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MOHAWK INDUSTRIES, INC. ANNOUNCES
SECOND QUARTER AND FIRST SIX MONTHS RESULTSCalhoun, Georgia, July 17, 1996 - Mohawk Industries, Inc. (NASDAQ/NMS-MOHK) today announced the highest quarterly earnings per share attained by the Company since its stock first was publicly traded in 1992. Net earnings were $16,395,000 or $0.48 per share for the current quarter. Net earnings for the second quarter 1995 before nonrecurring charges were $8,919,000 or $0.26 per share, and $5,619,000 or $0.17 per share after nonrecurring charges. The improvement in earnings is primarily attributable to increased sales, manufacturing improvements from restructuring and reduced raw material costs. Net sales for the quarter increased 11% to $474,552,000 compared to $429,241,000 for the second quarter of 1995. This sales increase was attributable to a gain in the Company's market share and an acceleration of customer orders from the third quarter. The Company believes its customers accelerated their orders in anticipation of a July 1996 price increase which was in response to fiber cost increases.
Net earnings for the first six months of 1996 were the highest first half earnings in the Company's history with net earnings of $21,733,000 or $0.63 per share. This compares to first half 1995 net earnings before nonrecurring charges of $13,227,000 or $0.39 per share and first half 1995 net earnings after nonrecurring charges of $9,926,000 or $0.29 per share. This improvement in earnings was attributable to increased sales, manufacturing improvements from restructuring and reduced raw material costs. Net sales for the first half of 1996 were $858,219,000 representing a 6% increase from first half 1995 sales of $808,002,000.
In commenting on the second quarter performance, David L. Kolb, Chairman and CEO, stated, "Our second quarter results reflect the efforts over the last fifteen months to reorganize our residential operations. Although we have not completed this restructuring, we are seeing improvements in our manufacturing and marketing operations from the realignment of the residential operations and other manufacturing improvements. Also, the higher production levels during the second quarter resulted in better absorption of fixed costs thereby improving the gross profit as a percentage of net sales. Offsetting the improvements in our gross profit was an increase in selling, general and administrative expenses primarily attributable to increased sample costs and bad debt reserves. We believe that dealer orders for product samples have increased in response to a competitor's recent move into retail operations.
As we continue the consolidation of our residential operations, the installation of our company-wide management information systems, and the expansion of our nation-wide distribution systems, we expect continued improvements in our financial performance when compared to 1995. However, these improvements may be partially offset by raw material price increases and some slowing of the economy in the second half of 1996.
During the quarter our Company was honored by awards for design and safety. Our Commercial Business received two prestigious gold awards for product design presented at the 1996 NeoCon design show in Chicago. In addition, our Company earned two of the top four 1995 safety awards presented by the Carpet and Rug Institute after reviewing the safety data for 169 carpet mills."
Some of the statements contained in this press release are forward looking statements that involve risks and uncertainties. A variety of factors could cause actual results to differ materially from those anticipated, some of which are market conditions in the carpet industry, raw material prices and other risk factors that are discussed from time to time in the Company's SEC reports.
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," "Eden," "Galaxy," "Harbinger," "Helios," "Horizon," "Karastan," "Mohawk" and "Mohawk Commercial." Mohawk offers a broad line of washable accent and bath rugs through Aladdin and area rugs through Karastan and American Rug Craftsmen. The Company markets its products primarily through retailers and commercial dealers.
Mohawk Industries, Inc. and Subsidiaries
Consolidated Statement of Earnings Data
(Amounts in thousands, except per share data)
Three Months Ended Six Months Ended Jun 29, 1996 July 1, 1995(1) Jun 29, 1996 July 1, 1995(1) Net sales $ 474,552 429,241 858,219 808,002 Cost of sales 357,438 335,144 653,921 631,987 Gross profit 117,114 94,097 204,298 176,015 Selling, general and administrative expenses 80,213 69,356 149,352 134,619 Restructuring costs - 2,674 - 2,674 Carrying value reduction of property, plant and equipment - 2,711 - 2,711 Operating income 36,901 19,356 54,946 36,011 Interest expense 8,691 9,454 17,182 18,478 Other expense, net 1,114 738 1,845 1,341 Earnings before income taxes 27,096 9,164 35,919 16,192 Income taxes 10,701 3,545 14,186 6,266 Net earnings $ 16,395 5,619 21,733 9,926 Earnings per common and common equivalent share $ 0.48 0.17 0.63 0.29 Weighted average common and common equivalent shares outstanding 34,514 33,747 34,306 33,717
Consolidated Balance Sheet Data
(Amounts in thousands)
Jun 29, 1996 Jul 1, 1995 (1) ASSETS
Current assets:
Receivables $ 228,322 223,044 Inventories 326,202 306,998 Prepaid expenses 16,424 26,796 Deferred income taxes 12,858 4,453 Total current assets 583,806 561,291 Property, plant and equipment, net 329,379 366,833 Other assets 81,673 65,774 Total assets $ 994,858 993,898 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and note payable $ 81,089 55,497 Accounts payable and accrued expenses 229,761 192,204 Total current liabilities 310,850 247,701 Long-term debt 353,247 444,867 Deferred income taxes and other long-term liabilities 26,805 26,276 Total liabilities 609,902 718,844 Total stockholders' equity 303,956 275,054 Total liabilities and stockholders' equity $ 994,858 993,898
- (1) Certain prior year financial statement balances have been reclassified to conform with the current year's presentation.
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