Mohawk Industries, Inc. Announces First Quarter 2001 Results

Apr 16, 2001, 01:00 ET from Mohawk Industries, Inc.

    CALHOUN, Ga., April 16 /PRNewswire/ -- Mohawk Industries, Inc. (NYSE:   MHK)
 today announced that net sales for the first quarter were $743,683,000
 compared to $765,083,000 for the first quarter of 2000.  Diluted earnings per
 share (EPS) was $0.51 per share or $27,206,000 in net earnings in the first
 quarter of 2001.  This compares to EPS in the first quarter of 2000 of $0.61
 per share or $33,997,000 in net earnings.  Gross profit as percentage of net
 sales declined to 23.9% from 24.9%.  The lower sales and earnings are
 attributable to declining industry shipments and the slowing economy.
 Recently published statistics on housing starts, building permits and existing
 home sales are all down when compared to the prior year.  The lower gross
 profit percentage results from costs at higher than normal levels due to
 higher oil and energy costs, losses on the disposition of Crown Crafts
 obsolete inventory, and an unfavorable product mix.  A price increase on
 selected items was implemented during March but had little impact on the
 quarter.
     Selling, general and administrative expenses were slightly down at
 $124,420,000 in the current year compared to $124,857,000 in the prior year.
 This improvement was made even though costs were absorbed associated with the
 roll out of hard surface products to all regions.  This investment is setting
 the foundation to support our move from being a carpet supplier to a total
 flooring supplier.
     The Company's effective income tax rate is 37% in the current year
 compared to 39.5% in the prior year.  This rate reduction results from tax
 planning strategies and is expected to continue at the lower rate into future
 periods.
     In commenting on the first quarter performance, Jeffrey S. Lorberbaum,
 President and CEO, stated, "We are not satisfied with our results this
 quarter.  The slower economy and rising energy costs continue to impact our
 business.  We continue to expand the marketing programs to assist our dealers
 with the Ralph Lauren, Mohawk Floorscapes, and Mohawk Color Center programs as
 well as our brand advertising.  Our new product introductions have been
 sampled earlier than in prior years and inventories to support them have been
 put in place.  The hard surface infrastructure is being implemented and the
 category is growing as we anticipated.  We are excited about all our hard
 surface products and believe that their success will add to long-term
 shareholder value.
     "As our stock price remains at levels below our expectations, we will
 continue the repurchase program previously authorized by our Board of
 Directors.  During the first quarter, we purchased an additional 171,000
 shares of our stock and we have purchased 8,916,000 shares since the inception
 of the program in September 1999.  Even with our stock repurchase program and
 the roll out of our hard surface products, the Company's debt to total
 capitalization ratio improved from 43.9% at the end of 2000 to 42.8% this
 quarter.  Finally, we are very pleased with the recognition we received
 recently in the financial press.  We made both the Fortune 500 list (as number
 491) and the Forbes 500 list (as number 468) when ranked by net sales.  Even
 more impressive, we were named number one in our textile industry group by
 Fortune magazine."
     The on-going deterioration in key economic statistics that influence the
 floorcovering industry along with the decline in the overall economy continue
 to have a negative impact on sales and margins.  However, the Federal
 Reserve's recent reductions in interest rates and the proposed income tax
 reductions are both positive economic events.  The Company continues to look
 for opportunities to grow its shareholder value through acquisitions, new
 products offerings and cost control.  After considering all of these factors,
 the Company believes that EPS for the second quarter of 2001 will be below
 last year by 10% to 15% and the third quarter of 2001 EPS will be below last
 year by 5% to 10%.  It is too early to determine when an upturn will occur,
 but the industry historically leads economic cycles as consumers purchase
 flooring previously postponed.
     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 manufacturing capabilities, marketing strategies and
 distribution network.  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; oil price increases; 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 wood, vinyl, carpet padding and ceramic tile.  The
 Company markets its products primarily through retailers and dealers.
 
            There will be a conference call Tuesday, April 17, 2001
                            at 11:00 AM Eastern Time
                The telephone number to call is 1-800-603-9255.
 
  A replay of the call will be available two hours after the completion of the
 conference from 4/17/2001 through 4/22/2001.  To access the call, please call
 800-642-1687 or for local participants, call 706-645-9291 and enter Conference
                                 I.D. # 749189.
 
