10-K 1 a201210k.htm 10-K 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[Mark One]

: ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

OR

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 

1934

For the transition period from to 

Commission File Number

01-13697

MOHAWK INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Delaware 52-1604305

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

160 S. Industrial Blvd.,

Calhoun, Georgia 30701

(Address of principal executive offices) (Zip Code)

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

Securities Registered Pursuant to Section 12(b) of the Act:

Title of Each Class Name of Each Exchange on Which Registered

Common Stock, $.01 par value New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. 

 Yes : No 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act Yes  No :

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 

Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and 

(2) has been subject to such filing requirements for the past 90 days. Yes : No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every 

Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the 

preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes : No 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not 

contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated 

by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller 

reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the 

Exchange Act.

Large accelerated filer : Accelerated filer 

Non-accelerated filer  Smaller reporting company 

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Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  No :

The aggregate market value of the Common Stock of the Registrant held by non-affiliates (excludes beneficial owners of more than 

10% of the Common Stock) of the Registrant (48,771,300 shares) on June 29, 2012 (the last business day of the Registrant’s most recently 

completed fiscal second quarter) was $3,405,699,879. The aggregate market value was computed by reference to the closing price of the 

Common Stock on such date.

Number of shares of Common Stock outstanding as of February 20, 2013: 69,326,449 shares of Common Stock, $.01 par value. 

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the 2013 Annual Meeting of Stockholders-Part III.

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Table of Contents

Page

No.

Part I

Item 1. Business 3

Item 1A. Risk Factors 9

Item 1B. Unresolved Staff Comments 15

Item 2. Properties 15

Item 3. Legal Proceedings 16

Item 4. Mine Safety Disclosures 16

Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer 

Purchases of Equity Securities 16

Item 6. Selected Financial Data 18

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of 

Operations 19

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 30

Item 8. Consolidated Financial Statements and Supplementary Data 31

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial 

Disclosure 62

Item 9A. Controls and Procedures 62

Item 9B. Other Information 62

Part III

Item 10. Directors, Executive Officers and Corporate Governance 63

Item 11. Executive Compensation 63

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related 

Stockholder Matters 63

Item 13. Certain Relationships and Related Transactions, and Director Independence 63

Item 14. Principal Accounting Fees and Services 63

Part IV

Item 15. Exhibits, Financial Statement Schedules 64

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PART I

Item 1. Business

General

Mohawk Industries, Inc. (“Mohawk” or the “Company”) is a leading producer of floor covering products for residential 

and commercial applications in the United States ("U.S.") and residential applications in Europe. The Company is the second 

largest carpet and rug manufacturer and one of the largest manufacturers, marketers and distributors of ceramic tile, natural 

stone and hardwood flooring in the United States, as well as a leading producer of laminate flooring in the U.S. and Europe. 

The Company has recently expanded its international presence through investments in Australia, Brazil, China, France, Mexico 

and Russia. The Company had annual net sales in 2012 of $5.8 billion. Approximately 83% of this amount was generated by 

sales in North America and approximately 17% was generated by sales outside North America. The Company has three 

reporting segments: the Mohawk segment, the Dal-Tile segment and the Unilin segment. Selected financial information for the 

Mohawk, Dal-Tile and Unilin segments, geographic net sales and the location of long-lived assets is set forth in Note 16 to the

consolidated financial statements.

The Mohawk segment designs, manufactures, sources, distributes and markets its floor covering product lines, which 

include carpets, ceramic tile, laminate, rugs, carpet pad, hardwood and resilient, in a broad range of colors, textures and patterns 

for residential and commercial applications in both remodeling and new construction. The Mohawk segment markets and 

distributes its carpets, rugs, ceramic tile, laminate, hardwood and resilient under various brands, including the following 

premium brand names: Mohawk®, Aladdin®, Mohawk ColorCenters®, Mohawk Floorscapes®, Portico®, Mohawk Home®, 

Bigelow®, Durkan®, Horizon®, Karastan®, Lees®, Merit® and SmartStrand®. The Mohawk segment markets and distributes soft 

and hard surface products through over 24,000 customers, which include independent floor covering retailers, home centers, 

mass merchandisers, department stores, commercial dealers and commercial end users. Some products are also marketed 

through private labeling programs. The Mohawk segment’s soft surface operations are vertically integrated from the extrusion 

of resin to the manufacturing and distribution of finished carpets and rugs.

The Dal-Tile segment designs, manufactures, sources, distributes and markets a broad line of ceramic tile, porcelain tile 

and natural stone products used in the residential and commercial markets for both remodeling and new construction. In 

addition, Dal-Tile sources, markets and distributes other tile related products. Most of the Dal-Tile segment’s ceramic tile 

products are marketed under the Dal-Tile® and American Olean® brand names and sold through independent distributors, home 

center retailers, individual floor covering retailers, ceramic specialists, commercial dealers and commercial end users. The DalTile segment operations are vertically integrated from the production of raw material for body and glaze preparation to the 

manufacturing and distribution of ceramic and porcelain tile.

The Unilin segment designs, manufactures, sources, licenses, distributes and markets laminate and hardwood flooring 

used primarily in the residential market for both remodeling and new construction in Europe and the U.S. Unilin is one of the 

leaders in laminate flooring technology, having commercialized direct pressure laminate (“DPL”), a technology used in a 

majority of laminates today, and has developed the patented UNICLIC® glueless installation system and a variety of other new 

technologies, such as beveled edges, multiple length planks and new surface and finish features from which the company 

generates licensing revenue. Unilin sells its flooring products under the Quick-Step®, Columbia Flooring®, Century Flooring®

and Mohawk® brands through retailers, independent distributors and home centers. Unilin is one of the largest verticallyintegrated laminate flooring manufacturers in the U.S. producing both laminate flooring and related high density fiberboard. In

Europe, Unilin also produces roofing systems, insulation panels and other wood products. In 2012, Unilin began marketing 

luxury vinyl tiles in Europe. This product features UNICLIC® technology for easy installation. 

Recent Developments

In January 2013, Unilin purchased Pergo, a leading manufacturer of premium laminate flooring in the U.S. and Europe. 

Pergo complements our specialty distribution network in the United States, leverages our geographic position in Europe, 

expands our geographic reach to the Nordic countries and India and enhances our patent portfolio.

On December 20, 2012, the Company entered into a definitive share purchase agreement (the “Share Purchase 

Agreement”) to acquire Fintiles S.p.A. and its subsidiaries (collectively, the “Marazzi Group”), a global producer of tile 

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products for residential and commercial applications in Russia, the United States and Europe, pursuant to which the Company 

will acquire all of the outstanding shares of the Marazzi Group and retire all outstanding debt of the Marazzi Group for an 

estimated transaction value of approximately €1,170 million, or $1,504.4 million, subject to certain adjustments set forth in the 

share purchase agreement and plus transaction expenses. The Company expects to complete the transaction during the first half 

of 2013 pending customary governmental approvals and the satisfaction of other closing conditions.

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On January 28, 2013, the Company entered into an agreement to purchase Spano Invest NV, a Belgian panel board 

manufacturer, for €125 million or $168 million in cash. The Company expects to complete the transaction during the second 

half of 2013 pending customary governmental approvals and the satisfaction of other closing conditions.

Industry

In 2011, the primary categories of the U.S. floor covering industry, based on sales dollars, were carpet and rug (53%), 

resilient and rubber (14%), ceramic tile (12%), hardwood (10%), stone (6%) and laminate (5%). Each of these categories is 

influenced by the average selling price per square foot, the residential builder and homeowner remodeling markets, housing 

starts and housing resales, average house size and home ownership. In addition, the level of sales in the floor covering industry, 

both in the U.S. and Europe, is influenced by consumer confidence, spending for durable goods, interest rates and availability of 

credit, turnover in housing, the condition of the residential and commercial construction industries and the overall strength of 

the economy.

Domestic carpet and rug sales volume of U.S. manufacturers was approximately 1.1 billion square yards, or $9.5 billion, 

in 2011. The carpet and rugs category has two primary markets, residential and commercial. In 2011, the residential market 

made up approximately 68% of industry amounts shipped and the commercial market comprised approximately 32%. Sales of 

U.S. carpet and rug are distributed to the residential market for both new construction and residential replacement.

The U.S. ceramic tile industry shipped 2.1 billion square feet, or $2.2 billion, in 2011. The ceramic tile industry’s two 

primary markets, residential applications and commercial applications, represent 56% and 44% of the 2011 industry total, 

respectively. Of the total residential market, 73% of the dollar values of shipments were made in response to residential 

replacement demand.

In 2011, the U.S. laminate industry shipped 0.9 billion square feet, or $0.9 billion. The laminate industry’s two primary 

markets, residential applications and commercial applications, represent 88% and 12% of the 2011 industry total, respectively. 

Sales of U.S. laminate flooring are primarily distributed through the residential replacement market. In 2011, the European 

laminate industry produced approximately 4.9 billion square feet which accounted for approximately 14% of the European floor 

covering market.

In 2011, the U.S. hardwood industry shipped 0.9 billion square feet, representing a market of approximately $1.8 billion. 

The hardwood industry’s two primary markets, residential applications and commercial applications, represent 77% and 23% of 

the 2011 industry total, respectively. Sales of U.S. hardwood are primarily distributed to the residential market for both new 

construction and residential replacement.

In 2011, the U.S. stone flooring industry shipped 0.3 billion square feet, representing a market of approximately $1.1 

billion. The stone flooring industry’s two primary markets, residential applications and commercial applications, represent 53%

and 47% of the 2011 industry total, respectively. Sales of U.S. stone flooring are primarily distributed to the residential market 

for both new construction and residential replacement.

In 2011, the U.S. resilient and rubber industry shipped 3.2 billion square feet, representing a market of approximately 

$2.4 billion. The resilient and rubber industry’s two primary markets, residential applications and commercial applications, 

represent 43% and 57% of the 2011 industry total, respectively. Sales of U.S. resilient are distributed to the residential market 

for both new construction and residential replacement.

Sales and Distribution

Mohawk Segment

Through its Mohawk segment, the Company designs, manufactures, sources, distributes and markets thousands of styles 

of carpet and rugs in a broad range of colors, textures and patterns. In addition, the Mohawk segment markets and distributes 

ceramic tile, laminate, hardwood, resilient floor covering, carpet pad and flooring accessories. The Mohawk segment positions 

product lines in all price ranges and emphasizes quality, style, performance and service. The Mohawk segment markets and 

distributes its product lines to over 24,000 customers, which include independent floor covering retailers, home centers, mass 

merchandisers, department stores, commercial dealers and commercial end users. Some products are also marketed through 

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private labeling programs. Sales to residential customers represent a significant portion of the total industry and the majority of 

the segment's carpet and rug sales.

The Company has positioned its premier residential carpet and rug brand names across all price ranges. The Mohawk, 

Horizon, WundaWeve®, SmartStrand and Karastan brands are positioned to sell primarily in the medium-to-high retail price 

channels in the residential broadloom and rug markets. These lines have substantial brand name recognition among carpet 

dealers and retailers, with the Karastan and Mohawk brands having among the highest consumer recognition in the industry. 

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Karastan is a leader in the high-end market. The Aladdin and Mohawk Home brands compete primarily in the value retail price 

channel. The Portico and Properties® brand names compete primarily in the builder and multi-family markets, respectively. The 

Company markets its hard surface product lines, which include Mohawk Ceramic, Mohawk Hardwood, Mohawk Laminate, 

Mohawk LVT and Congoleum, across all price ranges.

The Company offers marketing and advertising support through residential dealer programs like Mohawk Floorscapes, 

Mohawk ColorCenter, and Karastan. These programs offer varying degrees of support to dealers in the form of sales and 

management training, in-store merchandising systems, exclusive promotions and assistance in certain administrative functions, 

such as consumer credit, advertising and website technology.

The Company produces and markets its commercial broadloom and modular carpet tile under the Mohawk Group which 

includes the following brands: Bigelow, Lees, and Karastan Contract. It markets its hospitality carpet under the Durkan brand 

which includes the Merit collection of hospitality carpet. The commercial customer base is divided into several channels: 

corporate office space, education institutions, healthcare facilities, retail space and institutional and government facilities. 

Different purchase decision makers and decision-making processes exist for each channel.

The Company’s sales forces are generally organized by product type and sales channels in order to best serve each type of 

customer. Product delivery to dealers is done predominantly on Mohawk trucks operating from strategically positioned 

warehouses/cross-docks that receive inbound product directly from the source of manufacture.

Dal-Tile Segment

The Dal-Tile segment designs, manufactures, sources, distributes and markets a broad line of ceramic tile, porcelain tile 

and natural stone products. Products are distributed through separate distribution channels consisting of independent 

distributors, home center retailers, individual floor covering retailers, ceramic specialists and commercial dealers and directly to 

commercial end users. The business is organized to address the specific customer needs of each distribution channel, and 

dedicated sales forces support the various channels.

The Company serves as a “one-stop” source that provides customers with one of the ceramic tile industry’s broadest 

product lines—a complete selection of glazed floor tile, glazed wall tile, glazed and unglazed ceramic mosaic tile, porcelain tile, 

quarry tile and stone products, as well as installation products. In addition to products manufactured by the Company’s ceramic

tile business, the Company also sources products from other manufacturers to enhance its product offering.

The Company has two of the leading brand names in the U.S. ceramic tile industry—Dal-Tile and American Olean. The 

Dal-Tile and American Olean brand names date back over 50 years and are well recognized in the industry. Both of these 

brands are supported by a fully integrated marketing program, displays, merchandising boards, literature/catalogs and internet 

websites. The Company is focused on sales growth opportunities through innovative products and programs in both the 

residential and commercial channels.

A network of Company-owned service centers distributes primarily the Dal-Tile brand product with a fully integrated 

marketing program, emphasizing a focus on quality and fashion serving customers in the U.S., Canada and Puerto Rico. The 

service centers provide distribution points for customer pick-up, local delivery and showrooms for product selection and design

assistance. In addition, the Dal-Tile brand is distributed through independent distributors in Mexico. The American Olean brand

is primarily distributed through independent distributors and Company-owned service centers that service both residential and 

commercial customers.

In addition to Company-owned service centers, the Company uses regional distribution centers which include the 

utilization of the Company’s truck fleet to help deliver high-quality customer service with shorter lead times, increased order

fill rates and improved on-time deliveries to customers.

Unilin Segment

The Unilin segment designs, manufactures, licenses, distributes and markets laminate and hardwood flooring. It also 

designs and manufactures roofing systems, insulation panels and other wood products in Europe. Products are distributed 

through separate distribution channels consisting of retailers, independent distributors and home centers. Unilin U.S. operations 

also manufacture Mohawk branded laminate and hardwood flooring, which sells through the Mohawk channel and also directly 

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through home centers and mass merchandisers. The majority of Unilin’s laminate sales, both in the U.S. and Europe, are for 

residential replacement. The business is organized to address the specific customer needs of each distribution channel.

The Unilin segment markets and sells laminate and hardwood flooring products under the Quick-Step, Columbia 

Flooring, Century Flooring, Mohawk and Pergo® brands. Unilin also sells private label laminate and hardwood flooring 

products. The Company believes Quick-Step and Pergo are leading brand names in the U.S. and European flooring industry. In 

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addition, Unilin markets and sells insulation panels in Europe. The segment also licenses its UNICLIC and Pergo intellectual 

property to floor manufacturers throughout the world.

In the U.S., Europe and Asia, the Company uses regional distribution centers and direct shipping from manufacturing 

facilities to provide high-quality customer service and enhance the Company’s ability to plan and manage inventory 

requirements.

Advertising and Promotion

The Company promotes its brands through advertising in television, print, social and internet media, as well as 

cooperative advertising, point-of-sale displays, sponsorship of a European cycling team and marketing literature. The Company 

also continues to rely on the substantial brand name recognition of its product lines. The cost of point-of-sale displays and 

product samples, a significant promotional expense, is partially offset by sales of samples to customers.

Manufacturing and Operations

Mohawk Segment

The Company’s carpet and rug manufacturing operations are vertically integrated and include the extrusion of resin and 

post-consumer plastics into triexta fiber, polyester, nylon and polypropylene, and yarn processing, backing manufacturing, 

tufting, weaving, dyeing, coating and finishing. The Mohawk segment continues to invest in capital expenditures, principally in

state-of-the-art equipment, to increase manufacturing efficiency, improve overall cost competitiveness and develop new 

capabilities.

Dal-Tile Segment

The Company’s tile manufacturing operations are vertically integrated from the production of raw material for body and 

glaze preparation to the manufacturing and distribution of ceramic and porcelain tile in the U.S. and Mexico. The Company 

believes that its manufacturing organization offers competitive advantages due to its ability to manufacture a differentiated 

product line consisting of one of the industry’s broadest product offerings of colors, textures and finishes and its ability to

utilize the industry’s newest technology, as well as the industry’s largest offering of trim and angle pieces. In addition, Dal-Tile 

also imports or sources a portion of its product to supplement its product offerings. The Dal-Tile segment continues to invest in 

capital expenditures, principally in state-of-the-art equipment, to increase manufacturing capacity, improve efficiency and 

develop new capabilities. The segment is expanding its international presence through investments in China and Mexico and 

through the pending acquisition of the Marazzi Group in Europe and Russia.

Unilin Segment

The Company’s laminate flooring manufacturing operations are vertically integrated, both in the U.S. and in Europe, and 

include high-density fiberboard (“HDF”) production, paper impregnation, short-cycle pressing, cutting and milling. The 

European operations also include resin production. Unilin has state-of-the-art equipment that results in competitive 

manufacturing in terms of cost and flexibility. In addition, Unilin has significant manufacturing capability for both engineered 

and prefinished solid wood flooring for the U.S. and European markets. The Unilin segment continues to invest in capital 

expenditures, principally in new plants and state-of-the-art equipment, to increase manufacturing capacity, improve efficiency 

and develop new capabilities. The segment is expanding its international presence through investments in Australia, Brazil, 

France and Russia, and with the recent acquisition of Pergo, the Nordic countries and India. The manufacturing facilities for 

other activities in the Unilin business (roofing systems, insulation panels and other wood products) are all configured for costefficient manufacturing and production flexibility and are competitive in the European market.

Raw Materials and Suppliers

Mohawk Segment

The principal raw materials used in the production of carpet and rugs are nylon, triexta, polyester, polypropylene, 

synthetic backing materials, latex and various dyes and chemicals, all of which are petroleum based. Major raw materials used 

in the Company’s manufacturing process are available from independent sources, and the Company obtains most of its 

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externally purchased fibers and resins principally from six major suppliers. If these suppliers were unable to satisfy the 

requirements, the Company believes that alternative supply arrangements would be available. Although the market for carpet 

raw materials is sensitive to temporary disruptions, the carpet and rug business has not experienced a significant shortage of raw 

materials in recent years.

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Dal-Tile Segment

The principal raw materials used in the production of ceramic tile are clay, talc, nepheline syenite and glazes. The 

Company has entered into a long-term supply agreement for most of its talc requirements. In addition, the Company has longterm clay mining rights in Kentucky and Mississippi that satisfy nearly all of its clay requirements for producing quarry tile.

The Company purchases a number of different grades of clay for the manufacture of its non-quarry tile. The Company believes 

that there is an adequate supply of all grades of clay and that all are readily available from a number of independent sources.

The Company has two suppliers for its nepheline syenite requirements. If these suppliers were unable to satisfy the 

requirements, the Company believes that alternative supply arrangements would be available. Glazes are used on a significant 

percentage of manufactured tiles. Glazes consist of frit (ground glass), zircon, stains and other materials, with frit being the 

largest ingredient. The Company manufactures approximately 75% of its frit requirements.

Unilin Segment

The principal raw materials used in producing boards, laminate and hardwood flooring are wood, paper, resins, coatings 

and stains. Wood supply is a very fragmented market in Europe. The Company has long-standing relationships with numerous 

suppliers. These suppliers provide a wide variety of wood species, varying from fresh round wood to several kinds of byproducts of sawmills and used wood recycled specifically for chipboard production, giving the Company a cost-effective and 

secure supply of raw material. In the U.S., the Company has a long-term contract with a contiguously located lumber company 

that supplies most of its total needs for HDF board production. The supply of various species of hardwoods and hardwood 

veneers used in the production of solid wood and engineered flooring is both localized and global.

Major manufacturers supply the papers required in the laminate flooring business in both Europe and the U.S. The 

Company processes most of the paper impregnation internally in its laminate flooring facilities in Europe and the U.S. In 

Europe, the resins for paper impregnation are manufactured by the Company, which permits greater control over the laminate 

flooring manufacturing process, enabling the Company to produce higher-quality products. The Company buys the balance of 

its resin requirements from a number of companies. The Company believes there are ample sources of supply located within a 

reasonable distance of Unilin’s facilities.

Competition

The principal methods of competition within the floor covering industry generally are service, style, quality, price, 

product innovation and technology. In each of the markets, price competition and market coverage are particularly important 

because there is limited differentiation among competing product lines. The Company’s investments in manufacturing 

equipment, computer systems and distribution network, as well as the Company’s marketing strategy, contribute to its ability to

compete primarily on the basis of performance, quality, style and service, rather than just price.

Mohawk Segment

The carpet and rug industry is highly competitive. Based on industry publications, the top five North American carpet and 

rug manufacturers (including their North American and foreign divisions) in 2011 had carpet and rug sales in excess of $7.1 

billion of the over $9.9 billion market. The Company believes it is the second largest producer of carpets and rugs (in terms of 

sales dollars) in the world based on its 2011 net sales.

