-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Hyo9qUos0BmiicB86J0EMtD69NCsdRwjNBooLympJQErHdhKKWpYRMYt5g9Bdhq1 jDfAZ/atPkleKnr/lM07Dg== 0000931763-99-000278.txt : 19990205 0000931763-99-000278.hdr.sgml : 19990205 ACCESSION NUMBER: 0000931763-99-000278 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990204 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990204 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOHAWK INDUSTRIES INC CENTRAL INDEX KEY: 0000851968 STANDARD INDUSTRIAL CLASSIFICATION: CARPETS AND RUGS [2273] IRS NUMBER: 521604305 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13697 FILM NUMBER: 99521387 BUSINESS ADDRESS: STREET 1: 160 S INDUSTRIAL BLVD STREET 2: PO BOX 12069 CITY: CALHOUN STATE: GA ZIP: 30701 BUSINESS PHONE: 7066297721 MAIL ADDRESS: STREET 1: P O BOX 12069 CITY: CALHOUN STATE: GA ZIP: 30703 8-K 1 FORM 8-K 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 4, 1999 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) Item 5. Other Events ------------ On February 4, 1999, Mohawk Industries, Inc. ("Mohawk") issued a press release announcing its fourth quarter 1998 earnings. 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 February 4, 1999 2 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 4, 1999 By: /s/ Frank H. Boykin ------------------------- Frank H. Boykin Corporate Controller 3 INDEX TO EXHIBITS ----------------- Exhibit ------- 99.1 Press Release dated February 4, 1999 4 EX-99.1 2 PRESS RELEASE EXHIBIT 99.1 Mohawk Industries, Inc. Press Release [LOGO OF MOHAWK APPEARS HERE] 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 RESULTS FOR THE 1998 FOURTH QUARTER AND YEAR Calhoun, Georgia, February 4, 1999 - Mohawk Industries, Inc. (NYSE: MHK), today announced the highest quarterly and annual earnings per share (before nonrecurring costs) attained by the Company. Net earnings for the quarter were a record $38,830,000 (34% above last year) or $0.67 diluted earnings per share (EPS) before a $2,900,000 pre-tax charge for the write-down of assets to be disposed of related to the pooling-of-interests acquisition of World Carpets, Inc. and a $17,700,000 pre-tax charge for nonrecurring costs associated with the World acquisition. Additionally, certain of the World acquisition costs are not deductible for income tax purposes and have resulted in a higher effective income tax rate in the fourth quarter and year-to-date results for 1998. This compares to net earnings before nonrecurring charges for the fourth quarter of 1997 of $28,883,000 or $0.50 diluted earnings per share. The fourth quarter 1997 results included nonrecurring charges for the disposition of fixed assets and compensation expense related to stock option exercises all of which are described in the chart below. After the nonrecurring charges, net earnings were $24,799,000 or $0.43 diluted earnings per share for the fourth quarter of 1998. Net earnings for the fourth quarter of 1997 after nonrecurring charges were $23,610,000 or $0.41 diluted earnings per share. This improvement in net earnings and EPS, primarily results from higher sales and higher gross profit. All areas of the Company provided improved earnings (before nonrecurring costs) for the quarter and year including the 1998 acquisitions. Net sales for the current quarter increased 15% to $723,013,000 compared to $629,966,000 for the fourth quarter of 1997. Net sales, excluding acquisitions completed in 1998, increased 10% when the fourth quarter of 1998 is compared to 1997. These sales increases were attributable to continued emphasis on supporting dealers and strong customer acceptance of new product introductions, both of which the Company believes resulted in an overall gain in market share. Selling, general and administrative expenses were $110,529,000 or 15.3% of net sales in the fourth quarter of 1998 as compared to $91,963,000 or 14.6% of net sales in the fourth quarter of 1997. The increase in selling, general and administrative expenses as a percentage of net sales is primarily attributable to higher sample expenses. Interest expense was higher in the fourth quarter of 1998 as a result of