Congoleum Corporation Reports Year End Results

MERCERVILLE, NJ, Mar 30 (MARKET WIRE) --
Congoleum Corporation (PINKSHEETS: CGMC) today reported its financial
results for the fourth quarter ended December 31, 2008. Sales for the
three months ended December 31, 2008 were $31.7 million, compared with
sales of $43.8 million reported in the fourth quarter of 2007, a decrease
of 27.6%. The net loss for the quarter was $6.4 million, compared with a
net loss of $2.4 million in the fourth quarter of 2007. Net loss per
share was $0.77 in the fourth quarter of 2008 compared with net loss of
$0.29 per share in the fourth quarter of 2007.

Sales for the year ended December 31, 2008 were $172.6 million, compared
with sales of $204.3 million in 2007. The net loss for the year ended
December 31, 2008 was $14.6 million, or $1.77 per share, versus a net loss
of $0.7 million, or $.08 per share, in 2007. The net loss for 2008
includes an $11.5 million charge taken during the third quarter of 2008
to increase reserves for estimated legal and related expenses in
connection with the reorganization proceedings. The net loss for the year
ended December 31, 2007 included four adjustments that were recorded to
reflect revised estimates of costs and cost recoveries associated with
the Chapter 11 proceedings and related matters. First, Congoleum reversed
$41.0 million of post-petition interest expense it had accrued on its 8
5/8% Senior Notes. Payment of this interest had been contemplated under
earlier plans of reorganization, but has been eliminated under the terms
of plans filed in 2007 and 2008. Second, Congoleum wrote off $14.9
million in formerly anticipated legal fee recoveries. These recoveries
had likewise been anticipated under earlier plans but not under the terms
of plans filed in 2007 and 2008. Third, based on the expected timing and
cost to obtain confirmation of its most recent plan at the time,
Congoleum recorded a $26.4 million charge to increase its reserves for
estimated legal and related expenses. Finally, the tax impact of these
adjustments gave rise to a net deferred tax liability of $1.7 million,
which was recorded as tax expense. Excluding these charges and credits,
Congoleum's net income in 2007 would have been $1.4 million, which
included a $1.3 million gain on replacement of a production line.

Roger S. Marcus, Chairman of the Board, commented: "Before addressing our
2008 results and the status of our reorganization, let me begin with the
economy and how it has affected our business. Nearly all of our products
are purchased for use in three end markets. The first is the new
residential construction market which has been depressed for some time
now. The second market is manufactured housing, which includes
recreational vehicles and motor homes. This market seemed to be holding
up relatively well in the early part of 2008, but began deteriorating
rapidly later in the year due to the combined impact of the economy and
high gas prices, with production coming to a virtual standstill by
December. Forecasts for 2009 predict this market may be down as much as
50% from 2008. Our third market is residential retail, which serves
consumer remodel and replacement demand. While this market has been
relatively better than the other two, it is also economically sensitive
and was down well into double digits in 2008 from 2007.

"The current economic downturn and its impact on our industry are
unprecedented in recent decades, and our operating results for 2008
suffered accordingly. Although our sales decrease was significant, it was
consistent with conditions in our end markets and we believe we maintained
our share of these markets during the year. Excluding the charge for
asbestos reorganization costs, we lost $4.8 million. We incurred some
one-time costs in 2008 that contributed to the loss. First, we invested
over $2 million in display systems during the fourth quarter of 2008 to
expand our position in major home centers, although little sales benefit
was anticipated before 2009. Second, we spent over $1 million on samples,
displays, and merchandising in connection with the introduction of several
new products in late fall 2008, likewise for the primary benefit of 2009.
Finally, we reduced costs aggressively during the year, including
shrinking our workforce by 19%. Severance charges related to these
layoffs affected 2008 results by $1.3 million. Without these steps and
the charge related to the reorganization proceedings, our results for
2008 would have been close to breaking even. Our overall performance was
an extraordinary feat in light of the economy and resulting sales
decrease. It speaks volumes about the dedication and resourcefulness of
our employees."

