UNITED STATES  

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 19, 2007


MOHAWK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or Other
Jurisdiction of
Incorporation)

01-19826
(Commission File
Number)

52-1604305
(IRS Employer
Identification No.)

 

 

 

160 South Industrial Blvd., Calhoun, Georgia

30701

(Address of Principal Executive Offices)

 (Zip Code)

 

Registrant's telephone number, including area code (706) 629-7721

__________________________________________________________________________________
(Former Name or Former Address, if Changed Since Last Report)

      Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 o Written communication pursuant to Rule 425 under Securities Act (17 CFR 230.425)
 o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act CFR 240.14d-2(b))
 o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act CFR 240.17R 240.13e-4(c))

 



Item 2.02  Results of Operations and Financial Condition.

On April 19, 2007, Mohawk Industries, Inc.,  issued a press release announcing its first quarter financial results. A copy of the press release is attached hereto and hereby incorporated by reference as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits.

(d)  Exhibits

99.1 Press release dated April 19, 2007.

 


SIGNATURES


 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

                                                                                                            Mohawk Industries, Inc.

                                                                                                        

                  Date: April 19, 2007                                               By: /s/ THOMAS  J. KANUK

                                                                                                                  Thomas J. Kanuk

                                                                                                            V.P.  & Corporate Controller



INDEX TO EXHIBITS

Exhibit

99.1.    Press release dated April 19, 2007.

MOHAWK INDUSTRIES, INC

Exhibit 99.1

  

For Release:              Immediately
 Contact:                      Frank H. Boykin, Chief Financial Officer

 

MOHAWK INDUSTRIES, INC. ANNOUNCES
FIRST QUARTER EARNINGS
 

Calhoun, Georgia, April 19, 2007 - Mohawk Industries, Inc. (NYSE:MHK) today announced 2007 first quarter net earnings of $90 million and diluted earnings per share (EPS) of $1.32 (both 14% above last year).  The 2007 first quarter net earnings include income of $5.8 million from a partially paid customs refund, net of taxes.  Net sales for the quarter were $1,864 million, a decrease of 3% from 2006. We continued to generate strong cash flow during the quarter.  Cash flow from operations was $89 million and EBITDA was $249 million during the quarter. In addition, debt of $84 million was paid down during the quarter.

In commenting on the first quarter results, Jeffrey S. Lorberbaum, Chairman and CEO, stated:   "The first quarter results were better than we had anticipated and exceeded our estimate. The U.S. flooring business remains slow, however comparisons to the prior year,  when the industry slowed down, will be easier in the second half of 2007. The residential business remains challenging in all product categories reflecting softness in both the new and remodeling businesses. Commercial sales are outperforming the rest of the business and are expected to continue throughout this year.  In the U.S., we are managing our costs and improving productivity while still maintaining investments in products, marketing and assets.  All businesses are managing their inventory levels, expenses and production schedules to adapt to the current industry downturn. The European economy maintained its positive trend and appears to have good momentum.  The improved economic conditions in Europe allowed us to pass through rising material and energy costs.   

The Mohawk segment sales were off 9% as they continue to be impacted by the downward trends in the industry. Industry sales declined more in the first quarter than in the fourth quarter.  The commercial channel is stronger with the modular carpet category increasing its market share. Raw material costs remained stable from the fourth quarter. With the recent spike in oil prices, we are seeing an escalation in our costs from our suppliers and we are evaluating a price increase on our products to compensate.  We have adjusted our plant production levels and reduced expenses to offset some of the lower volumes.  In addition, we have multiple initiatives to improve productivity, efficiency and other costs.



The Dal-Tile segment sales were down 2% in the quarter.  Our earlier investments are minimizing some of the declining sales trends affecting the entire industry.  Commercial is still growing and is expected to be strong throughout the year. We are reducing our outsourced ceramic tile purchases to offset slower sales.  We have opened new galleries in New York City and Chicago and a stone center in Atlanta to strengthen our position in these markets. All were favorably received by our customers. 

Our Unilin segment continues to perform well with sales up 16% over last year. The European business showed improvement while the U.S. business slowed due to weakness in the residential category. In Europe operating margins were positively impacted by price increases in both laminate and other board products offsetting rising energy and raw material costs. Strong demand resulted in positive overhead absorption.  Recent rulings in both the U.S. and Europe have bolstered the strength of our patents in the market place.  We have signed a cross license agreement on profile patents with Välinge that allows us to pursue more aggressively companies that infringe on our technology.  This settles much of our outstanding patent litigation. We still have a limited number of companies with which we have ongoing disputes and may require additional legal action."

In an internal review, the Company discovered that it had exchanged employee compensation information with its competitors while gathering market data.  The Company has discontinued this activity and voluntarily disclosed the practice to the Department of Justice.   This has no effect at all on the marketing or selling of our products. The Company believes that this matter will not be material to its financial condition. 

The company does not expect substantial improvement in the operating environment during the second quarter.  The management team is committed to maintaining the proper balance between cost cutting and being prepared for a future turn around.  Based on these factors, the guidance for the second quarter of 2007 is $1.51 to $1.60 EPS.

