<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): February 5, 1998
MOHAWK INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 01-19826 52-1604305
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
160 South Industrial Blvd., Calhoun, Georgia 30701
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(Address, including zip code, of principal executive offices)
(706) 629-7721
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(Registrant's telephone number, including area code)
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Item 5. Other Events
------------
On February 5, 1998, Mohawk Industries, Inc. ("Mohawk") issued a press
release containing certain earnings information with respect to the fourth
quarter and the fiscal year ended December 31, 1997. 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.
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C. Exhibits
99.1 Press Release dated February 5, 1998
2
<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: February 5, 1998 By: /s/ Frank H. Boykin
-------------------------
Frank H. Boykin
Corporate Controller
3
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INDEX TO EXHIBITS
-----------------
Exhibit
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99.1 Press Release dated February 5, 1998
<PAGE>
EXHIBIT 99.1
Mohawk Industries, Inc.
Press Release
NEWS RELEASE
- ----------------------------------------------[LOGO OF MOHAWK APPEARS HERE]
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
RESULTS FOR THE 1997 FOURTH QUARTER AND YEAR
AND SECONDARY OFFERING OF STOCKHOLDER'S COMMON STOCK
CALHOUN, GEORGIA, FEBRUARY 5, 1998 - MOHAWK INDUSTRIES, INC. (NYSE: MHK),
TODAY ANNOUNCED RECORD RESULTS FOR THE QUARTER AND YEAR ENDED DECEMBER 31, 1997.
NET EARNINGS FOR THE QUARTER WERE A RECORD $24,224,000 (75% ABOVE LAST YEAR) OR
$0.46 DILUTED EARNINGS PER SHARE (EPS) BEFORE A $5,500,000 CHARGE FOR THE WRITE-
DOWN OF ASSETS HELD FOR SALE (FAS NO. 121) AND A $2,600,000 CHARGE FOR
COMPENSATION EXPENSE RELATED TO STOCK OPTION EXERCISES. AFTER THE NONRECURRING
CHARGES, NET EARNINGS WERE $19,323,000 OR $0.37 DILUTED EARNINGS PER SHARE FOR
THE FOURTH QUARTER OF 1997. THIS COMPARES TO NET EARNINGS BEFORE NONRECURRING
CHARGES FOR THE FOURTH QUARTER OF 1996 OF $13,867,000 OR $0.27 DILUTED EARNINGS
PER SHARE. THE FOURTH QUARTER 1996 RESULTS INCLUDED NONRECURRING CHARGES FOR
FAS NO. 121 AND RESTRUCTURING COSTS FOR MILL CLOSINGS, ALL OF WHICH ARE
DESCRIBED IN THE CHART BELOW. NET EARNINGS FOR THE FOURTH QUARTER OF 1996 AFTER
NONRECURRING CHARGES WERE $12,517,000 OR $0.24 DILUTED EARNINGS PER SHARE. THIS
IMPROVEMENT IN NET EARNINGS AND EPS, PRIMARILY RESULTS FROM HIGHER SALES, LOWER
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES, AND LOWER INTEREST EXPENSE.
NET SALES FOR THE CURRENT QUARTER INCREASED 12% TO $516,118,000 COMPARED TO
$461,505,000 FOR THE FOURTH QUARTER OF 1996. ALL MAJOR PRODUCT CATEGORIES
ACHIEVED SALES INCREASES IN THE FOURTH QUARTER OF 1997 AS COMPARED TO THE FOURTH
QUARTER OF 1996. THESE SALES INCREASES WERE ATTRIBUTABLE TO STRONG CUSTOMER
ACCEPTANCE OF NEW PRODUCT INTRODUCTIONS, EXPANSION OF RESIDENTIAL WAREHOUSING
<PAGE>
OPERATIONS, AND FURTHER REFINEMENT OF THE SALES ORGANIZATION TO ACHIEVE BETTER
REGIONAL CUSTOMER FOCUS, ALL OF WHICH THE COMPANY BELIEVES RESULTED IN AN
OVERALL GAIN IN MARKET SHARE. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES WERE
$74,068,000 OR 14.4% OF NET SALES IN THE FOURTH QUARTER OF 1997 AS COMPARED TO
$74,217,000 OR 16.1% OF NET SALES IN THE FOURTH QUARTER OF 1996. THE
IMPROVEMENT IN SELLING, GENERAL AND ADMINISTRATIVE EXPENSES IS PRIMARILY
ATTRIBUTABLE TO LOWER ADMINISTRATIVE, BAD DEBT AND SAMPLE EXPENSES. INTEREST
EXPENSE WAS LOWER IN 1997 AS A RESULT OF REDUCED LEVELS OF DEBT.