Dal-Tile Segment

The ceramic tile industry is significantly more fragmented than the carpet industry. The Company estimates that over 100 

tile manufacturers, more than half of which are based outside the U.S., compete for sales of ceramic tile to customers located in 

the U.S. Although the U.S. ceramic tile industry is highly fragmented at both the manufacturing and distribution levels, the 

Company believes it is one of the largest manufacturers, distributors and marketers of ceramic tile in the world. The Company 

believes it is substantially larger than the next largest competitor in the United States and that it is the only significant 

manufacturer with its own North American distribution system.

Unilin Segment

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The Company faces competition in the laminate and hardwood flooring channel from a large number of domestic and 

foreign manufacturers. The Company estimates that there are over 100 wood flooring manufacturers located in various 

countries. The Company believes it is one of the largest manufacturers, distributors and licensors of laminate flooring in the 

world, with a focus on high-end products. The Company believes it is one of the largest manufacturers and distributors of 

hardwood flooring in the U.S. In addition, the Company believes it has a competitive advantage in the laminate flooring 

channel as a result of Unilin’s industry leading design, patented technologies and brands, which allows the Company to 

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distinguish its laminate and hardwood flooring products in the areas of finish, quality, installation and assembly and provides a 

source of additional revenue for the Company from licensing royalties.

Patents and Trademarks

Intellectual property is important to the Company’s business, and the Company relies on a combination of patent, 

copyright, trademark and trade secret laws to protect its interests.

The Company uses several trademarks that it considers important in the marketing of its products, including Aladdin, 

American Olean, Bigelow, Century Flooring, Columbia Flooring, Dal-Tile, Duracolor®, didit, Durkan, Elka®, Everset fibers®, 

Horizon, Karastan, Lees, Merit, Mohawk, Mohawk ColorCenter, Mohawk Floorscapes, Mohawk GreenWorks®, Mohawk 

Home, Pergo, Portico, PureBond®, Quick-Step, SmartStrand, Ultra Performance System®, UNICLIC, UNILIN®, Utherm® and 

Wear-Dated®. These trademarks represent innovations that highlight competitive advantages and provide differentiation from 

competing brands in the market.

Unilin owns a number of important patent families in Europe and the U.S. some of which the Company licenses to 

manufacturers and distributors throughout the world. The most important of these patent families is the UNICLIC family, which 

include the snap, pretension, clearance and the beveled edge patent and are not expected to expire until 2017, protecting Unilin's 

interlocking laminate flooring technology. The recent acquisition of Pergo potentially enhances the intellectual property 

revenue stream with new “clicking” technology that could be licensed until 2021. Also, the marketability of the Company's 

furniture technology utilizing the “click” methodology continues to develop. The licensing and related furniture products are in 

the early stages of introduction into the European market. The Company believes these and other ongoing innovations will 

partially offset the impact of the future expiration of the UNICLIC family patents. The licensing revenue from patents included

in the Unilin results was approximately €80 million in 2012. The licensing revenue from patents generated in the Unilin 

operations is partially offset by various expenses such as amortization, developing new technologies, filing new patents, 

supporting existing patents, defending patent lawsuits, collection and auditing of receivables, bad debt and other administrative 

activities. The Company continues to build upon these patents, trademarks and its proven innovation in pursuing growth 

opportunities.

Sales Terms and Major Customers

The Company’s sales terms are substantially the same as those generally available throughout the industry. The Company 

generally permits its customers to return products purchased from it within specified time periods from the date of sale, if the 

customer is not satisfied with the quality of the product.

During 2012, no single customer accounted for more than 5% of total net sales, and the top 10 customers accounted for 

less than 20% of the Company’s net sales. The Company believes the loss of one major customer would not have a material 

adverse effect on its business.

Employees

As of December 31, 2012, the Company employed approximately 25,100 persons consisting of approximately 18,200 in 

the U.S., approximately 3,600 in Mexico, approximately 2,200 in Europe, approximately 800 in Malaysia, approximately 200 in 

Canada and approximately 100 in Russia. The majority of the Company’s European and Mexican manufacturing employees are 

members of unions. Most of the Company’s U.S. employees are not a party to any collective bargaining agreement. 

Additionally, the Company has not experienced any strikes or work stoppages in recent years. The Company believes that its 

relations with its employees are good.

Available Information

The Company’s Internet address is http://www.mohawkind.com. The Company makes the following reports filed by it 

available, free of charge, on its website under the heading “Investor Information”:

• annual reports on Form 10-K;

• quarterly reports on Form 10-Q;

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• current reports on Form 8-K; and

• amendments to the foregoing reports.

The foregoing reports are made available on the Company’s website as soon as practicable after they are filed with, or 

furnished to, the Securities and Exchange Commission (“SEC”).

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Item 1A. Risk Factors

Certain Factors affecting the Company’s Performance

In addition to the other information provided in this Form 10-K, the following risk factors should be considered when 

evaluating an investment in shares of the Company’s Common Stock. If any of the events described in these risks were to 

occur, it could have a material adverse effect on the Company’s business, financial condition and results of operations.

The floor covering industry is sensitive to changes in general economic conditions, such as consumer confidence and 

income, corporate and government spending, interest rate levels, availability of credit and demand for housing. The 

downturn in the U.S. and global economies, along with the residential and commercial markets in such economies, 

negatively impacted the floor covering industry and the Company’s business. Although these difficult economic conditions 

have improved, there may be additional downturns that could cause the industry to deteriorate further. Further, significant 

or prolonged declines in such economies or in spending for replacement floor covering products or new construction activity 

could have a material adverse effect on the Company’s business.

The floor covering industry in which the Company participates is highly dependent on general economic conditions, such as 

consumer confidence and income, corporate and government spending, interest rate levels, availability of credit and demand for 

housing. The Company derives a majority of its sales from the replacement segment of the market. Therefore, economic 

changes that result in a significant or prolonged decline in spending for remodeling and replacement activities could have a 

material adverse effect on the Company’s business and results of operations.

The floor covering industry is highly dependent on construction activity, including new construction, which is cyclical in nature 

and recently experienced a downturn. The downturn in the U.S. and global economies, along with the residential and 

commercial markets in such economies, negatively impacted the floor covering industry and the Company’s business. Although 

the impact of a decline in new construction activity is typically accompanied by an increase in remodeling and replacement 

activity, these activities lagged during the downturn. Although the difficult economic conditions have improved, there may be 

additional downturns that could cause the industry to deteriorate in the foreseeable future. A significant or prolonged decline in 

residential or commercial construction activity could have a material adverse effect on the Company’s business and results of 

operations.

In periods of rising costs, the Company may be unable to pass raw materials, energy and fuel-related cost increases on to its 

customers, which could have a material adverse effect on the Company’s business.

The prices of raw materials and fuel-related costs vary significantly with market conditions. Although the Company generally 

attempts to pass on increases in raw material, energy and fuel-related costs to its customers, the Company’s ability to do so is 

dependent upon the rate and magnitude of any increase, competitive pressures and market conditions for the Company’s 

products. There have been in the past, and may be in the future, periods of time during which increases in these costs cannot be 

recovered. During such periods of time, the Company’s business may be materially adversely affected.

The Company faces intense competition in the flooring industry that could decrease demand for the Company’s products or 

force it to lower prices, which could have a material adverse effect on the Company’s business.

The floor covering industry is highly competitive. The Company faces competition from a number of manufacturers and 

independent distributors. Some of the Company’s competitors are larger and have greater resources and access to capital than 

the Company does. Maintaining the Company’s competitive position may require substantial investments in the Company’s 

product development efforts, manufacturing facilities, distribution network and sales and marketing activities. Competitive 

pressures may also result in decreased demand for the Company’s products or force the Company to lower prices. Any of these 

factors or others may impact demand which could have a material adverse effect on the Company’s business.

Uncertainty in the credit market or downturns in the global economy and the Company’s business could affect the 

Company’s overall availability and cost of credit.

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Uncertainty in the credit markets could affect the overall availability and cost of credit. Despite recent improvement in overall 

economic conditions, market conditions could impact the Company’s ability to obtain financing in the future, including any 

financing necessary to refinance existing indebtedness, and the cost and terms of it, remains uncertain. These and other 

economic factors could have a material adverse effect on demand for the Company’s products and on its financial condition and 

operating results. Further, these generally negative economic and business conditions may factor into the Company’s periodic 

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credit ratings assessment by Moody’s Investors Service, Inc. ("Moody's"), Standard & Poor’s Financial Services, LLC ("S&P") 

and Fitch, Inc. A rating agency’s evaluation is based on a number of factors, which include scale and diversification, brand 

strength, profitability, leverage, liquidity and interest coverage. Any future downgrades in the Company’s credit ratings could

increase the cost of its existing credit and could adversely affect the cost of and ability to obtain additional credit in the future. 

A downgrade of the Company’s credit rating by Moody's or S&P would increase interest expense on the Company’s senior 

unsecured $900.0 million notes by 25 basis points per downgrade. The Company can provide no assurances that downgrades 

will not occur.

If the Company were unable to meet certain covenants contained in its existing credit facilities, it may be required to repay 

borrowings under the credit facilities prior to their maturity and may lose access to the credit facilities for additional 

borrowings that may be necessary to fund its operations, which could have a material adverse effect on the Company’s 

business. 

On July 8, 2011, the Company entered into a $900.0 million five-year, senior, secured revolving credit facility (the “Senior 

Credit Facility”). On January 20, 2012, the Company entered into an amendment to the Senior Credit Facility that provides for 

an incremental term loan facility in the aggregate principal amount of $150.0 million. As of December 31, 2012, the amount 

utilized under the Senior Credit Facility including the term loan was $251.2 million resulting in a total of $793.1 million

available under the Senior Credit Facility. The amount utilized included $153.9 million of borrowings, $46.8 million of standby

letters of credit guaranteeing the Company’s industrial revenue bonds and $50.5 million of standby letters of credit related to

various insurance contracts and foreign vendor commitments. In addition, on December 19, 2012, the Company entered into a 

three-year on-balance sheet U.S. trade accounts receivable securitization agreement (the "Securitization Facility") that allows

the Company to borrow up to $300 million based on available accounts receivable and is secured by the Company's U.S. trade 

accounts receivable. At December 31, 2012, the amount utilized under the Securitization Facility was $280.0 million.

During the term of the credit facilities, if the Company’s cash flow is worse than expected or the U.S. trade accounts 

receivables are lower than expected, the Company may need to refinance all or a portion of its indebtedness through a public 

and/or private debt offering or a new bank facility and may not be able to do so on terms acceptable to it, or at all. If the 

Company is unable to access debt markets at competitive rates or in sufficient amounts due to credit rating downgrades, market 

volatility, market disruption, or other factors, it could materially adversely affect the Company’s ability to repay its 

indebtedness and otherwise have a material adverse effect on the Company’s financial condition and results of operations.

Additionally, the credit facilities include certain affirmative and negative covenants that impose restrictions on the Company’s 

financial and business operations, including limitations on liens, indebtedness, investments, fundamental changes, asset 

dispositions, dividends and other similar restricted payments, transactions with affiliates, payments and modifications of certain 

existing debt, future negative pledges, and changes in the nature of the Company’s business. Many of these limitations are 

subject to numerous exceptions. The Company is also required to maintain a Consolidated Interest Coverage Ratio of at least 

3.0 to 1.0 and a Consolidated Net Leverage Ratio of no more than 3.75 to 1.0 for the Senior Credit Facility, each as of the last 

day of any fiscal quarter and as defined in the Senior Credit Facility. A failure to comply with the obligations contained in our 

current or future credit facilities or indentures relating to our outstanding public debt could result in an event of default or an 

acceleration of debt under other instruments that may contain cross-acceleration or cross-default provisions. We cannot be 

certain that we would have, or be able to obtain, sufficient funds to make these accelerated payments.

The Company may be unable to obtain raw materials or sourced product on a timely basis, which could have a material 

adverse effect on the Company’s business.

The principal raw materials used in the Company’s manufacturing operations include nylon, polypropylene, triexta and 

polyester resins and fibers, which are used primarily in the Company’s carpet and rugs business; clay, talc, nepheline syenite 

and glazes, including frit (ground glass), zircon and stains, which are used exclusively in the Company’s ceramic tile business; 

and wood, paper, and resins which are used primarily in the Company’s laminate flooring business. In addition, the Company 

sources finished goods as well. For certain of such raw materials and sourced products, the Company is dependent on one or a 

small number of suppliers. An adverse change in the Company’s relationship with such a supplier, the financial condition of 

such a supplier or such supplier’s ability to manufacture or deliver such raw materials or sourced products to the Company 

could lead to an interruption of supply or require the Company to purchase more expensive alternatives. An extended 

interruption in the supply of these or other raw materials or sourced products used in the Company’s business or in the supply 

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of suitable substitute materials or products would disrupt the Company’s operations, which could have a material adverse effect

on the Company’s business.

Fluctuations in currency exchange rates may impact the Company’s financial condition and results of operations and may 

affect the comparability of results between the Company’s financial periods.

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The results of the Company’s foreign subsidiaries reported in the local currency are translated into U.S. dollars for balance 

sheet accounts using exchange rates in effect as of the balance sheet date and for the statement of operations accounts using, 

principally, the Company’s average rates during the period. The exchange rates between some of these currencies and the U.S. 

dollar in recent years have fluctuated significantly and may continue to do so in the future. The Company may not be able to 

manage effectively the Company’s currency translation risks, and volatility in currency exchange rates may have a material 

adverse effect on the Company’s consolidated financial statements and affect comparability of the Company’s results between 

financial periods.

The Company may experience certain risks associated with acquisitions, joint ventures and strategic investments.

The Company has typically grown its business through acquisitions. Growth through acquisitions involves risks, many of which 

may continue to affect the Company after the acquisition. The Company cannot give assurance that an acquired company will 

achieve the levels of revenue, profitability and production that the Company expects. The combination of an acquired 

company’s business with the Company’s existing businesses involves risks. The Company cannot be assured that reported 

earnings will meet expectations because of goodwill and intangible asset impairment, other asset impairments, increased 

interest costs and issuance of additional securities or incurrence of debt. The Company may also face challenges in 

consolidating functions, integrating the Company’s organizations, procedures, operations and product lines in a timely and 

efficient manner and retaining key personnel. These challenges may result in:

• maintaining executive offices in different locations;

• manufacturing and selling different types of products through different distribution channels;

• conducting business from various locations;

• maintaining different operating systems and software on different computer hardware; and

• providing different employment and compensation arrangements for employees.

The diversion of management attention and any difficulties encountered in the transition and integration process could have a 

material adverse effect on the Company’s revenues, level of expenses and operating results.

Failure to successfully manage and integrate an acquisition with the Company’s existing operations could lead to the potential 

loss of customers of the acquired business, the potential loss of employees who may be vital to the new operations, the potential 

loss of business opportunities or other adverse consequences that could have a material adverse effect on the Company’s 

business, financial condition and results of operations. Even if integration occurs successfully, failure of the acquisition to

achieve levels of anticipated sales growth, profitability or productivity, or otherwise perform as expected, may have a material 

adverse effect on the Company’s business, financial condition and results of operations.

In addition, we have made certain investments, including through joint ventures, in which we have a minority equity interest 

and lack management and operational control. The controlling joint venture partner in a joint venture investment may have 

business interests, strategies or goals that are inconsistent with ours, and business decisions or other actions or omissions of the 

controlling joint venture partner or the joint venture company may result in harm to our reputation or adversely affect the value 

of our investment in the joint venture.

A failure to identify suitable acquisition candidates or partners for strategic investments and to complete acquisitions could 

have a material adverse effect on the Company’s business.

As part of the Company’s business strategy, the Company intends to continue to pursue a wide array of potential strategic 

transactions, including acquisitions of complementary businesses, as well as strategic investments and joint ventures. Although

the Company regularly evaluates such opportunities, the Company may not be able to successfully identify suitable acquisition 

candidates or investment opportunities, to obtain sufficient financing on acceptable terms to fund such strategic transactions, to 

complete acquisitions and integrate acquired businesses with the Company’s existing businesses, or to manage profitably 

acquired businesses or strategic investments.

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The Company manufactures, sources and sells many products internationally and is exposed to risks associated with doing

business globally.

The Company's international activities are significant to its manufacturing capacity, revenues and profits, and the Company is 

further expanding internationally. The Company increasingly sells products, operates plants and invests in companies in other 

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parts of the world. Currently, the Company has significant operations in Europe, Malaysia and Australia for its Unilin division

(including Belgium, Netherlands, France, Sweden and Russia) and Mexico for its ceramic tile business, which will expand to 

Western Europe and Russia following the acquisition of the Marazzi Group. In addition, the Company has invested in joint 

ventures in Brazil and China related to laminate flooring and ceramic tile, respectively. The business, regulatory and political 

environments in these countries differ from those in the U.S. The Company’s international sales, operations and investments are

subject to risks and uncertainties, including: 

• changes in foreign country regulatory requirements;

• differing business practices associated with foreign operations;

• various import/export restrictions and the availability of required import/export licenses;

• imposition of foreign tariffs and other trade barriers;

• political, legal and economic instability;

• foreign currency exchange rate fluctuations;

• foreign country tax rules, regulations and other requirements, such as changes in tax rates and statutory and judicial 

interpretations in tax laws;

• inflation;

• differing labor laws and changes in those laws;

• work stoppages and disruptions in the shipping of imported and exported products;

• government price controls;

• extended payment terms and the inability to collect accounts receivable; 

• tax inefficiencies and currency exchange controls that may adversely impact its ability to repatriate cash from non-U.S. 

subsidiaries; and 

• compliance with laws governing international relations, including those that prohibit improper payments to 

government officials. 

The Company cannot assure investors that it will succeed in developing and implementing policies and strategies to counter the 

foregoing factors effectively in each location where the Company does business and therefore that the foregoing factors will not 

have a material adverse effect on the Company’s operations or upon its financial condition and results of operations.

Negative tax consequences could materially and adversely affect the Company's business, financial condition, cash flows or 

results of operations. 

We are subject to the tax laws of the many jurisdictions in which we operate. The tax laws are complex, and the manner in 

which they apply to our facts is sometimes open to interpretation. In calculating the provision for income taxes, we must make 

judgments about the application of these inherently complex tax laws. Our domestic and international tax liabilities are largely 

dependent upon the distribution of profit before tax among these many jurisdictions. However, it also includes estimates of 

additional tax which may be incurred for tax exposures and reflects various estimates and assumptions, including assessments 

of future earnings of the Company that could impact the valuation of our deferred tax assets. Our future results of operations 

and tax liability could be adversely affected by changes in the effective tax rate as a result of a change in the mix of earnings in 

countries with differing statutory tax rates, changes in the overall profitability of the Company, changes in tax legislation and 

rates, changes in generally accepted accounting principles, changes in the valuation of deferred tax assets and liabilities, 

changes in the amount of earnings permanently reinvested offshore, the results of audits and examinations of previously filed 

tax returns, and ongoing assessments of our tax exposures. 

The Company has been, and in the future may be, subject to costs, liabilities and other obligations under existing or new 

laws and regulations, which could have a material adverse effect on the Company’s business.

The Company and its customers and suppliers are subject to various federal, state and local laws, regulations and licensing 

requirements. The Company faces risks and uncertainties related to compliance with and enforcement of increasingly numerous 

and complex federal, state and local laws and regulations. In addition, new laws and regulations may be enacted in the U.S. or 

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abroad that may require the Company to incur additional personnel-related, environmental, or other costs on an ongoing basis, 

such as recently enacted healthcare legislation in the United States.

Further, the Company’s operations are subject to various environmental, health and safety laws and regulations, including those

governing air emissions, wastewater discharges, and the use, storage, treatment, recycling and disposal of materials and 

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finished product. The applicable requirements under these laws are subject to amendment, to the imposition of new or 

additional requirements and to changing interpretations of agencies or courts. The Company could incur material expenditures 

to comply with new or existing regulations, including fines and penalties and increased costs of its operations. For example, 

enactment of climate control legislation or other regulatory initiatives by the U.S. Congress or various states, or the adoption of 

regulations by the Environmental Protection Agency and analogous state or foreign governmental agencies that restrict 

emissions of greenhouse gases in areas in which the Company conducts business could have an adverse effect on its operations 

and demand for its products. The Company’s manufacturing processes use a significant amount of energy, especially natural 

gas. Increased regulation of energy use to address the possible emission of greenhouse gases and climate change could have a 

material adverse effect on the Company’s business.

The nature of the Company’s business and operations, including the potential discovery of presently unknown environmental 

conditions, exposes it to the risk of claims under environmental, health and safety laws and regulations. The Company could 

incur material costs or liabilities in connection with such claims.

The Company’s business operations could suffer significant losses from natural disasters, catastrophes, fire or other 

unexpected events.

Many of the Company’s business activities involve substantial investments in manufacturing facilities and many products are 

produced at a limited number of locations. These facilities could be materially damaged by natural disasters, such as floods, 

tornados, hurricanes and earthquakes, or by fire or other unexpected events. The Company could incur uninsured losses and 

liabilities arising from such events, including damage to its reputation, and/or suffer material losses in operational capacity, 

which could have a material adverse impact on its business, financial condition and results of operations.

The Company may be exposed to litigation, claims and other legal proceedings in the ordinary course of business relating to 

its products, which could have a material adverse effect on the Company’s business.

