Mohawk Industries, Inc. Announces Third Quarter Earnings

PRNewswire-FirstCall/ -- Mohawk Industries, Inc. (NYSE:MHK) today announced 2008 third quarter sales of $1,763 million, a decrease of 9% from 2007. The company generated cash flow from operations of $185 million, paid down debt of $128 million and has over $800 million available under current credit facilities. As a result of Mohawk's declining stock price and deteriorating industry conditions, accounting rules required non-cash charges for a preliminary goodwill and other intangibles impairment of $1,216 million net of tax and for a deferred tax asset impairment of $253 million. While our goodwill and other intangibles impairment analysis is not yet complete, we believe the preliminary amount is a reasonable estimate and we will adjust the charge if required. These impairment charges do not require any cash payments or impact our operations, liquidity or debt covenants. Including the non-cash write offs during the quarter, the company reported a net loss of $1,394 million or $20.37 per share. Excluding the non-cash write off, non-GAAP net earnings were $76 million or $1.10 per share. In the third quarter of 2007, net earnings were $122 million or $1.78 per share.

Net sales for the first nine months of 2008 were $5,341 million representing an 8% decrease from 2007. For the first nine months of 2008, the loss was $1,239 million or $18.12 per share including a non-cash write off for a preliminary goodwill and other intangibles impairment of $1,216 million net of tax and for a deferred tax asset impairment of $253 million. Excluding the non-cash write off's, non-GAAP net earnings were $230 million or $3.35 per share in the first nine months of 2008.

In commenting on the third quarter results, Jeffrey S. Lorberbaum, Chairman and CEO stated, "We generated strong cash flow from operations of $185 million during the period while our earnings were under pressure from falling demand and higher costs. All of our businesses are focused on reducing overhead costs, managing working capital and enhancing sales and margins. The U.S. economy is declining with consumers reducing discretionary expenditures. Residential home sales and remodeling are at low levels and commercial projects are being impacted by tightening credit and softening business conditions. The European economy has become significantly weaker and affected both our flooring and non-flooring products. Government intervention should help stabilize the banking system and improve availability of credit. We are hopeful that the declining energy and commodity prices will help strengthen consumer confidence and lead to an improvement in the flooring market next year.

The Mohawk segment was impacted most by the down turn. Sales declined by 11% with both costs and revenues under pressure. Almost every channel and product category has slowed during the quarter. The price increases we announced in the summer should be fully implemented by year end. During the quarter raw materials escalated more than we anticipated. Additional price increases were initiated in our ceramic, laminate, and vinyl products during the period. Our SG&A has been reduced from the prior year and will decline further in the future from additional actions. To right size the business, we announced closing two staple yarn plants and several regional distribution centers in the fourth quarter. This restructuring will benefit us with lower overhead and more efficient operations going forward. We are carefully rationalizing all our facilities to match the needs for both our near-term and long-term environment.

Dal-Tile sales declined in the quarter 5% below the prior year with business deteriorating through the quarter. We believe Dal-Tile is performing much better than the overall ceramic market. We are increasing our product offerings to the hospitality, multifamily and other commercial segments. New commercial introductions in the American Olean brand will add to our commercial sales through independent distributors. We have begun our factory direct program for large customers and expanded our product line for the Mexican market. We are reducing our ceramic production in the fourth quarter with both shorter work schedules and shift reductions. Our sales, distribution and administrative infrastructures are being reduced further to adapt to the poor environment. Savings in trucking costs are being achieved through increased fleet utilization and synergies with other Mohawk shipments.

The Unilin sales declined 5% as reported or 11% on a constant exchange rate basis. The Western European market has softened substantially as the global economy declines. Our laminate sales were down in both U.S. and Europe with Eastern Europe and Russia out performing other areas. Our laminate royalties have also declined as the industry units contracted. Roofing system sales were slightly up for the period. Our European board volume has declined along with the industry and pricing is at cyclical low levels. In the Columbia wood operations, we have taken out costs and launched new products. Customer demand for wood is very challenging and Columbia continues to operate at a loss. During the period, Unilin costs were higher due to rising chemical, energy, transportation and increased unabsorbed overhead. Many cost initiatives are under way including reengineering products, implementing new systems and reducing infrastructure."