NET EARNINGS, BEFORE NONRECURRING CHARGES, FOR THE YEAR 1997 OF
$72,931,000, (42% ABOVE LAST YEAR) OR $1.39 DILUTED EARNINGS PER SHARE WERE THE
HIGHEST IN THE COMPANY'S HISTORY. THIS COMPARES TO NET EARNINGS, BEFORE
NONRECURRING CHARGES, OF $51,280,000 OR $0.99 DILUTED EARNINGS PER SHARE IN
1996. THE IMPROVEMENT IN NET EARNINGS AND EPS PRIMARILY RESULTS FROM HIGHER
SALES, LOWER SELLING, GENERAL AND ADMINISTRATIVE EXPENSES, AND LOWER INTEREST
EXPENSE. AFTER NONRECURRING CHARGES, WHICH ARE ALL MORE FULLY DESCRIBED IN THE
CHART BELOW, NET EARNINGS FOR 1997 WERE $68,030,000 OR $1.30 DILUTED EARNINGS
PER SHARE. FOR THE YEAR ENDED DECEMBER 31, 1996, THE COMPANY RECORDED NET
EARNINGS OF $49,050,000, OR $0.95 DILUTED EARNINGS PER SHARE, AFTER THE
NONRECURRING CHARGES.
DURING THE FOURTH QUARTER OF 1997, THE COMPANY REVISED ITS ESTIMATE OF THE
FAIR VALUE OF CERTAIN PROPERTY, PLANT AND EQUIPMENT HELD FOR SALE. THIS
REVISION RESULTED IN A $5,500,000 PRE-TAX WRITE-DOWN TO THE CARRYING VALUE OF
THOSE ASSETS. THE REVISION WAS BASED UPON CURRENT APPRAISALS AND OTHER MARKET
INFORMATION. IN ADDITION, A $2,600,000 PRE-TAX CHARGE WAS RECORDED FOR
ADDITIONAL INCOME TAX REIMBURSEMENTS TO BE MADE TO CERTAIN EXECUTIVES FOR THE
EXERCISE OF STOCK OPTIONS. THE INCOME TAX REIMBURSEMENTS WERE RECORDED IN
ACCORDANCE WITH THE STOCK OPTION AGREEMENTS ENTERED INTO IN 1988 AND 1989 IN
CONNECTION WITH THE COMPANY'S 1988 LEVERAGED BUYOUT.
NET SALES FOR THE YEAR TOTALED $1,901,352,000, REPRESENTING AN INCREASE OF
APPROXIMATELY 7% OVER THE $1,779,389,000 RECORDED IN THE PRIOR YEAR. ALL MAJOR
PRODUCT CATEGORIES ACHIEVED SALES INCREASES IN 1997 AS COMPARED TO 1996. THESE
SALES INCREASES WERE ATTRIBUTABLE TO STRONG CUSTOMER ACCEPTANCE OF NEW PRODUCT
INTRODUCTIONS, EXPANSION OF RESIDENTIAL WAREHOUSING OPERATIONS, FURTHER
REFINEMENT OF THE SALES ORGANIZATION TO ACHIEVE BETTER REGIONAL CUSTOMER FOCUS,
AND COMPETITIVE CHANGES IN THE DISTRIBUTION SEGMENT OF THE INDUSTRY, ALL OF
WHICH THE COMPANY BELIEVES RESULTED IN AN OVERALL GAIN IN MARKET SHARE.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES WERE $286,996,000 OR 15.1% OF NET
SALES IN 1997 AS COMPARED TO $284,194,000 OR 16.0% OF NET SALES IN 1996. THE
IMPROVEMENT IN THE SELLING, GENERAL AND ADMINISTRATIVE EXPENSE AS A PERCENTAGE
OF NET SALES IS PRIMARILY ATTRIBUTABLE TO LOWER ADMINISTRATIVE, BAD DEBT AND
SAMPLE EXPENSES. INTEREST EXPENSE WAS LOWER IN 1997 AS A RESULT OF REDUCED
LEVELS OF DEBT.
