<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
Date of Report (Date of earliest event reported): October 15, 1998
MOHAWK INDUSTRIES, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 01-19826 52-1604305
- --------------- ------------------------ -------------------
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
160 South Industrial Blvd., Calhoun, Georgia 30701
- --------------------------------------------------------------------------------
(Address, including zip code, of principal executive offices)
(706) 629-7721
----------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS
------------
On October 15, 1998, Mohawk Industries, Inc. ("MOHAWK") issued a press
release containing certain earnings information with respect to the third
quarter and first nine months ended September 26, 1998. A copy of such
press release is included as an exhibit to this report and incorporated
herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
-------------------------------------------------------------------
C. Exhibits
99.1 Press Release dated October 15, 1998
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Mohawk Industries, Inc.
Date: October 23, 1998 By: /s/ FRANK H. BOYKIN
-------------------------
Frank H. Boykin
Corporate Controller
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
-------
99.1 Press Release dated October 15, 1998
<PAGE>
NEWS RELEASE
____________
POST OFFICE BOX 12069
SOUTH INDUSTRIAL BLVD.
CALHOUN, GA 30703
(706) 629-7721
For Release: Immediately
Contact: John D. Swift, Chief Financial Officer
MOHAWK INDUSTRIES, INC. ANNOUNCES RECORD 1998
THIRD QUARTER AND FIRST NINE MONTHS RESULTS
Calhoun, Georgia, October 15, 1998 - Mohawk Industries, Inc. (NYSE:MHK) today
announced the highest quarterly earnings per share attained by the Company. Net
earnings for the quarter ended September 26, 1998 increased 56% to $32,467,000
or $0.61 diluted earnings per share, compared to net earnings of $20,853,000 or
$0.40 diluted earnings per share, for the third quarter of 1997. This
improvement in net earnings was the result of higher sales, improved gross
profit margins, lower interest expense, and lower selling, general and
administrative expense as a percentage of net sales. Net sales for the quarter
increased 15% to $576,328,000 compared to $500,818,000 for the third quarter of
1997. Sales increased over 11% during the quarter excluding the impact of the
acquisitions. All areas of the Company provided strong growth in both sales and
earnings including our third quarter acquisitions of Newmark & James and
American Weavers.
Net earnings for the first nine months of 1998 increased 60% over 1997 and were
the highest first nine months' earnings in the Company's history with net
earnings of $77,829,000 or $1.47 diluted earnings per share. This compares to
the first nine months of 1997 net earnings of $48,707,000 or $0.93 diluted
earnings per share. This improvement in net earnings was attributable to higher
sales, improved gross profit margins, lower interest expense and lower selling,
general and administrative expense as a percentage of net sales. Net sales for
the first nine months of 1998 were $1,582,494,000 representing a 14% increase
from the first nine months of 1997 sales of $1,385,234,000.
In commenting on the third quarter performance, David L. Kolb, Chairman and CEO,
stated, "We have recorded higher earnings, on a year-to-year comparison, for
eleven consecutive quarters with our most current period the strongest in our
history. New 1998 product introductions in residential and commercial broadloam
carpet and area rugs have received wide consumer acceptance thereby adding
significantly to 1998 sales and profit growth. This strong demand for new
products has resulted in the acceleration of the expansion of manufacturing
capacities during the third quarter to better meet customer orders. Gross profit
for the quarter improved from 23.3% of net sales in the prior year quarter to
25.0% in the current quarter as the result of manufacturing efficiencies and
favorable material costs. Positive cash flow from operations has continued to
reduce our requirement for debt financing, resulting in lower interest expense
for both the current quarter and nine-month period and improving our debt-to-
total capitalization ratio to approximately 38% from 46% one year ago. We
continue to support the Carpet and Rug Institute's industry-wide advertising
campaign as well as expand our focused company advertising campaigns. We are
optimistic about the result of these advertising efforts. On June 30, 1998, we
completed the acquisition of Newmark & James, with
<PAGE>
annual sales in excess of $35,000,000, which fills a niche in the high-end
washable bath rug market in which we previously had a limited presence. On
August 10, 1998, we completed the acquisition of American Weavers, with annual
sales in excess of $40,000,000. American Weavers provides an entry into new
related product lines that are carried by some of Mohawk's current customers and
some new customers. These product lines include tufted, woven and knitted
decorative throws, placemats, table runners and kitchen chair pads. In addition,
American Weavers has a strong position in tufted accent, scatter and area rugs
that will effectively complement our current lines. Both acquisitions were
immediately accretive to Mohawk's earnings and provided a positive contribution
to sales and earnings in the third quarter of 1998.
