Excluding the unfavorable effects of foreign exchange rates, the impact of the third quarter 2000 divestiture of the Installation Products Group ("IPG") and the impact of the second quarter 2000 Gema acquisition, net sales decreased 3.7%.
Second quarter 2001 after-tax earnings from continuing operations were $33.0 million or 81 cents per share, compared to 2000's second quarter loss from continuing operations of $102.6 million or $2.55 per share. The second quarter of 2000 results included a $236.0 million pre-tax charge for an increase in the estimate of probable liability for asbestos-related claims and a pre-tax gain of $5.2 million related to demutualization proceeds received from an insurance company.
Excluding the asbestos charge and the demutualization gain, after-tax earnings from continuing operations for the second quarter of 2000 would have been $47.4 million, or $1.18 per share. Also, in second quarter of 2001, as a result of Armstrong World Industries' Chapter 11 filing, Armstrong recorded $0.5 million of net reorganization benefit and did not record $21.5 million on contractual interest expense related to prepetition debt, in accordance with generally accepted accounting principles.
The company said soft economic conditions led to lower sales in the quarter. Lower sales volume and higher energy and raw material costs resulted in lower earnings as compared to the second quarter of 2000.
"We anticipated the lower sales volume and higher costs we experienced in the second quarter and we are comfortable with our performance in the disappointing economy," said Armstrong Chairman and CEO Michael D. Lockhart. "While the economic environment is challenging, we are pleased with the progress we are making to improve the market position of the business."
Floor covering net sales of $308.3 million decreased 9.3% vs. prior year due to the third quarter 2000 IPG divestiture and lower sales volumes in residential sheet and commercial tile products. Operating income of $27.8 million was down 37.8% driven by the IPG divestiture and lower sales volume.
Wood products net sales of $233.8 million were down 6.1% from the second quarter of 2000 due to lower volume and increased pressure on pricing. Operating income declined to $14.1 million primarily driven by lower sales volume combined with higher lumber costs.
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