<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[Mark One]
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 26, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to __________
Commission File Number: 01-19826
MOHAWK INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 52-1604305
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
Post Office Box 12069, 160 South Industrial Boulevard, Calhoun, Georgia 30703
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (706) 629-7721
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
The number of shares outstanding of the issuer's classes of capital stock as of
November 5, 1998, the latest practicable date, is as follows: 52,428,776 shares
of Common Stock, $.01 par value.
<PAGE>
MOHAWK INDUSTRIES, INC.
INDEX
Page No.
-------
Part I. Financial Information:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
September 26, 1998 and December 31, 1997 3
Condensed Consolidated Statements of Earnings -
Three months ended September 26, 1998 and September 27, 1997 5
Nine months ended September 26, 1998 and September 27, 1997 6
Condensed Consolidated Statements of Cash Flows -
Nine months ended September 26, 1998 and September 27, 1997 7
Notes to Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 11
Part II. Other Information 12
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands)
(Unaudited)
September 26, December 31,
1998 1997
------------ -----------
Current assets:
Receivables $ 307,069 238,579
Inventories 356,266 291,306
Prepaid expenses 4,821 15,192
Deferred income taxes 27,670 28,192
---------- -------
Total current assets 695,826 573,269
---------- -------
Property, plant and equipment, at cost 645,095 580,764
Less accumulated depreciation and
amortization 304,203 260,946
---------- -------
Net property, plant and equipment 340,892 319,818
---------- -------
Other assets 90,401 67,868
---------- -------
Total assets $1,127,119 960,955
========== =======
See accompanying notes to condensed consoidated financial statements.
3
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, CONTINUED
LIABILITIES AND STOCKHOLDERS' EQUITY
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
September 26, December 31,
1998 1997
------------- ------------
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 32,209 35,959
Accounts payable and accrued expenses 305,521 227,161
---------- -------
Total current liabilities 337,730 263,120
Deferred income taxes 28,391 28,391
Long-term debt, less current portion 268,365 257,238
Other long-term liabilities 5,363 6,291
---------- -------
Total liabilities 639,849 555,040
---------- -------
Stockholders' equity:
Preferred stock, $.01 par value; 60 shares
authorized; no shares issued - -
Common stock, $.01 par value; 150,000 shares
authorized; 52,404 and 52,167 shares issued
in 1998 and 1997, respectively 524 522
Additional paid-in capital 139,593 136,069
Retained earnings 347,153 269,324
---------- -------
Total stockholders' equity 487,270 405,915
---------- -------
Total liabilities and stockholders' equity $1,127,119 960,955
========== =======
See accompanying notes to condensed consolidated financial statements.
</TABLE>
4
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------
September 26, 1998 September 27, 1997
------------------ ------------------
<S> <C> <C>
Net sales $576,328 500,818
Cost of sales 432,060 384,338
-------- -------
Gross profit 144,268 116,480
Selling, general and administrative expenses 84,688 74,441
-------- -------
Operating income 59,580 42,039
-------- -------
Other expense:
Interest expense 5,022 6,689
Other expense, net 893 871
-------- -------
5,915 7,560
-------- -------
Earnings before income taxes 53,665 34,479
Income taxes 21,198 13,626
-------- -------
Net earnings $ 32,467 20,853
======== =======
Basic earnings per share $ 0.62 0.40
======== =======
Weighted-average common shares outstanding 52,385 51,935
======== =======
Diluted earnings per share $ 0.61 0.40
======== =======
Weighted-average common and dilutive potential
common shares outstanding 53,119 52,454
======== =======
See accompanying notes to condensed consolidated financial statements.
