Sales for the three months ended March 31, 2002 were $57.9 million, compared with sales of $51.6 million reported in the first quarter of 2002, an increase of 12.3%. The net loss for the quarter (before a required accounting change) was $0.6 million versus a net loss of $3.7 million in the first quarter of 2001. The net loss per share (before accounting change) was $.08 in the first quarter of 2002 compared with $.45 per share in the first quarter of 2001. The company recorded a non-cash transition charge of $10.5 million or $1.27 per share in the first quarter of 2002 for impairment of goodwill as required for adoption of Statement of Financial Accounting Standards No. 142.
Roger S. Marcus, Chairman of the Board, commented "Congoleum's results in the first quarter of 2002 showed a quantum improvement over the first quarter of 2001. Several factors contributed to the sales growth. First, shipments of the new DuraStone product continue to surpass even our most optimistic projections. Second, the quarter benefited from initial shipments to a major home center chain. A third factor contributing to the improvement was sales of the newly introduced sheet product, Utopia. Fourth, our builder products are selling well as a result of the new designs and constructions we added last fall. Finally, sales to the manufactured housing industry were up from the very low levels of the first quarter of 2001. However, the near-term outlook for this segment remains weak and we do not anticipate sales for the balance of 2002 will exceed prior year levels."
Marcus continued, "Despite the increased sales, we reported a loss for the quarter, albeit a much lesser one than the first quarter of last year. Our initial investment for expansion in the mass merchandiser business, combined with costs associated with launching new products, has had a short-term negative effect on profitability. This has offset savings from lower raw materials costs and further improvements in manufacturing efficiency.
"For the balance of the year, we expect to continue to benefit from sales of our new products. April business was excellent, with incoming orders the best they have been in years despite the tepid state of manufactured housing. If these trends continue and we maintain the pace of improvement over 2001 that we achieved in the first quarter, we should turn in a very solid performance for the full year of 2002."