In the ordinary course of business, the Company is subject to a variety of product-related claims, lawsuits and legal 

proceedings, including those relating to product liability, product warranty, product recall, personal injury, and other matters 

that are inherently subject to many uncertainties regarding the possibility of a loss to the Company. Such matters could have a

material adverse effect on its business, results of operations and financial condition if the Company is unable to successfully

defend against or resolve these matters or if its insurance coverage is insufficient to satisfy any judgments

against the Company or settlements relating to these matters. Although the Company has product liability insurance, the 

policies may not provide coverage for certain claims against the Company or may not be sufficient to cover all possible 

liabilities. Further, the Company may not be able to maintain insurance at commercially acceptable premium levels. Moreover, 

adverse publicity arising from claims made against the Company, even if the claims are not successful, could adversely affect 

the Company’s reputation or the reputation and sales of its products.

The Company’s inability to protect its intellectual property rights or collect license revenues, particularly with respect to the 

Company’s patented laminate flooring technology and its registered trademarks, could have a material adverse effect on the 

Company’s business.

The future success and competitive position of certain of the Company’s businesses, particularly the Company’s laminate 

flooring business, depend in part upon the Company’s ability to obtain, maintain and license proprietary technology used in the

Company’s principal product families. The Company relies, in part, on the patent, trade secret and trademark laws of the U.S. 

and countries in Europe, as well as confidentiality agreements with some of the Company’s employees, to protect that 

technology.

The Company has obtained a number of patents relating to the Company’s products and associated methods and has filed 

applications for additional patents, including the UNICLIC and Pergo family of patents, which protects its interlocking laminate 

flooring technology. The Company cannot assure investors that any patents owned by or issued to it will provide the Company 

with competitive advantages, that third parties will not challenge these patents, or that the Company’s pending patent 

applications will be approved. In addition, patent filings by third parties, whether made before or after the date of the 

Company’s filings, could render the Company’s intellectual property less valuable.

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Furthermore, despite the Company’s efforts, the Company may be unable to prevent competitors and/or third parties from using 

the Company’s technology without the Company’s authorization through license agreements, independently developing 

technology that is similar to that of the Company or designing around the Company’s patents. The use of the

Company’s technology or similar technology by others could reduce or eliminate any competitive advantage the Company has 

developed, cause the Company to lose sales or otherwise harm the Company’s business. In addition, if the Company does not 

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obtain sufficient protection for the Company’s intellectual property, the Company’s competitiveness in the markets it serves 

could be significantly impaired, which could have a material effect on the Company’s business.

The Company has obtained and applied for numerous U.S. and Foreign Service marks and trademark registrations and will 

continue to evaluate the registration of additional service marks and trademarks, as appropriate. The Company cannot guarantee 

that any of the Company’s pending or future applications will be approved by the applicable governmental authorities. 

Moreover, even if such applications are approved, third parties may seek to oppose or otherwise challenge the registrations. A 

failure to obtain trademark registrations in the U.S. and in other countries could limit the Company’s ability to protect the 

Company’s trademarks and impede the Company’s marketing efforts in those jurisdictions and could have a material effect on 

the Company’s business.

The Company generates license revenue from certain patents in the UNICLIC and Pergo families that are not expected to expire 

until 2017 and 2021, respectively. The Company continues to develop new sources of revenue to offset the expiration in its 

UNICLIC and Pergo family of patents. The failure to develop alternative revenues could have a material adverse effect on the 

Company’s business. 

The Company generally requires third parties with access to the Company’s trade secrets to agree to keep such information 

confidential. While such measures are intended to protect the Company’s trade secrets, there can be no assurance that these 

agreements will not be breached, that the Company will have adequate remedies for any breach or that the Company’s 

confidential and proprietary information and technology will not be independently developed by or become otherwise known to 

third parties. In any of these circumstances, the Company’s competitiveness could be significantly impaired, which would limit 

the Company’s growth and future revenue.

Companies may claim that the Company infringed their intellectual property or proprietary rights, which could cause it to 

incur significant expenses or prevent it from selling the Company’s products.

In the past, companies have claimed that certain technologies incorporated in the Company’s products infringe their patent 

rights. There can be no assurance that the Company will not receive notices in the future from parties asserting that the 

Company’s products infringe, or may infringe, those parties’ intellectual property rights. The Company cannot be certain that 

the Company’s products do not and will not infringe issued patents or other intellectual property rights of others. Historically, 

patent applications in the U.S. and some foreign countries have not been publicly disclosed until the patent is issued (or, in 

some recent cases, until 18 months following submission), and the Company may not be aware of currently filed patent 

applications that relate to the Company’s products or processes. If patents are later issued on these applications, the Company

may be liable for infringement.

Furthermore, the Company may initiate claims or litigation against parties for infringement of the Company’s proprietary rights

or to establish the invalidity, noninfringement, or unenforceability of the proprietary rights of others. Likewise, the Company

may have similar claims brought against it by competitors. Litigation, either as plaintiff or defendant, could result in significant 

expense to the Company and divert the efforts of the Company’s technical and management personnel from operations, whether 

or not such litigation is resolved in the Company’s favor. In the event of an adverse ruling in any such litigation, the Company 

might be required to pay substantial damages (including punitive damages and attorney’s fees), discontinue the use and sale of 

infringing products, expend significant resources to develop non-infringing technology or obtain licenses authorizing the use of 

infringing technology. There can be no assurance that licenses for disputed technology or intellectual property rights would be

available on reasonable commercial terms, if at all. In the event of a successful claim against the Company along with failure to 

develop or license a substitute technology, the Company’s business, financial condition and results of operations would be 

materially and adversely affected.

The long-term performance of the Company’s business relies on its ability to attract, develop and retain talented 

management.

To be successful, the Company must attract, develop and retain qualified and talented personnel in management, sales, 

marketing, product design and innovation and operations, and as it considers entering new international markets, skilled 

personnel familiar with those markets. The Company competes with multinational firms for these employees and invests 

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resources in recruiting, developing, motivating and retaining them. The failure to attract, develop, motivate and retain key 

employees could negatively affect the Company’s competitive position and its operating results.

The Company is subject to changing regulation of corporate governance and public disclosure that have increased both 

costs and the risk of noncompliance.

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The Company’s stock is publicly traded. As a result, the Company is subject to the rules and regulations of federal and state 

agencies and financial market exchange entities charged with the protection of investors and the oversight of companies whose 

securities are publicly traded. These entities, including the Public Company Accounting Oversight Board, the Securities and 

Exchange Commission and the New York Stock Exchange, frequently issue new requirements and regulations. The Company’s 

efforts to comply with the regulations and interpretations have resulted in, and are likely to continue to result in, increased

general and administrative costs and diversion of management’s time and attention from revenue generating activities to 

compliance activities.

Declines in the Company’s business conditions may result in an impairment of the Company’s tangible and intangible assets 

which could result in a material non-cash charge.

A significant or prolonged decrease in the Company’s market capitalization, including a decline in stock price, or a negative 

long-term performance outlook, could result in an impairment of its tangible and intangible assets which results when the 

carrying value of the Company’s assets exceed their fair value.

Forward-Looking Information

Certain of the statements in this Form 10-K, particularly those 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” within the meaning of 

Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 

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; inflation in raw material prices and other 

input costs; energy costs and supply; timing and level of capital expenditures; timing and implementation of price increases for 

the Company’s products; impairment charges; integration of acquisitions; international operations; introduction of new 

products; rationalization of operations; tax, product and other claims; litigation; and other risks identified in Mohawk’s SEC 

reports and public announcements.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties 

The Company owns a 0.1 million square foot headquarters office in Calhoun, Georgia on an eight-acre site. The Company 

also owns a 2.1 million square foot manufacturing facility located in Dalton, Georgia used by the Mohawk segment, a 

1.7 million square foot manufacturing facility located in Monterey, Mexico and a 1.0 million square foot manufacturing facility

located in Muskogee, Oklahoma used by the Dal-Tile segment, and a 1.1 million square foot manufacturing facility located in 

Wielsbeke, Belgium and a 0.5 million square foot manufacturing facility located in Thomasville, North Carolina used by the 

Unilin segment.

The following table summarizes the Company’s facilities both owned and leased for each segment in square feet (in 

millions):

Mohawk Segment Dal-Tile Segment Unilin Segment

Primary Purpose Owned Leased Owned Leased Owned Leased

Manufacturing 17.7 — 4.6 0.1 8.7 0.4

Selling and Distribution 3.7 4.8 0.4 7.4 0.1 0.3

Other 0.9 0.1 0.2 0.3 0.1 —

Total 22.3 4.9 5.2 7.8 8.9 0.7

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The Company’s properties are in good condition and adequate for its requirements. The Company believes its principal 

plants are generally adequate to meet its production plans pursuant to the Company’s long-term sales goals. In the ordinary 

course of business, the Company monitors the condition of its facilities to ensure that they remain adequate to meet long-term 

sales goals and production plans.

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Item 3. Legal Proceedings

The Company is involved in litigation from time to time in the regular course of its business. Except as noted below, there 

are no material legal proceedings pending or known by the Company to be contemplated to which the Company is a party or to 

which any of its property is subject.

Beginning in August 2010, a series of civil lawsuits were initiated in several U.S. federal courts alleging that certain 

manufacturers of polyurethane foam products and competitors of the Company’s carpet underlay division had engaged in price 

fixing in violation of U.S. antitrust laws. Mohawk has been named as a defendant in a number of the individual cases (the first

filed on August 26, 2010), as well as in two consolidated amended class action complaints, the first filed on February 28, 2011, 

on behalf of a class of all direct purchasers of polyurethane foam products, and the second filed on March 21, 2011, on behalf 

of a class of indirect purchasers. All pending cases in which the Company has been named as a defendant have been filed in or 

transferred to the U.S. District Court for the Northern District of Ohio for consolidated pre-trial proceedings under the name In 

re: Polyurethane Foam Antitrust Litigation, Case No. 1:10-MDL-02196. 

In these actions, the plaintiffs, on behalf of themselves and/or a class of purchasers, seek three times the amount of 

unspecified damages allegedly suffered as a result of alleged overcharges in the price of polyurethane foam products from at 

least 1999 to the present. Each plaintiff also seeks attorney fees, pre-judgment and post-judgment interest, court costs, and 

injunctive relief against future violations. In December 2011, the Company was named as a defendant in a Canadian Class 

action, Hi ! Neighbor Floor Covering Co. Limited v. Hickory Springs Manufacturing Company, et.al., filed in the Superior 

Court of Justice of Ontario, Canada and Options Consommateures v. Vitafoam, Inc. et.al., filed in the Superior Court of Justice 

of Quebec, Montreal, Canada, both of which allege similar claims against the Company as raised in the U.S. actions and seek 

unspecified damages and punitive damages. The Company denies all of the allegations in these actions and will vigorously 

defend itself. 

The Company believes that adequate provisions for resolution of all contingencies, claims and pending litigation have 

been made for probable losses that are reasonably estimable. These contingencies are subject to significant uncertainties and we 

are unable to estimate the amount or range of loss, if any, in excess of amounts accrued. The Company does not believe that the

ultimate outcome of these actions will have a material adverse effect on its financial condition but could have a material adverse 

effect on its results of operations, cash flows or liquidity in a given quarter or year. 

Environmental Matters

The Company is subject to various federal, state, local and foreign environmental health and safety laws and regulations, 

including those governing air emissions, wastewater discharges, the use, storage, treatment, recycling and disposal of solid and 

hazardous materials and finished product, and the cleanup of contamination associated therewith. Because of the nature of the 

Company’s business, the Company has incurred, and will continue to incur, costs relating to compliance with such laws and 

regulations. The Company is involved in various proceedings relating to environmental matters and is currently engaged in 

environmental investigation, remediation and post-closure care programs at certain sites. The Company has provided accruals 

for such activities that it has determined to be both probable and reasonably estimable. The Company does not expect that the 

ultimate liability with respect to such activities will have a material adverse effect on its financial condition but could have a 

material adverse effect on its results of operations, cash flows or liquidity in a given quarter or year. 

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity 

Securities

Market for the Common Stock

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The Company’s common stock, $0.01 par value per share (the “Common Stock”) is quoted on the New York Stock 

Exchange (“NYSE”) under the symbol “MHK.” The table below shows the high and low sales prices per share of the Common 

Stock as reported on the NYSE Composite Tape, for each fiscal period indicated. 

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Mohawk Common Stock

High Low 

2011

First Quarter $ 63.12 54.42

Second Quarter 68.86 57.43

Third Quarter 61.47 39.93

Fourth Quarter 61.30 40.19

2012

First Quarter 68.16 57.62

Second Quarter 75.44 60.21

Third Quarter 82.76 64.22

Fourth Quarter 93.95 77.67

As of February 20, 2013, there were approximately 297 holders of record of Common Stock. The Company has not paid 

or declared any cash dividends on shares of its Common Stock since completing its initial public offering. The Company’s 

policy is to retain all net earnings for the development of its business, and presently, it does not anticipate paying cash dividends 

on the Common Stock in the foreseeable future. The payment of future cash dividends will be at the sole discretion of the Board

of Directors and will depend upon the Company’s profitability, financial condition, cash requirements, future prospects and 

other factors deemed relevant by the Board of Directors.

The Company did not repurchase any of its common stock during the fourth quarter of 2012.

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Item 6. Selected Financial Data

The following table sets forth the selected financial data of the Company for the periods indicated which information is 

derived from the consolidated financial statements of the Company. The selected financial data should be read in conjunction 

with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Company’s 

consolidated financial statements and notes thereto included elsewhere herein.

As of or for the Years Ended December 31,

2012 2011 2010 2009 2008

(In thousands, except per share data)

Statement of operations data:

Net sales (a) $ 5,787,980 5,642,258 5,319,072 5,344,024 6,826,348

Cost of sales (a) 4,297,922 4,225,379 3,916,472 4,111,794 5,088,584

Gross profit 1,490,058 1,416,879 1,402,600 1,232,230 1,737,764

Selling, general and administrative expenses 1,110,550 1,101,337 1,088,431 1,188,500 1,318,501

Impairment of goodwill and other 

intangibles (b) — — — — 1,543,397

Operating income (loss) 379,508 315,542 314,169 43,730 (1,124,134)

Interest expense 74,713 101,617 133,151 127,031 127,050

Other expense (income), net (c) 303 14,051 (11,630) (5,588) 21,288

Earnings (loss) before income taxes 304,492 199,874 192,648 (77,713) (1,272,472)

Income tax expense (benefit) (d) 53,599 21,649 2,713 (76,694) 180,062

Net earnings (loss) 250,893 178,225 189,935 (1,019) (1,452,534)

Less: Net earnings attributable to 

the noncontrolling interest 635 4,303 4,464 4,480 5,694

Net earnings (loss) attributable to 

Mohawk Industries, Inc. $ 250,258 173,922 185,471 (5,499) (1,458,228)

Basic earnings (loss) per share $ 3.63 2.53 2.66 (0.08) (21.32)

Diluted earnings (loss) per share $ 3.61 2.52 2.65 (0.08) (21.32)

Balance sheet data:

Working capital (includes short-term debt) $ 1,721,397 1,296,818 1,199,699 1,474,978 1,369,333

Total assets (b and d) 6,303,684 6,206,228 6,098,926 6,391,446 6,446,175

Long-term debt (including current portion) 1,382,942 1,586,439 1,653,582 1,854,479 1,954,786

Total stockholders’ equity 3,719,617 3,415,785 3,271,556 3,200,823 3,153,803

(a) During 2009, the Company recognized an increased number of warranty claims related to the performance of commercial carpet tiles 

that used a newer carpet backing technology. As a result, the Company recorded a $121,224 carpet sales allowance and a $12,268 

inventory write-off.

(b) In 2008, the Company recorded an impairment of goodwill and other intangibles which included $276,807 for the Mohawk segment, 

$531,930 for the Dal-Tile segment and $734,660 for the Unilin segment.

(c) In 2010, the Company received $7,730 in refunds from the U.S. government in reference to settlement of customs disputes dating 

back to 1986.

(d) In 2008, the Company recorded a valuation allowance of approximately $253,000 against the deferred tax asset recorded in 2007 as a 

result of a change in residency the Company implemented in one of its foreign subsidiaries.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

In 2011, the primary categories of the U.S. floor covering industry, based on sales dollars, were carpet and rug (53%), 

resilient and rubber (14%), ceramic tile (12%), hardwood (10%), stone (6%) and laminate (5%). Each of these categories is 

influenced by the average selling price per square foot, the residential builder and homeowner remodeling markets, housing 

starts and housing resales, average house size and home ownership. In addition, the level of sales in the floor covering industry, 

both in the U.S. and Europe, is influenced by consumer confidence, spending for durable goods, interest rates and availability of 

credit, turnover in housing, the condition of the residential and commercial construction industries and the overall strength of 

the economy.

The Company has three reporting segments: the Mohawk segment, the Dal-Tile segment and the Unilin segment. The 

Mohawk segment designs, manufactures, sources, distributes and markets its floor covering product lines, which include 

carpets, ceramic tile, laminate, rugs, carpet pad, hardwood and resilient, primarily in North America through its network of 

regional distribution centers and satellite warehouses using company-operated trucks, common carrier or rail transportation. 

The segment’s product lines are sold through various selling channels, which include independent floor covering retailers, home

centers, mass merchandisers, department stores, commercial dealers and commercial end users. The Dal-Tile segment designs, 

manufactures, sources, distributes and markets a broad line of ceramic tile, porcelain tile, natural stone and other products, 

primarily in North America through its network of regional distribution centers and Company-operated service centers using 

company-operated trucks, common carriers or rail transportation. The segment’s product lines are sold through Companyowned service centers, independent distributors, home center retailers, tile and flooring retailers and contractors. The Unilin

segment designs, manufactures, sources, licenses, distributes and markets laminate, hardwood flooring, roofing systems, 

insulation panels and other wood products, primarily in North America and Europe through various selling channels, which 

include retailers, independent distributors and home centers.

Net earnings attributable to the Company were $250.3 million, or diluted EPS of $3.61 for 2012 compared to net earnings 

attributable to the Company of $173.9 million, or diluted EPS of $2.52 for 2011. The increase in EPS was primarily attributable

to the favorable net impact of price and product mix, improved manufacturing efficiencies, higher sales volume, lower interest 

expense and the change in the net impact of unrealized foreign exchange gains/losses, partially offset by higher input costs, 

increases in costs to support new product introductions and geographic expansion and higher tax expense primarily attributable 

to the geographic dispersion of earnings. 

For the year ended December 31, 2012, the Company generated $587.6 million of cash from operating activities which it 

partially used for capital expenditures, repayment of borrowings, the purchase of the non-controlling interest within the DalTile segment and a joint venture investment. As of December 31, 2012, the Company had cash and cash equivalents of $477.7 

million, of which $42.6 million was in the United States and $435.1 million was in foreign countries.

Recent Developments

On December 20, 2012, the Company entered into a definitive share purchase agreement to acquire Fintiles S.p.A. and its 

subsidiaries (collectively, the “Marazzi Group”), for an estimated transaction value of approximately €1,170 million, or 

$1,504.4 million. The Company expects to complete the transaction during the first half of 2013 pending customary 

governmental approvals and the satisfaction of other closing conditions.

On January 10, 2013, the Company announced that it completed the acquisition of Pergo, a leading manufacturer of 

premium laminate flooring. The Company remitted approximately $150 million in cash for the acquisition using both European 

and U.S. cash available.

On January 28, 2013, the Company entered into an agreement to purchase Spano Invest NV, a Belgian panel board 

manufacturer, for €125 million ($168 million) in cash. This transaction is expected to close in the second half of 2013 pending

customary governmental approvals and the satisfaction of other closing conditions.

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The results of operations do not include the effect of the foregoing acquisitions, as the Pergo acquisition closed after 

December 31, 2012, and the Marazzi and Spano acquisitions remain pending.

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Results of Operations

Following are the results of operations for the last three years:

For the Years Ended December 31,

2012 2011 2010

(In millions)

Statement of operations data:

Net sales $ 5,788.0 100.0% 5,642.3 100.0% 5,319.1 100.0 %

Cost of sales (1) 4,297.9 74.3% 4,225.4 74.9% 3,916.5 73.6 %

Gross profit 1,490.1 25.7% 1,416.9 25.1% 1,402.6 26.4 %

Selling, general and administrative 

expenses (2) 1,110.6 19.2% 1,101.3 19.5% 1,088.4 20.5 %

Operating income 379.5 6.6% 315.6 5.6% 314.2 5.9 %

Interest expense (3) 74.7 1.3% 101.6 1.8% 133.2 2.5 %

Other expense (income) (4) 0.3 0.0% 14.1 0.2% (11.6) (0.2)%

Earnings before income taxes 304.5 5.3% 199.9 3.5% 192.6 3.6 %

Income tax expense 53.6 0.9% 21.7 0.4% 2.7 0.1 %

Net earnings 250.9 4.3% 178.2 3.2% 189.9 3.6 %

Less: Net earnings attributable to the 

noncontrolling interest 0.6 0.0% 4.3 0.1% 4.4 0.1 %

Net earnings attributable to Mohawk 

Industries, Inc. $ 250.3 4.3% 173.9 3.1% 185.5 3.5 %

(1) Cost of sales includes:

Restructuring charges $ 14.8 0.3% 17.5 0.3% 12.4 0.2 %

(2) Selling, general and administrative expenses 

include:

Restructuring charges 3.7 0.1% 5.7 0.1% 0.8 — %

Lease charges — —% 6.0 0.1% — — %

(3) Interest expense includes:

Debt extinguishment costs — —% 1.1 —% 7.5 0.1 %

(4) Other expense (income) includes:

Unrealized foreign currency losses — —% 9.1 0.2% — — %

U.S. customs refund — —% — —% (7.7) (0.1)%

Acquisitions purchase accounting — —% — —% 1.7 — %

Year Ended December 31, 2012, as Compared with Year Ended December 31, 2011

Net sales

Net sales for 2012 were $5,788.0 million, reflecting an increase of $145.7 million, or 2.6%, from the $5,642.3 million

reported for 2011. The increase was primarily driven by the favorable net impact of price and product mix of approximately 

$146 million and higher volume of approximately $92 million, partially offset by the net impact of unfavorable foreign 

exchange rates of approximately $92 million. 

