EX-99.1 3 dex991.txt PRESS RELEASE DATED OCTOBER 15, 2001 Exhibit 99.1 For Release: Immediately Contact: John D. Swift, Chief Financial Officer MOHAWK INDUSTRIES, INC. ANNOUNCES RECORD THIRD QUARTER NET EARNINGS AND SALES INCLUDING A 21% INCREASE IN EARNINGS PER SHARE Calhoun, Georgia, October 15, 2001 - Mohawk Industries, Inc. (NYSE:MHK) today announced record net earnings and diluted earnings per share (EPS) for the third quarter of $1.05 per share (21% above last year) or $55,727,000 (20% above last year) in net earnings. This compares to EPS of $0.87 per share or $46,408,000 in net earnings for the third quarter of 2000 before a 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 improvement in EPS was the result of increased sales, reduced interest costs, and an adjustment to reduce the effective income tax rate for tax credits. Net sales for the quarter increased 4% to a record $869,666,000 compared to $838,514,000 for the third quarter of 2000. The sales increase was attributable to the sales growth in soft non-carpet products and hard surface products offset by a small reduction in carpet sales. EPS for the first nine months of 2001 was $2.44 (5% above last year) or $129,399,000 (1% above last year) in net earnings. Both were records for Mohawk. This compares to EPS of $2.33 or $127,584,000 in net earnings for the first nine months of 2000 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 improvement in EPS was attributable to reduced interest costs, an adjustment to reduce the effective income tax rate for tax credits, and a reduced number of diluted shares outstanding. Net sales for the first nine months of 2001 were $2,441,697,000 representing a 1% decrease from the first nine months 2000 sales of $2,456,405,000. In commenting on the third quarter performance, Jeffrey S. Lorberbaum, President and CEO, stated, "Although we are very pleased with our financial results this quarter, it is tempered by the tragedy that occurred on September 11, 2001. We at Mohawk extend our deepest sympathy to all those affected by this tragedy. We also want to offer thanks to the police, firefighters and emergency workers for their efforts over the last month. Our complete support is with our armed forces as they pursue the terrorists who planned and committed these terrible acts! During the third quarter, we experienced strong sales growth of our soft non- carpet products. Additionally, our hard surface product categories continued to grow according to plan. We are pleased with our progress in the hard surface product roll out and look forward to continued significant long-term growth in this area. The assimilation of Crown Crafts into our Company was completed during the first half of 2001, and we are now seeing the positive results of this acquisition as well as strong sales growth in other soft non-carpet products. Continued emphasis has been placed on cost control in all areas of our business. Improvements in productivity and waste reduction along with favorable energy and material costs continued to help offset unfavorable volume variances as we reduced inventories by over $40 million for the quarter. Selling, general and administrative costs for the quarter have been held to a level consistent with last year before the $7,000,000 pre-tax charge. We have also been able to reduce income tax expense through tax credits. Before September 11, we were in a weak economy that was beginning to show some signs of recovery. Since September 11, there is much uncertainty in the economy. There are a number of factors affecting our business currently. Lower consumer confidence, reduced corporate expenditures and the threat of terrorism are all having a negative impact while lower interest rates and reduced oil prices are positively helping the industry. In addition, we believe there are several positive factors influencing Mohawk as we continue through this downturn. Mohawk's strong financial position (debt-to-total capital ratio of 34%), efficient and extensive distribution network, and diversified new product offerings are benefiting us positively and position Mohawk to take advantage of the growth opportunities that will arise as the economy recovers." At this time, we anticipate that the fourth quarter of 2001 earnings per share will be in line with last year but because of current economic conditions, we believe it is too early to forecast 2002. We were honored to be voted "Best Overall Carpet Manufacturer" by floorcovering retailers in the Floor Covering News Award of Excellence as part of Surfaces ------------------- 2001. In addition, the Home Furnishing News biannual survey of consumer brand -------------------- preferences reported that Mohawk brands attained the top three positions for broadloom and the number two and three rating for rugs. 