Lancaster, PA, Aug. 6—Armstrong Holdings’ second quarter net sales from continuing operations of $748.6 million were 5.5% lower than the second quarter last year. Excluding the unfavorable effects of foreign exchange rates, the impact of last year’s third quarter divestiture of the Installation Products Group (IPG) and the impact of the second quarter 2000 Gema acquisition, net sales decreased 3.7%.

Second quarter after tax earnings from continuing operations were $33 million or $0.81 per share, compared to last year’s second quarter loss from continuing operations of $102.6 million or $2.55 per share. The last year’s second quarter results included a $236 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 last year would have been $47.4 million, or $1.18 per share. Also, in the 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 same period last year.

"We anticipated the lower sales volume and higher costs we experienced in the second quarter and we’re comfortable with our performance in the disappointing economy," said Armstrong chairman and CEO Michael D. Lockhart. "While the economic environment is challenging, we’re pleased with the progress we’re making to improve the market position of the business."

Floorcovering net sales of $308.3 million decreased 9.3% from the prior year due to the third quarter 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.

Net sales in the Americas decreased 7.6% from prior year as a result of the IPG divestiture and lower sales volumes of residential sheet and commercial tile products. European net sales were 11.2% below 2000 levels as a result of weaker sales of cushion vinyl products. Excluding the unfavorable effects of foreign exchange rates, net sales in Europe were 4.2% below last year. Pacific area sales decreased $2.6 million versus last year. Operating income of $27.8 million in 2001 compared to $44.7 million last year. The operating income reduction was driven primarily by the impact of the IPG divestiture and lower sales volumes, which were partially offset by operating cost reductions.

While building products unit sales decreased, net sales of $206.5 million were up 1.7% over the prior year due primarily to the second quarter 2000 Gema acquisition. Operating income of $25.7 million decreased $5.5 million primarily due to higher energy costs.

Wood products net sales of $233.8 million were down 6.1% from the second quarter last year 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. Wood flooring sales decreased 7.5% versus 2000, driven primarily by lower volume and weaker pricing. Operating income declined to $14.1 million in 2001 from $29.2 million last year, primarily driven by lower sales volume combined with higher lumber costs.

Copyright 2001 Floor Focus Inc