Exhibit 99.1
[LOGO]
FOR IMMEDIATE RELEASE CONTACT: Media Inquiries:
May 9, 2003 Tom Burlington
Manager, Corporate
Communication
(717) 396-5220
Investor Inquiries:
Karen Wallace
Assistant Treasurer
Investor Relations
(717) 396-6144
ARMSTRONG REPORTS FIRST QUARTER 2003 RESULTS
LANCASTER, PA May 9, 2003 -- Armstrong Holdings, Inc. (OTCBB: ACKHQ) today
reported first quarter 2003 net sales of $774.9 million that were about 3.6
percent higher than first quarter net sales of $748.0 million in 2002. Excluding
the effects of favorable foreign exchange rates of $35.3 million, consolidated
net sales decreased by 1.1%. Wood Flooring sales increased while all other
segment sales were lower, after adjusting for the benefits of a weaker U.S.
dollar, primarily due to lower sales volumes.
First quarter 2003 operating income of $11.3 million compared to income of
$40.5 million in the first quarter of 2002. The net effect of exchange rates on
operating income was $0.4 million. The decline in operating income was primarily
due to lower net sales, excluding the effect of foreign exchange rates, and from
higher raw material costs, particularly lumber, natural gas and oil-based
materials. In addition, there was a $6.4 million decrease in the U.S. pension
credit in the first quarter of 2003 as compared to the prior year. The prior
year results also benefited by $5.3 million from changes in long-term disability
benefit policies for certain employees. A restructuring charge of $3.2 million
was recorded in the first quarter of 2003 as part of the restructuring plan to
consolidate certain functions in the European Textiles and Sports Flooring and
Resilient Flooring segments, compared to a $0.5 million restructuring charge in
2002 in the Textiles and Sports Flooring segment.
More details on the Company's performance can be found in its Form 10-Q,
filed with the SEC today. References to performance excluding the effects of
foreign exchange are non-GAAP measures. Management believes that this
information improves the comparability of business performance by excluding the
impacts of changes in foreign exchange rates when translating comparable foreign
currency amounts.
Segment Highlights
Resilient Flooring net sales were $286.7 million in the first quarter of
2003 and $281.3 million in the first quarter of 2002. This 1.9% increase
primarily resulted from favorable foreign exchange rates. Operating income of
$17.6 million in the quarter compared to operating income in the first quarter
of 2002 of $18.8 million. This decrease was primarily due to higher raw material
costs, lower volume and a 2002 benefit of $3.1 million related to changes in
long-term disability benefit policies for certain employees. Additionally, 2003
included $0.9 million of restructuring charges.
Wood Flooring net sales of $167.2 million in the first quarter of 2003
increased 3.9% from $160.9 million in the prior year. This increase was
primarily driven by increased volume and by an improved mix of products.
Operating income of $2.2 million in the first quarter of 2003 compared to $8.7
million in the first quarter of 2002. The decline in operating income was
primarily attributable to increases in lumber costs.
Textiles and Sports Flooring net sales in the first quarter of 2003
increased to $62.0 million from $54.0 million. Excluding the effects of
favorable foreign exchange rates of $12.3 million, sales were down 6.5% due to
weak European markets. An operating loss of $6.0 million in 2003 compared to an
operating loss in 2002 of $1.9 million. The 2003 results included restructuring
charges of $2.3 million, as compared to restructuring charges in 2002 of $0.5
million.
Building Products net sales of $207.1 million in the first quarter of 2003
increased from $195.5 million in the prior year. Excluding the effects of
favorable foreign exchange rates of $12.6 million, sales would have decreased by
0.5%, primarily due to lower sales volume in the U.S. and European commercial
markets, partially offset by gains in the emerging markets of Eastern Europe.
Operating income decreased to $17.8 million from operating income of $22.7
million in the first quarter of 2002. This decrease resulted from increases in
natural gas costs, higher administrative expenses, and a 2002 benefit of $1.2
million related to changes in long-term disability benefit policies for certain
employees.
Cabinets net sales in the first quarter of 2003 of $51.9 million decreased
from $56.3 million in 2002. An operating loss of $3.6 million in 2003 compared
to operating income of $3.2
million in the prior year. The operating loss was primarily due to the negative
effects of lower volume, increases in raw material costs and inventory
obsolescence.
Armstrong Holdings, Inc. is the parent company of Armstrong World
Industries, Inc., a global leader in the design and manufacture of floors,
ceilings and cabinets. In 2002, Armstrong's net sales totaled more than $3
billion. Based in Lancaster, PA, Armstrong has 50 plants in 15 countries and
approximately 16,500 employees worldwide. More information about Armstrong is
available on the Internet at www.armstrong.com.
