Excluding the favorable effects of foreign exchange rates of $42.1 million, consolidated net sales decreased by 4.7 percent, primarily due to lower sales volume.

An operating loss of $33.4 million was recorded for the second quarter of 2003 compared to operating income of $55.6 million in the second quarter of 2002. The decline in operating income was primarily due to a non-cash charge in the second quarter of 2003 of $73 million related to management's current assessment of probable asbestos-related insurance asset recoveries. Also contributing to the decline in operating results were lower net sales, excluding the effect of foreign exchange rates, and higher raw material costs, particularly lumber, petroleum-based materials, natural gas and higher costs of foreign sourced products. In addition, there was a $7.1 million decrease in the U.S. pension credit in the second quarter of 2003 as compared to the prior year. Partially offsetting these costs increases were lower selling, general and administrative costs.

Resilient Flooring net sales were $308.3 million in the second quarter of 2003 and $304 million in the second quarter of 2002. 2003 sales compared to 2002 were favorably impacted by $12.8 million from the effects of foreign exchange rates in translation.

Operating income of $19.1 million in the quarter compared to operating income in the second quarter of 2002 of $20.8 million. This decrease was due to increases in raw material costs and sourced product costs, and a shift in demand to lower margin products, partially offset by lower SG&A expenses. Additionally, 2002 included $2.2 million of net restructuring charges.

Wood Flooring net sales of $181.6 million in the second quarter of 2003 decreased 4.4 percent from $190 million in the prior year. This decrease was primarily driven by lower sales volume. Operating income of $5.7 million in the second quarter of 2003 compared to $18.5 million in the second quarter of 2002. The decline in operating income was primarily attributable to increases in lumber and manufacturing costs and lower sales volumes, partially offset by lower selling expenses.

Textiles and Sports Flooring net sales of $67.1 million increased in the second quarter of 2003 compared to $60.1 million in the second quarter of 2002. Excluding the favorable effects of foreign exchange rates of $15.3 million, net sales decreased 11 percent due to weak European markets. An operating loss of $3.1 million in the second quarter of 2003 was incurred compared to an operating loss of $0.3 million in the second quarter of 2002. The increased loss was due to lower sales volume and competitive pricing pressures, partially offset by lower selling and advertising costs.

For the six-month period ending June 30, 2003, net sales were $1,601.8 million, an increase of 1.8 percent from the $1,573.7 million reported for the first six months of 2002. Increases in Building Products, and Resilient and Textiles and Sports Floorings were partially offset by decreases in Cabinets and Wood Flooring. Excluding the favorable effects of foreign exchange rates of $77.4 million, consolidated net sales decreased 3 percent.

An operating loss in the first half of 2003 of $22.1 million compared to operating income of $96.1 million for the first six months of 2002. This reduction was primarily due to the previously mentioned non-cash charge related to management's current assessment of probably asbestos-related insurance asset recoveries. Also contributing to the decline were increased raw material costs, a $13.5 million decreased U.S. pension credit and lower sales volume, partially offset by decreased selling and advertising expenses and lower production costs.