LANCASTER, Pa., Nov. 9 /PRNewswire/ -- Armstrong Holdings, Inc. today reported third quarter 2001 net sales of $804.7 million from continuing operations that were 6.9% lower than in the third quarter of 2000. Excluding the unfavorable effects of foreign exchange rates and the impact of the third quarter 2000 Installation Products Group (``IPG'') divestiture, net sales decreased 5.7%.

``While we continue to be affected by the economic downturn, we are 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.''

Floor covering net sales of $303.3 million decreased 13.1% versus prior year due to lower sales volume in laminate and commercial tile products, and the third quarter 2000 IPG divestiture. Operating income of $29.1 million was down from $35.2 million in 2000. 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.

Textile and sports flooring net sales in the third quarter of 2001 increased 4.6% over the prior year to $72.1 million. A third quarter 2001 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 2000 of $2.6 million.

During the third quarter of 2001, Armstrong terminated its plans to permanently exit the Textiles and Sports Flooring segment. This decision led to the reversal of previously accrued losses, which was recorded as part of discontinued operations. This segment is now included as part of continuing operations. The third-quarter and the first nine months of 2000 results have been reclassified to reflect the adoption of several recent accounting pronouncements.

Floor coverings sales decreased 13.1% due mainly to lower sales volume in the Americas and the Installation Products Group (``IPG'') divestiture. Building products sales decreased 4.8% due to lower sales volume in the U.S. commercial market. Wood products sales decreased 2.7% due to lower flooring sales, partially offset by higher cabinet sales. Textiles and sports flooring sales increased 4.6% due to higher sales of sports flooring products.

Floor coverings net sales were $303.3 million and $349.1 million in 2001 and 2000, respectively. Net sales in the Americas decreased 14.0% from prior year as a result of lower volume of laminate and commercial tile, and the IPG divestiture. Excluding the unfavorable effects of foreign exchange rates, net sales in Europe were 5.4% below last year as a result of weaker sales of cushion vinyl and linoleum products. Pacific area sales decreased $1.6 million versus 2000. Operating income of $29.1 million in 2001 compared to $35.2 million in 2000.

Wood flooring sales decreased 5.4% versus 2000, driven primarily by lower sales to independent wholesalers offset by higher sales to the home center market. An operating loss of $1.8 million in 2001 compared to operating income of $18.5 million in 2000. The decrease was primarily driven by lower sales volume in wood flooring, competitive pricing pressure and higher selling and promotional expenses.

Textiles and sports flooring net sales of $72.1 million in the third quarter of 2001 were 4.6% higher than last year primarily from improved service levels of sports flooring products. An operating loss of $7.2 million was incurred compared to an operating loss of $2.6 million in 2000. The 2001 operating loss was partially the result of an $8.4 million fixed asset impairment charge and a $2.1 million inventory write-down.