Wellesley Mills, MA, August 7--American Biltrite Inc., Congoleum's majority shareholder, reported today that it plans to sell or otherwise dispose of its Janus pre-finished hardwood flooring business and will record a charge to second quarter earnings in connection with the planned disposition.
American Biltrite's second quarter results will include $8.5 million in non-cash charges reducing the carrying values of fixed assets, inventories, deferred tax assets, and other current assets to amounts expected to be realized through the disposition. The company expects these charges will represent the substantial majority of the expenses to exit this business. Future expenses in connection with the disposition, which will be reported as losses on discontinued operations, are currently anticipated to be approximately $2 million. The company anticipates the disposition of Janus, net of future expenses, will generate between $3 million and $5 million in cash.
Roger S. Marcus, Chairman of the Board, commented, "American Biltrite's decision to dispose of the Janus business will permit us to concentrate our capital and management resources on our other operations, where we believe we can earn acceptable returns. Despite a significant investment in acquiring and moving into a new manufacturing facility for the Janus operation, we have been unable to improve its efficiency or increase its sales to acceptable levels. The combination of downward pricing pressures in the market and higher costs for raw lumber have resulted in continuing operating losses for Janus, and we do not believe that it would be in American Biltrite's best interests to continue funding those losses or invest further capital to try to grow sales beyond the break-even point. We have therefore decided to sell or otherwise dispose of the Janus business, and unless it is sold, expect to cease its operations by October. I thank the employees of Janus for their efforts. Our decision and the market conditions that drove it are in no way a reflection on their dedication."
