Message #5 From:
NewsBot Date: August 10, 2006 02:10:00 PM
CGM News Congoleum Corporation Reports Second Quarter Results
MERCERVILLE, N.J.--(BUSINESS WIRE)--Aug. 10, 2006--Congoleum Corporation (AMEX:CGM) reported today its financial results for the second quarter ended June 30, 2006.
Sales for the three months ended June 30, 2006 were $58.7 million, compared with sales of $58.1 million reported in the second quarter of 2005, an increase of $.6 million or 1%. Net income for the second quarter of 2006 was $.6 million, compared with a net loss of $14.6 million in the second quarter of 2005, which included a $15.5 million charge for asbestos liabilities. Net income per share was $.08 for the second quarter of 2006, compared with a net loss per share of $1.77 in the second quarter of 2005.
Sales for the six months ended June 30, 2006 were $116.0 million, essentially level with sales of $115.7 million in the first six months of 2005. Net income for the six months ended June 30, 2006 was $0.8 million, or $ .10 per share, versus a net loss of $15.0 million, or $1.81 per share, in the first six months of 2005 (after the asbestos related charge of $15.5 million).
Roger S. Marcus, Chairman of the Board, commented, "Sales during the second quarter benefited from several factors. These included volume growth in our popular DuraCeramic products, our new K-Tech for Kitchens line introduced earlier this year, and the effect of selling price increases. Sales also benefited from our largest distributor replenishing a portion of the inventory that it had reduced in the first quarter."
Mr. Marcus continued, "Unfortunately, the positive sales effects from these factors was largely offset by a marked slowdown in both the builder business and more upscale remodel markets, as well as the continuing loss of do-it-yourself tile business to foreign competition. High energy prices have not only hurt our consumers, but also added significant additional costs to our business, at a time when raw material costs are at a cyclical high point."
Mr. Marcus concluded, "Considering the demand weakness and cost pressures we faced, I am very pleased with our performance in the quarter. Our continued focus on plant efficiency and cost reduction, coupled with the growth in DuraCeramic sales and the new K-Tech line, enabled us to be profitable despite the very difficult environment."
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.
Congoleum Corporation is a leading manufacturer of resilient flooring, serving both residential and commercial markets. Its sheet, tile and plank products are available in a wide variety of designs and colors, and are used in remodeling, manufactured housing, new construction and commercial applications. The Congoleum brand name is recognized and trusted by consumers as representing a company that has been supplying attractive and durable flooring products for over a century. Congoleum is a 55% owned subsidiary of American Biltrite Inc. (AMEX:ABL).
The above news release contains certain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks, uncertainties and assumptions. These statements can be identified by the use of the words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "project" and other words of similar meaning. In particular, these include statements relating to intentions, beliefs or current expectations concerning, among other things, future performance, results of operations, the outcome of contingencies such as bankruptcy and other legal proceedings, and financial conditions. These statements do not relate strictly to historical or current facts. These forward-looking statements are based on Congoleum's expectations, as of the date of this release, of future events, and Congoleum undertakes no obligation to update any of these forward-looking statements. Although Congoleum believes that these expectations are based on reasonable assumptions, within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from its expectations. Readers are cautioned not to place undue reliance on any forward-looking statements. Any or all of these statements may turn out to be incorrect. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Any forward-looking statements made in this press release speak only as of the date of such statement. It is not possible to predict or identify all factors that could potentially cause actual results to differ materially from expected and historical results. Factors that could cause actual results to differ from expectations include: (i) the future cost and timing of estimated asbestos liabilities and payments, (ii) the availability of insurance coverage and reimbursement from insurance companies that underwrote the applicable insurance policies for the Company for asbestos-related claims, (iii) the costs relating to the execution and implementation of any plan of reorganization pursued by Congoleum, (iv) timely reaching agreement with other creditors, or classes of creditors, that exist or may emerge, (v) satisfaction of the conditions and obligations under Congoleum's outstanding debt instruments, (vi) the response from time to time of Congoleum's and its controlling shareholder's, American Biltrite Inc.'s, lenders, customers, suppliers and other constituencies to the ongoing process arising from Congoleum's strategy to settle its asbestos liability, (vii) Congoleum's ability to maintain debtor-in-possession