Exhibit 99.1
For Release: Immediately
Contact: John D. Swift, Chief Financial Officer
MOHAWK INDUSTRIES, INC. ANNOUNCES RECORD THIRD QUARTER NET
EARNINGS AND SALES INCLUDING A 21% INCREASE IN EARNINGS PER SHARE
Calhoun, Georgia, October 15, 2001 - Mohawk Industries, Inc. (NYSE:MHK) today
announced record net earnings and diluted earnings per share (EPS) for the third
quarter of $1.05 per share (21% above last year) or $55,727,000 (20% above last
year) in net earnings. This compares to EPS of $0.87 per share or $46,408,000 in
net earnings for the third quarter of 2000 before a pre-tax charge of $7,000,000
related to an antitrust litigation settlement. After the pre-tax charge, EPS was
$0.79 per share or $42,137,000 in net earnings. This improvement in EPS was the
result of increased sales, reduced interest costs, and an adjustment to reduce
the effective income tax rate for tax credits. Net sales for the quarter
increased 4% to a record $869,666,000 compared to $838,514,000 for the third
quarter of 2000. The sales increase was attributable to the sales growth in soft
non-carpet products and hard surface products offset by a small reduction in
carpet sales.
EPS for the first nine months of 2001 was $2.44 (5% above last year) or
$129,399,000 (1% above last year) in net earnings. Both were records for Mohawk.
This compares to EPS of $2.33 or $127,584,000 in net earnings for the first nine
months of 2000 before the pre-tax charge of $7,000,000. After the pre-tax
charge, EPS was $2.26 per share or $123,337,000 in net earnings. This
improvement in EPS was attributable to reduced interest costs, an adjustment to
reduce the effective income tax rate for tax credits, and a reduced number of
diluted shares outstanding. Net sales for the first nine months of 2001 were
$2,441,697,000 representing a 1% decrease from the first nine months 2000 sales
of $2,456,405,000.
In commenting on the third quarter performance, Jeffrey S. Lorberbaum, President
and CEO, stated, "Although we are very pleased with our financial results this
quarter, it is tempered by the tragedy that occurred on September 11, 2001. We
at Mohawk extend our deepest sympathy to all those affected by this tragedy. We
also want to offer thanks to the police, firefighters and emergency workers for
their efforts over the last month. Our complete support is with our armed forces
as they pursue the terrorists who planned and committed these terrible acts!
During the third quarter, we experienced strong sales growth of our soft non-
carpet products. Additionally, our hard surface product categories continued to
grow according
to plan. We are pleased with our progress in the hard surface product roll out
and look forward to continued significant long-term growth in this area. The
assimilation of Crown Crafts into our Company was completed during the first
half of 2001, and we are now seeing the positive results of this acquisition as
well as strong sales growth in other soft non-carpet products. Continued
emphasis has been placed on cost control in all areas of our business.
Improvements in productivity and waste reduction along with favorable energy and
material costs continued to help offset unfavorable volume variances as we
reduced inventories by over $40 million for the quarter. Selling, general and
administrative costs for the quarter have been held to a level consistent with
last year before the $7,000,000 pre-tax charge. We have also been able to reduce
income tax expense through tax credits.
Before September 11, we were in a weak economy that was beginning to show some
signs of recovery. Since September 11, there is much uncertainty in the economy.
There are a number of factors affecting our business currently. Lower consumer
confidence, reduced corporate expenditures and the threat of terrorism are all
having a negative impact while lower interest rates and reduced oil prices are
positively helping the industry. In addition, we believe there are several
positive factors influencing Mohawk as we continue through this downturn.
Mohawk's strong financial position (debt-to-total capital ratio of 34%),
efficient and extensive distribution network, and diversified new product
offerings are benefiting us positively and position Mohawk to take advantage of
the growth opportunities that will arise as the economy recovers."
At this time, we anticipate that the fourth quarter of 2001 earnings per share
will be in line with last year but because of current economic conditions, we
believe it is too early to forecast 2002.