Mr. Marcus continued, "Despite these challenging market conditions, we
have continued to make selective investments where we think we can
mitigate the current demand weakness and improve our position as the
economy recovers. During the fourth quarter of 2008, as mentioned, we
increased our presence significantly in the major home center channel and
launched three new product lines. While we anticipate 2009 will be
another very difficult year, we believe our products offer excellent
value to consumers willing to spend in this environment."

Mr. Marcus concluded, "As we reported earlier this month, the Bankruptcy
Court found some legal deficiencies in our latest reorganization plan, and
we are seeking to resolve those through the appellate process as the
Bankruptcy Judge suggested. I'm encouraged that this will give all parties
the guidance necessary to reach agreement on a confirmable plan, which we
hope will enable us to emerge in late 2009 or early 2010."

Congoleum Corporation is a leading manufacturer of resilient flooring,
serving both residential and commercial markets. Its sheet, tile and plank
products are available in a wide variety of designs and colors, and are
used in remodeling, manufactured housing, new construction and commercial
applications. The Congoleum brand name is recognized and trusted by
consumers as representing a company that has been supplying attractive and
durable flooring products for over a century.

The above news release contains certain forward-looking statements, within
the meaning of the Private Securities Litigation Reform Act of 1995, that
involve risks, uncertainties and assumptions. These statements can be
identified by the use of the words such as "anticipate," "believe,"
"estimate," "expect," "intend," "plan," "project" and other words of
similar meaning. In particular, these include statements relating to
intentions, beliefs or current expectations concerning, among other
things, future performance, results of operations, the outcome of
contingencies such as bankruptcy and other legal proceedings, and
financial conditions. These statements do not relate strictly to
historical or current facts. These forward-looking statements are based
on Congoleum's expectations, as of the date of this release, of future
events, and Congoleum undertakes no obligation to update any of these
forward-looking statements.

Although Congoleum believes that these expectations are based on
reasonable assumptions, within the bounds of its knowledge of its
business and operations, there can be no assurance that actual results
will not differ materially from its expectations. Readers are cautioned
not to place undue reliance on any forward-looking statements. Any or all
of these statements may turn out to be incorrect. By their nature,
forward-looking statements involve risks and uncertainties because they
relate to events and depend on circumstances that may or may not occur in
the future. Any forward-looking statements made in this press release
speak only as of the date of such statement. It is not possible to
predict or identify all factors that could potentially cause actual
results to differ materially from expected and historical results.
Factors that could cause actual results to differ from expectations
include: (i) the future cost and timing of estimated asbestos liabilities
and payments, (ii) the availability of insurance coverage and
reimbursement from insurance companies that underwrote the applicable
insurance policies for the Company for asbestos-related claims, (iii) the
costs relating to the execution and implementation of any plan of
reorganization pursued by Congoleum, (iv) timely reaching agreement with
other creditors, or classes of creditors, that exist or may emerge, (v)
satisfaction of the conditions and obligations under Congoleum's
outstanding debt instruments, (vi) the response from time to time of
Congoleum's and its controlling shareholder's, American Biltrite Inc.'s,
lenders, customers, suppliers and other constituencies to the ongoing
process arising from Congoleum's strategy to settle its asbestos
liability, (vii) Congoleum's ability to maintain debtor-in-possession
financing sufficient to provide it with funding that may be needed during
the pendency of its Chapter 11 case and to obtain exit financing
sufficient to provide it with funding that may be needed for its
operations after emerging from the bankruptcy process, in each case, on
reasonable terms, (viii) timely obtaining sufficient creditor and court
approval (including the results of any relevant appeals) of any
reorganization plan pursued by Congoleum, and the court overruling any
objections to the plan that may be filed, (ix) compliance with the United
States Bankruptcy Code, including Section 524(g), (x) costs of,
developments in, and the outcome of insurance coverage litigation pending
in New Jersey state court involving Congoleum and certain insurers, (xi)
the possible adoption of another party's plan of reorganization which may
prove to be unfeasible, (xii) increases in raw material and energy prices
or disruption in supply, (xiii) increased competitive activity from
companies in the flooring industry, some of which have greater resources
and broader distribution channels than Congoleum, (xiv) increases in the
costs of environmental compliance and remediation or the exhaustion of
insurance coverage for such expenses, (xv) unfavorable developments in
the national economy or in the housing industry in general, including
developments arising from the war in Iraq and Afghanistan and from the
tightening of credit availability, (xvi) shipment delays, depletion of
inventory and increased production costs resulting from unforeseen
disruptions of operations at any of Congoleum's facilities or
distributors, (xvii) product warranty costs, (xviii) changes in
distributors of Congoleum's products, and (xix) Congoleum's interests may
not be the same as its controlling shareholder, American Biltrite Inc. In
any event, if Congoleum is not successful in obtaining sufficient creditor
and court approval of a plan of reorganization, such failure would have a
material adverse effect upon its business, results of operations and
financial condition. Actual results could differ significantly as a result
of these and other factors discussed in Congoleum's annual report on Form
10-K for the year ended December 31, 2007 and subsequent filings made by
Congoleum with the Securities and Exchange Commission.