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" 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 and ceramic tile. The Company markets its products primarily through retailers and dealers. ##### There will be a conference call Tuesday, October 16, 2001 --------------------------------------------------------- at 11:00 AM Eastern Time ------------------------ The telephone number to call is 1-800-603-9255. ----------------------------------------------- MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statement of Earnings Data Three Months Ended Nine Months Ended -------------------------------------- -------------------------------------- (Amounts in thousands, except per share data) September 29, 2001 September 30, 2000 September 29, 2001 September 30, 2000 ------------------ ------------------ ------------------ ------------------ Net sales $ 869,666 838,514 2,441,697 2,456,405 Cost of sales 649,023 624,294 1,826,309 1,835,740 ------------------------------------------------------------------------------------------- -------------------------------------- Gross profit 220,643 214,220 615,388 620,665 Selling, general and administrative expenses 128,235 127,151 385,814 378,979 Class action legal settlement - 7,000 - 7,000 ------------------------------------------------------------------------------------------- -------------------------------------- Operating income 92,408 80,069 229,574 234,686 Interest expense 6,869 10,173 24,053 28,587 Other expense, net 1,051 846 4,094 2,834 ------------------------------------------------------------------------------------------- -------------------------------------- Earnings before income taxes 84,488 69,050 201,427 203,265 Income taxes 28,761 26,913 72,028 79,928 ------------------------------------------------------------------------------------------- -------------------------------------- Net earnings $ 55,727 42,137 129,399 123,337 ------------------------------------------------------------------------------------------- -------------------------------------- Basic earnings per share $ 1.06 0.79 2.47 2.28 ------------------------------------------------------------------------------------------- -------------------------------------- Weighted-average common shares outstanding 52,412 53,097 52,347 54,181 ------------------------------------------------------------------------------------------- -------------------------------------- Diluted earnings per share $ 1.05 0.79 2.44 2.26 ------------------------------------------------------------------------------------------- -------------------------------------- Weighted-average common and dilutive potential common shares outstanding 53,211 53,634 53,021 54,689 ------------------------------------------------------------------------------------------- -------------------------------------- Other Financial Information (Amounts in thousands) Depreciation & amortization $ 20,677 19,592 62,696 61,411 ------------------------------------------------------------------------------------------- -------------------------------------- Capital expenditures $ 14,306 18,696 40,953 53,538 ------------------------------------------------------------------------------------------- -------------------------------------- Consolidated Balance Sheet Data (Amounts in thousands) September 29, 2001 September 30, 2000 ------------------ ------------------ ASSETS Current assets: Receivables $ 432,651 394,896 Inventories 576,218 592,828 Prepaid expenses 13,337 16,091 Deferred income taxes 66,474 76,628 ----------------------------------------------------------------------------------------------------------------------------------- Total current assets 1,088,680 1,080,443 Property, plant and equipment, net 630,049 622,872 Other assets 115,800 119,544 ----------------------------------------------------------------------------------------------------------------------------------- $ 1,834,529 1,822,859 ----------------------------------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 238,215 33,874 Accounts payable and accrued expenses 412,075 411,540 ----------------------------------------------------------------------------------------------------------------------------------- Total current liabilities 650,290 445,414 Long-term debt, less current portion 219,571 592,747 Deferred income taxes and other long-term liabilities 80,614 54,375 ----------------------------------------------------------------------------------------------------------------------------------- Total liabilities 950,475 1,092,536 ----------------------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 884,054 730,323 ----------------------------------------------------------------------------------------------------------------------------------- $ 1,834,529 1,822,859 -----------------------------------------------------------------------------------------------------------------------------------
Dates for Future Press Releases and Conference Calls: -------------------------------------------------------------------------------- Press Release Conference call 3rd Qtr. 2001 October 15 October 16 11:00 a.m. (800-603-9255) 4th Qtr. 2001 February 7 February 8 11:00 a.m. " 1st Qtr. 2001 April 15 April 16 11:00 a.m. " 2nd Qtr. 2001 July 15 July 16 11:00 a.m. " 3rd Qtr. 2001 October 14 October 15 11:00 a.m. " Conference call replay is (800) 642-1687 and is available for five days after the conference call. Enter conference ID number 2088971. --------------------------------------------------------------------------------