Mohawk Industries, Inc. Announces First Quarter Earnings

    CALHOUN, Ga., April 19 /CNW/ -- 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 Valinge 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.


    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, net                         (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
    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
    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

        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.

For further information:

For further information: Frank H. Boykin, Chief Financial Officer of 
Mohawk Industries, Inc., +1-706-624-2695 Web Site:

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