 
     MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
 
                                                      Three Months Ended
                                              March 31, 2001    April 1, 2000
     Consolidated Statement of Earnings Data
     (Amounts in thousands, except per share data)
 
     Net sales                            $          743,683          765,083
     Cost of sales                                   565,658          574,520
         Gross profit                                178,025          190,563
     Selling, general and administrative
      expenses                                       124,420          124,857
         Operating income                             53,605           65,706
     Interest expense                                  8,952            8,740
     Other expense, net                                1,469              773
         Earnings before income taxes                 43,184           56,193
     Income taxes                                     15,978           22,196
         Net earnings                     $           27,206           33,997
     Basic earnings per share             $             0.52             0.61
     Weighted-average common shares
      outstanding                                     52,361           55,611
     Diluted earnings per share           $             0.51             0.61
     Weighted-average common and dilutive
      potential common
         shares outstanding                           52,970           56,097
 
     Other Financial Information
     (Amounts in thousands)
 
     Depreciation & amortization          $           20,943           20,875
     Capital expenditures                 $           11,697           18,059
 
     Consolidated Balance Sheet Data
     (Amounts in thousands)
                                              March 31, 2001    April 1, 2000
     ASSETS
     Current assets:
         Receivables                                $389,042          371,329
         Inventories                                 621,308          553,267
         Prepaid expenses                             21,818           14,985
         Deferred income taxes                        66,474           76,628
             Total current assets                  1,098,642        1,016,209
     Property, plant and equipment, net              641,669          626,276
     Other assets                                    117,970          119,215
                                                  $1,858,281        1,761,700
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
         Current portion of long-term debt          $203,635           33,920
         Accounts payable and accrued
          expenses                                   422,756          420,400
             Total current liabilities               626,391          454,320
     Long-term debt, less current portion            378,310          572,074
     Deferred income taxes and other long-
      term liabilities                                75,946           53,975
             Total liabilities                     1,080,647        1,080,369
     Total stockholders' equity                      777,634          681,331
                                                  $1,858,281        1,761,700
 
 
     Dates for Future Press Releases and Conference Calls:
 
                     Press Release     Conference Call
 
     1st Qtr. 2001   April 16          April 17       11:00 a.m. (800-603-9255)
     2nd Qtr. 2001   July 16           July 17        11:00 a.m.       "
     3rd Qtr. 2001   October 15        October 16     11:00 a.m.       "
     4th Qtr. 2002   February 7        February 8     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 749189.
 
 

SOURCE Mohawk Industries, Inc.
    CALHOUN, Ga., April 16 /PRNewswire/ -- Mohawk Industries, Inc. (NYSE:   MHK)
 today announced that net sales for the first quarter were $743,683,000
 compared to $765,083,000 for the first quarter of 2000.  Diluted earnings per
 share (EPS) was $0.51 per share or $27,206,000 in net earnings in the first
 quarter of 2001.  This compares to EPS in the first quarter of 2000 of $0.61
 per share or $33,997,000 in net earnings.  Gross profit as percentage of net
 sales declined to 23.9% from 24.9%.  The lower sales and earnings are
 attributable to declining industry shipments and the slowing economy.
 Recently published statistics on housing starts, building permits and existing
 home sales are all down when compared to the prior year.  The lower gross
 profit percentage results from costs at higher than normal levels due to
 higher oil and energy costs, losses on the disposition of Crown Crafts
 obsolete inventory, and an unfavorable product mix.  A price increase on
 selected items was implemented during March but had little impact on the
 quarter.
     Selling, general and administrative expenses were slightly down at
 $124,420,000 in the current year compared to $124,857,000 in the prior year.
 This improvement was made even though costs were absorbed associated with the
 roll out of hard surface products to all regions.  This investment is setting
 the foundation to support our move from being a carpet supplier to a total
 flooring supplier.
     The Company's effective income tax rate is 37% in the current year
 compared to 39.5% in the prior year.  This rate reduction results from tax
 planning strategies and is expected to continue at the lower rate into future
 periods.
     In commenting on the first quarter performance, Jeffrey S. Lorberbaum,
 President and CEO, stated, "We are not satisfied with our results this
 quarter.  The slower economy and rising energy costs continue to impact our
 business.  We continue to expand the marketing programs to assist our dealers
 with the Ralph Lauren, Mohawk Floorscapes, and Mohawk Color Center programs as
 well as our brand advertising.  Our new product introductions have been
 sampled earlier than in prior years and inventories to support them have been
 put in place.  The hard surface infrastructure is being implemented and the
 category is growing as we anticipated.  We are excited about all our hard
 surface products and believe that their success will add to long-term
 shareholder value.
     "As our stock price remains at levels below our expectations, we will
 continue the repurchase program previously authorized by our Board of
 Directors.  During the first quarter, we purchased an additional 171,000
 shares of our stock and we have purchased 8,916,000 shares since the inception
 of the program in September 1999.  Even with our stock repurchase program and
 the roll out of our hard surface products, the Company's debt to total
 capitalization ratio improved from 43.9% at the end of 2000 to 42.8% this
 quarter.  Finally, we are very pleased with the recognition we received
 recently in the financial press.  We made both the Fortune 500 list (as number
 491) and the Forbes 500 list (as number 468) when ranked by net sales.  Even
 more impressive, we were named number one in our textile industry group by
 Fortune magazine."
     The on-going deterioration in key economic statistics that influence the
 floorcovering industry along with the decline in the overall economy continue
 to have a negative impact on sales and margins.  However, the Federal
 Reserve's recent reductions in interest rates and the proposed income tax
 reductions are both positive economic events.  The Company continues to look
 for opportunities to grow its shareholder value through acquisitions, new
 products offerings and cost control.  After considering all of these factors,
 the Company believes that EPS for the second quarter of 2001 will be below
 last year by 10% to 15% and the third quarter of 2001 EPS will be below last
 year by 5% to 10%.  It is too early to determine when an upturn will occur,
 but the industry historically leads economic cycles as consumers purchase
 flooring previously postponed.
     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 manufacturing capabilities, marketing strategies and
 distribution network.  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; oil price increases; 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 wood, vinyl, carpet padding and ceramic tile.  The
 Company markets its products primarily through retailers and dealers.
 
