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 ATLANTA, Oct. 21 /PRNewswire/ -- Mohawk Industries, Inc. (NASDAQ-NMS: MOHK) today announced net earnings of $7,186,000 for the quarter ended Oct. 2, compared to net earnings of $4,186,000 for the same quarter in 1992.
 Earnings per common and common equivalent share were $0.36, compared to $0.27 per share for the prior year's third quarter. These net earnings were the highest ever recorded by the company in the third quarter and represented the tenth consecutive quarter of improvement in earnings before extraordinary charge compared to the corresponding quarter of the prior year.
 Net sales for the quarter increased 178.8 percent to $216,946,000 compared to $77,814,000 for the third quarter of 1992. This sales increase was primarily attributable to the impact of the acquisitions of Horizon Industries, Inc., American Rug Craftsmen, Inc. and Karastan Bigelow. The increase was negatively impacted by a reduction in sales as a result of the March 1993 blizzard discussed below.
 In commenting on the third quarter performance, David L. Kolb, chairman and CEO, stated, "We are pleased with the positive momentum from the acquisitions of Horizon, American Rug and, our most recent addition, Karastan Bigelow, as evidenced by the strong third quarter results." He further noted that: "The Karastan Bigelow business has two of the oldest and most widely recognized brand names in the industry and compliments those brands currently sold by our company. We are extremely pleased with the accretive effect on earnings in the third quarter of both American Rug and Karastan Bigelow and believe that they should continue to contribute positively to earnings."
 For the nine months ended Oct. 2, the company recorded net earnings of $15,305,000 compared to net earnings of $3,658,000 (after extraordinary charge and preferred stock dividends) in the first nine months of 1992. After adjusting for the three-for-two stock split, earnings per common and common equivalent share were $0.79 compared to $0.26 per share (after extraordinary charge and preferred stock dividends) for the comparable period in the prior year. Net sales for the first nine months of 1993 totaled $514,347,000, representing a 134.0 percent increase over the $219,817,000 recorded in the first nine months of the prior year. The majority of the sales increase was attributable to the acquisitions.
 On July 30, the company consummated its acquisition of the carpet and rug division of Fieldcrest Cannon, Inc. ("Karastan Bigelow") for a total purchase price of $155,458,000, which included cash of approximately $150 million (including acquisition costs) and a $5,458,000 note payable to Fieldcrest Cannon over six years.
 During the third quarter, management approved a plan to close one of its woven carpet manufacturing operations and to relocate the operation to another woven carpet facility acquired in the purchase of Karastan Bigelow. Management believes this relocation will improve operating efficiencies and reduce costs, thereby increasing stockholder value. The company recorded a pre-tax restructuring charge of $2,363,000 which included estimated costs related to the relocation of equipment, termination pay and losses on the disposition of certain equipment and property. The after-tax effect of this charge reduced net earnings by $1,395,000 or $0.07 per share for the quarter.
 As previously reported, the damage caused to the company's Calhoun, Ga., facilities as a result of the blizzard which hit the eastern United States in March 1993, was adequately insured against, both on a business interruption and property basis. The company had received approximately $14,775,000 in advances from its insurance carrier at Oct. 2. On a pre- tax basis, the company recorded reductions of $1,450,000 and $3,315,000 in cost of sales, and additional amounts of $2 million and $4,285,000 in other income, related to non-recurring gains on fixed asset replacements, for the quarter and the nine months ended Oct. 2, respectively. These amounts represent that portion of the anticipated settlements under both the business interruption and property insurance policies, which the company believes are highly probable of collection based upon information currently available.
