was $1,459,000, $1,080,000,
and $1,354,000 for the years ended December 31, 2004, 2003, and 2002, respectively.



| | (f) | Taxes
| | --- | -----



The Company is a joint venture partnership in the United States, and accordingly, all U.S. federal and state income taxes are the responsibility of the
two joint venture partners. Deferred income taxes and liabilities are recognized for foreign subsidiaries for taxes estimated to be payable in future years based upon differences between financial reporting and tax bases of assets and liabilities.
Deferred tax assets and liabilities are determined using enacted rates expected to apply to taxable income in the years the temporary differences are expected be recovered or settled.



(Continued)



6



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WORTHINGTON ARMSTRONG VENTURE



Notes to Consolidated Financial Statements



December 31, 2004, 2003, and 2002



| | (g) | Inventories
| | --- | -----------



Inventories are valued at the lower of cost or market. Cost is determined on the first-in, first-out (FIFO) method.



| | (h) | Long-Lived Assets
| | --- | -----------------



Property, plant, and equipment are stated at acquisition cost, with accumulated depreciation and amortization deducted to arrive at net book value.
Depreciation charges are determined generally on the straight-line basis over the useful lives as follows: buildings, 40 years; machinery and equipment, 5 to 12 years, and leasehold improvements over the shorter of 10 years or the life of the lease.
Impairment losses are recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amount.



| | (i) | Goodwill and Other Intangibles
| | --- | ------------------------------



Effective January 1, 2002, WAVE adopted Statement of Financial Accounting Standards (FAS) No. 142, Goodwill and Other Intangible Assets(FAS 142),
which requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually. FAS 142 also requires that intangible assets with determinable useful lives be amortized
over their respective estimated useful lives to their residual values and reviewed for impairment. The impairment tests performed in 2004, 2003, and 2002 did not result in an impairment of the companys goodwill.



| | (j) | Foreign Currency Translation and Transactions
| | --- | ---------------------------------------------



For subsidiaries with functional currencies other than the U.S. dollar, income statement items are translated into dollars at average exchange rates
throughout the year and balance sheet items are translated at year-end exchange rates. Gains or losses on foreign currency transactions are recognized in other income, net in the income statement.



| | (k) | Cash and Cash Equivalents
| | --- | -------------------------



Short-term cash investments that have maturities of three months or less when purchased are considered to be cash equivalents.



|(3) | Accounts Receivable
|--- | -------------------



The Company sells its products to select, preapproved customers whose businesses are directly affected by changes in economic and market conditions. The
Company considers these factors and the financial condition of each customer when establishing its allowance for losses from doubtful accounts. The allowance for doubtful accounts was $685,000 and $399,000 at December 31, 2004 and 2003,
respectively.



(Continued)



7



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WORTHINGTON ARMSTRONG VENTURE



Notes to Consolidated Financial Statements



December 31, 2004, 2003, and 2002



|(4) | Inventory
|--- | ---------



|                                                 |  |                |        |      |        |  
|------------------------------------------------ |  | -------------- | ------ | ---- | ------ | -
|                                                 |  | 2004           |        | 2003 |       
|                                                 |  | (In thousands) |       
|Finished goods                                   |  | $              | 13,393 |      | 12,806 |  
|Goods in process                                 |  |                | 144    |      | 49     |  
|Raw materials                                    |  |                | 16,620 |      | 9,532  |  
|Supplies                                         |  |                | 3,391  |      | 3,004  |  
|                                                 |  |                |        |      |        |  
|                                                 |  |                | 33,548 |      | 25,391 |  
|                                                 |  |               
|Inventory reserves and adjustment to actual cost |  |                | 7,223  |      | (735   | )
|                                                 |  |                |        |      |        |  
|Total inventory, net                             |  | $              | 40,771 |      | 24,656 |  
|                                                 |  |                |        |      |        |  



The adjustment to
actual cost represents the allocation of purchasing and production variances to inventory in order to record it at actual cost.



|(5) | Property, Plant, and Equipment
|--- | ------------------------------



|                                          |  |                |         |   |      |         |  
|----------------------------------------- |  | -------------- | ------- | - | ---- | ------- | -
|                                          |  | 2004           |         |   | 2003 |        
|                                          |  | (In thousands) |        
|Land                                      |  | $              | 1,356   |   |      | 1,302   |  
|Buildings                                 |  |                | 13,202  |   |      | 9,140   |  
|Machinery and equipment                   |  |                | 59,217  |   |      | 59,270  |  
|Construction in process                   |  |                | 1,058   |   |      | 843     |  
|                                          |  |                |         |   |      |         |  
|                                          |  |                | 74,833  |   |      | 70,555  |  
|                                          |  |               
|Accumulated depreciation                  |  |                | (44,643 | ) |      | (44,277 | )
|                                          |  |                |         |   |      |         |  
|Total property, plant, and equipment, net |  | $              | 30,190  |   |      | 26,278  |  
|                                          |  |                |         |   |      |         |  



Depreciation expense
was $5,115,000, $5,127,000, and $4,969,000 in 2004, 2003, and 2002, respectively.



|(6) | Goodwill and Other Intangibles
|--- | ------------------------------



Goodwill increased by $167,000, $322,000, and $252,000 during 2004, 2003, and 2002, respectively, due to foreign currency translation.



