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 ATLANTA, Dec. 6 /PRNewswire/ -- Mohawk Industries, Inc. (NASDAQ-NMS: MOHK) today announced that it has signed a definitive agreement with Aladdin Mills, Inc., and its shareholders, the Lorberbaum family, providing for Mohawk to merge with Aladdin in a transaction valued at approximately $386.5 million, based on Mohawk's Dec. 3 closing stock price of $28.50.
 Following the closing of the merger, the Lorberbaum family stockholders will own approximately 42 percent of Mohawk's outstanding common stock. Mohawk will issue approximately 13,562,000 shares of its common stock pursuant to the merger agreement entered into on Dec. 3. The transaction will be accounted for as a pooling of interests.
 The merger is subject to the approval of Mohawk's shareholders and the Securities and Exchange Commission, and the expiration of the waiting period under the Hart-Scott-Rodino Act. Mohawk will call a special meeting of its shareholders to vote on the transaction and expects the meeting to be held in February. The merger agreement provides that if on any of the five days ending at the closing of business on Dec. 10, shares of Mohawk's common stock trade on the NASDAQ National Market System at an average price per share below $27 (based on the weighted average of all trades on such day on the NASDAQ National Market System), the merger agreement may be terminated by Aladdin. The company has the right to terminate the merger agreement if on any day during the same period shares of Mohawk's Common Stock trade on the NASDAQ National Market System at an average price per share over $35. These rights to terminate the merger agreement must be exercised on or before 5 p.m. on Dec. 13. Kidder, Peabody and Co., Inc. has acted as financial advisor and rendered an opinion to the company in connection with this transaction.
 Commenting on the proposed merger, David L. Kolb, chairman and chief executive officer of Mohawk, stated: "We are very excited at the prospect of Aladdin becoming a part of the Mohawk organization. Under the leadership of Alan Lorberbaum, Aladdin has become a clear leader in the manufacture of tufted broadloom carpet and washable accent and bath rugs. Over the past five calendar years, Aladdin's sales have increased at a compounded annual rate of over 20 percent. In addition, sales have grown by over 25 percent for both the year ended June 27, 1993 and the three months ended Sept. 19, 1993 versus the same periods in 1992. Net earnings for the fiscal year 1993 and September 1993 quarter were up 66 percent and 45 percent respectively. We believe this is an important strategic move for the company and are further attracted by the financial success of Aladdin which should contribute positively to earnings per share after the closing.
 "We welcome the Aladdin organization to the Mohawk family. We intend to nominate two people designated by Aladdin to the Mohawk board and plan to keep the Aladdin management team intact. The strengths of both companies are complementary. By working together to identify synergies our two companies will be able to improve operating efficiencies and maximize customer service."
 Kolb went on to say: "Aladdin has made significant capital investments in modern, efficient equipment to increase productivity and reduce production costs in its manufacturing process. During its last five fiscal years, Aladdin has invested over $75 million to upgrade and expand its manufacturing and distribution capacity (including capital expenditures of approximately $44.0 million in fiscal 1993.) These productivity enhancements have enabled Aladdin to achieve a low cost structure, enabling it to offer competitive prices, in addition to its high level of customer service.
 "Aladdin's carpet products complement those of Mohawk and offer a broad range of broadloom and rugs. Its products are sold under its 'Aladdin', 'Townhouse,' 'Ciboney,' 'Modesto' and 'Hamilton' brand names and private labels for both residential and commercial applications. The combination of Aladdin and Mohawk products will give our customers a full line of broadloom and rug products."
 In addition to the announcement of the merger with Aladdin, Mohawk today announced that the company has received notification that the Internal Revenue Service is challenging certain deductions taken by a company that is the parent of a consolidated tax group of which Mohawk was previously a member. The IRS contends that certain interest deductions on intercompany indebtedness taken by the company's former parent should be recharacterized as non-deductible dividend distributions. Because the company was formerly part of the consolidated tax group in 1988, the company could be subject to a portion of the former parent's tax liability, (including taxes and interest) which in the company's case, could be as much as $24.5 million (as of October 1993). With respect to this potential liability, the company may have rights of contribution against certain of its former affiliates and a contractual right of indemnification against its former parent. The company intends to contest vigorously this matter and does not believe that any tax liability that it may ultimately have in this regard will have a material impact on its consolidated financial condition or results of operations.