 During August, the federal income tax rate was retroactively increased, effective Jan. 1, from 34 percent to 35 percent. The $640,000 additional tax expense recorded for the cumulative impact of this increase during the third quarter included $505,000 which resulted from restating the net deferred tax liability to the higher tax rate and $135,000 which resulted from applying the rate increase to pre-tax earnings for the six months ended July 3. Additionally, during the quarter, Mohawk completed a three-for-two split of its common stock. The stock split was effected in the form of a 50 percent stock dividend on the company's common stock, which was paid on Aug. 24 to owners of record at the close of business on Aug. 3. For all periods shown, financial data have been restated to reflect the split. All information with respect to the quarter and nine months ended Sept. 26, 1992 has been restated to reflect the adoption of FAS No. 109, Accounting for Income Taxes.
 Mohawk Industries, Inc. is a leading producer of both woven and tufted broadloom carpeting for residential and commercial applications. The company 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," "Mohawk Commercial," "Horizon," "Harbinger," "Karastan," "Bigelow" and "Helios." Through Karastan, American Rug Craftsmen and Helios, the company also offers a broad line of area rugs. The company markets its products primarily through retailers and commercial dealers and to selected end users.
 EDITOR'S NOTE: There will be a conference call Friday, Oct. 22 at 2 p.m. Eastern Time. The telephone number to call is 800-275-3939.
 Consolidated Statement of Earnings Data
 (Amounts in thousands, except per share data)
 3 mos. ended 9 mos. ended
 (Unaudited) 10/2/93 9/26/92 10/2/93 9/26/92
 Net sales $216,946 $ 77,814 $514,347 $219,817
 Cost of sales 166,643 59,945 397,259 169,556
 Gross profit 50,303 17,869 117,088 50,261
 Selling, general and
 administrative expenses 32,818 10,207 82,707 34,853
 Restructuring charge 2,363 --- 2,363 ---
 Operating income 15,122 7,662 32,018 15,408
 Other expense 1,858 594 5,222 3,145
 Earnings before income taxes and
 extraordinary charge 13,264 7,068 26,796 12,263
 Income taxes 6,078 2,882 11,491 5,000
 Earnings before extraordinary
 charge 7,186 4,186 15,305 7,263
 Extraordinary charge, net of
 income taxes --- --- --- 3,473
 Net earnings $ 7,186 $ 4,186 $ 15,305 $ 3,790
 Preferred stock dividends --- --- --- 132
 Net earnings after
 preferred stock dividends $ 7,186 $ 4,186 $ 15,305 $ 3,658
 Earnings per common and
 common equivalent share:(a)
 Earnings before extraordinary
 charge(a) $ 0.36 $ 0.27 $ 0.79 $ 0.51
 Net earnings (a)(b) $ 0.36 $ 0.27 $ 0.79 $ 0.26
 Weighted average common and
 common equivalent shares
 outstanding(a) 20,146 15,647 19,324 14,096
 Consolidated Balance Sheet Data
 (Amounts in thousands)
 ASSETS 10/2/93 9/26/92
 Current assets:
 Receivables $141,976 $ 33,539
 Inventories 169,982 47,107
 Prepaid expenses 3,840 1,410
 Deferred income taxes 4,368 ---
 Total current assets 320,166 82,056
 Property, plant and equipment, net 218,161 36,385
 Other assets 40,268 841
 Total $578,595 $119,282
 Current liabilities:
 Current portion of long-term debt $ 5,088 $ 466
 Accounts payable and accrued expenses 158,191 37,390
 Total current liabilities 163,279 37,856
 Long-term debt 234,141 13,484
 Deferred income taxes and other long-term
 liabilities 30,568 8,549
 Total liabilities 427,988 59,889
 Total stockholders' equity 150,607 59,393
 Total $578,595 $119,282
 (a) All share amounts reflect a 3-for-2 stock split.
 (b) Per share amounts prior to the stock split would have been $.54 and $1.19 for the quarter and nine months ended Oct. 2, 1993, respectively. Per share amounts prior to the stock split would have been $.40 and $.39 for the quarter and nine months ended Sept. 26, 1992, respectively.
 -0- 10/21/93
 /CONTACT: John D. Swift, vice president - Finance, Mohawk Industries, 404-951-6000/

CO: Mohawk Industries, Inc. ST: Georgia IN: TEX SU: ERN

RA-BR -- AT005 -- 5103 10/21/93 11:00 EDT
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Publication:PR Newswire
Date:Oct 21, 1993

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