The following table details amounts related to intangible assets as of
December 31, 2004 and 2003:



|                            |  |                |      |   |      |       |  
|--------------------------- |  | -------------- | ---- | - | ---- | ----- | -
|                            |  | 2004           |      |   | 2003 |      
|                            |  | (In thousands) |     
|Computer software and other |  | $              | 982  |   |      | 1,038 |  
|Accumulated amortization    |  |                | (921 | ) |      | (897  | )
|                            |  |                |      |   |      |       |  
|Intangible assets, net      |  | $              | 61   |   |      | 141   |  
|                            |  |                |      |   |      |       |  



(Continued)



8



---

WORTHINGTON ARMSTRONG VENTURE



Notes to Consolidated Financial Statements



December 31, 2004, 2003, and 2002



Computer software is amortized on a straight-line basis using useful lives of three to seven years. Amortization expense was $62,000, $93,000, and $77,000
in 2004, 2003, and 2002, respectively.



The expected annual
amortization expense for intangible assets is as follows: $53,000 in 2005 and $8,000 in 2006.



|(7) | Financial Instruments
|--- | ---------------------



The Company does not hold or issue financial instruments for trading purposes. The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable, and accrued expenses approximate their fair value due to the short-term maturity of these instruments. The carrying value of debt approximates fair value as the debt carries a variable interest rate.



|(8) | Debt
|--- | ----



Outstanding debt and the related average interest rate at December 31, 2004 and 2003, are as follows:



|                                                               |  |                |        |  |      |   |  |        |  |      |  
|-------------------------------------------------------------- |  | -------------- | ------ |  | ---- | - |  | ------ |  | ---- | -
|                                                               |  | 2004           |        |  | 2003 |  
|                                                               |  | (In thousands) |       
|Long-term debt:                                                |  |                |        |  |      |   |  |        |  |      |  
|Floating rate bank loan, payable quarterly, principal due 2005 |  |                | 50,000 |  | 2.24 | % |  | 50,000 |  | 2.12 | %
|Less current installments                                      |  |                | 50,000 |  | 2.24 | % |  | 50,000 |  | 2.12 | %
|                                                               |  |                |        |  |      |   |  |        |  |      |  
|Long-term debt                                                 |  | $              |       |  | 0.00 | % |  |       |  | 0.00 | %
|                                                               |  |                |        |  |      |   |  |        |  |      |  



The floating rate bank
loan agreement contains restrictive financial covenants regarding cash flow coverage ratios and leverage ratios. The Company was in compliance with these covenants as of December 31, 2004 and 2003. The loan was originally due on October 13, 2004,
but was extended. The full amount of the loan is how due on September 30, 2005.



|(9) | Pension Benefit Programs
|--- | ------------------------



The Company has a defined benefit pension plan for eligible hourly employees in its manufacturing plant located in Malvern, Pennsylvania. This plan was
curtailed in January 2004 due to the consolidation of the companys East coast operations, which eliminated the expected future years of service for participants in the plan (note 14). The curtailment event resulted in additional expense of the
remaining unrecognized prior service cost of $937,000. The Company also contributes to the Worthington defined-contribution pension plan for all other eligible U.S. employees. Cost for this plan was $630,000, $387,000, and $497,000 for 2004, 2003,
and 2002, respectively. The Company also contributes to government-related pension programs in a number of foreign countries. The cost for these plans amounted to $154,000, $82,000, and $60,000 for 2004, 2003, and 2002, respectively.



(Continued)



9



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WORTHINGTON ARMSTRONG VENTURE



Notes to Consolidated Financial Statements



December 31, 2004, 2003, and 2002



The following table summarizes the balance sheet amounts, as well as the benefit obligations, assets, funded status, and rate assumptions associated with
the Companys defined benefit plan. The defined benefit pension plan uses a December 31 measurement date.