We have continued with our successful strategy since our stock first was
publicly traded in 1992. We are committed to strengthening our alignment with
our independent retailers to ensure the mutual success of both Mohawk and our
customers. Our acquisition strategy continues to lead the industry consolidation
efforts and add value for our shareholders by acquiring companies which add
market niches that complement existing product lines or that provide
opportunities for synergies and cost savings through Mohawk's low cost
structure."
Certain of the statements in the immediately preceding paragraphs regarding the
effects of the Newmark & James and American Weavers acquisitions and the
industry-wide advertising campaigns 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 successfully integrate the
Newmark & James and American Weavers acquisitions and the effectiveness of the
advertising campaign. These or other assumptions identified from time to time in
the Company's SEC reports and public announcements 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 Newmark & James and area rugs
through Karastan, American Rug Craftsmen and American Weavers. Mohawk also
offers a complete laminate product line under the INSIGNIA brand name. The
Company markets its products primarily through retailers and commercial dealers.
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Statement of Earnings Data Three Months Ended Nine Months Ended
(Amounts in thousands, except per share data) Sept. 26, 1998 Sept. 27, 1997 Sept. 26, 1998 Sept. 27, 1997
------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Net sales $ 576,328 500,818 1,582,494 1,385,234
Cost of sales 432,060 384,338 1,191,644 1,067,999
- ----------------------------------------------------------------------------------------------------------------
Gross profit 144,268 116,480 390,850 317,235
Selling, general and administrative expenses 84,688 74,441 244,116 212,928
- ----------------------------------------------------------------------------------------------------------------
Operating income 59,580 42,039 146,734 104,307
Interest expense 5,022 6,689 16,338 21,543
Other expense, net 893 871 1,752 2,256
- ----------------------------------------------------------------------------------------------------------------
Earnings before income taxes 53,665 34,479 128,644 80,508
Income taxes 21,198 13,626 50,815 31,801
- ----------------------------------------------------------------------------------------------------------------
Net earnings $ 32,467 20,853 77,829 48,707
- ----------------------------------------------------------------------------------------------------------------
Basic earnings per share $ 0.62 0.40 1.49 0.94
- ----------------------------------------------------------------------------------------------------------------
Weighted-average common shares outstanding 52,385 51,935 52,310 51,840
- ----------------------------------------------------------------------------------------------------------------
Diluted earnings per share $ 0.61 0.40 1.47 0.93
- ----------------------------------------------------------------------------------------------------------------
Weighted-average common and dilutive potential
common shares outstanding 53,119 52,454 53,057 52,316
- ----------------------------------------------------------------------------------------------------------------
Consolidated Balance Sheet Data
(Amounts in thousands)
Sept. 26, 1998 Sept. 27, 1997
-------------- --------------
ASSETS
Current assets:
Receivables $ 307,069 253,806
Inventories 356,266 316,344
Prepaid expenses 4,821 7,723
Deferred income taxes 27,670 18,186
- ----------------------------------------------------------------------------------------------------------
Total current assets 695,826 596,059
Property, plant and equipment, net 340,892 322,431
Other assets 90,401 74,274
- ----------------------------------------------------------------------------------------------------------
$ 1,127,119 992,764
- ----------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 32,209 21,772
Accounts payable and accrued expenses 305,521 255,220
- ----------------------------------------------------------------------------------------------------------
Total current liabilities 337,730 276,992
Long-term debt, less current portion 268,365 302,916
Deferred income taxes and other long-term liabilities 33,754 27,910
- ----------------------------------------------------------------------------------------------------------
Total liabilities 639,849 607,818
- ----------------------------------------------------------------------------------------------------------
Total stockholders' equity 487,270 384,946
- ----------------------------------------------------------------------------------------------------------
$ 1,127,119 992,764
- ----------------------------------------------------------------------------------------------------------
<PAGE>
Dates for Future Press Releases and Conference Calls:
Press Release Conference Call
4th Qtr. 1998 February 4 February 5 11:00 a.m. (800-603-9255)
1st Qtr. 1999 April 22 April 23 11:00 a.m. "
2nd Qtr. 1999 July 22 July 23 11:00 a.m. "
3rd Qtr. 1999 October 21 October 22 11:00 a.m. "
</TABLE>