financing sufficient to provide it with funding that may be needed during the pendency of its Chapter 11 case and to obtain exit financing sufficient to provide it with funding that may be needed for its operations after emerging from the bankruptcy process, in each case, on reasonable terms, (viii) timely obtaining sufficient creditor and court approval (including the results of any relevant appeals) of any reorganization plan pursued by Congoleum and the court overruling any objections to the plan that may be filed, (ix) compliance with the United States Bankruptcy Code, including Section 524(g), (x) costs of, developments in, and the outcome of insurance coverage litigation pending in New Jersey state court involving Congoleum and certain insurers, (xi) the extent to which Congoleum is able to obtain reimbursement for costs of the coverage litigation, (xii) the possible adoption of another party's plan of reorganization which may prove to be unfeasible, (xiii) developments in, and the outcome of, proposed federal legislation that, if adopted, would establish a national trust to provide compensation to victims of asbestos-related injuries that would be funded by assessments against companies with asbestos-related liabilities such as Congoleum, (xiv) increases in raw material prices or disruption in supply, (xv) increased competitive activity from companies in the flooring industry, some of which have greater resources and broader distribution channels than Congoleum, (xvi) increases in the costs of environmental compliance and remediation or the exhaustion of insurance coverage for such expenses, (xvii) unfavorable developments in the national economy or in the housing industry in general, including developments arising from the war in Iraq, (xviii) shipment delays, depletion of inventory and increased production costs resulting from unforeseen disruptions of operations at any of Congoleum's facilities or distributors, (xix) product warranty costs, (xx) changes in distributors of Congoleum's products, (xxi) Congoleum's interests may not be the same as its controlling shareholder American Biltrite, Inc., (xxii) possible future sales by ABI could adversely affect the market for Congoleum's stock, and (xxiii) the potential impact if the Company is unable to maintain its listing on the American Stock Exchange. In any event, if Congoleum is not successful in obtaining sufficient creditor and court approval of its plan of reorganization, such failure would have a material adverse effect upon its business, results of operations and financial condition. Actual results could differ significantly as a result of these and other factors discussed in Congoleum's annual report on Form 10-K for the year ended December 31, 2005 and subsequent filings made by Congoleum with the Securities and Exchange Commission.
CONGOLEUM CORPORATION
RESULTS OF OPERATIONS
(In thousands, except per share amounts.)
(Unaudited)
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Net Sales $58,743 $58,108 $115,980 $115,738
Cost of Sales 45,139 44,338 89,099 88,307
Selling, General &
Administrative Expenses 10,261 10,673 20,657 22,406
Asbestos Related
Reorganization Charges - 15,454 - 15,454
--------- --------- --------- ---------
Income (Loss) from Operations 3,343 (12,357) 6,224 (10,429)
Interest Income 126 84 283 182
Interest Expense (2,867) (2,618) (5,601) (5,118)
Other Income 89 293 47 415
--------- --------- --------- ---------
Income (Loss) before Income
Taxes 691 (14,598) 953 (14,950)
Income Tax Expense 65 - 116 -
--------- --------- --------- ---------
Net Income (Loss) $626 $(14,598) $837 $(14,950)
========= ========= ========= =========
Net Income / (Loss) Per Share,
Basic $0.08 $(1.77) $0.10 $(1.81)
========= ========= ========= =========
Net Income / (Loss) Per Share,
Diluted $0.08 $(1.77) $0.10 $(1.81)
========= ========= ========= =========
Weighted Average Number of
Common Shares Outstanding -
Basic 8,269 8,260 8,272 8,260
========= ========= ========= =========
Weighted Average Number of
Common Shares Outstanding -
Diluted 8,329 8,260 8,327 8,260
========= ========= ========= =========
ADDITIONAL FINANCIAL
INFORMATION:
Capital Expenditures $494 $1,301 $996 $2,155
Depreciation and Amortization $2,684 $2,781 $5,345 $5,626
CONDENSED BALANCE SHEET
(In thousands)
(Unaudited)
June 30, December 31,
------------ ------------
2006 2005
------------ ------------
ASSETS:
Cash $15,444 $24,511
Restricted Cash 11,967 11,644
Accounts & notes receivable, net 24,235 17,092
Inventory 39,481 34,607
Other current assets 40,021 36,874
------------ ------------
Total current assets 131,148 124,728
Property, plant & equipment (net) 69,051 73,207
Other assets (net) 9,954 9,412
------------ ------------
Total assets $210,153 $207,347
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable, accrued expenses &
deferred income taxes $56,927 $63,317
Revolving credit loan - secured debt 13,288 9,404
Liabilities subject to compromise - current 29,281 23,990
------------ ------------
Total current liabilities 99,496 96,711
Liabilities subject to compromise 137,935 138,861
Long term debt - -
Other liabilities 16,735 16,735
------------ ------------
Total liabilities 254,166 252,307
Stockholders' equity (deficit) (44,013) (44,960)
------------ ------------
Total liabilities & stockholders' equity $210,153 $207,347
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