|                                                                             |  |                |        |   |      |        |  
|---------------------------------------------------------------------------- |  | -------------- | ------ | - | ---- | ------ | -
|                                                                             |  | 2004           |        |   | 2003 |       
|                                                                             |  | (In thousands) |       
|Benefit obligation at December 31                                            |  | $              | 8,896  |   |      | 8,051  |  
|Fair value of plan assets as of December 31                                  |  |                | 7,902  |   |      | 7,913  |  
|                                                                             |  |                |        |   |      |        |  
|Funded status                                                                |  |                | (994   | ) |      | (138   | )
|                                                                             |  |               
|Unrecognized prior service cost                                              |  |                |       |   |      | 1,062  |  
|Unrecognized net loss                                                        |  |                | 2,295  |   |      | 1,731  |  
|                                                                             |  |                |        |   |      |        |  
|Prepaid benefit cost                                                         |  |                | 1,301  |   |      | 2,655  |  
|                                                                             |  |               
|Accrued benefit liability, after recognition of additional minimum liability |  |                | (2,295 | ) |      | (2,793 | )
|Intangible asset                                                             |  |                |       |   |      | 1,062  |  
|Accumulated other comprehensive income                                       |  |                | 2,295  |   |      | 1,731  |  
|                                                                             |  |                |        |   |      |        |  
|Net amount recognized                                                        |  | $              | 1,301  |   |      | 2,655  |  
|                                                                             |  |                |        |   |      |        |  
|Benefit cost                                                                 |  | $              | 417    |   |      | 490    |  
|Curtailment cost                                                             |  |                | 937    |   |      |       |  
|Employer contribution                                                        |  |                |       |   |      | 2,902  |  
|Benefits paid                                                                |  |                | 345    |   |      | 204    |  
|                                                                             |  |               
|                                                                             |  | 2004           |        |   | 2003 |       
|Weighted average assumptions for year ended December 31:                     |  |                |        |   |      |        |  
|Discount rate                                                                |  |                | 6.00   | % |      | 6.75   | %
|Rate of compensation increase                                                |  |                | N/A    |   |      | N/A    |  
|Expected long-term rate of return on plan assets                             |  |                | 8.00   | % |      | 8.00   | %
|Weighted average assumptions as of December 31:                              |  |                |        |   |      |        |  
|Discount rate                                                                |  |                | 5.75   | % |      | 6.00   | %
|Rate of compensation increase                                                |  |                | N/A    |   |      | N/A    |  



The Company does not
expect to contribute to our U.S. defined benefit pension plan in 2005.



Investment Policies



The primary investment objective of the defined benefit pension plan is to achieve long-term growth of capital in excess of 8% annually, exclusive of contributions or withdrawals. These two objectives are to be achieved through a balanced
portfolio comprised of equities, fixed income, and cash investments.



(Continued)



10



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WORTHINGTON ARMSTRONG VENTURE



Notes to Consolidated Financial Statements



December 31, 2004, 2003, and 2002



Each asset class utilized by the defined benefit pension plan has a targeted percentage. The table below shows the asset allocation target and the
December 31, 2004 and 2003 position:



|                        |  |               |   |  |                         |   |  |      |  
|----------------------- |  | ------------- | - |  | ----------------------- | - |  | ---- | -
|                        |  |               |   |  | Position at December 31 |  
|                        |  | Target weight |   |  | 2004                    |   |  | 2003 |  
|Equity securities       |  | 65            | % |  | 71                      | % |  | 48   | %
|Fixed income securities |  | 35            | % |  | 26                      | % |  | 20   | %
|Cash and equivalents    |  | 0             | % |  | 3                       | % |  | 32   | %



Basis of
Rate-of-Return Assumption



For 2004, the Company assumed a
long-term rate of return of plan assets of 8%. In developing the 8% expected long-term rate of return assumption, the Company considered its historical compounded return and reviewed asset class return expectations and long-term inflation
assumptions.



Future Benefit Payments



The benefits expected to be paid in each of the next five years and in the
aggregate for the five years thereafter are shown in the table below.



|                                                         |  |   |      
|-------------------------------------------------------- |  | - | -----
|Expected future payments for period ending
December 31 : |  |  
|2005                                                     |  | $ | 345  
|2006                                                     |  |   | 339  
|2007                                                     |  |   | 332  
|2008                                                     |  |   | 325  
|2009                                                     |  |   | 317  
|2010-2014                                                |  |   | 1,494



|(10) | Income Taxes
|---- | ------------



The Company is a joint venture partnership in the United States, and accordingly, all U.S. federal and state income taxes are the responsibility of the
two joint venture partners. Therefore, no income tax provision has been recorded on U.S. income. There are no significant differences between the statutory income tax rates in foreign countries where the Company operates and the income tax provision
recorded in the income statements.



Deferred tax balances
recorded on the balance sheets relate primarily to depreciation and accrued expenses. In 2004, the provision for income tax expense (benefit) was $2,329,000 comprising $2,437,000 current and ($108,000) deferred. In 2003, the provision for income tax
expense (benefit) was $1,217,000 comprising $1,531,000 current and $(314,000) deferred. In 2002, the provision for income tax expense (benefit) was $917,000 comprising $1,334,000 current and $(417,000) deferred.



