Flooring News and Information

Lancaster, PA, Nov. 9—Armstrong Holdings had third quarter net sales of $804.7 million from continuing operations, 6.9% lower than in the third quarter last year. Excluding the unfavorable effects of foreign exchange rates and the impact of the third quarter Installation Products Group (IPG) divestiture, net sales decreased 5.7%.

After tax earnings from continuing operations for the third quarter were $14.3 million or $0.35 per share, compared to earnings of $72 million or $1.77 per share for the same period last year. Pre tax charges of $27.4 million were recorded in the third quarter related to asset write downs, impairment evaluations and reversals of restructuring accruals. Excluding these items, after tax earnings from continuing operations for the third quarter would have been $32.2 million, or $0.79 per share.

Last year’s third quarter results included $41.4 million in charges for net costs of reorganization, fixed asset impairments and management transition costs. The third quarter of last year also included a pre tax gain of $59.9 million from the sale of a business. Excluding these items, after tax earnings from continuing operations for the third quarter of last year would have been $54.5 million, or $1.34 per share.

The company said economic conditions continued to weaken in the third quarter, particularly in September, resulting in pricing pressure and lower sales volume. Increased investments in product development and marketing, coupled with these economic pressures, resulted in lower earnings compared to the third quarter of last year. Excluding charges for net costs of reorganization, asset write downs and impairment evaluations, management transition costs and asbestos liabilities of $25.4 million and $41.4 million in the third quarters of 2001 and 2000, respectively, operating income for the third quarter would have decreased 47% from the prior year to $58.3 million. The company anticipates that economic conditions will continue to pressure pricing and sales volume in the fourth quarter.

"While we continue to be affected by the economic downturn, we’re investing in our core businesses," said Armstrong chairman and CEO Michael D. Lockhart. "We remain focused on improving the cost structure, product offerings and long term profitability of the business."

Floorcovering net sales of $303.3 million decreased 13.1% versus prior year due to lower sales volume in laminate and commercial tile products, and last year’s third quarter IPG divestiture. Operating income of $29.1 million was down from $35.2 million the year before. Excluding expenses associated with reorganizing the European business and other management changes, operating income was $56.7 million in 2000. The operating income reduction was primarily due to lower sales volume, and higher selling and promotional expenses.

Building products net sales decreased 4.7% to $215.1 million due primarily to lower sales in the commercial construction market. Lower sales volume led to a decrease of $4.3 million in operating income to $31.1 million in the third quarter.

Wood products net sales of $214.2 million were down 2.7% from the third quarter of last year due to lower volume and weaker pricing. Competitive pricing pressure, and higher selling and promotional expenses, resulted in an operating loss of $1.8 million in the third quarter of 2001 compared to operating income of $18.5 million in 2000.

Textile and sports flooring net sales in the third quarter increased 4.6% over the prior year to $72.1 million. A third quarter operating loss of $7.2 million was attributable to an $8.4 million fixed asset impairment charge and a $2.1 million inventory write down. This compares to an operating loss in the third quarter of last year of $2.6 million.