            There will be a conference call Tuesday, April 17, 2001
                            at 11:00 AM Eastern Time
                The telephone number to call is 1-800-603-9255.
 
  A replay of the call will be available two hours after the completion of the
 conference from 4/17/2001 through 4/22/2001.  To access the call, please call
 800-642-1687 or for local participants, call 706-645-9291 and enter Conference
                                 I.D. # 749189.
 
 
     MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
 
                                                      Three Months Ended
                                              March 31, 2001    April 1, 2000
     Consolidated Statement of Earnings Data
     (Amounts in thousands, except per share data)
 
     Net sales                            $          743,683          765,083
     Cost of sales                                   565,658          574,520
         Gross profit                                178,025          190,563
     Selling, general and administrative
      expenses                                       124,420          124,857
         Operating income                             53,605           65,706
     Interest expense                                  8,952            8,740
     Other expense, net                                1,469              773
         Earnings before income taxes                 43,184           56,193
     Income taxes                                     15,978           22,196
         Net earnings                     $           27,206           33,997
     Basic earnings per share             $             0.52             0.61
     Weighted-average common shares
      outstanding                                     52,361           55,611
     Diluted earnings per share           $             0.51             0.61
     Weighted-average common and dilutive
      potential common
         shares outstanding                           52,970           56,097
 
     Other Financial Information
     (Amounts in thousands)
 
     Depreciation & amortization          $           20,943           20,875
     Capital expenditures                 $           11,697           18,059
 
     Consolidated Balance Sheet Data
     (Amounts in thousands)
                                              March 31, 2001    April 1, 2000
     ASSETS
     Current assets:
         Receivables                                $389,042          371,329
         Inventories                                 621,308          553,267
         Prepaid expenses                             21,818           14,985
         Deferred income taxes                        66,474           76,628
             Total current assets                  1,098,642        1,016,209
     Property, plant and equipment, net              641,669          626,276
     Other assets                                    117,970          119,215
                                                  $1,858,281        1,761,700
     LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
         Current portion of long-term debt          $203,635           33,920
         Accounts payable and accrued
          expenses                                   422,756          420,400
             Total current liabilities               626,391          454,320
     Long-term debt, less current portion            378,310          572,074
     Deferred income taxes and other long-
      term liabilities                                75,946           53,975
             Total liabilities                     1,080,647        1,080,369
     Total stockholders' equity                      777,634          681,331
                                                  $1,858,281        1,761,700
 
 
     Dates for Future Press Releases and Conference Calls:
 
                     Press Release     Conference Call
 
     1st Qtr. 2001   April 16          April 17       11:00 a.m. (800-603-9255)
     2nd Qtr. 2001   July 16           July 17        11:00 a.m.       "
     3rd Qtr. 2001   October 15        October 16     11:00 a.m.       "
     4th Qtr. 2002   February 7        February 8     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 749189.
 
 SOURCE  Mohawk Industries, Inc.