Congoleum reports second quarter loss
Sales for the six months ended June 30 were $108.6 million, compared with sales of $125.9 million reported in the first six months of 2002, a decrease of 13.8 percent. The net loss for the same period was $4.6 million, or 55 cents per share, vs. net income (before a required accounting change) of $200,000, or 2 cents per share, in the first six months of 2002.
During the first quarter of 2002, Congoleum recorded a non-cash transition charge of $10.5 million, or $1.27 per share, for impairment of goodwill as required for adoption of Statement of Financial Accounting Standards No. 142.
"Our disappointing performance reflects the weakest manufactured housing market in years, considerable softness in residential remodel demand, competitive pressures on margin and product mix driven by the poor economy, and increased costs for pensions, medical benefits, insurance, energy, and raw materials,” said Roger S. Marcus, chairman of the board. “While the factors influencing this performance are largely out of our control, it is not satisfactory and we are committed to major steps that we expect should considerably reduce our break-even point. These include cost reduction initiatives as well as an already announced price increase of 3 to 5 percent that will be effective Sept. 1. "We are continuing to proceed with our planned pre-packaged Chapter 11 reorganization,” Marcus continued, “and while progress at times is frustratingly slow for those of us close to it, much has in fact been accomplished, and we continue to anticipate filing in September with the hope of emerging with our plan confirmed by the end of the year. We have seen no apparent negative effects on our day-to-day business related to the coming reorganization, which I believe is the benefit we have obtained by structuring the plan to protect their interests. "We are committed to achieving profitability in the second half of 2003, and believe this is a realistic goal even without a meaningful improvement in sales,” said Marcus.”While we are not allowing optimism to diffuse our cost reduction fervor, we have seen recent indications of economic improvement. Orders from the manufactured housing industry have shown some strengthening over the last six weeks and there are also indications that remodel demand is picking up. Any improvement in industry conditions should further amplify the benefit of the changes we are making in our cost structure."