</TABLE>
5
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
------------------------------------------
September 26, 1998 September 27, 1997
------------------- ------------------
<S> <C> <C>
Net sales $1,582,494 1,385,234
Cost of sales 1,191,644 1,067,999
---------- ---------
Gross profit 390,850 317,235
Selling, general and administrative expenses 244,116 212,928
---------- ---------
Operating income 146,734 104,307
---------- ---------
Other expense:
Interest expense 16,338 21,543
Other expense, net 1,752 2,256
---------- ---------
18,090 23,799
---------- ---------
Earnings before income taxes 128,644 80,508
Income taxes 50,815 31,801
---------- ---------
Net earnings $ 77,829 48,707
========== =========
Basic earnings per share $ 1.49 0.94
========== =========
Weighted-average common shares outstanding 52,310 51,840
========== =========
Diluted earnings per share $ 1.47 0.93
========== =========
Weighted-average common and dilutive
potential common shares outstanding 53,057 52,316
========== =========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
6
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------------------------------
September 26, 1998 September 27, 1997
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 77,829 48,707
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 48,619 45,343
Provision for doubtful accounts 8,057 5,584
Changes in operating assets and liabilities:
Receivables (67,489) (43,796)
Inventories (49,843) (1,604)
Accounts payable and accrued expenses 62,023 63,548
Other assets and prepaid expenses 10,798 10,365
Other liabilities (1,213) (2,489)
-------- -------
Net cash provided by operating activities 88,781 125,658
-------- -------
Cash flows from investing activities:
Additions to property, plant and equipment, net (84,617) (19,594)
Acquisition - (36,000)
-------- -------
Net cash used in investing activities (84,617) (55,594)
-------- -------
Cash flows from financing activities:
Net change in revolving line of credit 27,829 (42,973)
Payment of note payable - (21,200)
Payments on term loans (30,244) (14,623)
Redemption of acquisition indebtedness (19,517) -
Proceeds from new loan - 9,350
Proceeds from IRBs and other, net of payments 9,596 6,554
Change in outstanding checks in excess of cash 4,646 (10,212)
Common stock transactions 3,526 3,040
-------- -------
Net cash used in financing activities (4,164) (70,064)
-------- -------
Net change in cash - -
Cash, beginning of year - -
-------- -------
Cash, end of period $ - -
======== =======
Net cash paid during the period for:
Interest $ 18,439 22,968
======== =======
Income taxes $ 46,255 32,228
======== =======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
(Unaudited)
1. The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. These statements should be
read in conjunction with the financial statements and notes thereto included in
the Company's 1997 Annual Report filed on Form 10-K, as filed with the
Securities and Exchange Commission, which includes consolidated financial
statements for the fiscal year ended December 31, 1997.
The Company's basic earnings per share are computed by dividing net earnings by
the weighted-average common shares outstanding, and diluted earnings per share
are computed by dividing net earnings by the weighted-average common and
dilutive potential common shares outstanding. Dilutive common stock options are
included in the diluted earnings per share calculation using the treasury stock
method.
2. Acquisitions
The Company completed its acquisitions of Newmark & James, Inc. and American
Weavers, LLC on June 30, 1998 and August 10, 1998, respectively. Both of these
acquisitions have been accounted for under the purchase method of accounting and
their results of operations are included in the Company's 1998 consolidated
statement of earnings from the respective dates of acquisition.
On October 22, 1998, the Company signed a definitive agreement to acquire all of
the outstanding capital stock of World Carpets, Inc. in exchange for
approximately 4,900 shares of the Company's common stock. The transaction will
be accounted for under the pooling-of-interests basis of accounting and,
accordingly, the Company's historical consolidated financial statements will be
restated to include the accounts and results of operations of World.
3. Receivables
Receivables are as follows:
September 26, 1998 December 31, 1997
------------------ -----------------
Customers, trade $351,469 273,636
Other 1,881 956
-------- -------
353,350 274,592
Less allowance for discounts,
returns, claims
and doubtful accounts 46,281 36,013
-------- -------
Net receivables $307,069 238,579
======== =======
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(In thousands)
(Unaudited)
4. Inventories
<TABLE>
<CAPTION>
The components of inventories are as follows:
September 26, 1998 December 31, 1997
-------------------- -----------------
<S> <C> <C>
Finished goods $192,524 154,059
Work in process 52,143 44,579
Raw materials 111,599 92,668
-------- -------
Total inventories $356,266 291,306
======== =======
5. Other assets
Other assets are as follows:
September 26, 1998 December 31, 1997
-------------------- -----------------
Goodwill, net of accumulated amortization of
$8,273 and $7,077, respectively $ 67,666 52,191
Other assets 22,735 15,677
-------- -------
Total other assets $ 90,401 67,868
======== =======
6. Accounts payable and accrued expenses
Accounts payable and accrued expenses
are as follows:
September 26, 1998 December 31, 1997
-------------------- -----------------
Outstanding checks in excess of cash $ 31,328 26,943
Accounts payable, trade 141,093 102,621
Accrued expenses 92,270 60,667
Accrued compensation 40,830 36,930
-------- -------
Total accounts payable and accrued expenses $305,521 227,161
======== =======
</TABLE>
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Company completed its acquisitions of Newmark & James, Inc. and American
Weavers, LLC on June 30, 1998 and August 10, 1998, respectively. Both of these
acquisitions have been accounted for under the purchase method of accounting and
their results of operations are included in the Company's 1998 consolidated
statement of earnings from the respective dates of acquisition.
