LANCASTER, Pa., April 30 (Reuters) - Floor covering maker Armstrong Holdings Inc. on Tuesday reported a 13 percent decline in first-quarter profits from continuing operations, as results were hurt by weak European sales and higher costs.

The company also said it expects to record a non-cash accounting charge of more than $500 million in 2002. Armstrong also said an annual pension credit reduction of about $20 million and increased cost of retiree medical benefits of about $16 million will reduce earnings for 2002.

Earnings from continuing operations for the first quarter of 2002 were $21.9 million, or 54 cents per diluted share, compared with $25.2 million, or 62 cents per share a year ago.

First-quarter net sales fell to $747.6 million from $779.9 million a year ago.