increased levels of debt associated with acquisitions that were completed during the last half of 1998. Net earnings, before nonrecurring charges, for the year 1998 of $122,811,000 (57% above last year) or $2.12 diluted earnings per share were the highest in the Company's history. This compares to net earnings, before nonrecurring charges, of $78,316,000 or $1.37 diluted earnings per share in 1997. The improvement in net earnings and EPS primarily results from higher sales, higher gross profit, and lower interest expense. After nonrecurring charges, which are all more fully described in the chart below, net earnings for 1998 were $107,612,000 or $1.86 diluted earnings per share. For the year ended December 31, 1997, the Company recorded net earnings of $73,424,000, or $1.28 diluted earnings per share, after the nonrecurring charges. Net sales for the year totaled $2,639,200,000, representing an increase of approximately 13% over the $2,327,341,000 recorded in the prior year. All major product categories achieved sales increases in 1998 as compared to 1997. These sales increases were attributable to continued emphasis on supporting dealers and strong customer acceptance of new product introductions, both of which the Company believes resulted in an overall gain in market share. Selling, general and administrative expenses were flat in 1998 when compared to 1997 as a percentage of net sales. Interest expense was lower in 1998 as a result of reduced levels of debt. The following chart describes the effect of the nonrecurring charges on net earnings and EPS (amounts in thousands, except per share data):
Quarters Ended Years Ended December 31, 1998 December 31, 1997 December 31, 1998 December 31, 1997 ----------------- ----------------- ----------------- ----------------- Earnings EPS Earnings EPS Earnings EPS Earnings EPS -------- ----- -------- ----- -------- ----- -------- ----- Net earnings, as reported $24,799 $0.43 $23,610 $0.41 $107,612 $1.86 $73,424 $1.28 Nonrecurring charges (net of taxes): Asset disposition (FAS No. 121) $ 1,650 $0.03 $ 3,581 $0.06 $ 1,711 $0.03 $ 3,322 $0.06 Compensation expense - - $ 1,692 $0.03 - - $ 1,570 $0.03 Acquisition costs $10,071 $0.17 - - $ 10,443 $0.18 - - Income tax rate differential $ 2,310 $0.04 - - $ 3,045 $0.05 - - ------- ----- ------- ----- -------- ----- ------- ----- Net earnings before nonrecurring charges $38,830 $0.67 $28,883 $0.50 $122,811 $2.12 $78,316 $1.37 ======= ===== ======= ===== ======== ===== ======= =====
In commenting on the fourth quarter performance, David L. Kolb, Chairman and CEO, stated, 2 "We are very pleased with the 1998 fourth quarter results which included a 15% increase in sales over the fourth quarter of 1997 as compared to an industry increase of approximately 4%. Net sales excluding our 1998 acquisitions were up 10% for the quarter and 11% for the year. New 1998 product introductions in broadloam carpet and area rugs have continued to receive wide customer acceptance during the fourth quarter resulting in strong sales and profit growth. The higher sales volume, which led to better absorption of manufacturing costs, as well as lower raw material prices, resulted in fourth quarter gross profit improving from 22.7% of net sales last year to 25.2% of net sales in 1998. Continued strong cash flow has reduced our borrowings, resulting in an improvement in our debt-to-total capitalization ratio from 44.2% at December 31, 1997 to 37.8% at December 31, 1998. This reduced debt level was achieved despite three acquisitions and strong sales growth that required additional working capital support. Each of the Newmark & James, American Weavers and World acquisitions have made a positive contribution to our quarterly and annual earnings in 1998. Additionally, our acquisitions of certain assets of Image Industries, Inc. which closed on January 29, 1999, and of Durkan Patterned Carpets, Inc. which is expected to close in the first half of 1999, are also expected to be accretive to earnings in 1999. We are moving quickly to integrate all of these acquisitions with our existing systems, procedures and material costs. This will allow us to more fully realize all of the synergies and cost savings for these acquisitions through Mohawk's low cost structure. We expect to have much of the integration effort completed by the end of the first half of 1999." The statements in the preceding paragraphs regarding improvement in operations from integration efforts may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, 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, American Weavers, World and Image acquisitions. 