(Continued)



11



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WORTHINGTON ARMSTRONG VENTURE



Notes to Consolidated Financial Statements



December 31, 2004, 2003, and 2002



|(11) | Leases
|---- | ------



The Company rents certain real estate and equipment. Several leases include options for renewal or purchase and contain clauses for payment of real estate
taxes and insurance. In most cases, management expects that in the normal course of business, leases will be renewed or replaced by other leases. Rent expense during 2004, 2003, and 2002 amounted to $2,756,000, $2,110,000, and $1,774,000,
respectively. Future minimum payments by year and in the aggregate for operating leases having noncancelable lease terms in excess of one year are as follows (in thousands):



|           |  |   |       
|---------- |  | - | ------
|Year:      |  |  
|2005       |  | $ | 2,607 
|2006       |  |   | 2,227 
|2007       |  |   | 2,138 
|2008       |  |   | 1,778 
|2009       |  |   | 1,770 
|Thereafter |  |   | 8,308 
|           |  |   |       
|Total      |  | $ | 18,828
|           |  |   |       



|(12) | Related Parties
|---- | ---------------



Armstrong provides certain selling, promotional, and administrative processing services to the Company for which it receives reimbursement. In 2004, 2003,
and 2002, the Company paid $11,765,000, $9,820,000, and $9,993,000 for these services, respectively. The Company also leases certain land and buildings from Armstrong and, accordingly, paid rent of $356,000, $385,000, and $330,000 in 2004, 2003, and
2002, respectively. No amounts were owed to Armstrong as of December 31, 2004, 2003, or 2002. Armstrong purchases some grid products from the Company, which is then resold along with Armstrong inventory to the customer. The total amount of sales to
Armstrong was approximately $59,952,000, $50,975,000, and $41,168,000 for the years ended December 31, 2004, 2003, and 2002, respectively.



Worthington also provides certain administrative processing services to the Company and received $18,000, $17,000, and $16,000 as reimbursement in 2004,
2003, and 2002, respectively. The Company purchased $11,102,000, $6,904,000, and $7,685,000 of raw materials from Worthington and related companies in 2004, 2003, and 2002, respectively. The Company also leases certain land and buildings from
Worthington, and accordingly, paid rent of $0 in 2004, $0 in 2003, and $449,000 in 2002. The Company paid Worthington $1,145,000, $850,000, and $682,000 for workers compensation, automobile and general liability insurance coverage in 2004,
2003, and 2002, respectively. The Company owed $2,022,000, $607,000, and $956,000 to Worthington as of December 31, 2004, 2003, and 2002, respectively.



On December 6, 2000, Armstrong filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court in order to
use the court-supervised reorganization process to achieve a resolution of its asbestos liability. The Company was not part of this filing. Management does not expect this event to have an adverse effect on the Companys financial condition,
liquidity, or results of operations.



(Continued)



12



---

WORTHINGTON ARMSTRONG VENTURE



Notes to Consolidated Financial Statements



December 31, 2004, 2003, and 2002



|(13) | Legal Proceedings
|---- | -----------------



The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the Companys consolidated financial position, results of operations, or liquidity.



|(14) | Plant Consolidation
|---- | -------------------



The Company consolidated its East coast manufacturing operations from facilities located in Malvern, Pennsylvania, and Sparrows Point, Maryland,
into one facility located in Aberdeen, Maryland. The consolidation began in May 2004 and was completed by December 2004. In connection with this, approximately 131 employees were provided severance benefits.



The total cost incurred as a result of the consolidation was $4.3 million.
These costs have all been expensed in 2004 in the cost of goods sold line of the income statement. The table below contains the significant categories of costs and their impact on the companys financial statements in 2004.



|                                       |  |                       |       |  |      
|-------------------------------------- |  | --------------------- | ----- |  | -----
|                                       |  | Total amount expected
|                                       |  | (In thousands)       
|Consolidation expenses:                |  |                       |       |  |      
|Severance and relocation               |  | $                     | 1,877 |  | 1,877
|Pension curtailment                    |  |                       | 937   |  | 937  
|Equipment relocation and miscellaneous |  |                       | 1,526 |  | 1,526
|                                       |  |                       |       |  |      
|Total                                  |  | $                     | 4,340 |  | 4,340
|                                       |  |                       |       |  |      



Liability related to
severance and relocation (in thousands):



|                           |  |   |        |  
|-------------------------- |  | - | ------ | -
|Balance, January 1, 2004   |  | $ |       |  
|Amount expensed            |  |   | 1,877  |  
|Amount paid or settled     |  |   | (1,516 | )
|                           |  |   |        |  
|Balance, December 31, 2004 |  | $ | 361    |  
|                           |  |   |        |  



13