The fourth quarter outlook is challenging due to the slowing economy, tightening credit and falling consumption of consumers and businesses. We do not expect to benefit significantly from declining oil and energy until the first half of 2009. In the quarter, our businesses will reduce inventory with increased shut downs and be impacted by a decline in product mix. The stronger dollar is expected to negatively impact our results in the period. Based on these factors our EPS guidance for the fourth quarter of 2008 is $0.20 to $0.30. Excluded from this guidance is a fourth quarter restructuring charge of $25 to $30 million related to closing facilities which will benefit our future operations.

We anticipate 2009 results will improve from our second half in 2008. During 2009 higher selling prices and lower costs should help our margins. Actions taken in 2008 to reduce overhead, improve productivity, shut down high cost capacity and manage inventories will positively impact our operations. Consumer discretionary spending for flooring will improve from substantial government stimulus, additional liquidity, lower gas and falling commodity prices. We remain convinced Mohawk will be a stronger company when we come out of this cycle.

Certain of the statements in the immediately preceding paragraphs, particularly anticipating future performance, business prospects, growth and operating strategies and similar matters and those that include the words "could," "should," "believes," "anticipates," "expects," and "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 costs and supply; timing and level of capital expenditures; integration of acquisitions; impairment charges; rationalization of operations; litigation and other risks identified in Mohawk's SEC reports and public announcements.

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Tanger Reports Third Quarter 2008 Results

PRNewswire-FirstCall/ -- Tanger Factory Outlet Centers, Inc. (NYSE:SKT) today reported funds from operations available to common shareholders ("FFO"), a widely accepted measure of REIT performance, for the three months ended September 30, 2008 increased 9.4% to $0.70 per share, or $26.5 million, as compared to FFO of $0.64 per share, or $23.9 million, for the three months ended September 30, 2007. For the nine months ended September 30, 2008, FFO was $64.4 million, or $1.70 per share, as compared to FFO of $67.4 million, or $1.80 per share, for the nine months ended September 30, 2007.

FFO for the nine months ended September 30, 2008 was impacted by a previously announced $8.9 million charge relating to the settlement of $200.0 million in 10 year US Treasury locks, as well as a $406,000 prepayment premium associated with the early extinguishment of debt. Excluding these two non-recurring charges, FFO for the nine months ended September 30, 2008 would have been $1.94 per share, representing an increase of 7.8% compared to the nine months ended September 30, 2007.

For the three months ended September 30, 2008, net income available to common shareholders increased 26.9% to $8.9 million or $0.28 per share, as compared to $7.0 million, or $0.22 per share for the third quarter of 2007. Net income available to common shareholders for the nine months ended September 30, 2008 was $14.3 million, or $0.45 per share compared $13.9 million, or $0.44 per share for the first nine months of 2007. Net income available to common shareholders for the nine months ended September 30, 2008 was also impacted by the non-recurring charges described above.

Net income and FFO per share amounts above are on a diluted basis. FFO is a supplemental non-GAAP financial measure used as a standard in the real estate industry to measure and compare the operating performance of real estate companies. A complete reconciliation containing adjustments from GAAP net income to FFO is included in this press release.

Third Quarter Highlights

-- Received an upgrade from BBB- to BBB from Standard and Poor's Ratings Services on October 23, 2008

-- 31.2% debt-to-total market capitalization ratio, compared to 30.5% as of September 30, 2007

-- 3.92 times interest coverage ratio compared to 3.40 times last year

-- 4.7% increase in same center net operating income for the third quarter and year to date

-- 47.0% average increase in base rental rates on 77,000 square feet of re-leased space during the third quarter of 2008, 43.8% increase year to date, compared to a 37.6% increase year to date in 2007

-- 8.3% average increase in base rental rates on 56,000 square feet of signed renewals during the third quarter of 2008, 17.6% increase year to date, compared to a 13.2% increase year to date in 2007

-- 96.7% occupancy rate for wholly-owned properties, up 0.5% from June 30, 2008

-- Same-space tenant sales for the rolling twelve months ended September 30, 2008 increased 0.3% to $341 per square foot excluding two properties undergoing major renovations

Stanley K. Tanger, Chairman of the Board and Chief Executive Officer, commented, "Our third quarter results were very positive. Same center net operating income increased 4.7% for the quarter as a result of our continuing efforts to drive rental rates on the renewal and releasing of space. Our balance sheet is conservatively positioned given current financial and economic conditions."