On October 22, 1998, the Company signed a definitive agreement to acquire all
of the outstanding capital stock of World Carpets, Inc. in exchange for
approximately 4.9 million shares of the Company's common stock. The transaction
will be accounted for under the pooling of interests basis of accounting and,
accordingly, the Company's historical consolidated financial statements will be
restated to include the accounts and results of operations of World.
Through restructuring efforts over the past three years, the Company has
installed new information technology systems throughout all of its organization,
all of which are Year 2000 compliant. In addition, management has concluded
identification of all other significant information technology systems that are
not Year 2000 compliant. Management is reviewing equipment and software with
the respective vendors from whom the equipment and software was purchased to
address any noncompliance issues. However, management believes that certain
Year 2000 issues exist with respect to the Company's business systems. The
Company has formed a committee of employees familiar with information technology
systems to assess and prioritize the need to act, on the basis of each system's
importance to the Company, to ensure that its business systems will be made Year
2000 compliant. Management has also begun a review of all process control
systems, both proprietary and non-proprietary. This review revealed that
certain Year 2000 issues exist. Management does not believe these issues are
material and will obtain the necessary technical resources to assist in making
these systems Year 2000 compliant. Although the Company can provide no
assurances, it estimates that it will cost no more than approximately $1,000,000
of incremental costs to make its business systems Year 2000 compliant and that
these upgrades will be completed in the second quarter of 1999.
The Company has also begun to review its top suppliers and customers to
determine their progress in becoming Year 2000 compliant. This will allow the
Company to determine whether a Year 2000 problem will impede the ability of its
suppliers and customers to provide goods and services as the Year 2000 is
approached and reached. An initial review indicated that all of major suppliers
and customers appear to be in the process of resolving any of their Year 2000
compliance issues and that they do not foresee any material problems. The
Company will follow-up with all of its suppliers and customers to insure that
all potential problems, including those of individual plant locations and local
suppliers, are managed correctly.
If the Company cannot successfully and timely resolve its Year 2000 issues,
its business, results of operations and financial condition could be materially
adversely affected. The Company has not developed a contingency plan in the
event of a Year 2000 problem, however, based upon the results of its internal
review, the Company does not believe a contingency plan is necessary. The
Company will, however, continue to evaluate the need for a contingency plan.
RESULTS OF OPERATIONS
Quarter Ended September 26, 1998 As Compared With Quarter Ended September 27,
- -----------------------------------------------------------------------------
1997
- ----
Net sales for the quarter ended September 26, 1998 were $576.3 million, which
represented an increase of 15% from the $500.8 million reported for the third
quarter of 1997. The Company believes the third quarter 1998 net sales
comparison to the third quarter of 1997 was impacted by continued favorable
industry conditions and a gain in market share resulting from continued emphasis
on supporting its dealers and strong acceptance of new products. In addition,
the acquisitions of Newmark & James and American Weavers contributed to the
current quarter increase in net sales.
Gross profit for the third quarter of the current year was $144.3 million
(25.0% of net sales). In the third quarter of 1997, gross profit was $116.5
million (23.3% of net sales). The improvement in gross margin resulted from
better absorption of fixed manufacturing costs through higher production volume
and continued improvements in manufacturing efficiencies from restructuring
efforts since 1996.
Selling, general and administrative expenses for the current quarter were
$84.7 million (14.7% of net sales) compared to $74.4 million (14.9% of net
sales) for the prior year's third period. The percentage decrease was primarily
10
<PAGE>
due to lower general and administrative expenses in the third quarter of 1998.
Interest expense for the current period was $5.0 million compared to $6.7
million in the third quarter of 1997. The primary factor for the decrease was a
reduction in debt levels in the third quarter of 1998 as compared to the third
quarter of 1997.
In the current period, income tax expense was $21.2 million, compared to $13.6
million in the third quarter of 1997, or 39.5% of earnings before income taxes
for both periods.
Nine Months Ended September 26, 1998 As Compared With Nine Months Ended
- -----------------------------------------------------------------------
September 27, 1997
- ------------------
Net sales for the first nine months ended September 26, 1998 were $1,582.5
million, which represented an increase of 14% from the $1,385.2 million reported
for the first nine months of 1997. The Company believes this sales increase was
impacted by continued favorable industry conditions and a gain in market share
resulting from continued emphasis on supporting its dealers and strong
acceptance of new products. In addition, the acquisitions of Newmark & James
and American Weavers contributed to the current quarter increase in net sales.