Mohawk Segment—Net sales decreased $15.6 million, or 0.5%, to $2,912.1 million for 2012, compared to $2,927.7 

million for 2011. The decrease was primarily driven by lower volume of approximately $142 million, which was partially offset 

by the favorable net impact of price and product mix of approximately $126 million. The volume decreases were primarily 

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attributable to the timing of carpet product transitions in the home center channel and lower demand for rug products in the 

retail channel.

Dal-Tile Segment—Net sales increased $162.1 million, or 11.1%, to $1,616.4 million for 2012, compared to $1,454.3 

million for 2011. The increase was primarily driven by volume increases of approximately $157 million and the favorable net 

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impact of price and product mix of approximately $11 million, partially offset by the net impact of unfavorable foreign 

exchange rates of approximately $6 million. The volume increases were primarily attributable to improvement in the U.S. 

commercial and residential channels and growth in the Mexican market.

Unilin Segment—Net sales increased $5.5 million, or 0.4%, to $1,350.3 million for 2012, compared to $1,344.8 million

for 2011. The increase was primarily driven by volume increases of approximately $84 million and the favorable net impact of 

price and product mix of approximately $8 million, partially offset by the impact of unfavorable foreign exchange rates of 

approximately $86 million. The volume increases were primarily attributable to flooring products primarily in Russia, Australia

and North America, as well as increases in wood panel and insulation products. 

Quarterly net sales and the percentage changes in net sales by quarter for 2012 versus 2011 were as follows (dollars in 

millions):

2012 2011 Change

First quarter $ 1,409.0 1,343.6 4.9 %

Second quarter 1,469.8 1,477.9 (0.5)%

Third quarter 1,473.5 1,442.5 2.1 %

Fourth quarter 1,435.7 1,378.3 4.2 %

Total year $ 5,788.0 5,642.3 2.6 %

Gross profit

Gross profit for 2012 was $1,490.1 million (25.7% of net sales), an increase of $73.2 million or 5.2%, compared to gross 

profit of $1,416.9 million (25.1% of net sales) for 2011. The increase in gross profit dollars was primarily attributable to the 

favorable net impact of price and product mix of approximately $62 million, operations productivity of approximately $52 

million and higher sales volume of approximately $22 million, partially offset by higher input costs of approximately $42 

million and the impact of unfavorable foreign exchange rates of approximately $19 million.

Selling, general and administrative expenses

Selling, general and administrative expenses for 2012 were $1,110.6 million (19.2% of net sales), compared to $1,101.3 

million (19.5% of net sales) for 2011. Selling, general and administrative expenses decreased as a percentage of net sales 

compared to the prior year primarily due to increased sales volume. The increase in selling, general and administrative expenses 

in dollars was primarily driven by increases in costs to support new product introductions and geographic expansion of 

approximately $31 million, partially offset by favorable foreign exchange rates of approximately $15 million and lower 

amortization costs of approximately $9 million. 

Operating income

Operating income for 2012 was $379.5 million (6.6% of net sales) reflecting an increase of $64.0 million, or 20.3%, 

compared to operating income of $315.5 million (5.6% of net sales) for 2011. The increase in operating income was primarily 

driven by the favorable net impact of price and product mix of approximately $62 million, operations productivity of 

approximately $52 million and sales volume increases of approximately $22 million, partially offset by higher input costs of 

approximately $42 million and increases in selling costs to support new product introductions, geographic expansion and higher 

sales volume of approximately $31 million.

Mohawk Segment—Operating income was $158.2 million (5.4% of segment net sales) for 2012 reflecting an increase of 

$48.3 million compared to operating income of $109.9 million (3.8% of segment net sales) for 2011. The increase in operating 

income was primarily driven by the favorable net impact of price and product mix of approximately $67 million, higher 

operations productivity of approximately $18 million and lower restructuring costs of approximately $15 million, partially 

offset by lower sales volume of approximately $36 million and higher input costs of approximately $18 million. 

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Dal-Tile Segment—Operating income was $121.0 million (7.5% of segment net sales) for 2012 reflecting an increase of 

$19.7 million compared to operating income of $101.3 million (7.0% of segment net sales) for 2011. The increase in operating 

income was primarily driven by sales volume increases of approximately $42 million and favorable foreign exchange rates of 

approximately $6 million, partially offset by increases in selling costs to support new product introductions and higher sales 

volume of approximately $16 million, manufacturing start-up and restructuring costs of approximately $9 million and higher 

input costs of approximately $7 million. 

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Unilin Segment—Operating income was $126.4 million (9.4% of segment net sales) for 2012 reflecting a decrease of $0.7 

million compared to operating income of $127.1 million (9.5% of segment net sales) for 2011. The decrease in operating 

income was primarily driven by higher input costs of approximately $18 million, increases in costs to support new product 

introductions and geographic expansion of approximately $11 million and unfavorable foreign exchange rates of approximately 

$10 million, partially offset by operations productivity of approximately $25 million and sales volume increases of 

approximately $15 million. 

Interest expense

Interest expense was $74.7 million for 2012, reflecting a decrease of $26.9 million compared to interest expense of 

$101.6 million for 2011. The decrease in interest expense in 2012 was due to lower outstanding debt and lower interest rates on

that outstanding debt. The lower interest rates were primarily attributable to the shift from higher interest rate senior notes to the 

Senior Credit Facility and the rating agency upgrades discussed in "Liquidity and Capital Resources". 

Other expense 

Other expense was $0.3 million for 2012, reflecting a change of $13.7 million compared to other expense of $14.1 million

for 2011. The change was primarily attributable to net foreign currency losses of approximately $16 million. The unrealized 

foreign currency losses in the prior year were primarily a result of volatility in the Mexican Peso and Canadian Dollar that 

occurred late in the third quarter of 2011. Prior to the second quarter of 2012, operations carried out in Mexico used the U.S.

dollar as the functional currency. Effective April 1, 2012, the Company changed the functional currency of its Mexico 

operations to the Mexican peso. See Note 1(l) of the Notes to the Consolidated Financial Statements.

Income tax expense

For 2012, the Company recorded income tax expense of $53.6 million on earnings before income taxes of $304.5 million

for an effective tax rate of 17.6%, as compared to an income tax expense of $21.7 million on earnings before income taxes of 

$199.9 million, resulting in an effective tax rate of 10.8% for 2011. The difference in the effective tax rate for the comparative 

period is primarily due to the geographical dispersion of earnings and losses, a favorable IRS audit settlement in 2011, and the 

expiration of statutes of limitations for both Federal and State tax purposes.

Year Ended December 31, 2011, as Compared with Year Ended December 31, 2010

Net sales

Net sales for 2011 were $5,642.3 million, reflecting an increase of $323.2 million, or 6.1%, from the $5,319.1 million 

reported for 2010. The increase was primarily due to higher sales volume of approximately $143 million, favorable price and 

product mix of approximately $127 million and the impact of favorable foreign exchange rates of approximately $53 million.

Mohawk Segment—Net sales increased $82.8 million, or 2.9%, to $2,927.7 million in 2011, compared to $2,844.9 million 

in 2010. The increase was primarily driven by favorable price and product mix of approximately $64 million, and higher sales 

volume of approximately $19 million.

Dal-Tile Segment—Net sales increased $86.9 million, or 6.4%, to $1,454.3 million in 2011, compared to $1,367.4 million 

in 2010. The increase was primarily driven by higher sales volume of approximately $75 million, favorable price and product 

mix of approximately $9 million and the impact of favorable foreign exchange rates of approximately $3 million.

Unilin Segment—Net sales increased $156.5 million, or 13.2%, to $1,344.8 million in 2011, compared to $1,188.3 

million in 2010. The increase was primarily due to favorable price and product mix of approximately $55 million, the impact of 

favorable foreign exchange rates of approximately $51 million and higher sales volume of approximately $51 million.

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Quarterly net sales and the percentage changes in net sales by quarter for 2011 versus 2010 were as follows (dollars in 

millions):

2011 2010 Change

First quarter $ 1,343.6 1,347.2 (0.3)%

Second quarter 1,477.9 1,400.1 5.6 %

Third quarter 1,442.5 1,309.6 10.1 %

Fourth quarter 1,378.3 1,262.2 9.2 %

Total year $ 5,642.3 5,319.1 6.1 %

Gross profit

Gross profit for 2011 was $1,416.9 million (25.1% of net sales) compared to gross profit of $1,402.6 million (26.4% of 

net sales) for 2010. Gross profit dollars were impacted by favorable price and product mix of approximately $124 million, 

lower manufacturing costs of approximately $69 million, higher sales volume of approximately $27 million and favorable 

foreign exchange rates of approximately $16 million, substantially offset by higher inflationary costs of approximately $206 

million, primarily related to raw materials, and approximately $7 million of higher restructuring charges. The lower 

manufacturing costs are primarily a result of cost savings initiatives implemented and various restructuring activities taken by 

the Company, including facility consolidations, workforce reductions and productivity improvements resulting from capital 

investments. In addition, the gross profit for 2010 included insurance settlement proceeds of approximately $9 million related to 

a flood in the Company’s Mexican manufacturing facility.

Selling, general and administrative expenses

Selling, general and administrative expenses for 2011 were $1,101.3 million (19.5% of net sales) compared to $1,088.4 

million (20.5% of net sales) for 2010. As a percentage of sales, selling, general and administrative expenses for 2011 decreased 

1.0% compared to the prior year as a result of the Company’s ability to leverage its various cost savings initiatives. The dollar 

increase in selling, general and administrative expenses is primarily a result of unfavorable foreign exchange rates of 

approximately $9 million, a lease charge (discussed below) of approximately $6 million and higher restructuring charges of 

approximately $5 million, partially offset by the various cost savings initiatives implemented by the Company including facility 

consolidations and productivity improvements.

During the fourth quarter of 2011, the Company corrected an immaterial error in its consolidated financial statements. 

The error related to accounting for operating leases. The correction of $6.0 million resulted in an additional charge (“lease 

charge”) to selling, general and administrative expense in the Company’s 2011 consolidated statement of operations. The 

Company believes the correction of this error to be both quantitatively and qualitatively immaterial to its quarterly results for 

2011 or to any of its previously issued consolidated financial statements. The correction had no impact on the Company’s cash 

flows as previously presented.

Operating income

Operating income for 2011 was $315.6 million (5.6% of net sales), reflecting a $1.4 million increase, compared to an 

operating income of $314.2 million (5.9% of net sales) for 2010. The increase in operating income was primarily a result of 

favorable price and product mix of approximately $124 million, lower manufacturing and selling, general and administrative 

expenses of approximately $77 million, higher sales volume of $27 million and the impact of favorable foreign exchange rates 

of approximately $7 million, substantially offset by higher inflationary costs of approximately $206 million, primarily related to 

raw materials, higher restructuring charges of approximately $11 million and a lease charge (discussed in selling, general and 

administrative expenses) of approximately $6 million. The lower manufacturing costs and selling, general and administrative 

expenses are primarily a result of cost saving initiatives implemented and various restructuring actions taken by the Company, 

including facility consolidations, workforce reductions and productivity improvements resulting from capital investments. In 

addition, the operating income for 2010 included insurance settlement proceeds of approximately $9 million related to a flood 

in the Company’s Mexican manufacturing facility.

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Mohawk Segment—Operating income was $109.9 million (3.8% of segment net sales) for 2011, reflecting a decrease of 

$13.0 million, compared to operating income of $122.9 million (4.3% of segment net sales) for 2010. Operating income was 

negatively impacted by higher inflationary costs of approximately $138 million, primarily related to raw materials, higher 

restructuring charges of approximately $14 million and a lease charge (discussed in selling, general and administrative 

expenses) of approximately $3 million, substantially offset by lower manufacturing costs and selling, general and administrative 

expenses of approximately $76 million and favorable price and product mix of approximately $64 million. The 

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lower manufacturing costs and selling, general and administrative expenses were primarily a result of cost savings initiatives 

implemented and various restructuring actions taken by the Company, including facility consolidations, workforce reductions 

and productivity improvements resulting from capital investments.

Dal-Tile Segment—Operating income was $101.3 million (7.0% of segment net sales) for 2011, reflecting an increase of 

$4.0 million, compared to operating income of $97.3 million (7.1% of segment net sales) for 2010. Operating income was 

favorably impacted by higher sales volume of approximately $18 million, lower manufacturing costs and selling, general and 

administrative expenses of approximately $10 million and favorable price and product mix of approximately $6 million, 

partially offset by higher inflationary costs of approximately $18 million, primarily related to raw materials and a lease charge 

(discussed in selling, general and administrative expenses) of approximately $3 million. The lower manufacturing costs and 

selling, general and administrative expenses are primarily a result of cost savings initiatives implemented and various 

restructuring actions taken by the Company, including workforce reductions and productivity improvements resulting from 

capital investments. In addition, the operating income for 2010 included insurance settlement proceeds of approximately $9 

million related to a flood in the Company’s Mexican manufacturing facility.

Unilin Segment—Operating income was $127.1 million (9.5% of segment net sales) for 2011 reflecting an increase of 

$12.8 million compared to operating income of $114.3 million (9.6% of segment net sales) for 2010. The increase was 

primarily driven by favorable price and product mix of approximately $54 million, lower manufacturing costs of approximately 

$10 million, favorable foreign exchange rates of approximately $7 million, higher sales volume of approximately $7 million 

and lower restructuring costs of approximately $2 million, substantially offset by higher inflationary costs of approximately $50 

million, primarily related to raw materials, and higher selling, general and administrative costs of approximately $17 million.

The lower manufacturing costs are primarily a result of cost savings initiatives implemented and various restructuring actions 

taken by the Company, including facility consolidations and productivity improvements resulting from capital investments.

Interest expense

Interest expense was $101.6 million for 2011, reflecting a decrease of $31.5 million compared to interest expense of 

$133.2 million for 2010. The decrease in interest expense resulted from lower interest costs on the Company’s outstanding debt 

and lower debt levels. In addition, the 2010 interest expense includes a $7.5 million premium paid to extinguish approximately 

$200 million aggregate principal amount of senior notes.

Other expense (income)

Other expense for 2011 was $14.1 million as compared to other income in the prior year of $11.6 million. The 

unfavorable impact of $25.7 million was primarily a result of unfavorable changes in net foreign currency gains/losses of 

approximately $13 million, and losses associated with the minority interest of approximately $5 million. In addition, other 

income for 2010 included an approximately $8 million benefit from customs refunds partially offset by acquisitions purchase 

accounting adjustments of $1.7 million. The unrealized foreign currency losses are attributable to certain of the Company’s 

consolidated foreign subsidiaries that measure financial conditions and results using the U.S. dollar rather than the local 

currency. The unrealized foreign currency losses were primarily a result of volatility in the Mexican Peso and the Canadian 

Dollar that occurred late in the third quarter of 2011. The customs refunds from the U.S. government resulted from settling 

customs disputes dating back to 1986. The Company is pursuing additional recoveries for years subsequent to 1986 but there 

can be no assurances such recoveries will occur. Additional future recoveries, if any, will be recorded as realized.

Income tax expense

For 2011, the Company recorded an income tax expense of $21.6 million on earnings before income taxes of $199.9 

million for an effective tax rate of 10.8%, as compared to an income tax expense of $2.7 million on earnings before income 

taxes of $192.6 million for an effective tax rate of 1.4% for 2010. The difference in the effective tax rate for the comparative 

period is primarily due to the benefit from the settlement of certain tax contingencies of $7.2 million and $30.0 million, 

respectively, in 2011 and 2010. In addition, both years were effected by the geographical dispersion of earnings and losses for

the current period. 

Liquidity and Capital Resources

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The Company’s primary capital requirements are for working capital, capital expenditures and acquisitions. The 

Company’s capital needs are met primarily through a combination of internally generated funds, bank credit lines and credit 

terms from suppliers.

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Cash flows provided by operating activities for 2012 were $587.6 million compared to $301.0 million provided by

operating activities for 2011. The increase in cash provided by operating activities for 2012 as compared to 2011 is primarily 

attributable to higher earnings, and improvements in working capital. As discussed in note 13 to the consolidated financial 

statements, on December 28, 2012, the Company received the refund of the deposit related to the tax assessment by the 

Belgium taxing authority of €23.8 million. On January 30, 2013, the Company received a refund of the interest deposit of €2.9 

million and interest income of €1.6 million earned on the deposit.

Net cash used in investing activities for 2012 was $215.3 million compared to $299.7 million for 2011. The decrease in 

investing activities primarily relates to lower capital expenditures and lower acquisition expenditures in 2012. Capital spending 

during 2013, excluding pending acquisition expenditures, is expected to range from approximately $275 million to $295 million 

and is intended to be used primarily to purchase equipment, add geographic capacity and to streamline manufacturing 

capabilities.

Net cash used in financing activities for 2012 was $216.8 million compared to $33.1 million for 2011. The change in cash 

used in financing activities as compared to 2011 is primarily attributable to the purchase of the non-controlling interest within 

the Dal-Tile segment for approximately $35.0 million, repayment of borrowings and funding of working capital. 

On July 8, 2011, the Company entered into a five-year, senior, secured revolving credit facility (the “Senior Credit 

Facility”). The Senior Credit Facility provides for a maximum of $900.0 million of revolving credit, including limited amounts 

of credit in the form of letters of credit and swingline loans. The Company paid financing costs of $8.3 million in connection 

with its Senior Credit Facility. These costs were deferred and, along with unamortized costs of $12.3 million related to the 

Company’s prior senior, secured revolving credit facility, are being amortized over the term of the Senior Credit Facility.

On January 20, 2012, the Company entered into an amendment to the Senior Credit Facility that provides for an 

incremental term loan facility in the aggregate principal amount of $150.0 million. The Company paid financing costs of $1.0 

million in connection with the amendment to its Senior Credit Facility. These costs were deferred and are being amortized over 

the remaining term of the Senior Credit Facility. The incremental term loan facility provides for eight scheduled quarterly 

principal payments of $1.875 million, with the first such payment due on June 30, 2012, followed by four scheduled quarterly 

principal payments of $3.750 million, with remaining quarterly principal payments of $5.625 million prior to maturity.

The Senior Credit Facility is scheduled to mature on July 8, 2016. The Company can terminate and prepay the Senior 

Credit Facility at any time without payment of any termination or prepayment penalty (other than customary breakage costs in 

respect of loans bearing interest at a rate based on LIBOR).

At the Company’s election, revolving loans under the Senior Credit Facility bear interest at annual rates equal to either 

(a) LIBOR for 1-, 2-, 3- or 6- month periods, as selected by the Company, plus an applicable margin ranging between 1.25% 

and 2.0%, or (b) the higher of the Bank of America, N.A. prime rate, the Federal Funds rate plus 0.5%, and a monthly LIBOR 

rate plus 1.0%, plus an applicable margin ranging between 0.25% and 1.0%. The Company also pays a commitment fee to the 

lenders under the Senior Credit Facility on the average amount by which the aggregate commitments of the lenders’ exceed 

utilization of the Senior Credit Facility ranging from 0.25% to 0.4% per annum. The applicable margin and the commitment fee 

are determined based on the Company’s Consolidated Net Leverage Ratio (with applicable margins and the commitment fee 

increasing as the ratio increases).

All obligations of the Company and the other borrowers under the Senior Credit Facility are required to be guaranteed by 

all of the Company’s material domestic subsidiaries and all obligations of borrowers that are foreign subsidiaries are guaranteed 

by those foreign subsidiaries of the Company which the Company designates as guarantors.

Due to the rating agency upgrade announced on March 14, 2012 by Standard & Poor’s Financial Services, LLC (“S&P”), 

the security interests in domestic accounts receivable and inventories, certain shares of capital stock (or equivalent ownership 

interests) of the domestic borrowers’ and domestic guarantors’ subsidiaries, and proceeds of any of the foregoing securing 

obligations under the Senior Credit Facility were released. The Company will be required to reinstate such security interests if 

there is a ratings downgrade such that: (a) both (i) the Moody’s Investor’s Service, Inc. (“Moody’s”) rating is Ba2 and (ii) the 

S&P rating is BB, (b) (i) the Moody’s rating is Ba3 or lower and (ii) the S&P rating is below BBB- (with a stable outlook or 

better) or (c) (i) the Moody’s rating is below Baa3 (with a stable outlook or better) and (ii) the S&P rating is BB- or lower.

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The Senior Credit Facility includes certain affirmative and negative covenants that impose restrictions on the Company’s 

financial and business operations, including limitations on liens, indebtedness, investments, fundamental changes, asset 

dispositions, dividends and other similar restricted payments, transactions with affiliates, payments and modifications of certain 

existing debt, future negative pledges, and changes in the nature of the Company’s business. Many of these limitations are 

subject to numerous exceptions. The Company is also required to maintain a Consolidated Interest Coverage Ratio of at least 

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3.00 to 1.0 and a Consolidated Net Leverage Ratio of no more than 3.75 to 1.0, each as of the last day of any fiscal quarter, as 

defined in the Senior Credit Facility. The Senior Credit Facility also contains customary representations and warranties and 

events of default, subject to customary grace periods.