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," "World" and "Mohawk Commercial". Mohawk offers a broad line of washable accent and bath rugs through Aladdin and Newmark & James; area rugs through Karastan, American Rug Craftsmen and American Weavers; and decorative throws, placemats, table runners and kitchen chair pads through American Weavers. Mohawk also offers a complete laminate product line under the INSIGNIA brand name and distributes carpet padding and ceramic tile. The Company markets its products primarily through retailers and dealers. 3 MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statement of Earnings Data Three Months Ended Twelve Months Ended (Amounts in thousands, except per share data) Dec 31, 1998 Dec 31, 1997 (1) Dec 31, 1998 (1) Dec 31, 1997 (1) ------------ ---------------- ---------------- ---------------- Net sales $723,013 629,966 2,639,200 2,327,341 Cost of sales 540,811 486,726 1,998,903 1,808,137 -------- ------- --------- --------- Gross profit 182,202 143,240 640,297 519,204 Selling, general and administrative expenses 110,529 91,963 406,170 354,528 Carrying value reduction of assets held for sale 2,900 5,500 2,900 5,500 Compensation expense for stock option exercises - 2,600 - 2,600 -------- ------- --------- --------- Operating income 68,773 43,177 231,227 156,576 Interest expense 7,274 6,835 29,290 34,551 Acquisition costs - World merger 17,700 - 17,700 - Other expense, net 216 81 1,849 447 -------- ------- --------- --------- Earnings before income taxes 43,583 36,261 182,388 121,578 Income taxes 18,784 12,651 74,776 48,154 -------- ------- --------- --------- Net earnings $ 24,799 23,610 107,612 73,424 ======== ======= ========= ========= Basic earnings per share $ 0.43 0.41 1.88 1.29 ======== ======= ========= ========= Weighted-average common shares outstanding 57,344 57,029 57,243 56,812 ======== ======= ========= ========= Diluted earnings per share $ 0.43 0.41 1.86 1.28 ======== ======= ========= ========= Weighted-average common and dilutive potential common shares outstanding 58,066 57,568 57,984 57,303 ======== ======= ========= =========
Consolidated Balance Sheet Data (Amounts in thousands) Dec 31, 1998 Dec 31, 1997 (1) ------------ ---------------- ASSETS Current assets: Cash $ - 145 Receivables 321,126 286,871 Inventories 412,194 367,076 Prepaid expenses 21,283 15,547 Deferred income taxes 52,304 39,082 ---------- --------- Total current assets 806,907 708,721 Property, plant and equipment, net 422,922 391,101 Other assets 101,577 76,735 ---------- --------- $1,331,406 1,176,557 ========== ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 34,176 41,529 Accounts payable and accrued expenses 353,514 285,084 ---------- --------- Total current liabilities 387,690 326,613 Long-term debt, less current portion 321,792 336,209 Deferred income taxes and other long-term liabilities 35,215 36,602 ---------- --------- Total liabilities 744,697 699,424 ---------- --------- Total stockholders' equity 586,709 477,133 ---------- --------- $1,331,406 1,176,557 ========== =========
(1) Restated to give retroactive effect to the merger of Mohawk and World, which was accounted for under the pooling-of-interests basis of accounting. - -------------------------------------------------------------------------------- Dates for Future Press Releases and Conference Calls: Press Release Conference Call 1st Qtr. 1999 April 22 April 23 11:00 a.m. (800-603-9255) 2nd Qtr. 1999 July 22 July 23 11:00 a.m. " 3rd Qtr. 1999 October 21 October 22 11:00 a.m. " - -------------------------------------------------------------------------------- 4 -----END PRIVACY-ENHANCED MESSAGE-----