EXHIBIT 99.1
For Release: Immediately
Contact: John D. Swift, Chief Financial Officer
MOHAWK INDUSTRIES, INC. ANNOUNCES RECORD FOURTH QUARTER AND
YEAR NET EARNINGS WITH A 51% INCREASE IN THE FOURTH QUARTER
Calhoun, Georgia, February 7, 2002 - Mohawk Industries, Inc. (NYSE:MHK) today
announced record net earnings and diluted earnings per share (EPS) for the
fourth quarter of 2001 with $59,193,000 (51% above last year) in net earnings or
$1.11 per share (50% above last year). This compares to $39,262,000 in net
earnings or EPS of $0.74 for the fourth quarter of 2000. This improvement was
the result of increased sales, improved gross profit, reduced selling, general
and administrative and interest expenses, and an adjustment to reduce the
effective income tax rate for tax credits. Net sales for the quarter increased
7% to $895,825,000 compared to $837,886,000 for the fourth quarter of 2000. The
sales increase was attributable to the sales growth across various product
categories.
Net earnings for the year 2001 were $188,592,000 (13% above last year) and EPS
was $3.55 (15% above last year). These are the highest earnings and EPS ever
recorded by Mohawk. This compares to $166,852,000 in net earnings for the year
2000 (before the pre-tax charge of $7,000,000 related to an anti-trust
litigation settlement) or EPS of $3.08. After the pre-tax charge, 2000 net
earnings were $162,599,000 or EPS of $3.00. This improvement was attributable to
increased sales, reduced interest expenses, an adjustment to reduce the
effective income tax rate for tax credits and a reduced number of diluted shares
outstanding. Net sales for the year of 2001 were $3,445,945,000 representing a
1% increase over 2000 sales of $3,404,034,000.
In commenting on the fourth quarter performance, Jeffrey S. Lorberbaum,
President and CEO, stated, "These are outstanding results, particularly in the
face of the recessionary economy we have seen for the last few quarters. With
stronger than expected sales growth, reduced selling, general and administrative
expenses, lower interest expense, more favorable income tax rates and record net
earnings, we were able to exceed our goals in every area. We have reduced our
inventory levels by $43 million since the beginning of the year, improving our
fourth quarter inventory turnover from 4.4 to 5.1 turns. We have made $281
million in debt repayments reducing our debt to capitalization ratio to 25% and
reducing our debt by 48% for the year. Our management has decreased working
capital and capital expenditures in our core business in 2001 while investing in
working capital for
our hard surface products. Our cash flow from operations was the highest ever at
$326 million for the year or a $110 million improvement over last year.
I would personally like to thank all of our employees for their hard work and
dedication in making it possible for us to achieve these outstanding results.
Their efforts have allowed us to successfully roll out our hard surface programs
this year in each of our regions with our hard surface margins covering the
investments we made for the year. We continue to place emphasis on cost control
and efficiency improvements throughout our organization as we move forward.
We are working diligently to complete the various aspects of the Dal-Tile merger
as soon as possible and look forward to completing the merger in the near
future.
We were very pleased to be named to The Bloomberg 100 list in its
January/February 2002 issue and for a third year to the Forbes Platinum 400
list. In addition, commercial designers gave the Mohawk commercial brands a
strong rating by placing them in one of the top three places for service,
quality, design, value, and performance as shown in the October 2001 issue of
Floor Focus. No other commercial carpet manufacturer achieved as high a rating
in all categories."
There is still much uncertainty in the economy and economists are somewhat
divided on the timing and magnitude of the recovery. Mohawk is not totally
confident that our improvement in sales will continue as robustly as it has over
the last quarter. Additionally, increasing petroleum prices could negatively
affect Mohawk's results in future quarters. At this time, Mohawk anticipates
that the first quarter 2002 EPS will be 20% to 30% above 2001 and second quarter
2002 will be 15% to 20% above last year. None of the above information includes
the impact of Mohawk's proposed merger with Dal-Tile.
During the fourth quarter of 2001, the Company changed its accounting for
shipping and handling costs. Prior to the fourth quarter those costs were
included as a reduction to net sales. In the fourth quarter of 2001, these costs
were recorded in cost of sales. The amounts included in net sales in prior
periods have been reclassified from net sales to cost of sales to conform to the
presentation in the fourth quarter of 2001. The impact of these changes was to
increase net sales and cost of sales for the quarter and year ended December 31,
2001 by $38,010,000 and $148,921,000, respectively, and for the quarter and year
ended December 31, 2000 by $38,445,000 and $148,188,000, respectively.
Certain of the statements in the immediately preceding paragraphs, particularly
anticipating future financial performance, business prospects, growth and
operating strategies, proposed acquisitions, and similar matters, and those
preceded by, followed by or that otherwise include the words "believes,"
"expects," "anticipates," "intends," "estimates," or similar expressions
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended and Section 21E of the Securities Exchange
Act of 1934, as amended. For those statements, Mohawk claims the protection of
the safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. Those statements are based on many
assumptions including assumptions regarding the Company's ability to maintain
its sales growth and gross margins and to control costs. These or other
assumptions could prove inaccurate and therefore, there can be no assurance that
the "forward-looking statements" will prove to be accurate. Forward-looking
statements involve a number of risks and uncertainties. The following important
factors affect the future results of Mohawk and could cause those results to
differ materially from those expressed in the forward-looking statements:
materially adverse changes in economic conditions generally in the carpet, rug
and floorcovering markets served by Mohawk; competition from other carpet, rug
and floorcovering manufacturers, raw material prices, timing and level of
capital expenditures, the successful integration of acquisitions including the
challenges inherent in diverting Mohawk's management attention and resources
from other strategic matters and from operational matters for an extended period
of time, the successful introduction of new products, the successful
rationalization of existing operations, and other risks identified from time to
time in the Company's SEC reports and public announcements.