Gross profit for the first nine months of the current year was $390.0 million
(24.7% of net sales). In the first nine months of 1997, gross profit was $317.2
million (22.9% of net sales). The improvement in gross profit resulted from
better absorption of fixed manufacturing costs through higher production volume
and continued improvements in manufacturing efficiencies from restructuring
efforts since 1996.
Selling, general and administrative expenses for the current period were
$244.1 million (15.4% of net sales) compared to $212.9 million (15.4% of net
sales) for the prior year's first nine months.
Interest expense for the current period was $16.3 million compared to $21.5
million in the first nine months of 1997. The primary factor for the decrease
was a reduction in debt levels in the third quarter of 1998 as compared to the
third quarter of 1997.
In the current period, income tax expense was $50.8 million, compared to $31.8
million in the first nine months of 1997, or 39.5% of earnings before income
taxes for both periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements are for working capital, capital
expenditures and acquisitions. The Company's capital needs are met through a
combination of internally-generated funds, bank credit lines and credit terms
from suppliers.
The level of accounts receivable increased from $238.6 million at the
beginning of 1998 to $307.1 million at September 26, 1998. The $68.5 million
increase resulted primarily from seasonally higher sales volume in the third
quarter as compared to December. Inventories rose from $291.3 million at the
beginning of 1998 to $356.3 million at September 26, 1998, due to requirements
to meet seasonal customer demand.
Capital expenditures totaled $84.6 million in the first nine months of 1998
(including amounts paid for the Newmark & James and American Weavers
acquisitions) and were incurred primarily to modernize and expand manufacturing
facilities and equipment. The Company's capital projects are primarily focused
on increasing capacity, improving productivity and reducing costs. Capital
spending for the remainder of 1998 is expected to range from $14 million to $19
million, the majority of which will be used to increase capacity and
productivity.
IMPACT OF INFLATION
Inflation affects the Company's manufacturing costs and operating expenses.
The carpet industry has experienced moderate inflation in the prices of certain
raw materials and outside processing for the last three years. The Company has
generally passed along nylon fiber cost increases to its customers.
SEASONALITY
The carpet business is seasonal, with the Company's second, third and fourth
quarters typically producing higher net sales and operating income. By
comparison, results for the first quarter tend to be the weakest. This
seasonality is
11
<PAGE>
primarily attributable to consumer residential spending patterns and higher
installation levels during the spring and summer months.
FORWARD-LOOKING INFORMATION
Certain of the matters discussed in the preceding pages, particularly
regarding 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. Forward-
looking statements involve a number of risks and uncertainties. The following
important factors, in addition to those discussed elsewhere in this document,
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, 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in routine litigation from time to time in the regular
course of its business. Except as noted below, there are no material legal
proceedings pending or known to be threatened against the Company or any of its
property.
In December 1995, the Company and four other carpet manufacturers were added
as defendants in a purported class action lawsuit, In re Carpet Antitrust
Litigation, pending in the United States District Court for the Northern
District of Georgia, Rome Division. The amended complaint alleges price fixing
regarding polypropylene products in violation of Section One of the Sherman Act.
In September 1997, the Court determined that the plaintiffs met their burden of
establishing the requirements for class certification and granted the
plaintiffs' motion to certify class action. The Company is a party to two
consolidated lawsuits captioned Gaehwiler v. Sunrise Carpet Industries, Inc. et.
al. and Patco Enterprises, Inc. v. Sunrise Carpet Industries, Inc. et. al.; both
of which were filed in the Superior Court of the State of California, City and
County of San Francisco in early 1996. Both complaints were brought on behalf of
a purported class of indirect purchasers of carpet in the State of California
and seek damages for alleged violations of California antitrust and unfair
competition laws. In October 1998, two plaintiffs, allegedly on behalf of an
alleged class of purchasers of nylon carpet products, filed a complaint against
the Company and three other carpet manufacturers: Designer Floor Covering, Inc.,
et al. v. Shaw Industries, Inc., et al. The complaint alleges price fixing with
respect to nylon carpet products in violation of Section One of the Sherman Act.