As of December 31, 2012, the amount utilized under the Senior Credit Facility including the term loan was $251.2 

million, resulting in a total of $793.1 million available under the Senior Credit Facility. The amount utilized included $153.9

million of borrowings, $46.8 million of standby letters of credit guaranteeing the Company’s industrial revenue bonds and 

$50.5 million of standby letters of credit related to various insurance contracts and foreign vendor commitments. 

On December 19, 2012, the Company entered into a three-year on-balance sheet trade accounts receivable securitization 

agreement (the "Securitization Facility"). The Securitization Facility allows the Company to borrow up to $300 million based 

on available accounts receivable and is secured by the Company's U.S. trade accounts receivable. Borrowings under the 

Securitization Facility bear interest at commercial paper interest rates, in the case of lenders that are commercial paper conduits, 

or LIBOR, in the case of lenders that are not commercial paper conduits, in each case, plus an applicable margin of 0.75% per 

annum. The Company also pays a commitment fee at a per annum rate of 0.30% on the unused amount of each lender's 

commitment. At December 31, 2012, the amount utilized under the Securitization Facility was $280.0 million.

On January 31, 2013, the Company issued $600 million aggregate principal amount of 3.850% Senior Notes due 2023. In 

the event that the Company does not complete its acquisition of the Marazzi Group on or prior to January 25, 2014 or if, prior to 

that date, the Share Purchase Agreement with respect to the acquisition is terminated, the Company will be required to redeem 

all of the notes on the special mandatory redemption date at a redemption price equal to 101% of the aggregate principal 

amount of the notes, plus accrued and unpaid interest thereon to, but not including, the special mandatory redemption date.

On January 17, 2006, the Company issued $900.0 million aggregate principal amount of 6.125% notes due January 15, 

2016. Interest payable on these notes is subject to adjustment if either Moody’s or S&P, or both, upgrades or downgrades the 

rating assigned to the notes. Each rating agency downgrade results in a 0.25% increase in the interest rate, subject to a 

maximum increase of 1% per rating agency. If later the rating of these notes improves, then the interest rates would be reduced

accordingly. Each 0.25% increase in the interest rate of these notes would increase the Company’s interest expense by 

approximately $0.1 million per quarter per $100.0 million of outstanding notes. In 2009, interest rates increased by an aggregate 

amount of 75 basis points as a result of downgrades by Moody’s and S&P. In the first quarter of 2012, interest rates decreased 

by 50 basis points as a result of the upgrades from S&P and Moody’s. Any future downgrades in the Company’s credit ratings 

could increase the cost of its existing credit and adversely affect the cost of and ability to obtain additional credit in the future.

In 2002, the Company issued $400.0 million aggregate principal amount of its senior 7.20% notes due April 15, 2012. 

During 2011, the Company repurchased $63.7 million of its senior 7.20% notes, at an average price equal to 102.72% of the 

principal amount. On April 16, 2012, the Company repaid the $336.3 million principal amount of outstanding senior 7.20%

notes, together with accrued interest of $12.1 million, at maturity using available borrowings under its Senior Credit Facility. 

As of December 31, 2012, the Company had invested cash of $417.5 million, of which $415.9 million was invested in 

A-1/P-1 rated money market cash investments in Europe. While the Company’s plans are to permanently reinvest the cash held 

in Europe, the estimated cost of repatriation for the cash invested in Europe would be approximately $145.6 million. The 

Company believes that its cash and cash equivalents on hand, cash generated from operations and availability under its credit 

facilities will be sufficient to meet its capital expenditure, working capital and debt servicing requirements over the next twelve 

months.

The Company may continue, from time to time, to retire its outstanding debt through cash purchases in the open market, 

privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, the 

Company’s liquidity requirements, contractual restrictions and other factors. The amount involved may be material.

The Company’s Board of Directors has authorized the repurchase of up to 15 million shares of the Company’s 

outstanding common stock. Since the inception of the program in 1999, a total of approximately 11.5 million shares have been 

repurchased at an aggregate cost of approximately $335.1 million. All of these repurchases have been financed through the 

Company’s operations and banking arrangements. No shares were repurchased during 2012 or 2011.

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Contractual obligations

The following is a summary of the Company’s future minimum payments under contractual obligations as of 

December 31, 2012 (in millions):

Total 2013 2014 2015 2016 2017 Thereafter

Recorded Contractual 

Obligations:

Long-term debt, 

including current 

maturities and capital 

leases $ 1,382.9 55.2 13.7 300.9 1,012.9 0.2 —

Unrecorded Contractual 

Obligations:

Interest payments on 

long-term debt and 

capital leases (1) 234.5 67.1 66.9 66.6 33.8 0.1 —

Operating leases 304.5 87.7 75.5 59.3 33.7 21.2 27.1

Purchase commitments 

(2) 145.4 80.3 37.9 26.0 1.2 — —

Expected pension 

contributions (3) 1.9 1.9 — — — — —

Uncertain tax positions 

(4) 1.2 1.2 — — — — —

Guarantees 11.9 8.6 3.3 — — — —

699.4 246.8 183.6 151.9 68.7 21.3 27.1

Total $ 2,082.3 302.0 197.3 452.8 1,081.6 21.5 27.1

(1) For fixed rate debt, the Company calculated interest based on the applicable rates and payment dates. For variable rate 

debt, the Company estimated average outstanding balances for the respective periods and applied interest rates in effect 

as of December 31, 2012 to these balances.

(2) Includes commitments for natural gas, electricity and raw material purchases.

(3) Includes the estimated pension contributions for 2013 only, as the Company is unable to estimate the pension 

contributions beyond 2013. The Company’s projected benefit obligation and plan assets as of December 31, 2012 were 

$37.6 million and $32.6 million, respectively. The projected benefit obligation liability has not been presented in the 

table above due to uncertainty as to amounts and timing regarding future payments.

(4) Excludes $33.7 million of non-current accrued income tax liabilities and related interest and penalties for uncertain tax 

positions. These liabilities have not been presented in the table above due to uncertainty as to amounts and timing 

regarding future payments.

Critical Accounting Policies

In preparing the consolidated financial statements in conformity with U.S. generally accepted accounting principles, the 

Company must make decisions which impact the reported amounts of assets, liabilities, revenues and expenses, and related 

disclosures. Such decisions include the selection of appropriate accounting principles to be applied and the assumptions on 

which to base accounting estimates. In reaching such decisions, the Company applies judgment based on its understanding and 

analysis of the relevant circumstances and historical experience. Actual amounts could differ from those estimated at the time 

the consolidated financial statements are prepared.

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The Company’s significant accounting policies are described in Note 1 to the Consolidated Financial Statements included 

elsewhere in this report. Some of those significant accounting policies require the Company to make subjective or complex 

judgments or estimates. Critical accounting policies are defined as those that are both most important to the portrayal of a 

company’s financial condition and results and require management’s most difficult, subjective, or complex judgment, often as a 

result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent 

periods.

The Company believes the following accounting policies require it to use judgments and estimates in preparing its 

consolidated financial statements and represent critical accounting policies.

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• Accounts receivable and revenue recognition. Revenues are recognized when there is persuasive evidence of an 

arrangement, delivery has occurred, the price has been fixed or is determinable, and collectability can be reasonably 

assured. The Company provides allowances for expected cash discounts, sales allowances, returns, claims and doubtful 

accounts based upon historical bad debt and claims experience and periodic evaluation of specific customer accounts 

and the aging of accounts receivable. If the financial condition of the Company’s customers were to deteriorate, 

resulting in an impairment of their ability to make payments, additional allowances may be required. A 10% change in 

the Company’s allowance for discounts, returns, claims and doubtful accounts would have affected net earnings by 

approximately $2 million for the year ended December 31, 2012.

• Inventories are stated at the lower of cost or market (net realizable value). Cost has been determined using the first-in 

first-out method (“FIFO”). Costs included in inventory include raw materials, direct and indirect labor and employee 

benefits, depreciation, general manufacturing overhead and various other costs of manufacturing. Market, with respect 

to all inventories, is replacement cost or net realizable value. Inventories on hand are compared against anticipated 

future usage, which is a function of historical usage, anticipated future selling price, expected sales below cost, 

excessive quantities and an evaluation for obsolescence. Actual results could differ from assumptions used to value 

obsolete inventory, excessive inventory or inventory expected to be sold below cost and additional reserves may be 

required. A 10% change in the Company’s reserve for excess or obsolete inventory would have affected net earnings 

by approximately $4 million for the year ended December 31, 2012.

• Goodwill and other intangibles. Goodwill is tested annually for impairment during the fourth quarter or earlier upon 

the occurrence of certain events or substantive changes in circumstances. The Company considers the relationship 

between its market capitalization and its book value, among other factors, when reviewing for indicators of 

impairment. The goodwill impairment tests are based on determining the fair value of the specified reporting units 

based on management judgments and assumptions using the discounted cash flows and comparable company market 

valuation approaches. The Company has identified Mohawk, Dal-Tile, Unilin Flooring, Unilin Chipboard and 

Melamine, and Unilin Roofing as its reporting units for the purposes of allocating goodwill and intangibles as well as 

assessing impairments. The valuation approaches are subject to key judgments and assumptions that are sensitive to 

change such as judgments and assumptions about appropriate sales growth rates, operating margins, weighted average 

cost of capital (“WACC”), and comparable company market multiples. When developing these key judgments and 

assumptions, the Company considers economic, operational and market conditions that could impact the fair value of 

the reporting unit. However, estimates are inherently uncertain and represent only management’s reasonable 

expectations regarding future developments. These estimates and the judgments and assumptions upon which the 

estimates are based will, in all likelihood, differ in some respects from actual future results. Should a significant or 

prolonged deterioration in economic conditions occur, such as declines in spending for new construction, remodeling 

and replacement activities; the inability to pass increases in the costs of raw materials and fuel on to customers; or a 

decline in comparable company market multiples, then key judgments and assumptions could be impacted. Generally, 

a decline in estimated after tax cash flows of more than 25% or a more than 15% increase in WACC or a significant or 

prolonged decline in market capitalization could result in an additional indication of impairment.

The impairment test for intangible assets not subject to amortization involves a comparison of the estimated fair value 

of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an 

impairment loss is recognized in an amount equal to that excess. Significant judgments inherent in this analysis include 

assumptions about appropriate sales growth rates, royalty rates, WACC and the amount of expected future cash flows. 

These judgments and assumptions are subject to the variability discussed above.

The impairment evaluation for indefinite lived intangible assets, which for the Company are its trademarks, is 

conducted during the fourth quarter of each year, or more frequently if events or changes in circumstances indicate that 

an asset might be impaired. The determination of fair value used in the impairment evaluation is based on discounted 

estimates of future sales projections attributable to ownership of the trademarks. Significant judgments inherent in this 

analysis include assumptions about appropriate sales growth rates, royalty rates, WACC and the amount of expected 

future cash flows. The judgments and assumptions used in the estimate of fair value are generally consistent with past 

performance and are also consistent with the projections and assumptions that are used in operating plans. Such 

assumptions are subject to change as a result of changing economic and competitive conditions. The determination of 

fair value is highly sensitive to differences between estimated and actual cash flows and changes in the related discount 

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rate used to evaluate the fair value of the trademarks. Estimated cash flows are sensitive to changes in the economy 

among other things.

The Company reviews its long-lived asset groups, which include intangible assets subject to amortization, which for 

the Company are its patents and customer relationships, for impairment whenever events or changes in circumstances 

indicate that the carrying amount of such asset groups may not be recoverable. Recoverability of asset groups to be 

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held and used is measured by a comparison of the carrying amount of long-lived assets to future undiscounted net cash 

flows expected to be generated by these asset groups. If such asset groups are considered to be impaired, the 

impairment recognized is the amount by which the carrying amount of the asset group exceeds the fair value of the 

asset group. Assets held for sale are reported at the lower of the carrying amount or fair value less estimated costs of 

disposal and are no longer depreciated.

The Company conducted its annual assessment of goodwill and indefinite lived intangibles in the fourth quarter and no 

impairment was indicated for 2012.

• Income taxes. The Company’s effective tax rate is based on its income, statutory tax rates and tax planning 

opportunities available in the jurisdictions in which it operates. Tax laws are complex and subject to different 

interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in 

determining the Company’s tax expense and in evaluating the Company’s tax positions. Deferred tax assets represent 

amounts available to reduce income taxes payable on taxable income in a future period. The Company evaluates the 

recoverability of these future tax benefits by assessing the adequacy of future expected taxable income from all 

sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning 

strategies. These sources of income inherently rely on estimates, including business forecasts and other projections of 

financial results over an extended period of time. In the event that the Company is not able to realize all or a portion of 

its deferred tax assets in the future, a valuation allowance is provided. The Company would recognize such amounts 

through a charge to income in the period in which that determination is made or when tax law changes are enacted. The 

Company had valuation allowances of $321.6 million in 2012, $334.2 million in 2011 and $325.1 million in 2010. For 

further information regarding the Company’s valuation allowances, see Note 13 to the consolidated financial 

statements.

In the ordinary course of business there is inherent uncertainty in quantifying the Company’s income tax positions. 

The Company assesses its income tax positions and records tax benefits for all years subject to examination based 

upon the Company’s evaluation of the facts, circumstances and information available as of the reporting date. For 

those tax positions where it is more likely than not that a tax benefit will be sustained, the Company has recorded the 

largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a 

taxing authority that has full knowledge of all relevant information, as required by the provisions of the Financial 

Accounting Standards Board (“FASB”) FASB Accounting Standards Codification Topic ("ASC") 740-10. For those 

income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit has been 

recognized in the consolidated financial statements. As of December 31, 2012, the Company has $53.8 million accrued 

for uncertain tax positions. For further information regarding the Company’s uncertain tax positions, see Note 13 to the 

consolidated financial statements.

• Environmental and legal accruals. Environmental and legal accruals are estimates based on judgments made by the 

Company relating to ongoing environmental and legal proceedings, as disclosed in the Company’s consolidated 

financial statements. In determining whether a liability is probable and reasonably estimable, the Company consults 

with its internal experts. The Company believes that the amounts recorded in the accompanying financial statements 

are based on the best estimates and judgments available to it.

Recent Accounting Pronouncements

Accounting Standards Update (“ASU”) No. 2011-05, “Comprehensive Income (Topic 220)-Presentation of 

Comprehensive Income” (“ASU 2011-05”) requires comprehensive income to be presented as a single continuous financial 

statement or in two separate but consecutive statements. The option of presenting other comprehensive income in the statement 

of stockholders' equity was eliminated. The Company adopted ASU 2011-05 in the first quarter of 2012 and chose to present 

comprehensive income as two separate but consecutive statements. 

Impact of Inflation

Inflation affects the Company’s manufacturing costs, distribution costs and operating expenses. The Company expects 

raw material prices, many of which are petroleum based, to fluctuate based upon worldwide supply and demand of commodities 

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utilized in the Company’s production processes. Although the Company attempts to pass on increases in raw material, energy 

and fuel-related costs to its customers, the Company’s ability to do so is dependent upon the rate and magnitude of any increase, 

competitive pressures and market conditions for the Company’s products. There have been in the past, and may be in the future, 

periods of time during which increases in these costs cannot be fully recovered. In the past, the Company has often been able to 

enhance productivity and develop new product innovations to help offset increases in costs resulting from inflation in its 

operations.

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Seasonality

The Company is a calendar year-end company. With respect to its Mohawk and Dal-Tile segments, its results of 

operations for the first quarter tend to be the weakest. The second, third and fourth quarters typically produce higher net sales 

and operating income in these segments. These results are primarily due to consumer residential spending patterns for floor 

covering, which historically have decreased during the first two months of each year following the holiday season. The Unilin 

segment’s second and fourth quarters typically produce higher net sales and earnings followed by a moderate first quarter and a

weaker third quarter. The third quarter is traditionally the weakest due to the European holiday in late summer.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The Company’s market risk is impacted by changes in foreign currency exchange rates, interest rates and certain 

commodity prices. Financial exposures to these risks are monitored as an integral part of the Company’s risk management 

program, which seeks to reduce the potentially adverse effect that the volatility of these markets may have on its operating 

results. From time to time, the Company enters into derivative contracts to manage these risks. The Company does not regularly 

engage in speculative transactions, nor does it regularly hold or issue financial instruments for trading purposes. The Company

did not have any derivative contracts outstanding as of December 31, 2012 and 2011. As of December 31, 2012, approximately 

65% of the Company’s debt portfolio was comprised of fixed-rate debt and 35% was floating-rate debt. A 1.0 percentage point 

change in the interest rate of the floating-rate debt would not have a material impact on the Company’s results of operations.

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Item 8. Consolidated Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm 32

Consolidated Balance Sheets as of December 31, 2012 and 2011 34

Consolidated Statements of Operations for the Years ended December 31, 2012, 2011 and 2010 35

Consolidated Statements of Comprehensive Income for the Years ended December 31, 2012, 2011 and 2010 36

Consolidated Statements of Stockholders’ Equity for the Years ended December 31, 2012, 2011 and 2010 37

Consolidated Statements of Cash Flows for the Years ended December 31, 2012, 2011 and 2010 38

Notes to Consolidated Financial Statements 39

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Mohawk Industries, Inc.:

We have audited the accompanying consolidated balance sheets of Mohawk Industries, Inc. and subsidiaries as of 

December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income, stockholders’ 

equity, and cash flows for each of the years in the three-year period ended December 31, 2012. These consolidated financial 

statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these 

consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United 

States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial 

statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates 

made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a 

reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial

position of Mohawk Industries, Inc. and subsidiaries as of December 31, 2012 and 2011, and the results of their operations and 

their cash flows for each of the years in the three-year period ended December 31, 2012, in conformity with U.S. generally 

accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United 

States), Mohawk Industries, Inc.’s internal control over financial reporting as of December 31, 2012, based on criteria 

established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway 

Commission (COSO), and our report dated February 27, 2013 expressed an unqualified opinion on the effectiveness of the 

Company’s internal control over financial reporting.

/s/ KPMG LLP

Atlanta, Georgia

February 27, 2013

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Mohawk Industries, Inc.:

We have audited Mohawk Industries, Inc.’s internal control over financial reporting as of December 31, 2012, based on 

criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the 

Treadway Commission (COSO). Mohawk Industries, Inc.’s management is responsible for maintaining effective internal 

control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, as set 

forth in Item 9A. of Mohawk Industries, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2012. Our 

responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United 

States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective 

internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding 

of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the 

design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other 

procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our 

opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the 

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally 

accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures 

that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and 

dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit 

preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and 

expenditures of the company are being made only in accordance with authorizations of management and directors of the 

company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or 

disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become 

inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Mohawk Industries, Inc. maintained, in all material respects, effective internal control over financial 

reporting as of December 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the 

Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United 

States), the consolidated balance sheets of Mohawk Industries, Inc. and subsidiaries as of December 31, 2012 and 2011, and the 

related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years

in the three-year period ended December 31, 2012, and our report dated February 27, 2013 expressed an unqualified opinion on 

those consolidated financial statements.

/s/ KPMG LLP

Atlanta, Georgia

February 27, 2013

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Index to Financial Statements

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2012 and 2011

2012 2011

(In thousands, except per share data)

ASSETS

Current assets:

Cash and cash equivalents $ 477,672 311,945

Receivables, net 679,473 686,165

Inventories 1,133,736 1,113,630

Prepaid expenses 138,117 112,779

Deferred income taxes 111,585 150,910

Other current assets 9,463 22,735

Total current assets 2,550,046 2,398,164

Property, plant and equipment, net 1,692,852 1,712,154

Goodwill 1,385,771 1,375,175

Tradenames 455,503 450,432

Other intangible assets, net 98,296 154,668

Deferred income taxes and other non-current assets 121,216 115,635

$ 6,303,684 6,206,228

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Current portion of long-term debt $ 55,213 386,255

Accounts payable and accrued expenses 773,436 715,091

Total current liabilities 828,649 1,101,346

Deferred income taxes 329,810 355,653

Long-term debt, less current portion 1,327,729 1,200,184

Other long-term liabilities 97,879 99,537

Total liabilities 2,584,067 2,756,720

Commitments and contingencies (Notes 7 and 14)

Redeemable noncontrolling interest — 33,723

Stockholders’ equity:

Preferred stock, $.01 par value; 60 shares authorized; no shares issued — —

Common stock, $.01 par value; 150,000 shares authorized; 80,185 and 79,815 shares 

issued in 2012 and 2011, respectively 802 798

Additional paid-in capital 1,277,521 1,248,131

Retained earnings 2,605,023 2,354,765

Accumulated other comprehensive income, net 159,733 135,639

4,043,079 3,739,333

Less treasury stock at cost; 11,032 and 11,034 shares in 2012 and 2011, respectively 323,462 323,548

Total stockholders’ equity 3,719,617 3,415,785

$ 6,303,684 6,206,228

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See accompanying notes to consolidated financial statements.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

Years Ended December 31, 2012, 2011 and 2010

2012 2011 2010

(In thousands, except per share data)

Net sales $ 5,787,980 5,642,258 5,319,072

Cost of sales 4,297,922 4,225,379 3,916,472

Gross profit 1,490,058 1,416,879 1,402,600

Selling, general and administrative expenses 1,110,550 1,101,337 1,088,431

Operating income 379,508 315,542 314,169

Interest expense 74,713 101,617 133,151

Other expense (income) 303 14,051 (11,630)

Earnings before income taxes 304,492 199,874 192,648

Income tax expense 53,599 21,649 2,713

Net earnings 250,893 178,225 189,935

Less: Net earnings attributable to noncontrolling interest 635 4,303 4,464

Net earnings attributable to Mohawk Industries, Inc. $ 250,258 173,922 185,471

Basic earnings per share attributable to Mohawk Industries, Inc. $ 3.63 2.53 2.66

Diluted earnings per share attributable to Mohawk Industries, Inc. $ 3.61 2.52 2.65

See accompanying notes to consolidated financial statements.

