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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): February 10, 2000
MOHAWK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 01-19826 52-1604305
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(State or other (Commission File (IRS Employer
Jurisdiction of Number) 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
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On February 10, 2000, Mohawk Industries, Inc. ("Mohawk") issued a
press release announcing fourth quarter earnings for 1999. 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 10, 2000
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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 10, 2000 By: /s/ Frank H. Boykin
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Frank H. Boykin
Corporate Controller
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INDEX TO EXHIBITS
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Exhibit
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99.1 Press Release dated February 10, 2000
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[LETTERHEAD OF MOHAWK]
For Release: Immediately
Contact: John D. Swift, Chief Financial Officer
MOHAWK INDUSTRIES, INC. ANNOUNCES RECORD
RESULTS FOR THE 1999 FOURTH QUARTER AND YEAR
Calhoun, Georgia, February 10, 2000 - Mohawk Industries, Inc. (NYSE: MHK), today
announced the highest fourth quarter and annual earnings per share attained by
the Company. Diluted earnings per share (EPS) for the quarter were a record
$0.70 per share (9% above last year) or $40,175,000 in net earnings. This
compares to EPS before nonrecurring charges for the fourth quarter of 1998 of
$0.64 per share or $39,143,000 in net earnings. This improvement in EPS and net
earnings, primarily results from higher sales. The fourth quarter 1998 results
included nonrecurring charges for the write-down of assets to be disposed of
related to the pooling-of-interests acquisition of World Carpets, Inc. and a
pre-tax charge for costs associated with the World acquisition. EPS for the
fourth quarter of 1998 after nonrecurring charges was $0.41 per share or
$25,112,000 in net earnings.
Net sales for the current quarter increased 4% to $775,547,000 compared to
$746,887,000 for the fourth quarter of 1998. This sales increase can be
attributed to internal growth. There was also an increase in sales attributable
to the acquisition of Image that was offset by four fewer shipping days in the
fourth quarter of 1999 when compared to the fourth quarter of 1998 due to
differences in the Company's fiscal calendar between the two years. Interest
expense was higher in the fourth quarter of 1999 primarily as a result of
increased levels of debt associated with acquisitions that were completed during
the first half of 1999 and the Company's stock repurchase program which was
offset by a decrease in the Company's weighted average interest rate in 1999.
The Company's Board of Directors authorized the repurchase of up to 10,000,000
shares of its outstanding common stock during the last half of 1999. As of
December 31, 1999, the Company had purchased 3,952,000 shares for approximately
$83,986,000, all of which are held as treasury shares. The Company has
currently repurchased a total of approximately 4,900,000 shares for
approximately $105,000,000.
EPS for the year 1999 of $2.61 per share (23% above last year) or $157,239,000
in net earnings were the highest in the Company's history. This compares to EPS
before nonrecurring items of $2.13 per share in 1998 or $130,494,000 in net
earnings. The improvement in EPS and net earnings primarily results from higher
sales and higher gross profit. For the year ended December 31, 1998, the
Company recorded EPS of $1.89 per share or $115,254,000 in net earnings, after
the nonrecurring charges for the write down of assets disposed of related to the
pooling-of-interests acquisition of World and pre-tax charge for costs
associated with the World acquisition.
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Net sales for the year totaled $3,083,264,000, representing an increase of
approximately 12% over the $2,744,620,000 recorded in the prior year. Interest
expense was higher in 1999 primarily as a result of increased levels of debt due
to acquisitions and the stock repurchase program which was offset by a decrease
in the Company's weighted average interest rate in 1999.
Effective January 1, 2000, the Company changed the estimated useful lives of
buildings, manufacturing equipment and furniture and fixtures. The Company
believes this change more accurately reflects the actual lives of these assets
and is more consistent with industry practice. The prospective change is
estimated to reduce annual depreciation expense by approximately $20 million in
2000.
In the January 2000 issue of Flooring Magazine, David L. Kolb, Chairman and CEO,
and Jeff Lorberbaum, President and COO, were recognized as the 1999 People of
the Year. This honor was given in recognition of the Company's series of
successful acquisitions and internal growth since 1992 allowing the Company to
grow from a Company with approximately $400 million in sales to the second
largest carpet manufacturer in the world with over $3 billion in sales in 1999.