Financing Activities and Balance Sheet Summary

On October 23, 2008, Tanger was upgraded by Standard and Poor's Ratings Services from BBB- to BBB, making it one of only two REITs to receive a ratings upgrade this year. The company also currently maintains an investment grade rating with Moody's Investors Service of Baa3.

On June 11, 2008, Tanger closed on a $235.0 million unsecured three year term loan facility. The facility bears interest at a spread over LIBOR of 160 basis points, with the spread adjusting over time, based upon the debt ratings of the company.

On June 26, 2008, the company used proceeds from the term loan to repay its only remaining mortgage with a principal balance of approximately $170.7 million two weeks ahead of its optional prepayment date. As a result of the repayment of this mortgage, Tanger's entire portfolio of wholly-owned properties is now unencumbered. The remaining proceeds of approximately $62.8 million, net of closing costs, were applied against amounts outstanding on the company's unsecured lines of credit and to settle two treasury based interest rate lock protection agreements.

On July 9, 2008, Tanger entered into a LIBOR based interest rate swap agreement, which effectively changes the floating rate of interest on $118.0 million of the unsecured three year term loan facility to a fixed rate of 5.21%. The interest rate swap agreement expires on April 1, 2011. Subsequently, on September 25, 2008, the company entered into an additional LIBOR based interest rate swap agreement, which effectively changes the floating rate of interest on the remaining $117.0 million of the unsecured three year term loan facility to a fixed rate of 5.30%. This interest rate swap agreement also expires on April 1, 2011.

As of September 30, 2008, Tanger had $783.3 million of debt outstanding, equating to a 31.2% debt-to-total market capitalization ratio. The company had $149.5 million outstanding on its $325.0 million in available unsecured lines of credit, and approximately 81% of Tanger's debt was at fixed interest rates as of September 30, 2008. During the third quarter of 2008, Tanger continued to maintain a strong interest coverage ratio of 3.92 times, compared to 3.40 times during the third quarter of last year.

Portfolio Operating Results

During the first nine months of 2008, Tanger executed 351 lease documents, totaling 1,521,000 square feet within its wholly-owned properties. Lease renewals accounted for 1,040,000 square feet, or 77.0% of the square feet which was scheduled to expire during 2008, and generated a 17.6% increase in average base rental rates on a straight-line basis. Base rental increases on re-tenanted space during the first nine months of 2008 averaged 43.8% on a straight-line basis and accounted for the remaining 481,000 square feet.

Same center net operating income increased 4.7% for the third quarter of 2008 and the first nine months of 2008 compared to the same period in 2007. Excluding two properties undergoing major renovations, reported tenant comparable sales per square foot for the rolling twelve months ended September 30, 2008 were up 0.3% to $341 per square foot, compared to $340 per square foot for the twelve months ended September 30, 2007. Sales were impacted by the general weakness in the U.S. economy, as well as severe weather and hurricanes during the third quarter of the year.

Investment and Other Activities

In Washington County, south of Pittsburgh, Pennsylvania, Tanger held a very successful grand opening celebration of its second center in the state on August 29, 2008. The first phase, totaling 370,000 square feet, was approximately 86% leased upon opening. The Washington County center is wholly owned by Tanger.

On October 23, 2008, Tanger held the grand opening of its center in Deer Park (Long Island), NY. The initial phase which contains approximately 656,000 square feet of retail space and 26,000 square feet of office space, opened to huge crowds and parking lots filled beyond their capacity. The retail space at the Deer Park center was approximately 77% leased upon opening. The Deer Park property is owned through a joint venture of which Tanger and two venture partners each own a one-third interest.

Based upon the tremendous response by customers at both of these centers' grand opening events, the company feels confident additional tenant interest in the remaining available space will remain high and additional signed leases for both properties will be completed during the first year stabilization period.

Tanger has entered into purchase options on new development sites located in Mebane, North Carolina and Irving, Texas. Tanger is continuing with its predevelopment work at these locations. However in October, 2008, Tanger made the decision to terminate its purchase options with respect to its potential sites in Port St. Lucie, Florida and Phoenix, Arizona. As a result, Tanger will be taking a charge of approximately $1.8 million relating to its predevelopment costs on these projects during the fourth quarter of 2008.

