UNITED STATES
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
October 17, 2006
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Date of Report (Date of earliest event reported)
Congoleum Corporation
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(Exact name of registrant as specified in its charter)
Delaware 01-13612 02-0398678
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
3500 Quakerbridge Road
P.O. Box 3127
Mercerville, NJ 08619-0127
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(Address of principal executive offices and zip code)
609-584-3000
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address,
if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On October 17, 2006, the Bankruptcy Court for the District of New Jersey entered
an order authorizing and ratifying the entry by Congoleum Corporation
("Congoleum") into a purchase agreement (the "Purchase Agreement") with
Armstrong World Industries, Inc. for the supply of certain coated felt sheet
flooring products. The Purchase Agreement will enable Congoleum to temporarily
replace part of the production capacity of one of the sheet flooring production
lines at Congoleum's Marcus Hook, Pennsylvania plant that sustained extensive
damage to certain of its components as a result of a fire in the production
line. Work on replacing the damaged line has already commenced, and repairs are
expected to be completed during the last quarter of 2006.
Pursuant to the Purchase Agreement, which is effective as of September 1, 2006,
Congoleum will purchase specified quantities of coated felt sheet flooring
products that meet Congoleum's specifications and requirements at fixed prices
through December 31, 2006. The Purchase Agreement may be extended by mutual
consent and subject to certain notice provisions.
Congoleum believes that the Purchase Agreement provides for an adequate supply
of product to replace the capacity of the damaged line that Congoleum was not
able to replace through available overtime capacity on the other production line
at the Marcus Hook Plant. By the Purchase Agreement, Congoleum will be able to
service its customers without any serious or long term disruption to its
business, goodwill or revenue stream. Furthermore, Congoleum expects that its
property and business interruption insurance coverage will minimize the costs
resulting from the incident, including the cost of replacing the production
capacity.
This Current Report on Form 8-K 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 Current Report on Form 8-K, 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 Current Report on Form 8-K 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 Congoleum 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 extent to which Congoleum is
able to obtain reimbursement for costs of the coverage litigation, (xii) the
possible adoption of another party's plan of reorganization which may prove to
be unfeasible, (xiii) the possible elimination of the interests of all existing
shareholders through the implementation of the "cram down" provisions of the
Bankruptcy Code if the holders of Congoleum's Senior Notes do not vote as a
class to accept Congoleum's plan of reorganization in the requisite number and
amount required by the Bankruptcy Code, (xiv) developments in, and the outcome
of, proposed federal legislation that, if adopted, would establish a national
trust to provide compensation to victims of asbestos-related injuries that would
be funded by assessments against companies with asbestos-related liabilities
such as Congoleum, (xv) increases in raw material prices or disruption in
supply, (xvi) increased competitive activity from companies in the flooring
industry, some of which have greater resources and broader distribution channels
than Congoleum, (xvii) increases in the costs of environmental compliance and
remediation or the exhaustion of insurance coverage for such expenses, (xviii)
unfavorable developments in the national economy or in the housing industry in
general, including developments arising from the war in Iraq, (xix) shipment
delays, depletion of inventory and increased production costs resulting from
unforeseen disruptions of operations at any of Congoleum's facilities or
distributors, (xx) product warranty costs, (xxi) changes in distributors of
Congoleum's products, (xxii) Congoleum's interests may not be the same as its
controlling shareholder American Biltrite, Inc., (xxiii) possible future sales
by American Biltrite, Inc. could adversely affect the market for Congoleum's
stock, (xxiv) the potential impact if Congoleum is unable to maintain its
listing on the American Stock Exchange, and (xxv) Congoleum's ability to replace
the production capacity damaged by a production line fire in August 2006. In any
event, if Congoleum is not successful in obtaining sufficient creditor and court
approval of its 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, 2005 and subsequent filings made by Congoleum with the Securities and
Exchange Commission.
SIGNATURE
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 hereunto duly authorized.
Date: October 19, 2006 Congoleum Corporation
By: /s/ Howard N. Feist III
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Name: Howard N. Feist III
Title: Chief Financial Officer