Congoleum Corporation Reports First Quarter Results.MERCERVILLE, N.J. -- Congoleum Corporation (AMEX AMEX See: American Stock Exchange :CGM (1) (Computer Graphics Metafile) An ISO/IEC standard format for 2D graphics images introduced in 1987. Primarily a vector graphics format for technical illustrations and geophysical visualizations, CGM also supports raster graphics and text. ) today reported its financial results for the first quarter ended March 31, 2005. Sales for the three months ended March 31, 2005 were $57.6 million, compared with sales of $52.0 million reported in the first quarter of 2004, an increase of 10.8%. The net loss for the quarter was $352 thousand, versus a net loss of $435 thousand in the first quarter of 2004. The net loss per share was $.04 in the first quarter of 2005 compared with $.05 per share in the first quarter of 2004. Roger S. Marcus, Chairman of the Board, commented "First quarter sales grew from 2004 to 2005 due to higher selling prices coupled with increased unit volume. Unit volume improved through growth in builder products and upper end residential tile tile, one of the ceramic products used in building, to which group brick and terra-cotta also belong. The term designates the finished baked clay—the material of a wide variety of units used in architecture and engineering, such as wall slabs or blocks, floor , partly offset by declines in sales of do-it-yourself tile through home centers. Selling price increases we instituted in 2004 and early 2005 to pass along raw material cost increases accounted for just over 7% of the total sales growth. Unfortunately, the rampant inflation in the cost of raw materials, particularly resins resins, n.pl complex, insoluble, sticky substances secreted by plants. Used as astringents, antimicrobials, and antiinflammatories, and are burned as incense. Can cause oral ulcers and epidermal irritations. , amounted to more than eight points in gross margin versus the first quarter of last year, significantly more than what we passed along in our pricing. We continue to improve manufacturing efficiency and control operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . However, the combined effect of these improvements, our higher unit volume, and increases in selling prices, merely offset the surge in raw material prices. We had hoped the raw material cost inflation would moderate, but it has not abated Abated, an ancient technical term applied in masonry and metal work to those portions which are sunk beneath the surface, as in inscriptions where the ground is sunk round the letters so as to leave the letters or ornament in relief. From 1911 Encyclopædia Britannica ." Mr. Marcus continued, "As we indicated last month, we continue to make positive progress with our reorganization. We reached an agreement in principle with representatives of the Asbestos asbestos, mineral asbestos, common name for any of a variety of silicate minerals within the amphibole and serpentine groups that are fibrous in structure and more or less resistant to acid and fire. Claimants' Committee and the Future Claimants' Representative to make certain modifications to our proposed plan of reorganization and related documents governing the settlement and payment of asbestos-related claims against Congoleum. Our attorneys are preparing an amended plan and disclosure statement which we expect to submit to the court in the near future. We remain committed to overcoming the inevitable challenges, getting a plan confirmed, and putting the financial and management burden of our asbestos liabilities behind us." On December 31, 2003, Congoleum Corporation filed a voluntary petition with the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Bankruptcy Court bankruptcy court n. the specialized Federal court in which bankruptcy matters under the Federal Bankruptcy Act are conducted. There are several bankruptcy courts in each state, and each one's territory covers several counties. for the District of New Jersey (Case No. 03-51524) seeking relief under Chapter 11 of the United States Bankruptcy Code Bankruptcy Code may refer to:
Congoleum Corporation is a leading manufacturer of resilient See resiliency. 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 remodeling /re·mod·el·ing/ (re-mod´el-ing) reorganization or renovation of an old structure. bone remodeling , manufactured housing Manufactured housing (also known as prefab housing) is a type of housing unit that is largely assembled in factories and then transported to sites of use. In the United States, the term "manufactured home" specifically refers to a house built entirely in a protected , 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc intentions, beliefs or current expectations concerning, among other things, future performance, results of operations, the outcome of contingencies such as bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most and other legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. , 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or 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 and availability of insurance coverage and reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. from