Armstrong Takes Asbestos Hit In Fourth Quarter

Lancaster, PA, Mar. 19 --Armstrong Holdings had fourth quarter net sales of $752.1 million that were about 2% higher than fourth quarter sales of $738.3 million the previous year. Strong sales growth in wood flooring was augmented by growth in building products, while sales in resilient flooring and cabinets declined. During the fourth quarter, Armstrong recorded a non-cash charge of $2.5 billion to increase the company's estimated asbestos related liability. This charge was the result of progress in the Chapter 11 proceedings, including the filing of a Plan of Reorganization and proposed Disclosure Statement with the U.S. Bankruptcy Court during the fourth quarter. Fourth quarter operating loss from continuing operations of $2.49 billion compares to income of $1.8 million in the fourth quarter of 2001. The fourth quarter of 2001 included $5.7 million of goodwill amortization for which there was not a corresponding expense in 2002. In the fourth quarter, earnings benefited primarily from increased net sales and improved operating performance in wood flooring, which were partially offset by inefficiencies in cabinets and a $4.4 million decreased U.S. pension credit. The fourth quarter of 2001 included a $6.0 million restructuring charge, while the corresponding 2002 period had a $0.2 million restructuring reversal. Net sales for the year were $3.17 billion, a slight increase from $3.14 billion a year ago. Strong sales growth in wood flooring and a slight increase in cabinets were partially offset by lower sales in textiles, sports flooring, resilient flooring and building products. For the year, an operating loss of $2.34 billion compares to operating income of $140.1 million the previous year. 2002 included an asbestos related charge of $2.5 billion, while 2001 included goodwill amortization of $22.8 million and an asbestos related insurance asset recovery charge of $22.0 million. Weak commercial markets and European economies hurt results. In addition, a $17.6 million lower U.S. pension credit and increased costs for medical benefits negatively impacted results. Resilient flooring net sales of $1.15 billion decreased 1.0% from $1.16 billion a year ago. Operating income of $64.5 million compares to operating income of $70.8 million last year, including $2.4 million of goodwill amortization. Wood flooring net sales of $719.3 million increased 9.8% from $655.3 million the previous year. Operating income increased to $53.0 million. Operating income of $0.9 million the previous year included $19.8 million of goodwill amortization and $4.1 million of severance costs related to restructuring. Textiles and sports flooring net sales declined to $247.2 million from $262.9 million. An operating loss of $4.7 million compares to an operating loss of $0.7 million the previous year, which included restructuring charges of $1.2 million. Building products net sales of $826.6 million decreased slightly from $831.0 million in the year before. Operating income increased to $96.5 million from operating income of $92.4 million in 2001. Cabinets' net sales of $226.9 million increased from $225.3 million in 2001. An operating loss of $3.9 million compares to operating income of $15.2 million the previous year. The operating loss primarily resulted from $10.9 million of increased manufacturing costs for material, labor and supply chain inefficiencies and $6.8 million in charges for inventory write downs.