Tanger Elects New Board Member

At its meeting on October 28, 2008, the Nominating and Corporate Governance Committee of the company's Board of Directors recommended, and the Board of Directors approved, that the number of directors be expanded from six members to seven members, and that Ms. Bridget Ryan Berman shall serve as independent director of the company effective January 1, 2009 until the next Annual Shareholders Meeting.

Ms. Berman was formerly the Chief Executive Officer of Giorgio Armani Corp., the wholly-owned US subsidiary of Giorgio Armani S.p.A., one of the leading fashion and luxury goods groups in the world, from 2006 to 2007. Previously, she was Vice President/Chief Operating Officer of Apple Computer Retail from 2004 to 2005 and held various executive positions with Polo Ralph Lauren Corporation, including Group President of Polo Ralph Lauren Global Retail, from 1992 to 2004. Ms. Berman also served in various capacities at May Department Stores, Federated Department Stores, and Allied Stores Corp. from 1982 to 1992. In addition, Ms. Berman was a member of the board of directors, and served on the audit committee for J. Crew Group, Inc. from 2005 to 2006.

"We are pleased to add to our Board of Directors someone with Ms. Berman's credentials," said Steven B. Tanger, President and Chief Operating Officer. "Ms. Berman's extensive experience and impressive background in the retail industry will add value and perspective to our board."

2008 FFO Per Share Guidance

Based on current market conditions and the strength and stability of its core portfolio, the company currently believes its net income for 2008, excluding gains or losses on the sale of real estate, will be between $0.63 and $0.69 per share and its FFO for 2008 will be between $2.35 and $2.41 per share. The company's earnings estimates include the impact of the expected write-off of predevelopment costs mentioned above totaling approximately $1.8 million, but do not include the impact of any potential gains on the sale of land parcels or the impact of any potential sales or acquisitions of properties. The following table provides the reconciliation of estimated diluted net income available to common shareholders per share to estimated diluted FFO per share:

For the twelve months ended December 31, 2008:
Low Range High Range
Estimated diluted net income per share $0.63 $0.69
Minority interest, gain/loss on the sale of
real estate, depreciation and amortization
uniquely significant to real estate
including minority interest share and our
share of joint ventures 1.72 1.72
Estimated diluted FFO per share $2.35 $2.41



Third Quarter Conference Call

Tanger will host a conference call to discuss its third quarter results for analysts, investors and other interested parties on Wednesday, October 29, 2008, at 10:00 A.M. eastern time. To access the conference call, listeners should dial 1-877-277-5113 and request to be connected to the Tanger Factory Outlet Centers Third Quarter 2008 Financial Results call. Alternatively, the call will be web cast by CCBN and can be accessed at the company's web site at http://www.tangeroutlet.com/investorrelations/news .

A telephone replay of the call will be available from October 29, 2008 starting at 1:00 P.M. Eastern Time through 11:59 P.M., November 7, 2008, by dialing 1-800-642-1687 (conference ID # 65292786). Additionally, an online archive of the broadcast will also be available through November 7, 2008.

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Aflac To Take Early Delivery of Shares from Repurchase Agreement

PRNewswire-FirstCall/ -- Aflac Incorporated announced today that it will take early delivery of 10.7 million common shares that were acquired through a previously announced repurchase agreement. The company will also receive $141.8 million of unused funds. This will bring the total number of shares Aflac has repurchased in 2008 to 23.2 million.

Commenting on the announcement, Chairman and Chief Executive Officer Daniel P. Amos stated: "Given the uncertainties in the marketplace, we felt it was best to take early delivery of the shares and terminate the agreement at this time. However, we still believe that repurchasing our shares is the best use of excess capital, and we will continue to purchase our shares in a way that is consistent with our financial objectives. At the same time, we continue to believe we are well-positioned to achieve our objectives for earnings-per-share growth for this year and next. Our goal for 2008 is a 14% to 15% increase in operating earnings per share, excluding the impact of foreign currency. Our objective for 2009 is to increase operating earnings per share 13% to 15%, excluding the impact of foreign currency."