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Index to Financial Statements

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

Years Ended December 31, 2012, 2011 and 2010

2012 2011 2010

(in thousands)

Net earnings $ 250,893 178,225 189,935

Other comprehensive income (loss):

Foreign currency translation 

adjustments 25,685 (42,006) (119,200)

Pension prior service cost and 

actuarial (loss) gain (1,591) (452) 380

Other comprehensive income (loss) 24,094 (42,458) (118,820)

Comprehensive income 274,987 135,767 71,115

Less: comprehensive income 

attributable to the non-controlling 

interest 635 4,303 4,464

Comprehensive income attributable to 

Mohawk Industries, Inc. $ 274,352 131,464 66,651

See accompanying notes to consolidated financial statements.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

Years Ended December 31, 2012, 2011 and 2010

Total Stockholders’ Equity

Redeemable

Noncontrolling

Interest

Common Stock Additional

Paid-in

Capital

Retained

Earnings

Accumulated

Other

Comprehensive

Income

Treasury Stock Total

Stockholders’

Shares Amount Shares Amount Equity

(In thousands)

Balances at December 31, 2009 $ 33,459 79,518 $ 795 $1,227,856 $1,998,616 $ 296,917 (11,034) $(323,361) $3,200,823

Shares issued under employee and 

director stock plans — 148 2 1,685 — — (3) (265) 1,422

Stock-based compensation expense — — — 6,888 — — — — 6,888

Tax deficit from stock-based 

compensation — — — (984) — — — — (984)

Distribution to noncontrolling interest, 

net of adjustments (5,726) — — — — — — — —

Noncontrolling earnings 4,464 — — — — — — — —

Accretion of redeemable noncontrolling 

interest 3,244 — — — (3,244) — — — (3,244)

 Currency translation adjustment — — — — — (119,200) — — (119,200)

 Pension prior service cost and actuarial 

gain or loss — — — — — 380 — — 380

 Net income — — — — 185,471 — — — 185,471

Balances at December 31, 2010 35,441 79,666 797 1,235,445 2,180,843 178,097 (11,037) (323,626) 3,271,556

Shares issued under employee and 

director stock plans — 149 1 2,543 — — 3 78 2,622

Stock-based compensation expense — — — 10,159 — — — — 10,159

Tax deficit from stock-based 

compensation — — — (16) — — — — (16)

Distribution to noncontrolling interest, 

net of adjustments (4,764) — — — — — — — —

Retained distribution noncontrolling 

interest (1,257) — — — — — — —

Noncontrolling earnings 4,303 — — — — — — — —

 Currency translation adjustment — — — — — (42,006) — — (42,006)

 Pension prior service cost and actuarial 

gain or loss — — — — — (452) — — (452)

 Net income — — — — 173,922 — — — 173,922

Balances at December 31, 2011 33,723 79,815 798 1,248,131 2,354,765 135,639 (11,034) (323,548) 3,415,785

Shares issued under employee and 

director stock plans 370 4 13,467 2 86 13,557

Stock-based compensation expense 14,082 14,082

Tax benefit from stock-based 

compensation 1,133 1,133

Distribution to noncontrolling interest, 

net of adjustments (423) —

Noncontrolling earnings 635 —

Purchase of noncontrolling interest (35,000) —

Tax effect of purchase of noncontrolling 

interest 1,065 708 708

 Currency translation adjustment 25,685 25,685

 Pension prior service cost and actuarial 

gain or loss (1,591) (1,591)

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 Net income 250,258 250,258

Balances at December 31, 2012 $ — 80,185 $ 802 $1,277,521 $2,605,023 $ 159,733 (11,032) $(323,462) $3,719,617

See accompanying notes to consolidated financial statements.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Years Ended December 31, 2012, 2011 and 2010

2012 2011 2010

(In thousands)

Cash flows from operating activities:

Net earnings $ 250,893 178,225 189,935

Adjustments to reconcile net earnings to net cash provided by operating 

activities:

Restructuring 18,564 23,209 12,341

Depreciation and amortization 280,293 297,734 296,773

Deferred income taxes 9,037 (4,616) (21,279)

Loss on extinguishment of debt — 1,116 7,514

Loss (gain) on disposal of property, plant and equipment 4,782 (1,273) (4,975)

Stock-based compensation expense 14,082 10,159 6,888

Other — (1,257) —

Changes in operating assets and liabilities, net of effects of acquisitions:

Receivables, net 10,888 (85,391) (12,273)

Income tax receivable — 1,631 68,740

Inventories (17,079) (100,205) (118,903)

Accounts payable and accrued expenses 39,181 (11,124) (86,947)

Other assets and prepaid expenses (9,864) (12,434) (11,791)

Other liabilities (13,187) 5,219 (6,311)

Net cash provided by operating activities 587,590 300,993 319,712

Cash flows from investing activities:

Additions to property, plant and equipment (208,294) (275,573) (156,180)

Proceeds from insurance claim — — 4,615

Acquisitions, net of cash acquired — (24,097) —

Investment in joint venture (7,007) — (79,917)

Net cash used in investing activities (215,301) (299,670) (231,482)

Cash flows from financing activities:

Payments on revolving line of credit (1,711,425) (1,431,349) —

Proceeds from revolving line of credit 1,567,300 1,729,349 —

Repayment of senior notes (336,270) (368,478) (199,992)

Proceeds from asset securitization borrowings 280,000 — —

Borrowings (payments) on term loan and other debt (3,259) 2,806 (812)

Debt issuance costs (1,797) (8,285) —

Debt extinguishment costs — (1,734) (7,514)

Purchase of non-controlling interest (35,000) — —

Distribution to non-controlling interest (423) (4,764) (3,472)

Change in restricted cash — 27,954 (27,954)

Change in outstanding checks in excess of cash 7,890 17,590 (17,900)

Proceeds from stock transactions 16,153 3,787 2,445

Net cash used in financing activities (216,831) (33,124) (255,199)

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Effect of exchange rate changes on cash and cash equivalents 10,269 (10,471) (10,272)

Net change in cash and cash equivalents 165,727 (42,272) (177,241)

Cash and cash equivalents, beginning of year 311,945 354,217 531,458

Cash and cash equivalents, end of year $ 477,672 311,945 354,217

See accompanying notes to consolidated financial statements.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2012, 2011 and 2010

(In thousands, except per share data)

(1) Summary of Significant Accounting Policies

(a) Basis of Presentation

Mohawk Industries, Inc. (“Mohawk” or the “Company”), a term which includes the Company and its subsidiaries, is a 

leading producer of floor covering products for residential and commercial applications in the United States (“U.S.”) and 

residential applications in Europe. The Company is the second largest carpet and rug manufacturer and one of the largest 

manufacturers, marketers and distributors of ceramic tile, natural stone and hardwood flooring in the U.S., as well as a leading 

producer of laminate flooring in the U.S. and Europe.

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant 

intercompany balances and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires 

management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of 

contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses 

during the reporting period. Actual results could differ from those estimates.

(b) Cash and Cash Equivalents 

The Company considers investments with an original maturity of three months or less when purchased to be cash 

equivalents. As of December 31, 2012, the Company had invested cash of $417,541 of which $415,877 was invested in A-1/P-1 

rated money market cash investments in Europe and $1,664 was in North America and Mexico. As of December 31, 2011, the 

Company had invested cash of $266,488 of which $259,991 was invested in A-1/P-1 rated money market cash investments in 

Europe and $6,497 was in North America and Mexico. 

(c) Accounts Receivable and Revenue Recognition

The Company is principally a carpet, rugs, ceramic tile, laminate and hardwood flooring manufacturer and sells carpet, 

rugs, ceramic tile, natural stone, hardwood, resilient and laminate flooring products in the U.S. principally for residential and 

commercial use. In addition, the Company manufactures laminate and sells carpet, rugs, hardwood and laminate flooring 

products in Europe principally for residential and commercial use. The Company grants credit to customers, most of whom are 

retail-flooring dealers, home centers and commercial end users, under credit terms that the Company believes are customary in 

the industry.

Revenues, which are recorded net of taxes collected from customers, are recognized when there is persuasive evidence of 

an arrangement, delivery has occurred, the price has been fixed or is determinable, and collectability can be reasonably assured. 

The Company provides allowances for expected cash discounts, returns, claims, sales allowances and doubtful accounts based 

upon historical bad debt and claims experience and periodic evaluations of specific customer accounts and the aging of 

accounts receivable. Licensing revenues received from third parties for patents are recognized based on contractual agreements.

(d) Inventories

The Company accounts for all inventories on the first-in, first-out (“FIFO”) method. Inventories are stated at the lower of 

cost or market (net realizable value). Cost has been determined using the FIFO method. Costs included in inventory include raw 

materials, direct and indirect labor and employee benefits, depreciation, general manufacturing overhead and various other costs 

of manufacturing. Market, with respect to all inventories, is replacement cost or net realizable value. Inventories on hand are

compared against anticipated future usage, which is a function of historical usage, anticipated future selling price, expected 

sales below cost, excessive quantities and an evaluation for obsolescence. Actual results could differ from assumptions used to

value obsolete inventory, excessive inventory or inventory expected to be sold below cost and additional reserves may be 

required.

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(e) Property, Plant and Equipment

Property, plant and equipment are stated at cost, including capitalized interest. Depreciation is calculated on a straight-line

basis over the estimated remaining useful lives, which are 25-35 years for buildings and improvements, 5-15 years for 

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

machinery and equipment, the shorter of the estimated useful life or lease term for leasehold improvements and 3-7 years for 

furniture and fixtures.

(f) Goodwill and Other Intangible Assets

In accordance with the provisions of the Financial Accounting Standards Board ("FASB") Accounting Standards 

Codification Topic ("ASC") 350, “Intangibles-Goodwill and Other,” the Company tests goodwill and other intangible assets 

with indefinite lives for impairment on an annual basis in the fourth quarter (or on an interim basis if an event occurs that might 

reduce the fair value of the reporting unit below its carrying value). The Company considers the relationship between its market 

capitalization and its book value, among other factors, when reviewing for indicators of impairment. The goodwill impairment 

tests are based on determining the fair value of the specified reporting units based on management’s judgments and assumptions 

using the discounted cash flows and comparable company market valuation approaches. The Company has identified Mohawk, 

Dal-Tile, Unilin Flooring, Unilin Chipboard and Melamine, and Unilin Roofing as its reporting units for the purposes of 

allocating goodwill and intangibles as well as assessing impairments. The valuation approaches are subject to key judgments 

and assumptions that are sensitive to change such as judgments and assumptions about appropriate sales growth rates, operating 

margins, weighted average cost of capital (“WACC”), and comparable company market multiples.

When developing these key judgments and assumptions, the Company considers economic, operational and market 

conditions that could impact the fair value of the reporting unit. However, estimates are inherently uncertain and represent only 

management’s reasonable expectations regarding future developments. These estimates and the judgments and assumptions 

upon which the estimates are based will, in all likelihood, differ in some respects from actual future results. Should a significant 

or prolonged deterioration in economic conditions occur, such as continued declines in spending for new construction, 

remodeling and replacement activities; the inability to pass increases in the costs of raw materials and fuel on to customers; or a 

decline in comparable company market multiples, then key judgments and assumptions could be impacted.

The impairment evaluation for indefinite lived intangible assets, which for the Company are its trademarks, is conducted 

during the fourth quarter of each year, or more frequently if events or changes in circumstances indicate that an asset might be 

impaired. During 2012, the Company adopted Accounting Standard Update No. 2011-08, "Testing Goodwill for Impairment,"

and early adopted Accounting Standard Update No. 2012-02, "Testing Indefinite-Lived Intangible Assets for Impairment." As a 

result, beginning in 2012, the first step of the impairment tests for our indefinite lived intangible assets is a thorough assessment 

of qualitative factors to determine the existence of events or circumstances that would indicate that it is not more likely than not 

that the fair value of these assets is less than their carrying amounts. If the qualitative test indicates it is not more likely than not 

that the fair value of these assets is less than their carrying amounts, a quantitative assessment is not required. If a quantitative 

test is necessary, the second step of our impairment test involves comparing the estimated fair value of a reporting unit to its 

carrying amount. The determination of fair value used in the impairment evaluation is based on discounted estimates of future 

sales projections attributable to ownership of the trademarks. Significant judgments inherent in this analysis include 

assumptions about appropriate sales growth rates, royalty rates, WACC and the amount of expected future cash flows. The 

judgments and assumptions used in the estimate of fair value are generally consistent with past performance and are also 

consistent with the projections and assumptions that are used in current operating plans. Such assumptions are subject to change 

as a result of changing economic and competitive conditions. The determination of fair value is highly sensitive to differences

between estimated and actual cash flows and changes in the related discount rate used to evaluate the fair value of the 

trademarks. Estimated cash flows are sensitive to changes in the economy among other things. If the carrying value of the 

intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. 

Intangible assets that do not have indefinite lives are amortized based on average lives, which range from 7-16 years.

(g) Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for 

the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and

liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are 

measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are 

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expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in 

income in the period that includes the enactment date. Changes in recognition or measurement are reflected in the period in 

which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits in 

income tax expense.

(h) Financial Instruments

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

The Company’s financial instruments consist primarily of receivables, accounts payable, accrued expenses and long-term 

debt. The carrying amount of receivables, accounts payable and accrued expenses approximates their fair value because of the 

short-term maturity of such instruments. The carrying amount of the Company’s floating rate debt approximates its fair value 

based upon level two fair value hierarchy. Interest rates that are currently available to the Company for issuance of long-term

debt with similar terms and remaining maturities are used to estimate the fair value of the Company’s long-term debt.

(i) Advertising Costs and Vendor Consideration

Advertising and promotion expenses are charged to earnings during the period in which they are incurred. Advertising 

and promotion expenses included in selling, general, and administrative expenses were $29,175 in 2012, $35,847 in 2011 and 

$38,553 in 2010.

Vendor consideration, generally cash, is classified as a reduction of net sales, unless specific criteria are met regarding 

goods or services that the vendor may receive in return for this consideration. The Company makes various payments to 

customers, including slotting fees, advertising allowances, buy-downs and co-op advertising. All of these payments reduce 

gross sales with the exception of co-op advertising. Co-op advertising is classified as a selling, general and administrative 

expense in accordance with ASC 605-50. Co-op advertising expenses, a component of advertising and promotion expenses, 

were $6,424 in 2012, $3,520 in 2011 and $4,660 in 2010.

(j) Product Warranties

The Company warrants certain qualitative attributes of its flooring products. The Company has recorded a provision for 

estimated warranty and related costs, based on historical experience and periodically adjusts these provisions to reflect actual 

experience.

(k) Impairment of Long-Lived Assets

The Company reviews its long-lived asset groups, which include intangible assets subject to amortization, which for the 

Company are its patents and customer relationships, for impairment whenever events or changes in circumstances indicate that 

the carrying amount of such asset groups may not be recoverable. Recoverability of asset groups to be held and used is 

measured by a comparison of the carrying amount of long-lived assets to future undiscounted net cash flows expected to be 

generated by these asset groups. If such asset groups are considered to be impaired, the impairment recognized is the amount by

which the carrying amount of the asset group exceeds the fair value of the asset group. Assets held for sale are reported at the 

lower of the carrying amount or fair value less estimated costs of disposal and are no longer depreciated.

(l) Foreign Currency Translation

Prior to the second quarter of 2012, operations carried out in Mexico used the U.S. dollar as the functional currency. 

Effective April 1, 2012, the Company changed the functional currency of its Mexico operations to the Mexican peso. The 

Company believes that the completion of a second plant in Mexico and growth in sales to the local Mexican market indicated a 

significant change in the economic facts and circumstances that justified the change in the functional currency. The effects of

the change in functional currency were not significant to the Company's consolidated financial statements. 

The Company’s subsidiaries that operate outside the United States use their local currency as the functional currency, 

with the exception of operations carried out in Canada in which case the functional currency is the U.S. dollar. Other than 

Canada, the functional currency is translated into U.S. dollars for balance sheet accounts using the month end rates in effect as 

of the balance sheet date and average exchange rate for revenue and expense accounts for each respective period. The 

translation adjustments are deferred as a separate component of stockholders’ equity, within accumulated other comprehensive 

income. Gains or losses resulting from transactions denominated in foreign currencies are included in other income or expense, 

within the consolidated statements of operations. The assets and liabilities of the Company’s Canadian operations are remeasured using a month end rate, except for non-monetary assets and liabilities, which are re-measured using the historical 

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exchange rate. Income and expense accounts are re-measured using an average monthly rate for the period, except for expenses 

related to those balance sheet accounts that are re-measured using historical exchange rates. The resulting re-measurement 

adjustment is reported in the consolidated statements of operations when incurred.

(m) Earnings per Share (“EPS”)

Basic net earnings per share (“EPS”) is calculated using net earnings available to common stockholders divided by the 

weighted-average number of shares of common stock outstanding during the year. Diluted EPS is similar to basic EPS except 

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

that the weighted-average number of shares is increased to include the number of additional common shares that would have 

been outstanding if the potentially dilutive common shares had been issued.

Dilutive common stock options are included in the diluted EPS calculation using the treasury stock method. Common 

stock options and unvested restricted shares (units) that were not included in the diluted EPS computation because the price was 

greater than the average market price of the common shares for the periods presented were 891, 1,180 and 1,203 for 2012, 2011

and 2010, respectively. 

Computations of basic and diluted earnings per share are presented in the following table:

2012 2011 2010

Net earnings attributable to Mohawk Industries, Inc. $ 250,258 173,922 185,471

Accretion of redeemable noncontrolling interest (1) — — (3,244)

Net earnings available to common stockholders $ 250,258 173,922 182,227

Weighted-average common shares outstanding-basic and diluted:

Weighted-average common shares outstanding - basic 68,988 68,736 68,578

Add weighted-average dilutive potential common shares - options 

and RSU’s to purchase common shares, net 318 228 206

Weighted-average common shares outstanding-diluted 69,306 68,964 68,784

Basic earnings per share attributable to Mohawk Industries, Inc. $ 3.63 2.53 2.66

Diluted earnings per share attributable to Mohawk Industries, Inc. $ 3.61 2.52 2.65

(1) Amount represents the adjustment to fair value of a redeemable noncontrolling interest in a consolidated subsidiary of 

the Company.

(n) Stock-Based Compensation

The Company recognizes compensation expense for all share-based payments granted based on the grant-date fair value 

estimated in accordance with ASC 718-10, “Stock Compensation”. Compensation expense is generally recognized on a straightline basis over the awards' estimated lives for fixed awards with ratable vesting provisions.

(o) Comprehensive Income

Comprehensive income includes foreign currency translation of assets and liabilities of foreign subsidiaries, effects of 

exchange rate changes on intercompany balances of a long-term nature and pensions. The Company does not provide income 

taxes on currency translation adjustments, as earnings from foreign subsidiaries are considered to be indefinitely reinvested.

Amounts recorded in accumulated other comprehensive income on the consolidated statements of stockholders' equity for 

the years ended December 31, 2012, 2011 and 2010 are as follows:

Foreign

translation

adjustment Pensions Total

December 31, 2009 $ 296,182 735 296,917

2010 activity (119,200) 380 (118,820)

December 31, 2010 176,982 1,115 178,097

2011 activity (42,006) (452) (42,458)

December 31, 2011 134,976 663 135,639

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2012 activity 25,685 (1,591) 24,094

December 31, 2012 $ 160,661 (928) 159,733

(p) Recent Accounting Pronouncements

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Index to Financial Statements

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

Accounting Standards Update (“ASU”) No. 2011-05, “Comprehensive Income (Topic 220)-Presentation of 

Comprehensive Income” (“ASU 2011-05”) requires comprehensive income to be presented in a single continuous financial 

statement or in two separate but consecutive statements. The option of presenting other comprehensive income in the statement 

of stockholders' equity was eliminated. The Company adopted ASU 2011-05 in the first quarter of 2012 and chose to present 

comprehensive income in two separate but consecutive statements. 

(q) Fiscal Year

The Company ends its fiscal year on December 31. Each of the first three quarters in the fiscal year ends on the Saturday 

nearest the calendar quarter end.

(2) Acquisitions

The Company invested in a Brazilian joint venture in the Unilin segment for $7,007 in 2012. The Company acquired an 

Australian distribution business in the Unilin segment for $24,097 in 2011. The Company acquired a 34% equity investment in 

a leading manufacturer and distributor of ceramic tile in China in the Dal-Tile segment for $79,917 in 2010. In June 2012, the 

Company increased its equity method ownership in the China joint venture to 49% through a restructuring transaction in which 

the majority equity owner acquired certain assets of the joint venture. Also in 2012, the Company purchased the non-controlling

interest within the Dal-Tile segment for $35,000.

On January 10, 2013, the Company completed its purchase of Pergo, a leading manufacturer of laminate flooring in the 

United States and the Nordic countries. The total value of the acquisition was approximately $150 million in cash. 

