Congoleum posts $838,000 fourth-quarter income from operations, $9.28 million for 2006

By Caroline Salls

Pittsburgh, March 21 - Congoleum Corp. reported an $838,000 income from operations for the quarter ended Dec. 31 on $46.03 million in sales, according to a company news release.

The figures compare to a $7.19 million loss from operations for the same period of 2005 on $61.38 million in net sales.

The net income for the fourth quarter of 2006 was $265,000, showing improvement over a $6.95 million net loss for the fourth quarter of 2005.

For full-year 2006, the company posted a $9.28 million income from operations on $219.47 million in net sales, compared with a $14.94 million loss from operations in 2005 on $237.63 million in net sales.

The 2006 net income was $679,000, up from a $21.58 million 2005 net loss.

Cash on Dec. 31 was $18.59 million, compared with $24.51 million on Dec. 31, 2005.

According to the release, the 2006 net income included a $1.3 million gain related to replacement of a major production line component required as a result of an explosion in August 2006.

The cost of the replacement equipment, which was covered by insurance, exceeded the depreciated book value of the line by this amount.

Also, the 2005 net loss included $25.3 million in charges for asbestos-related reorganization costs.

"Even without the travails of our reorganization, 2006 was one of the most difficult years I can recall," chairman of the board Roger S. Marcus said in the release.

"As the year began, retail conditions were fair, and we were still enjoying some remnants of manufactured housing demand arising from the 2005 hurricane season.

"Unfortunately, the hurricanes also contributed to sharp increases in raw material and energy costs, as well as materials shortages that forced us to change some suppliers. The need to qualify alternate materials on an expedited basis hurt our productivity and costs.

"Despite sharply higher raw material costs, the difficulty of changing materials, an explosion on our major production line, and an $18 million sales decline, we managed to earn a slight profit of $0.7 million.

"While we do not anticipate 2007 will see a repeat of the significant inflation, materials shortages, distributor inventory reductions or production disruptions that plagued 2006, we are concerned about the continuing sales softness since last September," Marcus added in the release.

Congoleum, a Mercerville, N.J.-based flooring company, filed for bankruptcy on Dec. 31, 2003 in the U.S. Bankruptcy Court for the District of New Jersey. Its Chapter 11 case number is 03-51524.

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