Congoleum Corporation Reports Fourth Quarter Results
These results include non-recurring costs associated with the previously announced termination of a major distributor, LDBrinkman, and the related startup of a new distributor, Mohawk Industries. The company recorded a charge of $7.7 million before taxes in the fourth quarter of 2000 for expenses arising from these changes. A provision for a future return of inventory reduced fourth quarter sales by $4.0 million and reduced earnings before taxes by an additional $1.3 million.
Excluding the charges and reduction in sales for the distributor transition, sales for the quarter ended December 31, 2000 were $55.5 million, up $1.8 million or 3.3% from the fourth quarter of 1999. Net earnings excluding these charges were $0.3 million, down from $1.5 million in the fourth quarter of 1999.
After the effect of the transition charges, sales for the three months ended December 31, 2000 were $51.5 million, down $2.3 million or 4.2% from the fourth quarter of 1999. The net loss for the fourth quarter of 2000 after these charges was $5.7 million. The loss per share after the charges was $.69 in the fourth quarter of 2000 compared with earnings per share of $.18 in the fourth quarter of 1999.
Roger S. Marcus, Chairman of the Board, commented, ``Two major factors lead to our loss for the year. The first was the depressed condition of the manufactured housing industry. Shipments to this industry constitute a major portion of our volume and our large share of the market left us bearing the full burden of the decline. The second factor was the replacement of a major distributor, which entailed significant expense and temporarily disrupted sales. Unfortunately, the impact of these factors overshadowed the spectacular success of our new Ultima product line, which has lead to a resurgence of enthusiasm for Congoleum at the retail level.''
Marcus continued, ``The addition of Mohawk as a distributor is expected to increase market penetration and expand our retail presence. The popularity of Ultima gives us an opportunity to capitalize on the momentum with additional designs as well as new products with similar selling features. Finally, the completion of our capital program provides highly efficient capacity to produce increased volume. The eventual recovery of the manufactured housing industry will further fuel this growth. With all these strengths, I believe Congoleum is poised for much greater success in the future.''