Armstrong Reports 3rd Quarter Results

Lancaster, PA, Nov. 8--Armstrong Holdings, hadd third quarter net sales of $846.0 million, compared to $804.9 million in the same period a year ago, an increase of 5.1%. Increases in Wood Flooring, Building Products, Resilient Flooring and Cabinets were partially offset by a decline in Textiles and Sports Flooring. Operating income of $52.4 million in the third quarter was up from $32.9 million in the third quarter of last year. Earnings from continuing operations for the third quarter were $29.4 million, or $0.72 per diluted share, as compared to $14.3 million, or $0.35 per diluted share for the third quarter of last year. Armstrong chairman and CEO Michael D. Lockhart said, "We are showing progress in our operations with the Wood Flooring business performing very well and the Building Products business continuing a solid performance. At the same time, a weak economy in Europe and cost increases related to medical benefits and pensions continue to negatively affect our results." The third quarter of 2001 included a non-cash pre-tax charge of $16.0 million related to probable asbestos related insurance recoveries, a net restructuring reversal of $1.1 million and $5.7 million of goodwill amortization, which as a result of adopting FAS 142, is no longer amortizable and has no corresponding cost in 2002. The company recorded a restructuring reversal of $0.6 million in the third quarter in its Textiles and Sports Flooring business. The following is a rundown of the third quarter performance of each division: Resilient Flooring had net sales of $314.6 million in the third quarter, an increase of 3.8% from $303.2 million in the same period a year ago. This primarily resulted from an increase in the Americas net sales of 3.7%, due to volume gains in laminate and improved product mix in commercial sheet and linoleum, partially offset by an unfavorable product mix in certain residential products. Excluding the effects of favorable foreign exchange rates, Europe decreased 6.3%, primarily due to lower sales of linoleum products. Operating income of $21.5 million in the third quarter compared to $28.3 million in the third quarter of last year. This decrease was primarily due to higher selling expenses and unfavorable price and mix in the Americas, partially offset by higher sales and lower advertising expenses. Building Products net sales of $225.8 million in the third quarter, an increase of 5.1% from $214.9 million in the third quarter a year ago. Excluding the effects of favorable foreign exchange rates, net sales increased 1.8%, primarily due to favorable product mix partially offset by lower volume in the U.S. commercial market. Operating income increased 10.9% to $34.6 million in the third quarter of 2002 from $31.2 million in the prior year due to increased net sales, lower energy costs and lower selling expenses. Wood Flooring net sales of $180.3 million in the third quarter increased 13.5% from sales of $158.9 million in the same period a year ago, driven primarily by increased volume and pricing in the independent channel. Operating income of $10.0 million in the third quarter compared to break even performance in the third quarter of last year. The increase in operating income was driven by higher net sales, improved production efficiencies, lower lumber costs and lower selling expense, partially offset by increased personnel and medical costs, and costs associated with exiting a product line and a provision for an accident. Cabinets net sales of $56.7 million in the third quarter an increase from net sales of $55.8 million in the third quarter a year ago, due primarily to increased volume. An operating loss of $0.3 million in the third quarter compared to operating income of $3.2 million in the same period a year ago.