"Despite a slow start, our first quarter bottom-line performance was the best it has been in five years thanks to the expenses we eliminated last year, and would have been even better if our largest distributor had not reduced its inventory by $2 million in the quarter" said Roger S. Marcus, Congoleum chairman of the board. "We are very encouraged by our sales in March and April, which indicate business is picking up momentum. With both factory and distributor stocks at relatively low levels, we stand to benefit from inventory rebuilding as well as improvements in underlying retail demand.
"We are also looking forward to introducing a major new sheet product in the third quarter of this year that we expect to generate considerable excitement at retail," Marcus continued. "Although the development and introduction costs will limit the profit contribution this year, we hope to see significant benefit in 2005 and beyond. Our 2004 results will depend on whether the recent business acceleration continues. If it does, we could have a good year, but even if it does not, the cost reduction steps taken in 2003 should enable us to perform much better in 2004, even with the increases in raw material costs that we have started to see.
"Turning to our Chapter 11 case, we are very pleased with the progress that has been made to date and are optimistic about the outcome of important decisions to be made by the court in the near future. We remain committed to our goal of completing the reorganization in 2004."