Certain of the statements in the immediately preceding paragraphs, particularly anticipating future performance, business prospects, growth and operating strategies, proposed acquisitions, and similar matters, and those that include the words "could," "should," "believes," "anticipates," "forecasts," "estimates," or similar expressions constitute "forward-looking statements."  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.  There can be no assurance that the forward-looking statements will be accurate because they are based on many assumptions, which involve risks and uncertainties.  The following important factors could cause future results to differ: changes in economic or industry conditions; competition; raw material and energy prices; timing and level of capital expenditures; integration of acquisitions; introduction of new products; rationalization of operations; litigation and other risks identified in Mohawk's SEC reports and public announcements. 



 Mohawk is a leading supplier of flooring for both residential and commercial applications.  Mohawk offers a complete selection of carpet, ceramic tile, laminate, wood, stone, vinyl, rugs and other home products.  These products are marketed under the premier brands in the industry, which include Mohawk, Karastan, Ralph Lauren, Lees, Bigelow, Dal-Tile, American Olean, Unilin and Quick Step.  Mohawk's unique merchandising and marketing assist our customers in creating the consumers' dream.  Mohawk provides a premium level of service with its own trucking fleet and over 250 local distribution locations. 

 

 There will be a conference call Friday, April 20, 2007 at 11:00 AM Eastern Time.
The telephone number to call is 1-800-603-9255 for US/Canada and 1-706-634-2294 for International/Local.
 A conference call replay will also be available until April 27, 2007 by dialing 1-800-642-1687
for US/local calls and 1-706-645-9291 for International/Local calls and entering Conference ID # 4403108.



MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

 

 

 

 

Consolidated Statement of Earnings Data

Three Months Ended

(Amounts in thousands, except per share data)

March 31, 2007

April 1, 2006

 

 

 

 

Net sales

 $

1,863,863 

1,925,106 

Cost of sales

1,340,423 

1,408,762 

    Gross profit

523,440 

516,344 

Selling, general and administrative expenses

352,863 

352,443 

    Operating income

170,577 

163,901 

Interest expense

41,579 

40,335 

Other (income) expense, net

4,227 

2,727 

U.S. Customs refund

(9,122)

    Earnings before income taxes

133,893 

120,839 

Income taxes

43,515 

41,718 

    Net earnings

 $

90,378 

79,121 

Basic earnings per share

 $

1.33 

1.17 

Weighted-average shares outstanding

67,906 

67,564 

Diluted earnings per share

 $

1.32 

1.16 

Weighted-average common and dilutive

potential common shares outstanding

68,255  

68,079  

Other Financial Information

(Amounts in thousands)

Net cash provided by operating activities

 $

88,767 

104,526 

Depreciation & amortization

 $

73,846 

64,853 

Capital expenditures

 $

24,956 

45,632 

Consolidated Balance Sheet Data

(Amounts in thousands)

March 31, 2007

April 1, 2006

ASSETS

 

 

 

 

Current assets:

    Cash & cash equivalents

 $

53,598 

  

82,174 

    Receivables

948,767 

  

948,229 

    Inventories

1,245,073 

  

1,248,474 

    Prepaid expenses

119,815 

  

140,194 

    Deferred income taxes

176,444 

  

34,857 

        Total current assets

2,543,697 

  

2,453,928 

Property, plant and equipment, net

1,864,999 

  

1,822,424 

Goodwill

2,710,821 

  

2,642,389 

Intangible assets

1,166,626 

  

1,173,136 

Other assets

29,141 

  

30,704 

 $

8,315,284 

  

8,122,581 

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt

 $

514,772 

100,156 

Accounts payable and accrued expenses

982,536 

  

1,033,726 

        Total current liabilities

1,497,308 

  

1,133,882 

Long-term debt, less current portion

2,189,862 

  

3,148,000 

Deferred income taxes and other long-term liabilities

775,517 

  

650,750 

        Total liabilities

4,462,687 

  

4,932,632 

Total stockholders' equity

3,852,597 

  

3,189,949 

 $

8,315,284 

  

8,122,581 

Segment Information

 

As of or for the Three Months Ended

(Amounts in thousands)

March 31, 2007

April 1, 2006

Net sales:

    Mohawk

 $

1,047,661 

1,150,546 

    Dal-Tile

466,961 

473,910 

    Unilin

352,096 

302,630 

    Corporate and eliminations

(2,855)

(1,980)

        Consolidated net sales

 $

1,863,863 

1,925,106 

Operating income:

    Mohawk

 $

48,445 

65,613 

    Dal-Tile

64,395 

69,602 

    Unilin

60,499 

40,019 

    Corporate and eliminations

(2,762)

(11,333)

        Consolidated operating income

 $

170,577 

163,901 

Assets:

    Mohawk

 $

2,470,812 

2,520,435 

    Dal-Tile

2,279,739 

2,257,052 

    Unilin

3,332,481 

3,255,582 

    Corporate and eliminations

232,252 

89,512 

        Consolidated assets

 $

8,315,284 

8,122,581 



  Reconciliation of EBITDA

 

   

Three Months Ended

     
(Amounts in thousands)  

March 31, 2007

     

 

 

EBITDA reconciliation:

   Operating income

 $

170,577 

Other expense

(4,227)

U.S. Customs refund, net

9,122 

Depreciation and amortization

73,846 

     EBITDA

 $

249,318 

The Company believes it is useful for itself and investors to review, as applicable, both GAAP and the

above Non-GAAP measures in order to assess the performance of the Company's business for

planning and forecasting in subsequent periods.