Congoleum Reports Year-End Loss on Asbestos Charge
Mercerville, NJ, March 14, 2006--Congoleum Corp. reported its financial results for the year ended December 31, 2005. The 2005 results include $25.3 million in charges related to asbestos liabilities, of which $15.5 million were recorded in the second quarter of 2005 and $9.9 million were recorded in the fourth quarter of 2005. This compares to $5.0 million in charges to resolve asbestos liabilities in 2004.
The net loss for 2005 was $21.6 million after charges for asbestos liabilities, compared with net income of $2.9 million in 2004 after charges for asbestos liabilities. Without the charges for asbestos liabilities, net income before taxes would have been $1.2 million in 2005 and $5.4 million in 2004. The net loss per share in 2005 was $2.61, compared to net income per basic share of $0.36 in 2004.
Sales for the year ended December 31, 2005 were $ 237.6 million, an increase of 3.5% compared to the $229.5 million reported in 2004.
Roger S. Marcus, Chairman of the Board, commented "It is unfortunate that the intense litigation surrounding our asbestos situation and reorganization process has greatly increased the time and cost needed to put these problems behind us. However, I am very encouraged by our latest plan, which we are currently preparing and will soon file with the Bankruptcy Court. We believe this plan will eliminate issues that were the basis of objections by opponents of prior plans. I'm optimistic that we will receive the requisite consents to confirm this plan in 2006, and that the charge in the fourth quarter, together with existing reserves, will be adequate to cover costs through the confirmation date."
Mr. Marcus commented "Without the asbestos related charges, our operations generated a pre-tax profit of $1.2 million last year, which I consider a major accomplishment in light of the extraordinary increases we experienced in the cost of raw materials and utilities. We aggressively pursued alternative raw material sources to help control costs and assure continuity of supply, and while this program was successful in accomplishing those objectives, the disruption of changing materials and formulas hurt our manufacturing efficiency until the trials were completed. While we instituted several selling price increases in response to soaring material prices, the time lag was such that we were unable to recover a significant portion of the additional costs we incurred. Despite these challenges, our operating results were positive. We grew our sales through both pricing and volume, including a strong performance in the manufactured housing market. Our manufacturing efficiency improved over 2004 despite the negative impact of qualifying new raw materials. Finally, we continued to implement further cost reductions in operating expenses."
Mr. Marcus continued "At this point, I am cautiously optimistic about our performance in 2006. We have just introduced an entirely new sheet flooring product called 'K-Tech' which targets the kitchen remodeling market. While it is too early to judge the results, it has been well received and we are positioning it to maximize incremental sales opportunities. The demand outlook from the manufactured housing industry also appears very encouraging. Our manufacturing efficiency continues to improve, and we should not face the same need to qualify new materials in 2006. Hopefully the raw material situation has stabilized and our selling price increases will recoup a greater portion of our added costs this year. Based on all this, I'm hopeful that 2006 will be a better year than 2005."
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 ag