insurance companies that underwrote the applicable insurance policies for asbestos-related claims and other costs relating to the execution and implementation of any plan of reorganization pursued by Congoleum, (ii) timely reaching agreement with other creditors, or classes of creditors, that exist or may emerge, (iii) satisfaction of the conditions and obligations under Congoleum's outstanding debt instruments, (iv) 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, (v) Congoleum's ability to maintain debtor-in-possession financing Debtor-in-possession financing New debt obtained by a firm during the Chapter 11 bankruptcy process, Federal Bankruptcy Rule 4001 (c)(1). This financing is unique because it is secured, that is, it has priority over existing debt, equity and other claims. sufficient to provide it with funding that may be needed during the pendency Pend´en`cy n. 1. The quality or state of being pendent or suspended. 2. The quality or state of being undecided, or in continuance; suspense; as, the pendency of a suit s>. of its Chapter 11 case and exit financing sufficient to provide it with funding for its operations after emerging from the bankruptcy process, in each case, on reasonable terms, (vi) timely obtaining sufficient creditor An individual to whom an obligation is owed because he or she has given something of value in exchange. One who may legally demand and receive money, either through the fulfillment of a contract or due to injury sustained as a result of another's Negligence and court approval of any reorganization plan A scheme authorized by federal law and promulgated by the president whereby he or she alters the structure of federal agencies to promote government efficiency and economy through a transfer, consolidation, coordination, authorization, or abolition of functions. pursued by Congoleum, (vii) compliance with the United States Bankruptcy Code, including Section 524(g), (viii) developments in, and the outcome of, insurance litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. pending in New Jersey state court, (ix) 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, (x) increases in raw material prices, (xi) increased competitive activity from companies in the flooring industry, some of which have greater resources and broader distribution channels than Congoleum, (xii) increases in the costs of environmental compliance and remediation or the exhaustion Exhaustion Situation in which a majority of participants trading in the same asset are either long or short, leaving few investors to take the other side of the transaction when participants wish to close their positions. of insurance coverage for such expenses, (xiii) unfavorable developments in the national economy or in the housing industry in general, including developments arising from the war in Iraq, (xiv) shipment delays, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able of inventory and increased production costs resulting from unforeseen disruptions of operations at any of Congoleum's facilities or distributors, (xv) product warranty costs, and (xvi) changes in distributors of Congoleum's products. 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2004 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
Months Ended
March 31,
---------------------
2005 2004
---------- ----------
Net Sales $57,630 $52,000
Cost of Sales 43,969 38,449
Selling, General & Administrative Expenses 11,733 11,985
---------- ----------
Income (Loss) from Operations 1,928 1,566
Interest Expense (Net) (2,402) (2,245)
Other Income 122 244
---------- ----------
Net Loss $(352) $(435)
========== ==========
Net Income / (Loss) Per Share, Basic $(0.04) $(0.05)
========== ==========
Net Income / (Loss) Per Share, Diluted $(0.04) $(0.05)
========== ==========
Weighted Average Number of Common Shares
Outstanding - Basic 8,261 8,260
========== ==========
Weighted Average Number of Common Shares
Outstanding - Diluted 8,693 8,314
========== ==========
ADDITIONAL FINANCIAL INFORMATION:
Capital Expenditures $854 $847
Depreciation and Amortization $2,833 $2,891
CONDENSED BALANCE SHEET
(In thousands)
March 31, December 31,
2005 2004
------------ ------------
(unaudited)
ASSETS:
Cash (including restricted amounts) $38,121 $45,392
Accounts & notes receivable, net 26,255 17,621
Inventory 40,366 39,623
Other current assets 16,919 15,802
------------ ------------
Total current assets 121,661 118,438
Property, plant & equipment (net) 77,655 79,550
Other assets (net) 14,810 14,894
------------ ------------
Total assets $214,126 $212,882
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable, accrued expenses &
deferred income taxes $55,926 $59,440
Revolving credit loan - secured debt 12,410 9,500
Liabilities subject to compromise - current 16,626 14,225
------------ ------------
Total current liabilities 84,962 83,165
Liabilities subject to compromise 137,089 137,290
Long term debt - -
Other liabilities 13,416 13,416
------------ ------------
Total liabilities 235,467 233,871
Stockholder's equity (deficit) (21,341) (20,989)
------------ ------------
Total liabilities & stockholder's equity $214,126 $212,882
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