Calhoun, GA, Oct. 15—Mohawk Industries, Inc. had record net earnings and diluted earnings per share (EPS) for the third quarter of $1.05 per share or $55.7 million (20% above last year) in net earnings. The per share figure was 21% above last year. This compares to EPS of $0.87 per share or $46.4 million in net earnings for the third quarter last year before a pre-tax charge of $7 million related to an antitrust litigation settlement. After the pre-tax charge, EPS was $0.79 per share or $42.1 million 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 $869.7 million compared to $838.5 million for the third quarter last year. 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 $129.4 million (1% above last year) in net earnings. Both were records for Mohawk. This compares to EPS of $2.33 or $127.6 million in net earnings for the first nine months last year before the pre-tax charge of $7 million. After the pre-tax charge, EPS was $2.26 per share or $123.3 million 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 this year were $2.4 billion, a 1% decrease from sales of $2.5 billion for the same period a year ago.

"Although we’re very pleased with our financial results this quarter, it’s tempered by the tragedy that occurred on September 11,” said CEO Jeffrey S. Lorberbaum. “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’re 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’re 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 million 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’s 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."

Copyright 2001 Floor Focus Inc