For more than 50 years, Aflac products have given policyholders the opportunity to direct cash where it is needed most when a life-interrupting medical event causes financial challenges. Aflac is the number one provider of guaranteed-renewable insurance in the United States and the number one insurance company in terms of individual insurance policies in force in Japan. Our insurance products provide protection to more than 40 million people worldwide. Aflac has been included in Fortune magazine's list of America's Most Admired Companies for seven years and in Fortune magazine's list of the 100 Best Companies to Work For in America for ten consecutive years. Aflac has been recognized three times by both Fortune magazine's list of the Top 50 Employers for Minorities and Working Mother magazine's list of the 100 Best Companies for Working Mothers and has also been included in Ethisphere magazine's list of the World's Most Ethical Companies for two consecutive years. Aflac Incorporated is a Fortune 500 company listed on the New York Stock Exchange under the symbol AFL. To find out more about Aflac, visit aflac.com.

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" to encourage companies to provide prospective information, so long as those informational statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those included in the forward-looking statements. We desire to take advantage of these provisions. This document contains cautionary statements identifying important factors that could cause actual results to differ materially from those projected herein, and in any other statements made by company officials in communications with the financial community and contained in documents filed with the Securities and Exchange Commission (SEC).

Forward-looking statements are not based on historical information and relate to future operations, strategies, financial results or other developments. Furthermore, forward-looking information is subject to numerous assumptions, risks, and uncertainties. In particular, statements containing words such as "expect," "anticipate," "believe," "goal," "objective," "may," "should," "estimate," "intends," "projects," "will," "assumes," "potential," "target" or similar words as well as specific projections of future results, generally qualify as forward-looking. Aflac undertakes no obligation to update such forward-looking statements. We caution readers that the following factors, in addition to other factors mentioned from time to time could cause actual results to differ materially from those contemplated by the forward- looking statements: legislative and regulatory developments, including changes to health care and health insurance delivery; assessments for insurance company insolvencies; competitive conditions in the United States and Japan; new product development and customer response to new products and new marketing initiatives; ability to attract and retain qualified sales associates and employees; ability to repatriate profits from Japan; changes in U.S. and/or Japanese tax laws or accounting requirements; credit and other risks associated with Aflac's investment activities; significant changes in investment yield rates; fluctuations in foreign currency exchange rates; deviations in actual experience from pricing and reserving assumptions including, but not limited to, morbidity, mortality, persistency, expenses and investment yields; level and outcome of litigation; downgrades in the company's credit rating; changes in rating agency policies or practices; subsidiary's ability to pay dividends to the parent company; ineffectiveness of hedging strategies; catastrophic events; and general economic conditions in the United States and Japan, including increased uncertainty in the U.S. and international financial markets.

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ISS Governance Services Recommends Approval of Servidyne Proposal to Increase Authorized Shares

BUSINESS WIRE --SERVIDYNE, INC. (NASDAQ: SERV), today announced that ISS Governance Services (ISS), an independent proxy advisory service, has recommended approval of the Company’s proposal to increase its authorized shares of common stock from 5 million shares to 10 million shares. ISS joins Glass Lewis in advising Servidyne shareholders to vote “FOR” the proposal at the Company’s upcoming annual meeting of shareholders on September 16, 2008.

Included in the new ISS report is its latest corporate governance quotient (CGQ) rating for Servidyne, which reflects that Servidyne outperformed over 80% of all companies ranked by ISS, based on up to 63 corporate governance variables used by ISS.

Established in 1925, Servidyne, Inc. is headquartered in Atlanta, Georgia, and operates globally through its wholly–owned subsidiaries. The Company provides comprehensive energy efficiency solutions, sustainability programs, and other products and services that significantly enhance the operating and financial performance of existing buildings. Servidyne enables customers to cut energy consumption and realize immediate cost savings across their portfolios, while reducing greenhouse gas emissions and improving the comfort and satisfaction of their buildings' occupants. The Company serves a broad range of markets in the United States and internationally, including corporate, commercial office, hospitality, gaming, retail, industrial, distribution, healthcare, government, multi-family and education. Servidyne also engages in commercial real estate investment and development. The Company currently owns or controls shopping centers in the Southeast and Midwest and office properties in metropolitan Atlanta. For more information about Servidyne, please visit www.servidyne.com or call 770-953-0304.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements contained in this letter are forward-looking statements within the meaning of federal securities laws. Such forward-looking statements involve known and unknown risks, uncertainties and other matters, including the risks and uncertainties set forth under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K, which may cause the actual results, performance or achievements of Servidyne, Inc. to be materially different from any past or future results, performance, or uncertainties expressed or implied by such forward-looking statements. Servidyne does not undertake to update these forward-looking statements.

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