 Mohawk Industries, Inc. is a leading producer of both woven and tufted broadloom carpeting for residential and commercial applications. Mohawk designs, manufactures and markets carpets in a broad range of colors, textures and patterns and is widely recognized through its eight premier brand names, "Mohawk," "Alexander Smith," "Horizon," "Harbinger," "Karastan," "Bigelow" and "Helios." Through Karastan, American Rug Craftsmen and Helios, Mohawk also offers a broad line of area rugs. The company markets its products primarily through retailers and commercial dealers and to selected end users.
 Selected consolidated financial data for Aladdin and Mohawk follows:
 Selected Consolidated Financial Data
 (Amounts in thousands, except per share data)
 Statement of Earnings Data 3 mos. ended Year ended
 10/2/93 9/26/92 12/31/92
 Net sales $216,946 $ 77,814 $352,512
 Cost of sales 166,643 59,945 272,706
 Gross profit 50,303 17,869 79,806
 Selling, general and
 administrative expenses 32,818 10,207 54,094
 Restructuring charge 2,363 --- --
 Operating income 15,122 7,662 25,712
 Other expense (income):
 Interest 3,754 560 4,841
 Other, net 104 34 (58)
 Gain on iu?rance claim (2,000) --- ---
 Other expense - net 1,858 594 4,783
 Earnings before income taxes and
 extraordinary charge 13,264 7,068 20,929
 Income taxes 6,078 2,882 8,534
 Earnings before extraordinary
 charge $ 7,186 $ 4,186 $ 12,395
 Extraordinary charge --- --- 3,568
 Net earnings 7,186 4,186 8,827
 Preferred stock dividend --- --- 132
 Net earnings after
 preferred stock dividends $ 7,186 $ 4,186 $ 8,695
 Earnings per common and
 common equivalent share
 before extraordinary chg. $ 0.36 $ 0.27 $ 0.82
 Net earnings per common and
 common equivalent share $ 0.36 $ 0.27 $ 0.58
 Weighted average common and
 common equivalent shares
 outstanding 20,146 15,647 15,045
 Balance Sheet Data:
 Working capital $156,887 $ 44,200 $ 95,639
 Total assets 578,595 119,282 298,895
 Total debt
 (including short-term debt) 239,229 13,950 115,385
 Shareholders equity 150,607 59,393 86,656
 Statement of Earnings Data Year ended
 12/31/91 12/31/90
 Net sales $278,924 $288,165
 Cost of sales 219,393 224,226
 Gross profit 59,531 63,939
 Selling, general and
 administrative expenses 39,170 41,626
 Restructuring charge --- --
 Operating income 20,361 22,313
 Other expense (income):
 Interest 8,807 10,235
 Other, net 1,310 1,848
 Gain on insurance claim --- ---
 Other expense - net 10,117 12,083
 Earnings before income taxes and
 extraordinary charge 10,244 10,230
 Income taxes 4,411 4,412
 Earnings before extraordinary
 charge $ 5,833 $ 5,818
 Extraordinary charge --- ---
 Net earnings 5,833 5,818
 Preferred stock dividend 599 658
 Net earnings after
 preferred stock dividends $ 5,234 $ 5,160
 Earnings per common and
 common equivalent share
 before extraordinary chg. $ 0.47 $ 0.46
 Net earnings per common and
 common equivalent share $ 0.47 $ 0.46
 Weighted average common and
 common equivalent shares
 outstanding 11,216 11,307
 Balance Sheet Data:
 Working capital $ 44,481 $ 52,864
 Total assets 117,519 128,233
 Total debt
 (including short-term debt) 63,284 77,994
 Shareholders equity 13,917 9,158
 (Dollars in Thousands)
 Statement of Earnings Data Fiscal
 3 mos. ended Year ended
 9/19/93 9/20/92 6/27/93
 Net sales $107,726 $ 86,058 $414,132
 Cost of sales 81,875 65,929 312,992
 Gross profit 25,851 20,129 101,140
 Selling, general and
 administrative expenses 16,443 13,119 64,649
 Operating income 9,408 7,010 36,491
 Other expense:
 Interest 1,022 899 4,381
 Other expense - net 359 305 1,300
 Other expense - net 1,381 1,204 5,681
 Earnings before income taxes 8,027 5,806 30,810
 Income taxes 3,173 2,223 12,208
 Earnings before cumulative
 effect of acctg. change 4,854 3,583 18,602
 Cumulative effect of change
 in accounting for income
 taxes 346 --- ---
 Net earnings $ 5,200 $ 3,583 $ 18,602
 Balance Sheet Data:
 Working capital $ 55,481 $ 44,570 $ 48,120
 Total assets 195,901 132,725 179,468
 Total debt
 (including short-term debt) 63,569 34,778 59,962
 Shareholders equity 69,778 49,167 64,578
 Statement of Earnings Data Fiscal year ended
 6/28/92 6/30/91
 Net sales $322,891 $260,743
 Cost of sales 246,753 204,229
 Gross profit 76,138 56,514
 Selling, general and
 administrative expenses 51,694 41,375
 Operating income 24,444 15,139
 Other expense:
 Interest 4,990 6,182
 Other expense - net 736 683
 Other expense - net 5,726 6,865
 Earnings before income taxes 18,718 8,274
 Income taxes 7,516 2,856
 Earnings before cumulative
 effect of acctg. change 11,202 5,418
 Cumulative effect of change
 in accounting for income
 taxes --- ---
 Net earnings $ 11,202 $ 5,418
 Balance Sheet Data:
 Working capital $ 42,569 $ 35,844
 Total assets 124,505 110,563
 Total debt
 (including short-term debt) 36,182 42,893
 Shareholders equity 45,584 34,220
 -0- 12/6/93
 /CONTACT: John D. Swift, vice president - Finance, Mohawk Industries, 404-951-6000/

CO: Mohawk Industries, Inc.; Aladdin Mills, Inc. ST: Georgia IN: TEX SU: TNM

CF-BR -- AT004 -- 0658 12/06/93 09:42 EST
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Date:Dec 6, 1993

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