Armstrong Holdings Inc. reported fourth quarter 2002 net sales of $752.1 million that were about 2 percent higher than fourth quarter sales of $738.3 million in 2001.

Strong sales growth in Wood Flooring was augmented by growth in Building Products, while sales in Resilient Flooring and Cabinets declined.

During the fourth quarter of 2002, Armstrong recorded a non-cash charge of $2.5 billion to increase the company's estimated asbestos-related liability. This charge was the result of progress in the Chapter 11 proceedings, including the filing of a Plan of Reorganization and proposed Disclosure Statement with the U.S. Bankruptcy Court during the fourth quarter of 2002.

Fourth quarter 2002 operating loss from continuing operations of $2,485.8 million compares to income of $1.8 million in the fourth quarter of 2001. The fourth quarter of 2001 included $5.7 million of goodwill amortization for which there was not a corresponding expense in 2002.

In the fourth quarter of 2002, earnings benefited primarily from increased net sales and improved operating performance in Wood Flooring, which were partially offset by inefficiencies in Cabinets and a $4.4 million decreased U.S. pension credit, according to Armstrong. The fourth quarter of 2001 included a $6 million restructuring charge, while the corresponding 2002 period had a $0.2 million restructuring reversal.

Net sales in 2002 of $3.17 billion increased slightly from $3.14 billion in 2001. Strong sales growth in Wood Flooring and a slight increase in Cabinets were partially offset by lower sales in Textiles and Sports Flooring, Resilient Flooring and Building Products.

An operating loss in 2002 of $2,337.3 million compares to operating income of $140.1 million in 2001. Year 2002 included an asbestos-related charge of $2.5 billion, while 2001 included goodwill amortization of $22.8 million and an asbestos-related insurance asset recovery charge of $22 million.

Weak commercial markets and European economies hurt 2002's results, according to Armstrong. In addition, a $17.6 million lower U.S. pension credit and increased costs for medical benefits negatively impacted results.

Resilient Flooring net sales in 2002 of $1,152.3 million decreased 1 percent from $1,164.2 million in 2001. Operating income of $64.5 million in 2002 compares to operating income in 2001 of $70.8 million, which included $2.4 million of goodwill amortization.

Wood Flooring net sales of $719.3 million in 2002 increased 9.8 percent from $655.3 million in 2001. Operating income increased to $53.0 million in 2002. Operating income of $0.9 million in 2001 included $19.8 million of goodwill amortization and $4.1 million of severance costs related to restructuring.

Textiles and Sports Flooring net sales in 2002 declined to $247.2 million from $262.9 million. A 2002 operating loss of $4.7 million compares to an operating loss in 2001 of $0.7 million, which included restructuring charges of $1.2 million.

Building Products net sales of $826.6 million in 2002 decreased slightly from $831.0 million in 2001. Operating income increased to $96.5 million from operating income of $92.4 million in 2001.

Cabinets' net sales in 2002 of $226.9 million increased from $225.3 million in 2001. An operating loss of $3.9 million in 2002 compares to operating income of $15.2 million in 2001. The operating loss primarily resulted from $10.9 million of increased manufacturing costs for material, labor and supply chain inefficiencies and $6.8 million in charges for inventory write-downs, Armstrong said.