Congoleum Reports 1Q Loss

Mercerville, NJ, May 10, 2007--Congoleum in the first quarter ended reported a net loss of $351,000, versus a net income of $211,000in the first quarter of 2006. Net loss per share was $.04 in the first quarter of 2007 compared with a net income of $.03 per share in the first quarter of 2006.

Sales for the three months ended March 31, 2007 were $49.3 million, compared with sales of $57.2 million reported in the first quarter of 2006, a decrease of 13.8%. ADVERTISEMENT

Roger S. Marcus, Chairman of the Board, commented, "$6.7 million, or 85% of the decrease in sales from the first quarter of 2006 occurred in the manufactured housing category, which was still benefiting this time last year from demand for replacement housing due to hurricanes Katrina and Rita. First quarter 2007 sales for the balance of our business were down 2% from year earlier levels, despite price increases of 3-4%. The reported decline in new home construction over the past few months has translated into lower sales for our new residential products. Also, the residential remodel market for flooring is the softest we've seen in more than a decade. Fortunately, the success of some of our newer products has helped mitigate the general decline in business."

"While gross profits declined with volume, we did see improvement in gross profit margins as a percent of sales compared to the first quarter of last year. The decline in sales was predominantly in low margin FEMA and new residential business which helped our margins improve this year. In addition, our margins in the first quarter of last year were hurt by manufacturing inefficiencies while we were switching raw material sources, and our performance this year improved as supplies were stable."

Mr. Marcus added, "We continue to aggressively control costs. In early February, we instituted a major cost reduction program that will have an impact on all expense areas for the balance of 2007. First quarter savings from this initiative were only $1.3 million due to the timing of the steps taken and the impact of severance charges, which amounted to $400 thousand. Now fully implemented, we anticipate this program will result in cost savings of $2.4 million in each of the next three quarters."

"Business conditions in new housing and remodeling remain weak and we are not expecting any improvement in the near term. Based on the current and projected conditions, we have tightened our belts throughout the company, not only with respect to operating expenses but also at all our manufacturing facilities. We are also keeping inventories at appropriate levels. With our breakeven level significantly reduced and our working capital requirements under control, we are positioned to both weather the downturn and show improved results from either seasonal or cyclical increases in sales."

Mr. Marcus concluded, "With respect to our reorganization progress, I am pleased to report that we are in active and constructive mediation discussions with all parties. I am hopeful that within the next few months we can draft a plan that enjoys the support of our major creditor constituencies and also meets the requirements of the bankruptcy court."

On December 31, 2003, Congoleum Corporation filed a voluntary petition with the United States Bankruptcy Court for the District of New Jersey (Case No. 03-51524) seeking relief under Chapter 11 of the United States Bankruptcy Code as a means to resolve claims asserted against it related to the use of asbestos in its products decades ago.