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EXHIBIT 99
For Release: Immediately
Contact: John D. Swift, Chief Financial Officer
MOHAWK INDUSTRIES, INC. ANNOUNCES RECORD
THIRD QUARTER AND FIRST NINE MONTHS RESULTS
Calhoun, Georgia, October 12, 2000 - Mohawk Industries, Inc. (NYSE:MHK) today
announced that diluted earnings per share (EPS) were a third quarter record of
$0.87 per share (18% above last year) or $46,408,000 in net earnings before a
previously announced pre-tax charge of $7,000,000 related to an antitrust
litigation settlement. After the pre-tax charge, EPS was $0.79 per share or
$42,137,000 in net earnings. This compares to EPS of $0.74 per share or
$45,079,000 in net earnings for the third quarter of 1999. This improvement in
EPS was the result of higher sales and gross profits. Net sales for the quarter
increased 4% to $838,514,000 compared to $809,933,000 for the third quarter
1999. The sales increase was attributable to internal growth. The gross profit
improvement was the result of favorable product mix and the change in the
depreciable lives of fixed assets as of the beginning of this year as compared
to last year.
Net earnings for the first nine months of 2000 were the highest first nine
months earnings in the Company's history with EPS of $2.33 (22% above last year)
or $127,584,000 in net earnings before the pre-tax charge of $7,000,000. After
the pre-tax charge, EPS was $2.26 per share or $123,337,000 in net earnings.
This compares to EPS of $1.91 or $117,064,000 in net earnings for the first nine
months of 1999. This improvement in EPS was attributable to increased sales and
better margins which resulted from product mix, the change in depreciable lives
and manufacturing efficiencies. Net sales for the first nine months of 2000
were $2,456,405,000 representing a 6% increase from the first nine months 1999
sales of $2,307,717,000. This increase was primarily due to internal growth.
In commenting on the third quarter performance, David L. Kolb, Chairman and CEO,
stated, "We are very proud of another record period that included higher sales
and operating margins for our Company. In addition to turning in record-
breaking results, we have entered into an agreement with Congoleum Corporation
to become a national distributor of their vinyl products beginning in the fourth
quarter of 2000. This relationship gives us a much stronger position in the
floorcovering industry with a complete line of soft and hard surface
floorcovering products for our customers. We will
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also complete the distribution of wood products and ceramic tile throughout the
U.S. into all of our sales regions during the remainder of 2000 and 2001 with a
dedicated salesforce committed to hard surface products.
In addition, we just announced an agreement to acquire certain assets of the
Wovens Division of Crown Crafts, Inc. for approximately $40,000,000 in cash.
This acquisition, which currently has annual sales of approximately $85,000,000,
will provide the ability for growth in our rug and textile product lines as well
as expand into new product areas. The manufacturing facilities are in close
proximity to our other manufacturing sites which will facilitate combining
operations and realizing synergies.
Also, our Company was selected by Industry Week magazine as one of the world's
100 best-managed companies. The winners of this award were selected from a list
of 1,000 of the world's largest publicly held manufacturing companies. We
continue to view our stock as a good long-term investment and have supported the
stock by repurchasing 175,000 shares during the third quarter."
During the next twelve months significant startup costs for vinyl, wood and
ceramics will be incurred to achieve a significant position in the hard surface
market. Payroll costs for over 200 new sales and technical personnel,
additional regional warehousing costs, sample expenses and other hard surface
flooring related costs and investments will be included in these startup costs.
Initially, we anticipate the growth in sales will not offset the increased
startup costs. In addition, the Company continues to experience increased oil-
related costs such as raw material, utility and fuel costs that have been
difficult to recover or offset on a timely basis. It appears that these higher
costs and higher interest rates are also having a dampening effect on the
economy and floorcovering industry. We expect the impact in the fourth quarter
2000 of the slowing economy, higher energy related costs and hard surface
startup costs to be somewhat offset by price increases and improved
productivity. The anticipated result is that fourth quarter earnings per share
will be above last year by middle single digit percentage growth. After the
fourth quarter, we believe additional hard surface startup costs will be
incurred against lower than normal hard surface revenue but it is difficult to
anticipate the state of the economy, the condition of oil-related and interest
costs, and the potential sales growth of these new product lines.
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 sales growth and gross margins and to control costs. These or other
assumptions could prove inaccurate and therefore, there can be no assurance that
the "forward-looking statements"
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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, 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 carpet padding,
wood and vinyl products and ceramic tile. The Company markets its products
primarily through retailers and dealers.
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There will be a conference call Friday, October 13, 2000
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at 11:00 AM Eastern Time
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The telephone number to call is 1-800-603-9255.
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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
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Three Months Ended Nine Months Ended
Consolidated Statement of Earnings Data --------------------------------------------------------------------------
(Amounts in thousands, except per share data) September 30, 2000 October 2, 1999 September 30, 2000 October 2, 1999
------------------ --------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Net sales $838,514 809,933 2,456,405 2,307,717
Cost of sales 624,294 606,687 1,835,740 1,725,231
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Gross profit 214,220 203,246 620,665 582,486
Selling, general and administrative expenses 127,151 119,258 378,979 361,920
Class action legal settlement 7,000 - 7,000 -
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Operating income 80,069 83,988 234,686 220,566
Interest expense 10,173 8,335 28,587 23,942
Other expense, net 846 1,142 2,834 3,130
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Earnings before income taxes 69,050 74,511 203,265 193,494
Income taxes 26,913 29,432 79,928 76,430
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Net earnings $ 42,137 45,079 123,337 117,064
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Basic earnings per share $ 0.79 0.74 2.28 1.93
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Weighted-average common shares outstanding 53,097 60,600 54,181 60,586
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Diluted earnings per share $ 0.79 0.74 2.26 1.91
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Weighted-average common and dilutive potential common
shares outstanding 53,634 61,114 54,689 61,218
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Consolidated Balance Sheet Data
(Amounts in thousands)
September 30, 2000 October 2, 1999
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ASSETS
Current assets:
Receivables $ 394,896 385,344
Inventories 592,828 537,579
Prepaid expenses 16,091 13,444
Deferred income taxes 76,628 52,568
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Total current assets 1,080,443 988,935
Property, plant and equipment, net 622,872 619,993
Other assets 119,544 107,310
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$1,822,859 1,716,238
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 33,874 197,013
Accounts payable and accrued expenses 411,540 401,869
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Total current liabilities 445,414 598,882
Long-term debt, less current portion 592,747 363,252
Deferred income taxes and other long-term liabilities 54,375 31,889
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Total liabilities 1,092,536 994,023
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Total stockholders' equity 730,323 722,215
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$1,822,859 1,716,238
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Dates for Future Press Releases and Conference Calls:
Press Release Conference Call
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3rd Qtr. 2000 October 12 October 13 11:00 a.m. (800-603-9255)
4th Qtr. 2000 February 8 February 9 11:00 a.m. "
1st Qtr. 2001 April 16 April 17 11:00 a.m. "
2nd Qtr. 2001 July 16 July 17 11:00 a.m. "
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