These materials contain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements provide
our expectations or forecasts of future events. Actual results could differ
materially as a result of known and unknown risks and uncertainties and other
factors, including: the outcome of Armstrong World Industries Inc.'s ("AWI")
Chapter 11 case; our ability to maintain financial liquidity; AWI's
asbestos-related liability and any other litigation; variations in raw material
and energy costs; our success in achieving manufacturing efficiencies and price
increases; our success in introducing new products; product and price
competition caused by factors such as worldwide excess industry capacity;
interest, foreign exchange and effective tax rates; success in achieving
integration of and synergies from our acquisitions; greater than expected
working capital requirements; business combinations among competitors and
suppliers; the strength of domestic and foreign end-use markets and improved
efficiencies in the European flooring market; effects on international
operations from changes in intellectual property protection and trade
regulations; and other risks, uncertainties and factors disclosed in our and
AWI's most recent reports on Forms 10-K, 10-Q and 8-K filed with the SEC. We
undertake no obligation to update any forward-looking statement.
# # #
FINANCIAL HIGHLIGHTS
Armstrong Holdings, Inc., and Subsidiaries
(amounts in millions, except for per-share amounts)
Three Months Ended
March 31,
2003 2002
-------------- -------------
Net sales $ 774.9 $ 748.0
Cost of goods sold 608.4 553.8
Selling, general and administrative expenses 157.3 158.6
Restructuring and reorganization charges, net 3.2 0.5
Equity (earnings) from affiliates, net (5.3) (5.4)
-------------- -------------
Operating income 11.3 40.5
Interest expense (unrecorded contractual interest of $24.7 and $24.7) 2.8 3.5
Other non-operating expense 1.3 0.7
Other non-operating (income) (0.8) (1.2)
Chapter 11 reorganization costs, net 4.0 6.2
-------------- -------------
Earnings before income taxes and cumulative effect of a change
in accounting principle 4.0 31.3
Income tax expense 2.1 9.4
-------------- -------------
Earnings before cumulative effect of a change in accounting principle 1.9 21.9
Cumulative effect of a change in accounting principle, net of tax of $2.2 - (593.8)
-------------- -------------
$ 1.9 $(571.9)
Net earnings (loss) ============== =============
Earnings per share of common stock, before cumulative effect of a change in
accounting principle: $ 0.05 $ 0.54
Basic $ 0.05 $ 0.54
Diluted
Loss per share of common stock, cumulative effect of a change in accounting
principle:
Basic $ - $(14.66)
Diluted $ - $(14.66)
Net earnings (loss) per share of common stock:
Basic $ 0.05 $(14.12)
Diluted $ 0.05 $(14.12)
Average number of common shares outstanding:
Basic 40.5 40.5
Diluted 40.7 40.7
SEGMENT RESULTS
Armstrong Holdings, Inc., and Subsidiaries
(amounts in millions)
Three Months Ended
March 31,
Continuing Operations 2003 2002
- --------------------- ------------ ------------
Net trade sales:
- ----------------
Resilient Flooring $ 286.7 $ 281.3
Wood Flooring 167.2 160.9
Textiles and Sports Flooring 62.0 54.0
Building Products 207.1 195.5
Cabinets 51.9 56.3
-------- --------
Total Net Sales $ 774.9 $ 748.0
======== ========
Operating income (loss):
- ------------------------
Resilient Flooring $ 17.6 $ 18.8
Wood Flooring 2.2 8.7
Textiles and Sports Flooring (6.0) (1.9)
Building Products 17.8 22.7
Cabinets (3.6) 3.2
All Other 0.4 0.6
Unallocated Corporate (expense) (17.1) (11.6)
-------- --------
Total Operating Income $ 11.3 $ 40.5
======== ========
Selected Balance Sheet Information
(amounts in millions)
March 31, December 31,
2003 2002
------------ ------------
Assets:
- -------
Current assets $ 1,259.0 $ 1,255.9
Property, plant and equipment, net 1,297.9 1,303.7
Other noncurrent assets 1,951.9 1,945.2
---------- ----------
Total assets $ 4,508.8 $ 4,504.8
========== ==========
Liabilities and shareholders' equity:
- -------------------------------------
Current liabilities $ 390.2 $ 404.3
Liabilities subject to compromise 4,861.8 4,861.1
Other noncurrent liabilities 594.6 586.1
Shareholders' deficit (1,337.8) (1,346.7)
---------- ----------
Total liabilities and shareholders' equity $ 4,508.8 $ 4,504.8
========== ==========
Selected Cash Flow Information
(amounts in millions)
Three Months Ended
March 31,
2002 2001
----------- -----------
Net (loss) earnings $ 1.9 $ (571.9)
Cumulative effect of a change in accounting
principles, net -- 593.8
Other adjustments to reconcile net earnings (loss)
to net cash used for operating activities 29.9 28.3
Changes in operating assets and liabilities, net (85.6) (52.8)
-------- --------
Net cash used for operating activities (53.8) (2.6)
Net cash used for investing activities (16.9) (15.2)
Net cash (used for) provided by financing activities (5.7) 2.5
Effect of exchange rate changes on cash and cash
equivalents 1.1 (0.4)
-------- --------
Net increase in cash and cash equivalents (75.3) (15.7)
Cash and cash equivalents, beginning of year 380.0 277.4
-------- --------
Cash and cash equivalents, end of period $ 304.7 $ 261.7
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