On December 20, 2012, the Company entered into a definitive share purchase agreement to acquire Fintiles S.p.A and its 

subsidiaries (collectively, the "Marazzi Group"), a global manufacturer, distributor and marketer of ceramic tile. At the closing 

of the transaction, the Company will pay a purchase price based on an enterprise value of €1.17 billion. The Company expects 

to complete the transaction in the first half of 2013 pending customary governmental approvals and the satisfaction of other 

closing conditions.

On January 28, 2013 the Company entered into an agreement to purchase Spano Invest NV, a Belgian panel board 

manufacturer, for €125 million. The Company expects to complete the transaction in the second half of 2013 pending 

customary governmental approvals and the satisfaction of other closing conditions.

(3) Receivables

December 31, 

2012

December 31, 

2011

Customers, trade $ 691,553 696,856

Income tax receivable — 1,703

Other 25,793 31,311

717,346 729,870

Less allowance for discounts, returns, claims and doubtful accounts 37,873 43,705

Receivables, net $ 679,473 686,165

The following table reflects the activity of allowances for discounts, returns, claims and doubtful accounts for the years 

ended December 31:

Balance at Additions Deductions(1) Balance

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beginning

of year

charged to

costs and

expenses

at end

of year

2010 $ 62,809 170,274 187,328 45,755

2011 45,755 161,073 163,123 43,705

2012 43,705 180,616 186,448 37,873

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

(1) Represents charge-offs, net of recoveries.

(4) Inventories

The components of inventories are as follows:

December 31, 

2012

December 31, 

2011

Finished goods $ 695,606 670,877

Work in process 103,685 113,311

Raw materials 334,445 329,442

Total inventories $ 1,133,736 1,113,630

(5) Goodwill and Other Intangible Assets

The Company conducted its annual impairment assessment in the fourth quarter of 2012 and determined the fair values of 

its reporting units and trademarks exceeded their carrying values. As a result, no impairment was indicated.

The following table summarizes the components of intangible assets:

Goodwill:

Mohawk Dal-Tile Unilin Total

Balances as of December 31, 2010

Goodwill $ 199,132 1,186,913 1,310,774 2,696,819

Accumulated impairments losses (199,132) (531,930) (596,363) (1,327,425)

— 654,983 714,411 1,369,394

Goodwill recognized during the year — — 19,066 19,066

Currency translation during the year — — (13,285) (13,285)

Balances as of December 31, 2011

Goodwill 199,132 1,186,913 1,316,555 2,702,600

Accumulated impairments losses (199,132) (531,930) (596,363) (1,327,425)

— 654,983 720,192 1,375,175

Currency translation during the year — — 10,596 10,596

Balances as of December 31, 2012

Goodwill 199,132 1,186,913 1,327,151 2,713,196

Accumulated impairments losses (199,132) (531,930) (596,363) (1,327,425)

$ — 654,983 730,788 1,385,771

During 2011, the Company recorded additional goodwill of $19,066 in the Unilin segment related to business 

acquisitions.

Intangible assets:

Tradenames

Indefinite life assets not subject to amortization:

Balance as of December 31, 2010 $ 456,890

Currency translation during the year (6,458)

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Balance as of December 31, 2011 450,432

Currency translation during the year 5,071

Balance as of December 31, 2012 $ 455,503

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

Customer

relationships Patents Other Total

Intangible assets subject to amortization:

Balance as of December 31, 2010 $ 106,432 112,520 1,285 220,237

Intangible assets recognized during the year 5,181 — — 5,181

Amortization during the year (47,460) (22,782) (122) (70,364)

Currency translation during the year 805 (1,194) 3 (386)

Balance as of December 31, 2011 64,958 88,544 1,166 154,668

Amortization during the year (38,595) (18,747) (121) (57,463)

Currency translation during the year (153) 1,234 10 1,091

Balance as of December 31, 2012 $ 26,210 71,031 1,055 98,296

Years Ended December 31,

2012 2011 2010

Amortization expense $ 57,463 70,364 69,513

Estimated amortization expense for the years ending December 31 are as follows:

2013 $ 22,715

2014 20,716

2015 18,421

2016 15,837

2017 14,207

(6) Property, Plant and Equipment

Following is a summary of property, plant and equipment:

December 31, 

2012

December 31, 

2011

Land $ 178,110 180,584

Buildings and improvements 730,668 682,395

Machinery and equipment 2,550,779 2,470,485

Furniture and fixtures 98,519 90,963

Leasehold improvements 54,880 54,501

Construction in progress 145,368 160,929

3,758,324 3,639,857

Less accumulated depreciation and amortization 2,065,472 1,927,703

Net property, plant and equipment $ 1,692,852 1,712,154

Additions to property, plant and equipment included capitalized interest of $4,577, $6,197 and $4,240 in 2012, 2011 and 

2010, respectively. Depreciation expense was $217,393, $220,580 and $218,649 for 2012, 2011 and 2010, respectively. 

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Included in the property, plant and equipment are capital leases with a cost of $7,219 and $7,803 and accumulated depreciation 

of $5,581 and $5,881 as of December 31, 2012 and 2011, respectively.

(7) Long-Term Debt

On July 8, 2011, the Company entered into a 5-year, senior, secured revolving credit facility (the “Senior Credit 

Facility”). The Senior Credit Facility provides for a maximum of $900,000 of revolving credit, including limited amounts of 

credit in the form of letters of credit and swingline loans. The Company paid financing costs of $8,285 in connection with its 

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

Senior Credit Facility. These costs were deferred and, along with unamortized costs of $12,277 related to the Company’s prior 

senior, secured revolving credit facility, are being amortized over the term of the Senior Credit Facility.

On January 20, 2012, the Company entered into an amendment to the Senior Credit Facility that provides for an 

incremental term loan facility in the aggregate principal amount of $150,000. The Company paid financing costs of $1,018 in 

connection with the amendment to its Senior Credit Facility. These costs were deferred and are being amortized over the 

remaining term of the Senior Credit Facility. The incremental term loan facility provides for eight scheduled quarterly principal 

payments of $1,875, with the first such payment due on June 30, 2012, followed by four scheduled quarterly principal payments 

of $3,750, with remaining quarterly principal payments of $5,625 prior to maturity.

The Senior Credit Facility is scheduled to mature on July 8, 2016. The Company can terminate and prepay the Senior 

Credit Facility at any time without payment of any termination or prepayment penalty (other than customary breakage costs in 

respect of loans bearing interest at a rate based on LIBOR).

At the Company’s election, revolving loans under the Senior Credit Facility bear interest at annual rates equal to either 

(a) LIBOR for 1-, 2-, 3- or 6- month periods, as selected by the Company, plus an applicable margin ranging between 1.25%

and 2.0%, or (b) the higher of the Bank of America, N.A. prime rate, the Federal Funds rate plus 0.5%, and a monthly LIBOR 

rate plus 1.0%, plus an applicable margin ranging between 0.25% and 1.0%. The Company also pays a commitment fee to the 

lenders under the Senior Credit Facility on the average amount by which the aggregate commitments of the lenders’ exceed 

utilization of the Senior Credit Facility ranging from 0.25% to 0.4% per annum. The applicable margin and the commitment fee 

are determined based on the Company’s Consolidated Net Leverage Ratio (with applicable margins and the commitment fee 

increasing as the ratio increases).

All obligations of the Company and the other borrowers under the Senior Credit Facility are required to be guaranteed by 

all of the Company’s material domestic subsidiaries and all obligations of borrowers that are foreign subsidiaries are guaranteed 

by those foreign subsidiaries of the Company which the Company designates as guarantors.

Due to the rating agency upgrade announced on March 14, 2012 by Standard & Poor’s Financial Services, LLC (“S&P”), 

the security interests in domestic accounts receivable and inventories, certain shares of capital stock (or equivalent ownership 

interests) of the domestic borrowers’ and domestic guarantors’ subsidiaries, and proceeds of any of the foregoing securing 

obligations under the Senior Credit Facility were released. The Company will be required to reinstate such security interests if 

there is a ratings downgrade such that: (a) both (i) the Moody’s Investor’s Service, Inc. (“Moody’s”) rating is Ba2 and (ii) the 

S&P rating is BB, (b) (i) the Moody’s rating is Ba3 or lower and (ii) the S&P rating is below BBB- (with a stable outlook or 

better) or (c) (i) the Moody’s rating is below Baa3 (with a stable outlook or better) and (ii) the S&P rating is BB- or lower.

The Senior Credit Facility includes certain affirmative and negative covenants that impose restrictions on the Company’s 

financial and business operations, including limitations on liens, indebtedness, investments, fundamental changes, asset 

dispositions, dividends and other similar restricted payments, transactions with affiliates, payments and modifications of certain 

existing debt, future negative pledges, and changes in the nature of the Company’s business. Many of these limitations are 

subject to numerous exceptions. The Company is also required to maintain a Consolidated Interest Coverage Ratio of at least 

3.00 to 1.0 and a Consolidated Net Leverage Ratio of no more than 3.75 to 1.0, each as of the last day of any fiscal quarter, as 

defined in the Senior Credit Facility. The Senior Credit Facility also contains customary representations and warranties and 

events of default, subject to customary grace periods.

As of December 31, 2012, the amount utilized under the Senior Credit Facility including the term loan was $251,238, 

resulting in a total of $793,137 available under the Senior Credit Facility. The amount utilized included $153,875 of 

borrowings, $46,823 of standby letters of credit guaranteeing the Company’s industrial revenue bonds and $50,540 of standby 

letters of credit related to various insurance contracts and foreign vendor commitments. 

On December 19, 2012, the Company entered into a three-year on-balance sheet trade accounts receivable securitization 

agreement (the "Securitization Facility"). The Securitization Facility allows the Company to borrow up to $300,000 based on 

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available accounts receivable and is secured by the Company's U.S. trade accounts receivable. Borrowings under the 

Securitization Facility bear interest at commercial paper interest rates, in the case of lenders that are commercial paper conduits, 

or LIBOR, in the case of lenders that are not commercial paper conduits, in each case, plus an applicable margin of 0.75% per 

annum. The Company also pays a commitment fee at a per annum rate of 0.30% on the unused amount of each lender's 

commitment. At December 31, 2012, the amount utilized under the Securitization Facility was $280,000.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

On January 31, 2013, the Company issued $600,000 aggregate principal amount of 3.850% Senior Notes due 2023. In the 

event that the Company does not complete its acquisition of the Marazzi Group on or prior to January 25, 2014 or if, prior to 

that date, the Share Purchase Agreement with respect to the acquisition is terminated, the Company will be required to redeem 

all of the notes on the special mandatory redemption date at a redemption price equal to 101% of the aggregate principal 

amount of the notes, plus accrued and unpaid interest thereon to, but not including, the special mandatory redemption date.

On January 17, 2006, the Company issued $900,000 aggregate principal amount of 6.125% notes due January 15, 2016. 

Interest payable on these notes is subject to adjustment if either Moody’s or S&P, or both, upgrades or downgrades the rating 

assigned to the notes. Each rating agency downgrade results in a 0.25% increase in the interest rate, subject to a maximum 

increase of 1% per rating agency. If later the rating of these notes improves, then the interest rates would be reduced 

accordingly. Each 0.25% increase in the interest rate of these notes would increase the Company’s interest expense by 

approximately $0.1 million per quarter per $100.0 million of outstanding notes. In 2009, interest rates increased by an aggregate 

amount of 75 basis points as a result of downgrades by Moody’s and S&P. In the first quarter of 2012, interest rates decreased 

by 50 basis points as a result of the upgrades from S&P and Moody’s. Any future downgrades in the Company’s credit ratings 

could increase the cost of its existing credit and adversely affect the cost of and ability to obtain additional credit in the future.

In 2002, the Company issued $400,000 aggregate principal amount of its senior 7.20% notes due April 15, 2012. During 

2011, the Company repurchased $63,730 of its senior 7.20% notes, at an average price equal to 102.72% of the principal 

amount. On April 16, 2012, the Company repaid the $336,270 principal amount of outstanding senior 7.20% notes, together 

with accrued interest of $12,106, at maturity using available borrowings under its Senior Credit Facility. 

The fair value and carrying value of the Company’s debt instruments are detailed as follows:

December 31, 2012 December 31, 2011

Fair Value Carrying Value Fair Value Carrying Value

7.20% senior notes, payable April 15, 2012 interest 

payable semiannually $ — — 336,606 336,270

6.125% notes, payable January 15, 2016 interest payable 

semiannually 1,011,600 900,000 963,900 900,000

Five-year senior secured credit facility, due July 8, 2016 153,875 153,875 298,000 298,000

Securitization facility 280,000 280,000 — —

Industrial revenue bonds, capital leases and other 49,067 49,067 52,169 52,169

Total long-term debt 1,494,542 1,382,942 1,650,675 1,586,439

Less current portion 55,213 55,213 386,591 386,255

Long-term debt, less current portion $ 1,439,329 1,327,729 1,264,084 1,200,184

The fair values of the Company’s debt instruments were estimated using market observable inputs, including quoted 

prices in active markets, market indices and interest rate measurements. Within the hierarchy of fair value measurements, these

are Level 2 fair values.

The aggregate maturities of long-term debt as of December 31, 2012 are as follows:

2013 $ 55,213

2014 13,653

2015 300,944

2016 1,012,864

2017 229

Thereafter 39

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$ 1,382,942

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

(8) Accounts Payable, Accrued Expenses and Deferred Tax Liability

Accounts payable and accrued expenses are as follows:

December 31, 2012 December 31, 2011

Outstanding checks in excess of cash $ 25,480 17,590

Accounts payable, trade 387,871 372,616

Accrued expenses 180,039 154,560

Product warranties 32,930 30,144

Accrued interest 26,843 34,235

Deferred tax liability 6,309 8,760

Income taxes payable 2,074 —

Accrued compensation and benefits 111,890 97,186

Total accounts payable and accrued expenses $ 773,436 715,091

(9) Product Warranties

The Company warrants certain qualitative attributes of its products for up to 50 years. The Company records a provision 

for estimated warranty and related costs in accrued expenses, based on historical experience and periodically adjusts these 

provisions to reflect actual experience.

Product warranties are as follows:

2012 2011 2010

Balance at beginning of year $ 30,144 37,265 66,545

Warranty claims paid during the year (55,314) (57,163) (77,017)

Pre-existing warranty accrual adjustment during the year — 4,473 2,261

Warranty expense during the year 58,100 45,569 45,476

Balance at end of year $ 32,930 30,144 37,265

(10) Stock-Based Compensation

The Company recognizes compensation expense for all share-based payments granted based on the grant-date fair value 

estimated in accordance with the provisions of ASC 718-10. Compensation expense is recognized on a straight-line basis over 

the options’ or other awards’ estimated lives for fixed awards with ratable vesting provisions.

Under the Company’s 2007 Incentive Plan (“2007 Plan”), the Company's principal stock compensation plan prior to May 

9, 2012, the Company reserved up to a maximum of 3,200 shares of common stock for issuance upon the grant or exercise of 

stock options, restricted stock, restricted stock units (“RSUs”) and other types of awards, to directors and key employees 

through 2017. Option awards are granted with an exercise price equal to the market price of the Company’s common stock on 

the date of the grant and generally vest between three and five years with a 10-year contractual term. Restricted stock and RSUs 

are granted with a price equal to the market price of the Company’s common stock on the date of the grant and generally vest 

between three and five years. On May 9, 2012, the Company's stockholders approved the 2012 Long-Term Incentive Plan 

(“2012 Plan”), which allows the Company to reserve up to a maximum of 3,200 shares of common stock for issuance upon the 

grant or exercise of awards under the 2012 Plan. No additional awards may be granted under the 2007 Plan after May 9, 2012. 

As of December 31, 2012, there have been no awards granted under the 2012 Plan. 

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

Additional information relating to the Company’s stock option plans follows:

2012 2011 2010

Options outstanding at beginning of year 1,305 1,371 1,481

Options granted 83 76 40

Options exercised (277) (82) (74)

Options forfeited and expired (116) (60) (76)

Options outstanding at end of year 995 1,305 1,371

Options exercisable at end of year 814 1,106 1,160

Option prices per share:

Options granted during the year 66.14 57.34 46.80

Options exercised during the year 28.37-88.33 28.37-63.14 16.66-57.88

Options forfeited and expired during the year 46.80-93.65 28.37-93.65 22.63-93.65

Options outstanding at end of year 28.37-93.65 28.37-93.65 28.37-93.65

Options exercisable at end of year 28.37-93.65 28.37-93.65 28.37-93.65

During 2012, 2011 and 2010, a total of 2, 3 and 4 shares, respectively, were awarded to the non-employee directors in lieu 

of cash for their annual retainers. 

In addition, the Company maintains an employee incentive program that awards restricted stock on the attainment of 

certain service criteria. The outstanding awards related to these programs and related compensation expense was not significant

for any of the years ended December 31, 2012, 2011 or 2010.

The Company’s Board of Directors has authorized the repurchase of up to 15,000 shares of the Company’s outstanding 

common stock. For the years ended December 31, 2012 and 2011, no shares of the Company’s common stock were purchased. 

For the year ended December 31, 2010, the Company repurchased approximately 6 shares at an average price of $56.94 in 

connection with the exercise of stock options under the Company’s 2007 Incentive Plan. Since the inception of the program, a 

total of approximately 11,518 shares have been repurchased at an aggregate cost of approximately $335,110. All of these 

repurchases have been financed through the Company’s operations and banking arrangements.

The fair value of option awards is estimated on the date of grant using the Black-Scholes-Merton valuation model that 

uses the assumptions noted in the following table. Expected volatility is based on the historical volatility of the Company’s 

common stock and other factors. The Company uses historical data to estimate option exercise and forfeiture rates within the 

valuation model. Optionees that exhibit similar option exercise behavior are segregated into separate groups within the 

valuation model. The expected term of options granted represents the period of time that options granted are expected to be 

outstanding. The risk-free rate is based on U.S. Treasury yields in effect at the time of the grant for the expected term of the 

award.

2012 2011 2010

Dividend yield ———

Risk-free interest rate 1.0% 2.0% 2.3%

Volatility 47.1% 48.1% 45.2%

Expected life (years) 5 5 5

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

A summary of the Company’s options under the 2002 and 2007 Plan as of December 31, 2012, and changes during the 

year then ended is presented as follows:

Shares

Weighted

average

exercise

price

Weighted

average

remaining

contractual

term (years)

Aggregate

intrinsic

value

Options outstanding, December 31, 2011 1,305 $ 72.08

Granted 83 66.14

Exercised (277) 60.76

Forfeited and expired (116) 70.93

Options outstanding, December 31, 2012 995 74.87 3.9 $ 15,643

Vested and expected to vest as of December 31, 2012 989 $ 74.95 3.9 $ 15,453

Exercisable as of December 31, 2012 814 $ 77.78 3.0 $ 10,437

The weighted-average grant-date fair value of an option granted during 2012, 2011 and 2010 was $28.71, $25.39 and 

$19.10, respectively. The total intrinsic value of options exercised during the years ended December 31, 2012, 2011, and 2009 

was $4,226, $1,148 and $1,714, respectively. Total compensation expense recognized for the years ended December 31, 2012, 

2011 and 2010 was $2,176 ($1,378, net of tax), $1,885 ($1,194, net of tax) and $2,436 ($1,543, net of tax), respectively, which

was allocated to selling, general and administrative expenses. The remaining unamortized expense for non-vested compensation 

expense as of December 31, 2012 was $2,096 with a weighted average remaining life of 1.4 years.

The following table summarizes information about the Company’s stock options outstanding as of December 31, 2012:

Outstanding Exercisable

Exercise price range

Number of

shares

Average

life

Average

price

Number of

shares

Average

price

Under $57.34 171 6.4 $ 47.90 98 $ 44.34

$57.88-$73.45 197 4.4 69.97 115 72.75

$73.54-$81.40 162 4.7 74.91 136 74.99

$81.90-$86.51 167 2.8 83.16 167 83.16

$87.87-$88.00 35 2.8 87.96 35 87.96

$88.33-$93.65 263 2.3 89.08 263 89.08

Total 995 3.9 $ 74.87 814 $ 77.78

A summary of the Company’s RSUs under the 2007 Plan as of December 31, 2012, and changes during the year then 

ended is presented as follows:

Shares

Weighted

average price

Weighted

average

remaining

contractual

term (years)

Aggregate

intrinsic value

Restricted Stock Units outstanding, December 31, 2011 495 $ 50.76

Granted 260 65.98

Released (140) 43.55

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Forfeited (10) 59.07

Restricted Stock Units outstanding, December 31, 2012 605 57.87 2.3 $ 54,774

Expected to vest as of December 31, 2012 551 2.1 $ 49,872

The Company recognized stock-based compensation costs related to the issuance of RSU’s of $11,887 ($7,530, net of 

taxes), $8,186 ($5,186, net of taxes) and $4,262 ($2,700, net of taxes) for the years ended December 31, 2012, 2011 and 2010, 

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

respectively, which has been allocated to selling, general and administrative expenses. Pre-tax unrecognized compensation 

expense for unvested RSU’s granted to employees, net of estimated forfeitures, was $15,437 as of December 31, 2012, and will 

be recognized as expense over a weighted-average period of approximately 2.9 years.

Additional information relating to the Company’s RSUs under the 2007 Plan is as follows:

2012 2011 2010

Restricted Stock Units outstanding, January 1 495 404 359

Granted 260 196 149

Released (140) (91) (95)

Forfeited (10) (14) (9)

Restricted Stock Units outstanding, December 31 605 495 404

Expected to vest as of December 31 551 438 343

(11) Employee Benefit Plans

The Company has a 401(k) retirement savings plan (the “Mohawk Plan”) open to substantially all of its employees within 

the Mohawk segment, Dal-Tile segment and U.S. based employees of the Unilin segment, who have completed 90 days of 

eligible service. The Company contributes $.50 for every $1.00 of employee contributions up to a maximum of 6% of the 

employee’s salary based upon each individual participants election. Employee and employer contributions to the Mohawk Plan 

were $35,986 and $15,046 in 2012, $34,595 and $14,541 in 2011 and $33,071 and $13,062 in 2010, respectively. 