We were honored to be voted "Best Overall Carpet Manufacturer" by floorcovering
retailers in the Floor Covering News Award of Excellence as part of Surfaces
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2001. In addition, the Home Furnishing News biannual survey of consumer brand
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preferences reported that Mohawk brands attained the top three positions for
broadloom and the number two and three rating for rugs.
Certain of the statements in the immediately preceding paragraphs, particularly
anticipating future financial performance, business prospects, growth and
operating strategies, proposed acquisitions, new products 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. 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 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 producer of woven and tufted broadloom carpet and rugs for
residential and commercial applications. The Company designs, manufactures and
markets carpet in a broad range of colors, textures and patterns and is widely
recognized through its premier brand names, some of which include "Mohawk,"
"Aladdin," "Bigelow," "Custom Weave," "Durkan," "Galaxy," "Harbinger," "Helios,"
"Horizon," "Image," "Karastan," "Mohawk Commercial," "World," and "Wunda Weve."
Mohawk offers a broad line of area and washable rugs branded by Karastan,
Aladdin, Newmark & James and American Rug Craftsmen and decorative throw
blankets, placemats, pillows and chairpads branded by American Weavers. Mohawk
also offers a complete laminate product line and distributes carpet padding and
ceramic tile. The Company markets its products primarily through retailers and
dealers.
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There will be a conference call Tuesday, October 16, 2001
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at 11:00 AM Eastern Time
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The telephone number to call is 1-800-603-9255.
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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statement of Earnings Data Three Months Ended Nine Months Ended
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(Amounts in thousands, except per share data) September 29, 2001 September 30, 2000 September 29, 2001 September 30, 2000
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Net sales $ 869,666 838,514 2,441,697 2,456,405
Cost of sales 649,023 624,294 1,826,309 1,835,740
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Gross profit 220,643 214,220 615,388 620,665
Selling, general and administrative expenses 128,235 127,151 385,814 378,979
Class action legal settlement - 7,000 - 7,000
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Operating income 92,408 80,069 229,574 234,686
Interest expense 6,869 10,173 24,053 28,587
Other expense, net 1,051 846 4,094 2,834
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Earnings before income taxes 84,488 69,050 201,427 203,265
Income taxes 28,761 26,913 72,028 79,928
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Net earnings $ 55,727 42,137 129,399 123,337
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Basic earnings per share $ 1.06 0.79 2.47 2.28
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Weighted-average common shares outstanding 52,412 53,097 52,347 54,181
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Diluted earnings per share $ 1.05 0.79 2.44 2.26
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Weighted-average common and dilutive potential
common shares outstanding 53,211 53,634 53,021 54,689
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Other Financial Information
(Amounts in thousands)
Depreciation & amortization $ 20,677 19,592 62,696 61,411
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Capital expenditures $ 14,306 18,696 40,953 53,538
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Consolidated Balance Sheet Data
(Amounts in thousands)
September 29, 2001 September 30, 2000
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ASSETS
Current assets:
Receivables $ 432,651 394,896
Inventories 576,218 592,828
Prepaid expenses 13,337 16,091
Deferred income taxes 66,474 76,628
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Total current assets 1,088,680 1,080,443
Property, plant and equipment, net 630,049 622,872
Other assets 115,800 119,544
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$ 1,834,529 1,822,859
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 238,215 33,874
Accounts payable and accrued expenses 412,075 411,540
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Total current liabilities 650,290 445,414
Long-term debt, less current portion 219,571 592,747
Deferred income taxes and other long-term liabilities 80,614 54,375
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Total liabilities 950,475 1,092,536
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Total stockholders' equity 884,054 730,323
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$ 1,834,529 1,822,859
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Dates for Future Press Releases and Conference Calls:
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Press Release Conference call
3rd Qtr. 2001 October 15 October 16 11:00 a.m. (800-603-9255)
4th Qtr. 2001 February 7 February 8 11:00 a.m. "
1st Qtr. 2001 April 15 April 16 11:00 a.m. "
2nd Qtr. 2001 July 15 July 16 11:00 a.m. "
3rd Qtr. 2001 October 14 October 15 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 2088971.
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