The Company believes these lawsuits are without merit and intends to vigorously
defend against them. The complaints filed do not specify any amount of damages,
but do request for any unlawful conduct to be enjoined and treble damages plus
reimbursement for fees and costs.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
Stockholders may intend to present a proposal from the floor of the 1999
annual meeting, and they may commence their own proxy solicitation, rather than
having the proposal included in the Company's 1999 annual proxy statement. Under
our bylaws, for any stockholder proposal to be presented in connection with an
annual meeting of stockholders, the stockholder must give us timely notice in
writing to our corporate Secretary. To be timely, we must receive the notice at
least 120 days prior to the date of the immediately preceding year's proxy
statement. With respect to the 1999 annual meeting, we must receive such notice
by December 2, 1998. If we do not receive notice of the proposal by that date,
we will retain discretionary voting authority over the proxies returned to us.
Discretionary voting authority is the ability to vote proxies that stockholders
have executed and returned to us, on matters not specifically reflected on the
proxy card, and on which stockholders have not had an opportunity to vote by
proxy.
12
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
NO. DESCRIPTION
- --- ----------------------------------------------------------------------
3.2 Amendment to the Restated Certificate of Incorporation of the
Registrant adopted on May 21, 1998 by the Registrants' Stockholders
(Incorporated by reference from exhibit 3.2 to the Company's
registration statement on S-3, file no. 333-66061)
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K
Current report on Form 8-K dated October 15, 1998
13
<PAGE>
SIGNATURES
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 thereunto duly authorized.
MOHAWK INDUSTRIES, INC.
Dated: November 6, 1998 By: /s/ David L. Kolb
------------------------------------
DAVID L. KOLB, Chairman of the Board
and Chief Executive Officer
(principal executive officer)
Dated: November 6, 1998 By: /s/ John D. Swift
------------------------------------
JOHN D. SWIFT, Chief Financial
Officer, Vice President-Finance and
Assistant Secretary (principal
financial and accounting officer)
14
<PAGE>
EXHIBIT INDEX
NO. DESCRIPTION
- --- ------------------------------------------------------------------------
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
15
<PAGE>
EXHIBIT 11
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share data)
(Unaudited)
NOTE: Earnings per share are presented in accordance with Regulation S-K, Item
601(b)(11) and FAS No. 128.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------------- -----------------------------
September 26, September 27, September 26, September 27,
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net earnings $ 32,467 20,853 77,829 48,707
======== ======= ======= =======
Weighted-average common and dilutive potential
common shares outstanding:
Weighted-average common shares outstanding 52,385 51,935 52,310 51,840
Add weighted-average dilutive potential common
shares - options to purchase common shares, net 734 519 747 476
-------- ------- ------- -------
Weighted-average common and dilutive potential
common shares outstanding 53,119 52,454 53,057 52,316
======== ======= ======= =======
Basic earnings per share $ 0.62 0.40 1.49 0.94
======== ======= ======= =======
Diluted earnings per share $ 0.61 0.40 1.47 0.93
======== ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MOHAWK
INDUSTRIES, INC.'S QUARTERLY REPORT TO STOCKHOLDERS FOR THE QUARTER ENDED
SEPTEMBER 26, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-26-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 353,350
<ALLOWANCES> 46,281
<INVENTORY> 356,266
<CURRENT-ASSETS> 695,826
<PP&E> 645,095
<DEPRECIATION> 304,203
<TOTAL-ASSETS> 1,127,119
<CURRENT-LIABILITIES> 337,730
<BONDS> 268,365
0
0
<COMMON> 524
<OTHER-SE> 486,746
<TOTAL-LIABILITY-AND-EQUITY> 1,127,119
<SALES> 1,582,494
<TOTAL-REVENUES> 1,582,494
<CGS> 1,191,644
<TOTAL-COSTS> 1,191,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 8,057
<INTEREST-EXPENSE> 16,338
<INCOME-PRETAX> 128,644
<INCOME-TAX> 50,815
<INCOME-CONTINUING> 77,829
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 77,829
<EPS-PRIMARY> 1.49
<EPS-DILUTED> 1.47
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MOHAWK
INDUSTRIES, INC.'S QUARTERLY REPORT TO STOCKHOLDERS FOR THE QUARTER ENDED
SEPTEMBER 27, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-27-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0.94<F1>
<EPS-DILUTED> 0.93<F1>
<FN>
<F1>BASIC EPS AND DILUTED EPS ARE PURSUANT TO FAS NO. 128. ALSO, PER SHARE
AMOUNTS REFLECT A 3-FOR-2 STOCK SPLIT EFFECTED DURING THE FOURTH QUARTER OF
1997.
</FN>
</TABLE>