In commenting on the fourth quarter performance, Mr. Kolb stated, "We are
pleased with our 1999 fourth quarter results which included a 4% increase in
sales over the fourth quarter of 1998 as compared to an industry increase of
approximately 2%. We have consistently outpaced industry growth during the
year and our management team is very focused on continuing in this strong
position. We are excited about the opportunities for future growth in both new
and existing product lines. At Surfaces 2000 we introduced our new hardwood
product under Mohawk Hardwood Flooring which will include a variety of colors,
patterns and designs. We also expanded our line of laminates to include a new
wide-plank product and began the geographical expansion of ceramic products into
additional regions of the U.S. Most encouraging was the strong customer
response to our new carpet introductions which focused on higher quality and
more stylized products for all divisions. Customer activity on our newly
introduced business to business internet service (www.mohawknet.com) has been
very strong with over 1000 dealers actively using the system at this time.
We were also included in the Forbes magazine Platinum 400 list which was
published in the January 2000 issue of Forbes. This list includes exceptional
large corporations that have achieved certain short- and long-term growth and
profitability goals. We were very pleased to be included in this prestigious
group."
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
successfully integrate its recent acquisitions and the success of the stock buy-
back program, new product introductions and new marketing programs. These or
other
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assumptions could prove inaccurate and therefore, there can be no assurance that
the "forward-looking statements" 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," "Mohawk Commercial," "World," and
"Wunda Weve." Mohawk offers a broad line of area and washable rugs branded by
Karastan, Aladdin, Newmark 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 and
ceramic tile. The Company markets its products primarily through retailers and
dealers.
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There will be a conference call on Friday, February 11, 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
<TABLE>
<CAPTION>
Consolidated Statement of Earnings Data Three Months Ended Twelve Months Ended
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(Amounts in thousands, except per share data) December 31, 1999 December 31, 1998(1) December 31, 1999 December 31, 1998(1)
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<S> <C> <C> <C> <C>
Net sales $ 775,547 746,887 3,083,264 2,744,620
Cost of sales 581,174 557,357 2,306,405 2,063,333
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Gross profit 194,373 189,530 776,859 681,287
Selling, general and administrative expenses 120,142 116,089 482,062 432,191
Carrying value reduction of property, plant and
equipment and other assets - 2,900 - 2,900
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Operating income 74,231 70,541 294,797 246,196
Interest expense 8,690 7,687 32,632 31,023
Acquisition costs -- World Merger - 17,700 - 17,700
Other expense, net (864) 1,043 2,266 2,667
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Earnings before income taxes 66,405 44,111 259,899 194,806
Income taxes 26,230 18,999 102,660 79,552
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Net earnings $ 40,175 25,112 157,239 115,254
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Basic earnings per share $ 0.70 0.42 2.63 1.91
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Weighted-average common shares outstanding 57,163 60,494 59,730 60,393
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Diluted earnings per share $ 0.70 0.41 2.61 1.89
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Weighted-average common and dilutive potential
common shares outstanding 57,730 61,216 60,349 61,134
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</TABLE>
Consolidated Balance Sheet Data
(Amounts in thousands)
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998 (1)
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ASSETS
Current assets:
Cash $ _ 2,384
Receivables 337,824 331,928
Inventories 494,774 423,837
Prepaid expenses 25,184 19,322
Deferred income taxes 76,628 69,464
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Total current assets 934,410 846,935
Property, plant and equipment, net 624,814 454,867
Other assets 123,649 103,684
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$ 1,682,873 1,405,486
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt 33,961 44,424
Accounts payable and accrued expenses 340,392 364,037
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Total current liabilities 374,353 408,461
Long-term debt, less current portion 562,104 332,665
Deferred income taxes and other long-term liabilities 53,870 53,301
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Total liabilities 990,327 794,427
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Total stockholders' equity 692,546 611,059
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$ 1,682,873 1,405,486
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</TABLE>
(1) Restated to give retroactive effect to the merger with Durkan Patterned
Carpets, Inc. which was accounted for under the pooling-of-interests method of
accounting and certain prior year financial statement balances have been
reclassified to conform with the current year's presentation.
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Dates for Future Press Releases and Conference Calls:
Press Release Conference Call
4th Qtr. 1999 February 10 February 11 11:00 a.m. (800-603-9255)
1st Qtr. 2000 April 24 April 25 11:00 a.m. "
2nd Qtr. 2000 July 20 July 21 11:00 a.m. "
3rd Qtr. 2000 October 19 October 20 11:00 a.m. "
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