CALHOUN — Mohawk Industries on Thursday reported third quarter net earnings for 2006 of $127.7 million and diluted earnings per share (EPS) of $1.88, both 10 percent above last year for the same period.

But company officials said they expect continued slow sales in the fourth quarter, and the company is reducing its manufacturing, administration and marketing expenses.

The company’s “earnings guidance” for the fourth quarter is from $1.51 to $1.60 EPS.

Net sales for the third quarter were $2.02 billion, an increase of 19 percent from 2005. The sales growth resulted from Mohawk’s acquisition of Unilin, hard surface sales growth and price increases, company officials said.

“I am pleased with our results for the quarter in light of the current business environment,” said Jeffrey S. Lorberbaum, chairman and CEO, in a press release.

“With 19 percent sales growth, higher gross margins and a 10 percent improvement in EPS over last year, our third quarter was positive. Our business is better balanced to minimize the impact of changing economic and industry cycles than in the past. The diversification of our product offering with a full line of soft and hard products, participation in all sales channels of residential and commercial, and our broader geographic exposure in Europe improve our position.”

Adjusted net earnings for the third quarter were $123.9 million, and adjusted EPS were $1.82 per share.

“During the quarter the slowing U.S. economy impacted our business,” Lorberbaum said. “Both residential replacement and new residential construction weakened through the quarter and the commercial business continued positive trends. ... We see weaker industry demand levels with the postponement of new home purchases and redecorating projects in the near term. Recent changes in gasoline prices have positively affected consumers and some retail categories. This could improve large discretionary purchases and positively affect retail flooring sales. Interest rates should remain favorable, consumer confidence should recover, and the industry demand for flooring should improve in the long term.”

Lorberbaum said Mohawk segment sales were “disappointing,” with sales declining 1 percent.

“Both new and replacement residential carpet declined significantly from the prior year, with commercial carpet continuing to grow,” he said. “With the lower sales levels, cost reduction plans are being implemented to reduce manufacturing labor; selling, general and administrative expenses; and other discretionary spending. Production schedules have been reduced to reflect lower demand and control inventory levels.”

Lorberbaum noted that during the third quarter, the company closed a yarn facility in Dalton, incurring $500,000 in costs.

“We will continue to review the business and adjust to the changing environment,” he said.

Mohawk’s Dal-Tile segment sales grew 11 percent during the third quarter, and the Unilin segment results “were strong for the third quarter, with good sales growth in the European laminate business,” Lorberbaum said.

For the first nine months of 2006, net earnings were $326.3 million (14 percent above last year) and EPS were $4.80 (13 percent above last year).

Adjusted net earnings for the first nine months of 2006 were $322.5 million, and adjusted EPS were $4.74 per share.

Mohawk has approximately 34,000 employees, including more than 9,000 in Murray and Whitfield counties.

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