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Mohawk Industries Inc. announces results for the 1994 fourth quarter and year.

ATLANTA--(BUSINESS WIRE)--Feb. 10, 1995--Mohawk Industries Inc. (NASDAQ/NMS:MOHK) today announced results for the fourth quarter and year ended Dec. 31, 1994. Net sales for the fourth quarter increased approximately 4 percent to $362,152,000 compared to $348,869,000 for the fourth quarter of 1993. This sales increase was primarily attributable to the sales growth of Aladdin and American Rug Craftsmen. Net earnings for the fourth quarter of 1994 were $7,613,000, or approximately 37 percent below the net earnings of $12,154,000 recorded in the prior year's fourth quarter. This decline occurred primarily due to costs associated with manufacturing facility consolidations and the introduction of new residential marketing programs. Additionally, the Company experienced raw material price increases in polypropylene materials. Price increases on the Company's polypropylene broadloom products have been announced and will be effective late in the first quarter of 1995. Earnings per share were $0.23 compared to $0.36 per share in the corresponding quarter of the prior year.

The additional consolidation and restructuring costs, part of the Company's long-term strategic plan to become one of the world's most efficient carpet manufacturing companies, included (i) the closing and relocation of one nylon spinning plant, (ii) additional training and other costs arising from the relocation of a specialized high-end commercial manufacturing operation, (iii) the closing and consolidation of one customer border rug manufacturing facility, (iv) start-up costs of a new mat manufacturing plant and (v) start-up costs of two new warehouse facilities. The additional marketing costs arose from the introduction of a record number of new marketing programs in the Residential Business. Included in these costs were expenditures associated with new product samples and promotions. Overall, these investments are aimed at reducing manufacturing costs and increasing market share in the future.

Net sales for the year totaled $1,437,406,000, representing approximately a 21 percent increase over the $1,188,186,000 recorded in 1993. This sales increase was attributable primarily to the impact of the acquisitions of Karastan Bigelow and American Rug Craftsmen, as well as strong internal growth by Aladdin and American Rug Craftsmen.

For the year ended Dec. 31, 1994, the Company recorded net earnings of $33,007,000 including the one-time acquisition charge discussed below, and $43,208,000 excluding the one-time acquisition charge, compared to $39,523,000 in 1993. Earnings per common and common equivalent share were $0.99 including the one-time acquisition charge, and $1.28 excluding the one-time acquisition charge, compared to $1.19 per share for the prior year. Included in the results of operations for the 1994 fiscal year is a one-time charge of $10,201,000 for transaction expenses related to the acquisition of Aladdin that were incurred during the first quarter of 1994. The Company will not receive an income tax benefit for a significant portion of this one-time charge. The Company recorded non-recurring adjustments totaling $1,950,000 in the last half of 1994 to reduce income tax expense, which reflect a change in the Company's federal and state income tax status. Results for 1994 also include a $6,005,000 pre-tax benefit that represented the final settlement in connection with the insurance claim related to the snow storm in early 1993.

In commenting on the fourth quarter performance, David L. Kolb, Chairman and CEO, stated, "Although our fourth quarter results were impacted by restructuring and marketing program costs, these expenditures will put us in a stronger position for the future. We believe the long-term benefits far outweigh the short-term impact of these investments. Our acquisition of Galaxy Carpet Mills was completed in January 1995, and it offers additional opportunities to further enhance stockholder value in the future. Also, Jeffrey Lorberbaum has been promoted to President and Chief Operating Officer of Mohawk Industries, Inc. and will have overall operating responsibility for the Company. We look forward to the positive future impact that Jeff will have on the overall Company based on the tremendous operating experience and business talents he brings to this new position. He will also continue to serve as President and Chief Executive Officer of Aladdin."

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", "Alexander Smith", "Mohawk Commercial", "Harbinger", "Karastan", "Bigelow", "Aladdin" and "Galaxy". Mohawk offers a broad line of washable accent and bath rugs through Aladdin and area rugs through Karastan, American Rug Craftsmen and Helios. The Company markets its products primarily through retailers and commercial dealers.

 Consolidated Statement of Earnings Data
 (Amounts in thousands, except per share data)

 Three Months Ended Twelve Months Ended
 Dec. 31, Dec. 31, Dec. 31, Dec. 31,
 1994 1993(B) 1994 1993(B)
Net sales $ 362,152 348,869 1,437,406 1,188,186
Cost of sales 286,920 272,789 1,107,890 917,824
 Gross profit 75,232 76,080 329,516 270,362
Selling, general and
 administrative expenses 57,044 49,570 231,050 185,135
Restructuring charge - - - 2,363
 Operating income 18,188 26,510 98,466 82,864
Interest expense 6,620 5,422 27,112 18,029
Acquisition costs --
 Aladdin pooling - - 10,201 -
Other expense, net 726 1,223 2,987 2,659
Gain on insurance claim - (461) - (4,746)
 Earnings before income
 taxes 10,842 20,326 58,166 66,922
Income taxes 3,229 8,172 25,159 27,399
 Net earnings $ 7,613 12,154 33,007 39,523
Earnings per common and
 common equivalent
 share(A) $ 0.23 0.36 0.99 1.19
Weighted average common
 and common equivalent
 shares outstanding(A) 33,661 33,780 33,374 33,109

 Mohawk Industries
 Consolidated Balance Sheet Data
 (amounts in thousands)

ASSETS Dec. 31, 1994 Dec. 31, 1993(B)
Current assets:
 Cash $ - 2,571
 Receivables 179,801 161,276
 Inventories 252,668 230,756
 Prepaid expenses 17,275 14,515
 Deferred income taxes 4,453 3,909
 Total current assets 454,197 413,027
Property, plant and
 equipment, net 339,299 309,171
Other assets 61,283 54,226
 -------- --------
 854,779 776,424

Current liabilities:
 Current portion of long-term debt 5,482 25,872
 Accounts payable and
 accrued expenses 156,552 188,420
 Total current liabilities 162,034 214,292
Long-term debt 393,895 302,597
Deferred income taxes and other
 long-term liabilities 34,832 29,543
 Total liabilities 590,761 546,432
Total stockholders' equity 264,018 229,992
 -------- --------
 854,779 776,424

(A) Common equivalent shares outstanding (1,358,000) are excluded for the first three months of the 12-month period ended Dec. 31, 1994 as the effect on loss per share for the first quarter would have been anti-dilutive.

(B) Restated to give retroactive effect to the merger of Mohawk and Aladdin, which was accounted for under the pooling-of-interests basis of accounting. Certain prior year's financial statement balances have been reclassified to conform with the current year's presentations.

CONTACT: Mohawk Industries Inc., Atlanta

John D. Swift, 404/951-6000
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Publication:Business Wire
Date:Feb 10, 1995
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