<PAGE>
THE FOLLOWING CHART DESCRIBES THE EFFECT OF THE NONRECURRING CHARGES ON NET
EARNINGS AND EPS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA):
<TABLE>
<CAPTION>
QUARTERS ENDED YEARS ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------- ------------------- ------------------ -------------------
EARNINGS EPS EARNINGS EPS EARNINGS EPS EARNINGS EPS
---------- ------- ---------- ------ ---------- ----- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET EARNINGS,
AS REPORTED $19,323 $0.37 $12,517 $0.24 $68,030 $1.30 $49,050 $0.95
NONRECURRING CHARGES
(NET OF TAXES):
FAS NO. 121 CHARGES $ 3,328 $0.06 $ 958 $0.02 $ 3,328 $0.06 $ 1,815 $0.03
COMPENSATION EXPENSE $ 1,573 $0.03 - - $ 1,573 $0.03 - -
RESTRUCTURING CHARGES - - $ 392 $0.01 - - $ 415 $0.01
------- ----- ------- ----- ------- ----- ------- -----
NET EARNINGS BEFORE
NONRECURRING CHARGES $24,224 $0.46 $13,867 $0.27 $72,931 $1.39 $51,280 $0.99
======= ===== ======= ===== ======= ===== ======= =====
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</TABLE>
IN COMMENTING ON THE FOURTH QUARTER PERFORMANCE, DAVID L. KOLB, CHAIRMAN
AND CEO, STATED, "WE ARE VERY PLEASED WITH THE FOURTH QUARTER RESULTS WHICH
INCLUDED A 12% INCREASE IN SALES AS COMPARED TO AN INDUSTRY INCREASE OF
APPROXIMATELY 4% OVER THE FOURTH QUARTER OF 1996. THE RESIDENTIAL BUSINESS
REFLECTED STRONG SALES GROWTH FOR BOTH THE QUARTER AND THE YEAR WHEN COMPARED TO
1996 RESULTING IN INCREASED MARKET SHARE FOR THAT BUSINESS UNIT. OUR COMMERCIAL
AND RUG BUSINESSES, THOUGH NOT AS STRONG AS THE RESIDENTIAL BUSINESS, DID SHOW
IMPROVEMENT IN BOTH SALES AND MARGINS OVER THE FOURTH QUARTER AND THE YEAR 1996.
WE ARE CONTINUING TO SEE IMPROVEMENTS IN OUR OPERATIONS FROM THE RESTRUCTURING
EFFORTS THAT BEGAN ALMOST TWO YEARS AGO. THE CARPET AND RUG INSTITUTE KICKED OFF
ITS INDUSTRY-WIDE ADVERTISING CAMPAIGN IN THE FOURTH QUARTER OF 1997 AND WE HAVE
BEEN VERY PLEASED WITH THE RESULTS TO DATE OF THAT CAMPAIGN."
