Mohawk Industries, Inc. Completes Acquisition Of Dal-Tile International Inc.
The acquisition was initially financed with a combination of a $600 million 364-day bridge credit facility, the Company's existing revolving credit facility and the Company's existing on-balance sheet asset financing securitization. The Company plans to repay the bridge credit facility after completion of the merger through a private placement of senior notes or other available means. After the completion of the acquisition, the Company estimates its debt-to-total capitalization ratio to be approximately 41%.
Commenting on the merger, Jeffrey S. Lorberbaum, President and Chief Executive Officer of Mohawk stated, "The Dal-Tile merger creates the largest floorcovering manufacturer and distributor in the world with the largest ceramic tile operation in the U.S. and the second largest carpet and rug operation. Dal-Tile adds approximately $1 billion in annual sales of ceramic tile and stone products offering the broadest selection of products and the most recognized brands in the industry. The Dal-Tile distribution channels, which include over 200 sales service centers, independent distributors and home center retailers, offer synergistic opportunities to increase sales, leveraging Mohawk's existing distribution channels with Dal-Tile's. The exceptional financial performance of Dal-Tile over the last four years reflects the superior business and growth strategy of the high quality management team. We plan to keep the operating management team intact going forward. The strengths of both companies are complementary with consistent strategies that include the most recognized brands, low cost operations, strong marketing programs, broad product lines and exceptional customer service.
"Although we estimate the merger will have no significant impact on earnings in 2002, we expect slight accretion in 2003 with more significant earnings improvements in future years when the merger synergies are more refined and Dal-Tile is completely assimilated with Mohawk. Some of the opportunities we are most excited about include (1) leveraging distribution channels to increase sales of both soft and hard surface floorcovering products, (2) utilizing Mohawk's internal trucking fleet and extensive distribution network to reduce costs and reduce customer delivery times, (3) expanding the well known brands of both companies to multiple products through more efficient advertising, (4) combining the best operations practices and procedures at both companies to create an even stronger combined company and (5) reducing administrative costs for the combined companies. We look forward to a successful merger and long term relationship with the Dal-Tile management team."
Certain of the statements in the immediately preceding paragraphs, particularly those statements regarding the effects and opportunities of the Dal-Tile acquisition, and those preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "estimates," or similar expressions constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. For those statements, Mohawk claims the protection of the safe harbor for forward- looking statements contained in the Private Securities Litigation Reform Act of 1995. Those statements are based on many assumptions, including assumptions regarding the successful integration of Dal-Tile into Mohawk's business. These or other assumptions could prove inaccurate and therefore, there can be no assurance that the "forward-looking statements" will prove to be accurate. Forward-looking statements involve a number of risks and uncertainties. The following important factors affect the future results of Mohawk and could cause those results to differ materially from those expressed in the forward-looking statements: materially adverse changes in economic conditions generally in the carpet, rug and floorcovering markets served by Mohawk; competition from other carpet, rug and floorcovering manufacturers, raw material prices, timing and level of capital expenditures, the successful integration of acquisitions including the challenges inherent in diverting Mohawk's management attention and resources from other strategic matters and from operational matters for an extended period of time, the successful introduction of new products, the successful rationalization of existing operations, the risks identified on the joint proxy statement-prospectus related to the acquisition of Dal-Tile by Mohawk, dated February 19, 2002, and other risks identified from time to time in the Company's SEC reports and public announcements.
Mohawk is a leading supplier of flooring for both residential and commercial applications and a producer of woven and tufted broadloom carpet, rugs and ceramic tile. The Company designs, manufactures and markets premier carpet brand names, which include "Mohawk," "Aladdin," "Bigelow," "Custom Weave," "Durkan," "Galaxy," "Helios," "Horizon," "Karastan," "Mohawk Commercial," "World," and "Wunda Weve." Mohawk offers a broad line of home products including rugs, throws, pillows and bedspreads under the brand names Aladdin, Goodwin Weavers, Karastan, Mohawk Home, Newmark. Mohawk also offers other products that include ceramic tile and natural stone products, and laminate, wood and vinyl flooring, and carpet padding under the brand names Dal-Tile, Mohawk and American Olean.
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SOURCE Mohawk Industries, Inc.
CONTACT: John D. Swift, Chief Financial Officer of Mohawk Industries,
Inc., +1-706-624-2247
URL: http://www.mohawkind.com
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