Server: Microsoft-IIS/4.0 Date: Thu, 18 Dec 1997 04:44:16 GMT Content-Type: text/html Accept-Ranges: bytes Last-Modified: Sat, 20 Sep 1997 15:39:02 GMT ETag: "78562f52dbc5bc1:15814" Content-Length: 73709 Mohawk Industries - Press Releases - 1997 (Second Quarter)

Press Releases - 1997 (Second Quarter)
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MOHAWK INDUSTRIES, INC. ANNOUNCES
SECOND QUARTER 1997 RESULTS

Calhoun, Georgia, July 17, 1997 - Mohawk Industries, Inc. (NASDAQ/NMS-MOHK) today announced the highest quarterly earnings per share attained by the Company since its stock first publicly traded in 1992. Net earnings for the quarter ended June 28, 1997 increased 18% to $19,307,000, or $0.56 per share, compared to $16,395,000, or $0.48 per share, for the second quarter 1996. This improvement in net earnings was the result of continued strong gross profit margins and lower selling, administrative and interest expenses. Net sales for the quarter increased 1% to $479,164,000 compared to $474,552,000 for the second quarter 1996. The second quarter 1997 net sales comparison to 1996 was unfavorably impacted by customers accelerating purchases to the first quarter of 1997 and second quarter of 1996 because of price increases in April 1997 and July 1996, respectively.

Net earnings for the first six months of 1997 were the highest first half earnings in the Company’s history with net earnings of $27,854,000 or $0.80 per share. This compares to first half 1996 net earnings of $21,733,000 or $0.63 per share. This improvement in net earnings was attributable to increased sales, manufacturing improvements from restructuring and reduced selling, administrative and interest expenses. Net sales for the first half of 1997 were $891,993,000 representing a 4% increase from first half 1996 sales of $858,219,000.

In commenting on the second quarter performance, David L. Kolb, Chairman and CEO, stated, "We continued our trend of improving quarterly earnings per share on a year-to-year comparison for the sixth consecutive quarter. Gross profit for the quarter remained strong at 24% of net sales. Cost reductions in both selling and administrative expenses contributed positively to the earnings growth. Positive cash flow from operations reduced our requirement for debt financing resulting in lower interest expense for both the current quarter and six-month period and improved our debt-to-total capitalization ratio to below 50%. We continue to support the Carpet and Rug Institute’s industry-wide advertising campaign, and funding for that program reduced earnings per share by $0.02 for the quarter. The campaign is progressing as scheduled, and we are optimistic about the ultimate result of the campaign.

Our proposed acquisition of selected assets of Diamond Rug & Carpet Mills, Inc. should close during the third quarter of 1997. We are prepared to integrate these assets into Mohawk operations immediately after the closing. We believe this acquisition will further enhance our competitive position within the industry."

Certain of the statements in the immediately preceding paragraphs regarding the effects of the Diamond acquisition and the industry-wide advertising campaign may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1993, as amended, and are subject to the safe harbor provisions thereof. Those statements are based on assumptions regarding the Company’s ability to consummate the Diamond acquisition and successfully integrate the acquired assets and the effectiveness of the advertising campaign. These or other assumptions could prove inaccurate and, therefore, there can be no assurance that the "forward-looking statements" will prove to be accurate.

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," "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 Three Months Ended Six Months Ended  
(Amounts in thousands, except per share data)   Jun 28, 1997   Jun 29, 1996 (1) Jun 28, 1997   Jun 29, 1996 (1)  
                   
Net sales $ 479,164   474,552   891,993   858,219  
Cost of sales   364,330   358,617   683,250   656,111  
Gross profit   114,834   115,935   208,743   202,108  
Selling, general and administrative expenses   74,487   79,034   146,448   147,162  
Operating income   40,347   36,901   62,295   54,946  
Interest expense   7,504   8,691   15,027   17,182  
Other expense, net   939   1,114   1,239   1,845  
Earnings before income taxes   31,904   27,096   46,029   35,919  
Income taxes   12,597   10,701   18,175   14,186  
Net earnings $ 19,307   16,395   27,854   21,733  
Earnings per common and common equivalent share $ 0.56   0.48   0.80   0.63  
Weighted average common and common equivalent shares outstanding   34,785   34,514   34,830   34,306  
                   
                   
                   
Consolidated Balance Sheet Data                  
(Amounts in thousands)                  
        Jun 28, 1997   Jun 29, 1996  
ASSETS                  
Current assets:                  
Receivables         $ 234,252   228,322  
Inventories           326,004   326,202  
Prepaid expenses           15,370   16,424  
Deferred income taxes           18,186   12,858  
Total current assets           593,812   583,806  
Property, plant and equipment, net           306,594   329,379  
Other assets           75,588   81,673  
          $ 975,994   994,858  
LIABILITIES AND STOCKHOLDERS' EQUITY                  
Current liabilities:                  
Current portion of long-term debt and notes payable         $ 20,500   81,089  
Accounts payable and accrued expenses           225,387   229,761  
Total current liabilities           245,887   310,850  
Long-term debt, less current portion           339,532   353,247  
Deferred income taxes and other long-term liabilities           28,689   26,805  
Total liabilities           614,108   690,902  
Total stockholders' equity           361,886   303,956  
          $ 975,994   994,858  
                   
(1) Certain prior year financial statement balances have been reclassified to conform with the current year's presentation.                  
                   

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