SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
March 31, 2003
Date of Report (Date of earliest event reported)
AMERICAN BILTRITE INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 1-4773
Delaware 04-1701350
State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
57 River Street
Wellesley Hills, Massachusetts 02481-2097
(Address of principal executive office)
Registrant's telephone number, including area code: (781) 237-6655
Not Applicable
(Former name or former address, if changed since last report)
Item 5: Other Events
On March 31, 2003, the Registrant announced that its majority-owned subsidiary
Congoleum Corporation had reached an agreement in principle to settle its
asbestos claims. A copy of that press release is attached as Exhibit 99.1, and
only the second, third and fifth through eighth paragraphs as well as the
Warning Regarding Forward Looking Statements contained therein are
incorporated by reference herein.
Item 7: Financial Statements, Pro Forma Financial Information And Exhibits
(c) Exhibits.
99.1 Press release dated March 31, 2003
Item 12: Results of Operations and Financial Condition.
On March 31, 2003, the Registrant issued a press release announcing its
earnings for the year ended December 31, 2003. The first, fourth and fifth
paragraphs as well as the Warning Regarding Forward Looking Statements
contained in the copy of that press release attached as Exhibit 99.1 contain
the information furnished under this Item 12.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN BILTRITE INC.
Date: April 1, 2003 By /s/ Howard N. Feist III
----------------------------------
Howard N. Feist III
Chief Financial Officer
Exhibit Index
Exhibit Description
Number
99.1 Press Release dated March 31, 2003
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
For Further Information:
Howard N. Feist
Chief Financial Officer
(781) 237-6655
AMERICAN BILTRITE REPORTS 2002 RESULTS, CHARGE FOR CONGOLEUM ANTICIPATED
ASBESTOS SETTLEMENT
WELLESLEY HILLS, MA, MARCH 31, 2003 - American Biltrite Inc. (AMEX:ABL)
reported today its results for 2002. Net sales for the year ended December 31,
2002 were $442.0 million, up 7.6% from $410.7 in 2001. The net loss for 2002
was $16.7 million, including a $7.7 million or $2.25 per share goodwill
accounting impairment charge and a $16.8 million charge by its 55% owned
consolidated subsidiary Congoleum Corporation (AMEX:CGM) to resolve asbestos
liabilities through a plan of reorganization. This compares with net earnings
of $2.8 million for the year ended December 31, 2001. The net loss per share
in 2002 was $4.84 compared with net earnings of $ .82 per share in 2001.
Congoleum has announced that it reached an agreement in principle that, when
consummated, will result in a global settlement of more than 75% of the
asbestos personal injury claims against it. The agreement in principle also
contemplates a Chapter 11 reorganization by Congoleum seeking confirmation of
a pre-packaged plan that would leave non-asbestos creditors unimpaired and
would resolve all pending and future personal injury asbestos claims against
Congoleum and its distributors and affiliates, including American Biltrite.
Approval of such a plan will require the supporting vote of at least 75% of
the asbestos claimants with claims against Congoleum. Congoleum recorded a
$17.3 million charge in the fourth quarter of 2002 for costs to resolve its
asbestos liabilities, of which American Biltrite included $ 16.8 million in
its consolidated financial results.
Roger S. Marcus, Chairman of the Board, commented "We believe the steps
Congoleum is taking to resolve its asbestos liabilities through a plan of
reorganization are very positive, not only for its customers, suppliers,
employees, and bondholders, but also for all its stockholders including
American Biltrite. Resolving the asbestos concern will eliminate a serious
distraction and permit Congoleum to increase focus on its business. While the
cost of resolving Congoleum's asbestos problem is reflected in American
Biltrite's consolidated financial statements, the related financial
obligations and economic risk are contained within Congoleum, and do not
affect the rest of American Biltrite's operations or resources."
"Results for the balance of American Biltrite's operations in 2002 were mixed
but profitable overall. The team at K&M Associates did an excellent job
growing jewelry sales and profits again in 2002 despite the loss of Kmart's
business at the end of 2001. Our tape and Canadian divisions had lower
revenues but remained profitable despite a very difficult economy,
particularly for their products which are dependent on business spending.
Janus Flooring relocated its factory during 2002, and the disruption of that
move resulted in limited sales growth and a greater loss versus 2001."
American Biltrite owns 55% of the common stock outstanding of Congoleum.
