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As required under generally accepted accounting principles, a $271.6 million ($3.96 per share) tax benefit to earnings was recorded during the quarter, which resulted from an international restructuring. Net sales for the quarter were $1807.3 million, a decrease of 5% from 2006. Sales were impacted favorably by the Columbia wood flooring acquisition, exchange rates and growth in the Dal-Tile segment, which partially offset other sales declines. Cash flow from operations continued strong at $273 million, and an additional $189 million of debt was paid during the quarter.
For the year 2007, earnings were $706.8 million and EPS were $10.32, including the $271.6 million one-time tax benefit, a pre-tax benefit of $9.2 million ($.09 per share) related to a refund from U.S. Customs and pre-tax charge of $14.2 million ($.13 per share) for plant closing costs. In 2006, net earnings and EPS were $455.8 million and $6.70 per share, respectively, and included a pre-tax benefit of $19.4 million ($.18 per share) related to a refund from U.S. Customs. Net sales for the year were $7586.0 million, a decrease of 4% from 2006. Sales were favorably impacted by growth in the Unilin segment, exchange rate gains and the acquisition of the Columbia wood flooring business, which partially offset other sales declines. For the year, Unilin’s results improved substantially with operating profit increasing 27%. For the year, cash flow from operations was $875 million and debt was reduced by $534 million.
“During 2007, we endured a difficult U.S. housing market and rising costs, while continuing the growth of our Unilin segment,” said Jeffrey S. Lorberbaum, chairman and chief executive officer. “Our management team in the U.S. handled the many challenges as the flooring market continued its decline. Our three segments are managing this cycle with many initiatives to improve revenues, reduce costs, increase prices, improve productivity, manage working capital and update our product portfolio.”
Dal-Tile sales were up 2% in the quarter compared to 2006 with operating margins of 13.2%. Dal-Tile is performing well with growth in the commercial and higher-end residential channels. The company is implementing price increases to pass through rising energy, logistics and other costs. Earlier investments in sales infrastructure have enabled the company to outperform the market, but are impacting margins. The Mexican market continues to expand and Dal-Tile is growing its business by focusing on premium ceramic products. During the year, it closed a high-cost ceramic facility in the U.S. and reduced outside purchases of ceramic to increase the utilization of the company’s plants and control inventory levels. The company has also completed the introduction of a new exterior collection of porcelain and stone tile, which extends the interior living areas to the outdoors in both residential and commercial applications.
A replay of a recent conference call discussing these and other results is available until February 21, 2008, by calling (800) 642-1687 or (706) 645-9291, and entering Conference ID # 30399711. Visit www.mohawkind.com or www.daltile.com for more information.