Wellesley Hills, MA, Aug. 12--American Biltrite Inc. reported today its results for the second quarter, which included a previously announced charge in connection with the planned sale or disposition of its Janus Flooring subsidiary.
Net sales for the three months ended June 30 were $105.8 million, down 13.3% from $122.0 million in the second quarter of 2002. The net loss for the second quarter of 2003 was $11.9 million, or $3.45 per share, compared with net income of $1.6 million, or $.48 per share, in the second quarter of 2002. For the six months ended June 30, the net loss was $15.0 million, or $4.36 per share, on sales of $209.8 million, compared with net earnings (before a required accounting change) of $0.9 million, or $.25 per share, on sales of $224.7 million.
The $11.9 million second quarter loss includes $9.9 million related to Janus and $2.0 million related to American Biltrite's 55% owned subsidiary Congoleum. Included in the $9.9 million Janus loss was $8.5 million in non-cash charges reducing the carrying values of Janus's 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 $3 million to $5 million in cash.
The company also indicated that based upon second quarter results, its Board of Directors decided not to declare the quarterly dividend it has historically paid in early October.
Roger S. Marcus, Chairman of the Board, commented "American Biltrite's loss for the quarter was due to Janus and, to a much lesser extent, Congoleum. Our 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. Congoleum continues to proceed with its plans to reorganize and resolve its asbestos liabilities. Congoleum's customers, suppliers, employees, bondholders, and stockholders would all benefit from the proposed plan of reorganization and resolution of the asbestos concern. Meanwhile Congoleum continues to pursue cost reduction initiatives to counter the poor current market conditions and to introduce innovative new products to position itself for future growth.
"Results for the balance of American Biltrite's operations in the quarter were essentially at break-even, reflecting the weak economy. Efforts across the company are focused on reducing costs, improving cash flow, and positioning ourselves to take advantage of an improving economy. Included in these initiatives was the decision not to declare a dividend."
The company also reported that two of its debt agreements were amended to allow it to satisfy certain financial covenants as of June 30, 2003. The company is in discussion with its lenders and expects to further amend these agreements by a required deadline of September 15.
American Biltrite owns 55% of the outstanding common stock of Congoleum. Generally accepted accounting principles require that American Biltrite recognize 100% of Congoleum's losses in excess of Congoleum's equity. Because of Congoleum's deficit equity position, American Biltrite's consolidated results include the $2.0 million loss reported by Congoleum for the second quarter of 2003.
However, Congoleum is separately financed and American Biltrite neither guaranties nor is otherwise obligated for any of Congoleum's debts.