Generally accepted accounting principles require that American Biltrite
recognize 100% of Congoleum's losses in excess of Congoleum's equity. Because
Congoleum's asbestos charge exceeded its equity, American Biltrite's
consolidated results reflect a charge of $16.8 million related to Congoleum's
asbestos liability, of which $16.1 million represents losses in excess of
American Biltrite's investment in Congoleum. However, Congoleum is separately
financed and American Biltrite neither guaranties nor is otherwise obligated
for any of Congoleum's debts. American Biltrite has no recorded value at risk
or economic obligation related to this $16.1 million, and does not anticipate
that Congoleum's plan of reorganization will have any effect on the rest of
American Biltrite's operations. Furthermore, American Biltrite's lending
agreements require that its investment in Congoleum be accounted for under the
equity method of accounting and not consolidated. Had the Company been
permitted by generally accepted accounting principles to account for its
investment in Congoleum under the equity method, its net loss would have been
reduced, and its consolidated equity increased, by $16.1 million.
The Congoleum agreement in principle with asbestos claimants and related plan
of reorganization are subject to, among other things, the parties entering
into a definitive agreement, acceptances of the requisite amount of holders of
asbestos claims to a plan of reorganization, and court approval. Under the
terms of the agreement in principle and Congoleum's contemplated plan of
reorganization, Congoleum would contribute its insurance for asbestos related
claims to a trust established pursuant to section 524(g) of the United States
Bankruptcy Code to which all present and future asbestos claims would be
channeled, and in order to meet the requirements of section 524(g), Congoleum
and/or American Biltrite would also contribute to the trust one or more notes
with payment of such contribution secured by a pledge by American Biltrite of
51% of the common stock of Congoleum. American Biltrite anticipates that it
also will seek 524(g) protection for certain asbestos claims related to its
former flooring division operations.
American Biltrite also reported that its Form 10-K filing will be delayed
slightly due to delays in Congoleum filing its Form 10-K as a result of
preparing additional disclosures to describe planned settlement terms of the
agreement in principle to settle outstanding asbestos claims. American
Biltrite will file Form 12b-25 notifying the SEC of this delay and expects to
file its Form 10-K by April 15, 2003, which should be considered timely filed.
For more information regarding Congoleum's planned settlement terms, please
refer to Congoleum's news release dated today.
WARNING REGARDING FORWARD LOOKING STATEMENTS
THE ABOVE NEWS RELEASE, INCLUDING THE CONGOLEUM NEWS RELEASE REFERRED TO
ABOVE, CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, THAT INVOLVE RISKS,
UNCERTAINTIES AND ASSUMPTIONS. THESE FORWARD-LOOKING STATEMENTS ARE BASED ON
AMERICAN BILTRITE'S EXPECTATIONS, AS OF THE DATE OF THIS RELEASE, OF FUTURE
EVENTS, AND AMERICAN BILTRITE UNDERSTANDS THAT THE FORWARD-LOOKING STATEMENTS
INCLUDED IN CONGOLEUM'S NEWS RELEASE ARE BASED ON CONGOLEUM'S EXPECTATIONS, AS
OF THE DATE OF ITS RELEASE, OF FUTURE EVENTS. AMERICAN BILTRITE UNDERTAKES NO
OBLIGATION TO UPDATE ANY OF THESE FORWARD LOOKING STATEMENTS. ALTHOUGH
AMERICAN BILTRITE BELIEVES THAT ITS EXPECTATIONS ARE BASED ON REASONABLE
ASSUMPTIONS, WITHIN THE BOUNDS OF ITS KNOWLEDGE OF ITS BUSINESS AND
EXPERIENCE, AND IT UNDERSTANDS THAT CONGOLEUM BELIEVES THE SAME WITH REGARD TO
ITS EXPECTATIONS REFERRED TO IN ITS NEWS RELEASE, THERE CAN BE NO ASSURANCE
THAT ACTUAL RESULTS WILL NOT DIFFER MATERIALLY FROM EXPECTATIONS. READERS ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON ANY FORWARD-LOOKING STATEMENTS.
FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER FROM EXPECTATIONS INCLUDE
WITH RESPECT TO BOTH AMERICAN BILTRITE AND CONGOLEUM: (I) THE FUTURE COST AND
TIMING OF ESTIMATED ASBESTOS LIABILITIES AND PAYMENTS AND AVAILABILITY OF
INSURANCE COVERAGE AND REIMBURSEMENT FROM INSURANCE COMPANIES FOR
ASBESTOS-RELATED PERSONAL INJURY CLAIMS, (II) TIMELY NEGOTIATING AND ENTERING
INTO SETTLEMENT AGREEMENTS ON SATISFACTORY TERMS WITH A SUFFICIENT MAJORITY OF
CLAIMANTS, INCLUDING CONGOLEUM ENTERING INTO A DEFINITIVE AGREEMENT THAT
INCORPORATES THE AGREEMENT IN PRINCIPLE REACHED BETWEEN CONGOLEUM AND
ATTORNEYS REPRESENTING MORE THAN 75% OF THE KNOWN PRESENT CLAIMANTS WITH
ASBESTOS CLAIMS PENDING AGAINST CONGOLEUM, (III) TIMELY REACHING AGREEMENT
WITH OTHER CREDITORS, OR CLASSES OF CREDITORS, THAT EXIST OR MAY EMERGE, (IV)
SATISFYING THE CONDITIONS AND OBLIGATIONS UNDER OUTSTANDING DEBT INSTRUMENTS,
(V) THE RESPONSE FROM TIME-TO-TIME OF LENDERS, CUSTOMERS, SUPPLIERS AND OTHER
CONSTITUENCIES TO THE ONGOING PROCESS ARISING FROM THE STRATEGY TO SETTLE
ASBESTOS LIABILITY, (VI) TIMELY OBTAINING SUFFICIENT CREDITOR AND COURT
APPROVAL OF ANY PURSUED REORGANIZATION PLAN (VII) COMPLIANCE WITH THE UNITED
STATES BANKRUPTCY CODE, INCLUDING SECTION 524(g), (VIII) INCREASES IN RAW
MATERIAL PRICES, (IX) INCREASED COMPETITIVE ACTIVITY FROM COMPETITORS, SOME OF
WHICH HAVE GREATER RESOURCES AND BROADER DISTRIBUTION CHANNELS, (X)
UNFAVORABLE DEVELOPMENTS IN VARIOUS MARKETS FOR THE COMPANY'S PRODUCTS OR IN
THE NATIONAL ECONOMY IN GENERAL, INCLUDING DEVELOPMENTS ARISING FROM THE WAR
IN IRAQ, (XI) SHIPMENT DELAYS, DEPLETION OF INVENTORY AND INCREASED PRODUCTION
COSTS RESULTING FROM UNFORESEEN DISRUPTIONS OF OPERATIONS AT ANY OF THE
COMPANY'S FACILITIES OR DISTRIBUTORS, (XII) PRODUCT WARRANTY COSTS, AND (XIII)
CHANGES IN CUSTOMERS FOR THE COMPANY'S PRODUCTS. IN ADDITION, IN VIEW OF
AMERICAN BILTRITE'S RELATIONSHIPS WITH CONGOLEUM, AMERICAN BILTRITE COULD BE
AFFECTED BY CONGOLEUM'S NEGOTIATIONS, AND THERE CAN BE NO ASSURANCE AS TO WHAT
THAT IMPACT, POSITIVE OR NEGATIVE, MIGHT BE. IN ANY EVENT, THE FAILURE TO
TIMELY REACH AGREEMENT WITH PLAINTIFFS REPRESENTING A SUFFICIENT NUMBER OF
ASBESTOS CLAIMANTS WITH PENDING ASBESTOS CLAIMS, WHICH AGREEMENT WOULD RESULT
IN A GLOBAL SETTLEMENT OF ASBESTOS LIABILITY, OR THE FAILURE TO REACH THE
PRESENTLY ANTICIPATED SETTLEMENT, COULD HAVE A MATERIAL ADVERSE EFFECT ON
AMERICAN BILTRITE'S OR CONGOLEUM'S BUSINESS, RESULTS OF OPERATIONS OR
FINANCIAL CONDITION. ACTUAL RESULTS COULD DIFFER SIGNIFICANTLY AS A RESULT OF
THESE AND OTHER FACTORS DISCUSSED IN AMERICAN BILTRITE'S ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 2001, CONGOLEUM'S ANNUAL REPORT ON FORM
10-K FOR THE YEAR ENDED DECEMBER 31, 2001, AMERICAN BILTRITE'S QUARTERLY
REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2002, CONGOLEUM'S
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2002 AND
THEIR OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
AMERICAN BILTRITE INC.
RESULTS FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2002 (UNAUDITED)
AND 2001
(Unaudited) (Unaudited)
For the Quarter Year Ended For the Ended For the
December 31, December 31,
2002 2001 2002 2001
------------------- ------------------- ------------------ ------------------
Net sales $105,547,000 $105,780,000 $442,033,000 $410,686,000
=================== =================== ================== ==================
(Loss) income from operations $ (18,016,000) $ 3,230,000 $ (15,134,000) $ 2,381,000
Noncontrolling interests 6,791,000 (445,000) 6,221,000 435,000
------------------- ------------------- ------------------ ------------------
Net (loss) income before accounting
change (11,225,000) 2,785,000 (8,913,000) 2,816,000
Cumulative effect of accounting change
(7,742,000)
------------------- ------------------- ------------------ ------------------
Net (loss) income $ (11,225,000) $ 2,785,000 $ (16,655,000) $ 2,816,000
=================== =================== ================== ==================
(Loss) income per share, basic and
diluted ($3.26) $0.81 ($4.84) $0.82
=================== =================== ================== ==================
Number of shares used in computing
(loss)
income per share 3,441,551 3,441,585 3,441,562 3,455,134