ON FEBRUARY 5, 1998, THE COMPANY FILED A REGISTRATION STATEMENT WITH THE
SECURITIES AND EXCHANGE COMMISSION COVERING A PROPOSED OFFERING OF 4,100,000
SHARES OF ITS COMMON STOCK WHICH ARE PROPOSED TO BE OFFERED BY A CERTAIN
NONMANAGEMENT SELLING STOCKHOLDER TO MEET DIVERSIFICATION AND ESTATE PLANNING
OBJECTIVES. IN ADDITION, THE SELLING STOCKHOLDER WILL GRANT TO THE UNDERWRITERS
AN OPTION TO PURCHASE UP TO 400,000 ADDITIONAL SHARES SOLELY TO COVER OVER
ALLOTMENTS IN THE OFFERING, IF ANY. CREDIT SUISSE FIRST BOSTON AND INVEMED
ASSOCIATES, INC. WILL ACT AS UNDERWRITERS OF THE OFFERING. A REGISTRATION
STATEMENT RELATED TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE SECURITIES MAY NOT
BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PRESS RELEASE SHALL NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
CERTAIN OF THE STATEMENTS IN THE PRECEDING PARAGRAPHS REGARDING IMPROVEMENT
IN OPERATIONS FROM RESTRUCTURING EFFORTS AND THE INDUSTRY-WIDE ADVERTISING
CAMPAIGN CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION
27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND ARE SUBJECT TO THE SAFE
HARBOR PROVISIONS THEREOF. THOSE STATEMENTS ARE BASED ON ASSUMPTIONS REGARDING
THE OPERATION AND EFFECT OF THE RESTRUCTURING EFFORTS AND 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
<PAGE>
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, COMMERCIAL DEALERS AND COMMERCIAL END USERS.
#####
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF EARNINGS DATA Three Months Ended Twelve Months Ended
(Amounts in thousands, except per share data) Dec 31, 1997 Dec 31, 1996(2) Dec 31, 1997(2) Dec 31, 1996(2)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales $516,118 461,505 1,901,352 1,779,389
Cost of sales 396,698 353,432 1,464,697 1,372,022
-------- ------- --------- ---------
Gross profit 119,420 108,073 436,655 407,367
Selling, general and administrative expenses 74,068 74,217 286,996 284,194
Restructuring costs - 700 - 700
Carrying value reduction of assets held for sale 5,500 1,710 5,500 3,060
Compensation expense for stock option exercises 2,600 - 2,600 -
-------- ------- --------- ---------
Operating income 37,252 31,446 141,559 119,413
Interest expense 4,914 6,360 26,457 31,486
Other expense, net 400 2,738 2,656 5,202
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Earnings before income taxes 31,938 22,348 112,446 82,725
Income taxes 12,615 9,831 44,416 33,675
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Net earnings $ 19,323 12,517 68,030 49,050
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Basic earnings per share (1) $ 0.37 0.24 1.31 0.96
-------- ------- --------- ---------
Weighted-average common shares outstanding (1) 52,129 51,707 51,912 51,260
-------- ------- --------- ---------
Diluted earnings per share (1) $ 0.37 0.24 1.30 0.95
-------- ------- --------- ---------
Weighted-average common and dilutive potential common
shares outstanding (1) 52,668 52,241 52,403 51,849
======== ======= ========= =========
CONSOLIDATED BALANCE SHEET DATA
(Amounts in thousands) Dec 31, 1997 Dec 31, 1996 (2)
------------ ----------------
ASSETS
Current assets:
Receivables $ 238,579 215,594
Inventories 291,306 302,767
Prepaid expenses 15,192 18,298
Deferred income taxes 28,192 18,186
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Total current assets 573,269 554,845
Property, plant and equipment, net 319,818 324,698
Other assets 67,868 74,806
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$ 960,955 954,349
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and note payable $ 35,959 41,832
Accounts payable and accrued expenses 227,161 201,315
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Total current liabilities 263,120 243,147
Long-term debt, less current portion 257,238 345,748
Deferred income taxes and other long-term liabilities 34,682 32,255
--------- ---------
Total liabilities 555,040 621,150
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Total stockholders' equity 405,915 333,199
--------- ---------
$ 960,955 954,349
========= =========
</TABLE>
(1) All per share and share amounts reflect a 3-for-2 stock split.
(2) Certain prior period financial statement balances have been reclassified to
conform with the current period's presentation.