Mohawk is a leading supplier of flooring for both residential and commercial
applications and a producer of woven and tufted broadloom carpet and rugs. The
Company designs, manufactures and markets premier carpet brand names, which
include "Mohawk," "Aladdin," "Bigelow," "Custom Weave," "Durkan," "Galaxy,"
"Helios," "Horizon," "Karastan," "Mohawk Commercial," "World," and "Wunda Weve."
Mohawk offers a broad line of home products including rugs, throws, pillows,
bedspreads under the brand names Karastan, Mohawk Home, Aladdin, Newmark,
Goodwin Weavers. Mohawk also offers other products that include laminate, wood,
ceramic, and vinyl flooring and carpet padding.
#####
There will be a conference call Friday, February 8, 2002
at 11:00 AM Eastern Time
The telephone number to call is 1-800-603-9255. A conference call replay
will also be available until Friday, March 1, 2002 by dialing 1-800-642-1687
and entering Conference ID 3106089.
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statement of Earnings Data
(Amounts in thousands, except per share data) Three Months Ended Year Ended
------------------------------------ ------------------------------------
December 31, 2001 December 31, 2000 December 31, 2001 December 31, 2000
----------------- ----------------- ----------------- -----------------
Net sales ........................................... $895,825 837,886 3,445,945 3,404,034
Cost of sales ....................................... 675,823 635,702 2,613,043 2,581,185
-------- ------- --------- ---------
Gross profit .................................... 220,002 202,184 832,902 822,849
Selling, general and administrative expenses ........ 122,419 126,755 505,745 505,734
Class action legal settlement ....................... - - - 7,000
-------- ------- --------- ---------
Operating income ................................ 97,583 75,429 327,157 310,115
Interest expense .................................... 5,734 9,457 29,787 38,044
Other expense, net .................................. 1,860 1,608 5,954 4,442
-------- ------- --------- ---------
Earnings before income taxes .................... 89,989 64,364 291,416 267,629
Income taxes ........................................ 30,796 25,102 102,824 105,030
-------- ------- --------- ---------
Net earnings .................................... $ 59,193 39,262 188,592 162,599
======== ======= ========= =========
Basic earnings per share ............................ $ 1.12 0.75 3.60 3.02
======== ======= ========= =========
Weighted-average common shares outstanding .......... 52,631 52,535 52,418 53,769
======== ======= ========= =========
Diluted earnings per share .......................... $ 1.11 0.74 3.55 3.00
======== ======= ========= =========
Weighted-average common and dilutive potential
common shares outstanding ....................... 53,501 52,953 53,141 54,255
======== ======= ========= =========
Other Financial Information
(Amounts in thousands)
Depreciation & amortization ......................... $ 21,471 20,935 84,167 82,346
======== ======= ========= =========
Capital expenditures ................................ $ 11,960 19,937 52,913 73,475
======== ======= ========= =========
Consolidated Balance Sheet Data
(Amounts in thousands)
December 31, 2001 December 31, 2000
----------------- -----------------
ASSETS
Current assets:
Receivables ........................................................................... $ 404,875 358,809
Inventories ........................................................................... 531,405 574,595
Prepaid expenses ...................................................................... 24,884 26,973
Deferred income taxes ................................................................. 70,058 66,474
---------- ---------
Total current assets .............................................................. 1,031,222 1,026,851
Property, plant and equipment, net ........................................................ 619,703 650,053
Other assets .............................................................................. 117,560 118,474
---------- ---------
$1,768,485 1,795,378
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt ..................................................... $ 158,366 224,391
Accounts payable and accrued expenses ................................................. 423,495 375,268
---------- ---------
Total current liabilities ......................................................... 581,861 599,659
Long-term debt, less current portion ...................................................... 150,067 365,437
Deferred income taxes and other long-term liabilities ..................................... 88,006 75,922
---------- ---------
Total liabilities ................................................................. 819,934 1,041,018
---------- ---------
Total stockholders' equity ................................................................ 948,551 754,360
---------- ---------
$1,768,485 1,795,378
========== =========
Dates for Future Press Releases and Conference Calls:
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Press Release Conference Call
4th Qtr. 2001 February 7 February 8 11:00 a.m. (800-603-9255)
1st Qtr. 2002 April 15 April 16 11:00 a.m. "
2nd Qtr. 2002 July 15 July 16 11:00 a.m. "
3rd Qtr. 2002 October 14 October 15 11:00 a.m. "
4th Qtr. 2002 February 6 February 7 11:00 a.m. "
Conference call replay is (800) 642-1687 and is available for five days
after the conference call. Enter conference ID number 3106089.
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