CONGOLEUM CORPORATION

RESULTS OF OPERATIONS

(In thousands, except per share amounts)
(Unaudited)

Three Months Ended Year-Ended
December 31, December 31,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------

Net Sales $ 31,696 $ 43,818 $ 172,644 $ 204,262
Cost of Sales 30,166 33,331 142,032 153,809
Selling, General &
Administrative Expenses 9,259 8,226 35,397 37,469
Asbestos Related Reorganization
Charges --- 41,315 11,491 41,315
--------- --------- --------- ---------

Income (Loss) from Operations (7,729) (39,054) (16,276) (28,331)

Interest Income/(Expense), Net (144) 38,565 857 29,800
Other Expense, Net (179) (200) (970) (447)
--------- --------- --------- ---------
Net Income (Loss) before Income
Taxes (8,052) (689) (16,389) 1,022
Provision (Benefit) for Taxes (1,665) 1,686 (1,768) 1,713
--------- --------- --------- ---------
Net Loss $ (6,387) $ (2,375) $ (14,621) $ (691)
========= ========= ========= =========

Net Loss Per Share, Basic $ (0.77) $ (0.29) $ (1.77) $ (0.08)
========= ========= ========= =========
Net Loss Per Share, Diluted $ (0.77) $ (0.29) $ (1.77) $ (0.08)
========= ========= ========= =========

Weighted Average Number of
Common Shares Outstanding -
Basic 8,272 8,272 8,272 8,272
========= ========= ========= =========
Weighted Average Number of
Common Shares Outstanding -
Diluted 8,272 8,272 8,272 8,272
========= ========= ========= =========

ADDITIONAL FINANCIAL
INFORMATION:
Capital Expenditures $ 1,845 $ 2,278 $ 4,591 $ 4,541
Depreciation and Amortization $ 2,457 $ 2,638 $ 10,238 $ 10,641

CONDENSED BALANCE SHEET

(In thousands)
(Unaudited)

December 31, December 31,
2008 2007
----------- -----------
ASSETS:
Cash and cash equivalents $ 15,077 $ 26,327
Restricted cash 29,680 6,501
Accounts & notes receivable, net 13,789 14,162
Inventory 35,814 35,182
Other current assets 3,922 13,138
----------- -----------
Total current assets 98,282 95,310

Property, plant & equipment (net) 56,520 61,993
Other assets (net) 17,065 15,402
----------- -----------
Total assets $ 171,867 $ 172,705
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable, accrued expenses &
deferred income taxes $ 80,924 $ 70,389
Revolving credit loan - secured debt 13,994 10,551
Liabilities subject to compromise - current 4,997 4,997
----------- -----------
Total current liabilities 99,915 85,937

Liabilities subject to compromise 161,503 133,224
Long term debt -- --
Other liabilities -- --
----------- -----------
Total liabilities 261,418 219,161

Stockholders' equity (deficit) (89,551) (46,456)
----------- -----------

Total liabilities & stockholders' equity $ 171,867 $ 172,705
=========== ===========

ADDITIONAL FINANCIAL INFORMATION:
Working Capital $ (1,633) $ 9,373
Current Ratio 1.0 1.1

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