Server: Microsoft-IIS/4.0 Date: Thu, 18 Dec 1997 04:43:27 GMT Content-Type: text/html Accept-Ranges: bytes Last-Modified: Fri, 19 Sep 1997 22:33:15 GMT ETag: "dc204254cc5bc1:15814" Content-Length: 19273 Mohawk Industries - Press Releases - 1996 (Second Quarter)

Press Releases - 1996 (Second Quarter)
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MOHAWK INDUSTRIES, INC. ANNOUNCES
SECOND QUARTER AND FIRST SIX MONTHS RESULTS

Calhoun, Georgia, July 17, 1996 - Mohawk Industries, Inc. (NASDAQ/NMS-MOHK) today announced the highest quarterly earnings per share attained by the Company since its stock first was publicly traded in 1992. Net earnings were $16,395,000 or $0.48 per share for the current quarter. Net earnings for the second quarter 1995 before nonrecurring charges were $8,919,000 or $0.26 per share, and $5,619,000 or $0.17 per share after nonrecurring charges. The improvement in earnings is primarily attributable to increased sales, manufacturing improvements from restructuring and reduced raw material costs. Net sales for the quarter increased 11% to $474,552,000 compared to $429,241,000 for the second quarter of 1995. This sales increase was attributable to a gain in the Company's market share and an acceleration of customer orders from the third quarter. The Company believes its customers accelerated their orders in anticipation of a July 1996 price increase which was in response to fiber cost increases.

Net earnings for the first six months of 1996 were the highest first half earnings in the Company's history with net earnings of $21,733,000 or $0.63 per share. This compares to first half 1995 net earnings before nonrecurring charges of $13,227,000 or $0.39 per share and first half 1995 net earnings after nonrecurring charges of $9,926,000 or $0.29 per share. This improvement in earnings was attributable to increased sales, manufacturing improvements from restructuring and reduced raw material costs. Net sales for the first half of 1996 were $858,219,000 representing a 6% increase from first half 1995 sales of $808,002,000.

In commenting on the second quarter performance, David L. Kolb, Chairman and CEO, stated, "Our second quarter results reflect the efforts over the last fifteen months to reorganize our residential operations. Although we have not completed this restructuring, we are seeing improvements in our manufacturing and marketing operations from the realignment of the residential operations and other manufacturing improvements. Also, the higher production levels during the second quarter resulted in better absorption of fixed costs thereby improving the gross profit as a percentage of net sales. Offsetting the improvements in our gross profit was an increase in selling, general and administrative expenses primarily attributable to increased sample costs and bad debt reserves. We believe that dealer orders for product samples have increased in response to a competitor's recent move into retail operations.

As we continue the consolidation of our residential operations, the installation of our company-wide management information systems, and the expansion of our nation-wide distribution systems, we expect continued improvements in our financial performance when compared to 1995. However, these improvements may be partially offset by raw material price increases and some slowing of the economy in the second half of 1996.

During the quarter our Company was honored by awards for design and safety. Our Commercial Business received two prestigious gold awards for product design presented at the 1996 NeoCon design show in Chicago. In addition, our Company earned two of the top four 1995 safety awards presented by the Carpet and Rug Institute after reviewing the safety data for 169 carpet mills."

Some of the statements contained in this press release are forward looking statements that involve risks and uncertainties. A variety of factors could cause actual results to differ materially from those anticipated, some of which are market conditions in the carpet industry, raw material prices and other risk factors that are discussed from time to time in the Company's SEC reports.

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 "Aladdin," "Alexander Smith," "Bigelow," "Eden," "Galaxy," "Harbinger," "Helios," "Horizon," "Karastan," "Mohawk" and "Mohawk Commercial." Mohawk offers a broad line of washable accent and bath rugs through Aladdin and area rugs through Karastan and American Rug Craftsmen. The Company markets its products primarily through retailers and commercial dealers.


Mohawk Industries, Inc. and Subsidiaries

Consolidated Statement of Earnings Data

(Amounts in thousands, except per share data)

  Three Months Ended Six Months Ended
    Jun 29, 1996 July 1, 1995(1) Jun 29, 1996 July 1, 1995(1)
Net sales $ 474,552 429,241 858,219 808,002
Cost of sales   357,438 335,144 653,921 631,987
Gross profit   117,114 94,097 204,298 176,015
Selling, general and administrative expenses   80,213 69,356 149,352 134,619
Restructuring costs   - 2,674 - 2,674
Carrying value reduction of property, plant and equipment   - 2,711 - 2,711
Operating income   36,901 19,356 54,946 36,011
Interest expense   8,691 9,454 17,182 18,478
Other expense, net   1,114 738 1,845 1,341
Earnings before income taxes   27,096 9,164 35,919 16,192
Income taxes   10,701 3,545 14,186 6,266
Net earnings $ 16,395 5,619 21,733 9,926
Earnings per common and common equivalent share $ 0.48 0.17 0.63 0.29
Weighted average common and common equivalent shares outstanding   34,514 33,747 34,306 33,717

Consolidated Balance Sheet Data

(Amounts in thousands)

    Jun 29, 1996 Jul 1, 1995 (1)

ASSETS

     

Current assets:

     
Receivables $ 228,322 223,044
Inventories   326,202 306,998
Prepaid expenses   16,424 26,796
Deferred income taxes   12,858 4,453
Total current assets   583,806 561,291
Property, plant and equipment, net   329,379 366,833
Other assets   81,673 65,774
Total assets $ 994,858 993,898

LIABILITIES AND STOCKHOLDERS' EQUITY

     

Current liabilities:

     
Current portion of long-term debt and note payable $ 81,089 55,497
Accounts payable and accrued expenses   229,761 192,204
Total current liabilities   310,850 247,701
Long-term debt   353,247 444,867
Deferred income taxes and other long-term liabilities   26,805 26,276
Total liabilities   609,902 718,844
Total stockholders' equity   303,956 275,054
Total liabilities and stockholders' equity $ 994,858 993,898

  1. (1) Certain prior year financial statement balances have been reclassified to conform with the current year's presentation.

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