The Company also has various pension plans covering employees in Belgium, France, and The Netherlands (the 

“Non-U.S. Plans”) that it acquired with the acquisition of Unilin. Benefits under the Non-U.S. Plans depend on compensation 

and years of service. The Non-U.S. Plans are funded in accordance with local regulations. The Company uses December 31 as 

the measurement date for its Non-U.S. Plans.

Components of the net periodic benefit cost of the Non-U.S. Plans are as follows:

2012 2011 2010

Service cost of benefits earned $ 1,870 1,708 1,506

Interest cost on projected benefit obligation 1,367 1,400 1,219

Expected return on plan assets (1,192) (1,232) (1,025)

Amortization of actuarial gain (10) (26) 4

Net pension expense $ 2,035 1,850 1,704

Assumptions used to determine net periodic pension expense for the Non-U.S. Plans:

2012 2011

Discount rate 4.50% 4.75%

Expected rate of return on plan assets 2.50%-3.50% 4.00%-5.00%

Rate of compensation increase 2.00%-4.00% 0.00%-3.00%

Underlying inflation rate 2.00% 2.00%

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

The obligations, plan assets and funding status of the Non-U.S. Plans were as follows:

2012 2011

Change in benefit obligation:

Projected benefit obligation at end of prior year $ 29,231 26,977

Cumulative foreign exchange effect 669 (876)

Service cost 1,870 1,708

Interest cost 1,367 1,400

Plan participants contributions 827 763

Actuarial loss 5,179 455

Benefits paid (1,552) (1,196)

Effect of curtailment and settlement (40) —

Projected benefit obligation at end of year $ 37,551 29,231

Change in plan assets:

Fair value of plan assets at end of prior year $ 26,109 24,108

Cumulative foreign exchange effect 515 (594)

Actual return on plan assets 4,771 1,203

Employer contributions 1,888 1,825

Benefits paid (1,552) (1,196)

Plan participant contributions 827 763

Fair value of plan assets at end of year $ 32,558 26,109

Funded status of the plans:

Ending funded status $ (4,993) (3,122)

Net amount recognized in consolidated balance sheets:

Accrued benefit liability (non-current liability) $ (4,993) (3,122)

Accumulated other comprehensive income 928 (663)

Net amount recognized $ (4,065) (3,785)

The Company’s net amount recognized in other comprehensive income related to actuarial gains (losses) was $(1,591), 

$(452) and $380 for the years ended December 31, 2012, 2011 and 2010, respectively.

Assumptions used to determine the projected benefit obligation for the Non-U.S. Plans were as follows:

2012 2011

Discount rate 3.25% 4.50%

Rate of compensation increase 2.00%-4.00% 0.00%-3.00%

Underlying inflation rate 2.00% 2.00%

The discount rate assumptions used to account for pension obligations reflect the rates at which the Company believes 

these obligations will be effectively settled. In developing the discount rate, the Company evaluated input from its actuaries,

including estimated timing of obligation payments and yield on investments. The rate of compensation increase for the 

Non-U.S. Plans is based upon the Company’s annual reviews.

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Index to Financial Statements

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

Non-U.S. Plans

December 31, 

2012

December 31, 

2011

Plans with accumulated benefit obligations in excess of plan assets:

Projected benefit obligation $ 15,067 16,492

Accumulated benefit obligation 12,396 15,496

Fair value of plan assets 11,702 14,703

Plans with plan assets in excess of accumulated benefit obligations:

Projected benefit obligation $ 22,484 12,739

Accumulated benefit obligation 20,640 10,687

Fair value of plan assets 20,856 11,406

Estimated future benefit payments for the Non-U.S. Plans are as follows:

2013 976

2014 984

2015 1,071

2016 1,102

2017 1,606

Thereafter 10,241

 The Company expects to make cash contributions of $1,930 to the Non-U.S. Plans in 2013.

The fair value of the Non-U.S. Plans' investments were estimated using market observable data. Within the hierarchy of 

fair value measurements, these investments represent Level 2 fair values. The fair value and percentage of each asset category 

of the total investments held by the plans as of December 31, 2012 and 2011 were as follows:

2012 2011

Non-U.S. Plans:

Insurance contracts (100%) $ 32,558 26,109

The Company’s approach to developing its expected long-term rate of return on pension plan assets combines an analysis 

of historical investment performance by asset class, the Company’s investment guidelines and current and expected economic 

fundamentals.

(12) Other Expense (Income)

Following is a summary of other expense (income):

2012 2011 2010

Foreign currency losses (gains) $ (5,599) 10,423 (2,270)

U.S. customs refund — — (7,730)

All other, net 5,902 3,628 (1,630)

Total other expense (income) $ 303 14,051 (11,630)

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Index to Financial Statements

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

(13) Income Taxes

Following is a summary of earnings from continuing operations before income taxes for United States and foreign 

operations:

2012 2011 2010

United States $ 164,122 78,224 39,332

Foreign 140,370 121,650 153,316

Earnings before income taxes $ 304,492 199,874 192,648

Income tax expense (benefit) for the years ended December 31, 2012, 2011 and 2010 consists of the following:

2012 2011 2010

Current income taxes:

U.S. federal $ 26,204 13,957 14,052

State and local 4,583 5,118 1,514

Foreign 13,775 7,190 8,426

Total current 44,562 26,265 23,992

Deferred income taxes:

U.S. federal 31,106 8,994 (8,578)

State and local 4,704 (3,488) 18,562

Foreign (26,773) (10,122) (31,263)

Total deferred 9,037 (4,616) (21,279)

Total $ 53,599 21,649 2,713

Income tax expense (benefit) attributable to earnings before income taxes differs from the amounts computed by applying 

the U.S. statutory federal income tax rate to earnings before income taxes as follows:

2012 2011 2010

Income taxes at statutory rate $ 106,572 69,956 67,427

State and local income taxes, net of federal income tax benefit 6,004 2,821 2,358

Foreign income taxes (66,538) (45,112) (21,389)

Change in valuation allowance 5,703 (2,052) (17,139)

Tax contingencies and audit settlements (3,598) (5,911) (3,447)

Acquisition related tax contingencies — — (30,162)

Change in statutory tax rate — — (49)

Other, net 5,456 1,947 5,114

$ 53,599 21,649 2,713

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Index to Financial Statements

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax 

liabilities as of December 31, 2012 and 2011 are presented below:

2012 2011

Deferred tax assets:

Accounts receivable $ 12,289 10,031

Inventories 38,801 39,227

Accrued expenses and other 97,808 90,171

Deductible state tax and interest benefit 13,119 17,224

Intangibles 113,282 136,891

Federal, foreign and state net operating losses and credits 247,786 273,509

Gross deferred tax assets 523,085 567,053

Valuation allowance (321,585) (334,215)

Net deferred tax assets 201,500 232,838

Deferred tax liabilities:

Inventories (8,106) (5,270)

Plant and equipment (277,324) (294,960)

Intangibles (128,433) (137,888)

Other liabilities (7,854) (6,401)

Gross deferred tax liabilities (421,717) (444,519)

Net deferred tax liability (1) $ (220,217) (211,681)

(1) This amount includes $4,317 and $1,822 of non-current deferred tax assets which are in deferred income taxes and other 

non-current assets and $6,309 and $8,760 current deferred tax liabilities which are included in accounts payable and 

accrued expenses in the consolidated balance sheets as of December 31, 2012 and 2011, respectively.

The Company evaluates its ability to realize the tax benefits associated with deferred tax assets by analyzing its forecasted 

taxable income using both historic and projected future operating results, the reversal of existing temporary differences, taxable 

income in prior carry-back years (if permitted) and the availability of tax planning strategies. The valuation allowance as of 

December 31, 2012, 2011 and 2010 is $321,585, $334,215 and $325,127, respectively. The valuation allowance as of 

December 31, 2012 relates to the net deferred tax assets of one of the Company’s foreign subsidiaries as well as certain state net 

operating losses and tax credits. The total change in the 2012 valuation allowance was a decrease of $12,630 which includes 

$5,863 related to foreign currency translation. The total change in the 2011 valuation allowance was an increase of $9,088, 

which includes $7,040 related to foreign currency translation. The total change in the 2010 valuation allowance was a decrease 

of $40,817, which includes $22,046 related to foreign currency translation. 

Management believes it is more likely than not that the Company will realize the benefits of its deferred tax assets, net of 

valuation allowances, based upon the expected reversal of deferred tax liabilities and the level of historic and forecasted taxable 

income over periods in which the deferred tax assets are deductible.

As of December 31, 2012, the Company has state net operating loss carry forwards and state tax credits with potential tax 

benefits of $49,081, net of federal income tax benefit; these carry forwards expire over various periods based on taxing 

jurisdiction. A valuation allowance totaling $39,461 has been recorded against these state deferred tax assets as of 

December 31, 2012. In addition, as of December 31, 2012, the Company has net operating loss carry forwards in various 

foreign jurisdictions with potential tax benefits of $198,705. A valuation allowance totaling $170,394 has been recorded against 

these deferred tax assets as of December 31, 2012.

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The Company does not provide for U.S. federal and state income taxes on the cumulative undistributed earnings of its 

foreign subsidiaries because such earnings are deemed to be permanently reinvested. As of December 31, 2012, the Company 

had not provided federal income taxes on earnings of approximately $786,000 from its foreign subsidiaries. Should these 

earnings be distributed in the form of dividends or otherwise, the Company would be subject to both U.S. income taxes and 

withholding taxes in various foreign jurisdictions. These taxes may be partially offset by U.S. foreign tax credits. 

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Index to Financial Statements

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

Determination of the amount of the unrecognized deferred U.S. tax liability is not practical because of the complexities 

associated with this hypothetical calculation.

Tax Uncertainties

In the normal course of business, the Company’s tax returns are subject to examination by various taxing authorities. 

Such examinations may result in future tax and interest assessments by these taxing jurisdictions. Accordingly, the Company 

accrues liabilities when it believes that it is not more likely than not that it will realize the benefits of tax positions that it has 

taken in its tax returns or for the amount of any tax benefit that exceeds the cumulative probability threshold in accordance with 

ASC 740-10. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The 

Company records interest related to unrecognized tax benefits in interest and penalties in income tax expense (benefit). 

Differences between the estimated and actual amounts determined upon ultimate resolution, individually or in the aggregate, are

not expected to have a material adverse effect on the Company’s consolidated financial position but could possibly be material 

to the Company’s consolidated results of operations or cash flow in any given quarter or annual period.

In January 2012, the Company received a €23,789 assessment from the Belgian tax authority related to its year ended 

December 31, 2008, asserting that the Company had understated its Belgian taxable income for that year. The Company filed a 

formal protest in the first quarter of 2012 refuting the Belgian tax authority's position and in order to eliminate the accrual of 

additional interest on the assessed amount, the Company remitted payment of the tax assessment, plus applicable interest of 

€2,912 (collectively, the “Deposit”). In July 2012, the Company received notification of the Belgian tax authority's intention to 

extend the statute of limitations back to and including the tax year 2005. On September 10, 2012, the Company received notice 

from the Belgian tax authority setting aside the 2008 assessment and refunding the Deposit to the Company. On October 23, 

2012, the Company received notification from the Belgian tax authority of its intent to increase the Company's tax base for the

2008 tax year under a revised theory. On December 28, 2012, the Company received the refund of the Deposit of €23,789. On 

January 30, 2013, the Company received a refund of the interest Deposit of €2,912 and interest income of €1,583 earned on the 

Deposit.

On December 28, 2012, the Belgian taxing authority issued assessments under a revised theory related to the years ended 

December 31, 2005 and December 31, 2009, in the amounts of €46,135 and €35,567, respectively, excluding potential interest 

and penalties. The Company intends to file a formal protest during the first quarter of 2013 relating to the new assessments. The 

Company disagrees with the views of the Belgian tax authority on this matter and will continue to vigorously defend itself. 

Although there can be no assurances, the Company believes the ultimate outcome of these actions will not have a material 

adverse effect on its financial condition but could have a material adverse effect on its results of operations, liquidity or cash 

flows in a given quarter or year. 

As of December 31, 2012, the Company’s gross amount of unrecognized tax benefits is $53,835, excluding interest and 

penalties. If the Company were to prevail on all uncertain tax positions, $36,902 of the unrecognized tax benefits would affect

the Company’s effective tax rate, exclusive of any benefits related to interest and penalties.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

2012 2011

Balance as of January 1 $ 46,087 49,943

Additions based on tax positions related to the current year 3,142 306

Additions for tax positions of prior years 17,006 7,907

Reductions for tax positions of prior years (3,571) (926)

Reductions resulting from the lapse of the statute of limitations (1,764) (1,391)

Settlements with taxing authorities (7,065) (9,752)

Balance as of December 31 $ 53,835 46,087

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The Company will continue to recognize interest and penalties related to unrecognized tax benefits as a component of its 

income tax provision. As of December 31, 2012 and 2011, the Company has $5,874 and $7,998, respectively, accrued for the 

payment of interest and penalties, excluding the federal tax benefit of interest deductions where applicable. During the years 

ending December 31, 2012 , 2011 and 2010, the Company reversed interest and penalties through the consolidated statements 

of operations of $1,585, $3,755 and $9,852, respectively. 

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

The Company believes that its unrecognized tax benefits could decrease by $7,499 within the next twelve months. The 

Company has effectively settled all Federal income tax matters related to years prior to 2009. Various other state and foreign 

income tax returns are open to examination for various years. The Internal Revenue Service ("IRS") recently concluded its 

examination of the Company's 2007-2009 federal income tax returns. The results of the federal income tax examination were 

submitted to the Congressional Joint Committee on Taxation for review. Subsequent to the quarter ended December 31, 2012, 

the Company received notice that the Congressional Joint Committee on Taxation had completed its review and took no 

exception to the conclusions reached by the IRS. 

(14) Commitments and Contingencies

The Company is obligated under various operating leases for office and manufacturing space, machinery, and equipment. 

Future minimum lease payments under non-cancelable capital and operating leases (with initial or remaining lease terms in 

excess of one year) as of December 31:

Capital Operating

Total Future

Payments

2013 $ 795 87,741 88,536

2014 587 75,509 76,096

2015 354 59,252 59,606

2016 266 33,665 33,931

2017 255 21,160 21,415

Thereafter 16 27,068 27,084

Total payments 2,273 304,395 306,668

Less amount representing interest 228

Present value of capitalized lease payments $ 2,045

Rental expense under operating leases was $97,587, $103,416 and $105,976 in 2012, 2011 and 2010, respectively.

The Company had approximately $50,540 as of December 31, 2012 and 2011 in standby letters of credit for various 

insurance contracts and commitments to foreign vendors that expire within two years. 

The Company is involved in litigation from time to time in the regular course of its business. Except as noted below, there 

are no material legal proceedings pending or known by the Company to be contemplated to which the Company is a party or to 

which any of its property is subject.

Beginning in August 2010, a series of civil lawsuits were initiated in several U.S. federal courts alleging that certain 

manufacturers of polyurethane foam products and competitors of the Company’s carpet underlay division had engaged in price 

fixing in violation of U.S. antitrust laws. Mohawk has been named as a defendant in a number of the individual cases (the first

filed on August 26, 2010), as well as in two consolidated amended class action complaints, the first filed on February 28, 2011, 

on behalf of a class of all direct purchasers of polyurethane foam products, and the second filed on March 21, 2011, on behalf 

of a class of indirect purchasers. All pending cases in which the Company has been named as a defendant have been filed in or 

transferred to the U.S. District Court for the Northern District of Ohio for consolidated pre-trial proceedings under the name In 

re: Polyurethane Foam Antitrust Litigation, Case No. 1:10-MDL-02196. 

In these actions, the plaintiffs, on behalf of themselves and/or a class of purchasers, seek three times the amount of 

unspecified damages allegedly suffered as a result of alleged overcharges in the price of polyurethane foam products from at 

least 1999 to the present. Each plaintiff also seeks attorney fees, pre-judgment and post-judgment interest, court costs, and 

injunctive relief against future violations. In December 2011, the Company was named as a defendant in a Canadian Class 

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action, Hi ! Neighbor Floor Covering Co. Limited v. Hickory Springs Manufacturing Company, et.al., filed in the Superior 

Court of Justice of Ontario, Canada and Options Consommateures v. Vitafoam, Inc. et.al., filed in the Superior Court of Justice 

of Quebec, Montreal, Canada, both of which allege similar claims against the Company as raised in the U.S. actions and seek 

unspecified damages and punitive damages. The Company denies all of the allegations in these actions and will vigorously 

defend itself. 

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Index to Financial Statements

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

The Company believes that adequate provisions for resolution of all contingencies, claims and pending litigation have 

been made for probable losses that are reasonably estimable. These contingencies are subject to significant uncertainties and we 

are unable to estimate the amount or range of loss, if any, in excess of amounts accrued. The Company does not believe that the

ultimate outcome of these actions will have a material adverse effect on its financial condition but could have a material adverse 

effect on its results of operations, cash flows or liquidity in a given quarter or year. 

On July 1, 2010, Monterrey, Mexico experienced flooding as a result of Hurricane Alex which temporarily interrupted 

operations at the Company’s Dal-Tile ceramic tile production facility. The plant was fully operational in the latter part of the 

third quarter of 2010. Prior to the close of the third quarter of 2010, the Company and its insurance carrier agreed to a final

settlement of its claim, which included property damage and business interruption for approximately $25,000. The amount 

included approximately $20,000 to cover costs to repair and/or replace property and equipment and approximately $5,000 to 

recover lost margin from lost sales. The settlement with the insurance carrier is recorded in cost of sales in the Company’s 2010 

consolidated statement of operations. As a result of the insurance settlement, the flooding did not have a material impact on the 

Company’s results of operations or financial position.

The Company has received partial refunds from the United States government in reference to settling custom disputes 

dating back to 1986. Accordingly, the Company realized a gain of $7,730 in other expense (income) in the Company’s 2010 

consolidated statement of operations. The Company is pursuing additional recoveries for prior years but there can be no 

assurances such recoveries will occur. Additional future recoveries, if any, will be recorded as realized.

The Company is subject to various federal, state, local and foreign environmental health and safety laws and regulations, 

including those governing air emissions, wastewater discharges, the use, storage, treatment, recycling and disposal of solid and 

hazardous materials and finished product, and the cleanup of contamination associated therewith. Because of the nature of the 

Company’s business, the Company has incurred, and will continue to incur, costs relating to compliance with such laws and 

regulations. The Company is involved in various proceedings relating to environmental matters and is currently engaged in 

environmental investigation, remediation and post-closure care programs at certain sites. The Company has provided accruals 

for such activities that it has determined to be both probable and reasonably estimable. The Company does not expect that the 

ultimate liability with respect to such activities will have a material adverse effect on its financial condition but could have a 

material adverse effect on its results of operations, cash flows or liquidity in a given quarter or year. 

In the normal course of business, the Company has entered into various collective bargaining agreements with its 

workforce in Europe, Mexico and Malaysia, either locally or within its industry sector. The Company believes that its relations

with its employees are good.

The Company recorded pre-tax business restructuring charges of $18,564 in 2012, of which $14,816 was recorded as cost 

of sales and $3,748 was recorded as selling, general and administrative expenses. The Company recorded pre-tax business 

restructuring charges of $23,209 in 2011, of which $17,546 was recorded as cost of sales and $5,663 was recorded as selling, 

general and administrative expenses. The Company recorded pre-tax business restructuring charges of $13,156 in 2010, of 

which $12,392 was recorded as cost of sales and $764 was recorded as selling, general and administrative expenses. The 

charges primarily relate to the Company’s actions taken to lower its cost structure and improve the efficiency of its 

manufacturing and distribution operations as it adjusts to current economic conditions.

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Index to Financial Statements

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

The activity for 2011 and 2012 is as follows:

Lease

impairments

Asset writedowns Severance

Other

restructuring

costs Total

Balance as of December 31, 2010 $ 10,983 — 2,108 420 13,511

Provisions

Mohawk segment 3,680 10,643 5,120 3,766 23,209

Cash payments (3,707) — (4,850) (2,406) (10,963)

Noncash items — (10,643) — (269) (10,912)

Balance as of December 31, 2011 10,956 — 2,378 1,511 14,845

Provisions:

Mohawk segment — 6,687 4,069 (252) 10,504

Dal-Tile segment 373 3,727 2,009 — 6,109

Unilin segment — 138 1,775 38 1,951

Cash payments (3,872) — (7,333) (1,297) (12,502)

Noncash items — (10,552) — — (10,552)

Balance as of December 31, 2012 $ 7,457 — 2,898 — 10,355

Subsequent to December 31, 2012, in conjunction with the Pergo acquisition, the Company announced its intention to 

move certain production activities from Sweden to Belgium. The Company is in the beginning stages of union negotiations.

(15) Consolidated Statements of Cash Flows Information

Supplemental disclosures of cash flow information are as follows:

2012 2011 2010

Net cash paid (received) during the years for:

Interest $ 80,985 119,463 139,358

Income taxes $ 43,650 34,479 (5,862)

Supplemental schedule of non-cash investing and financing activities:

Fair value of assets acquired in acquisition $ — 37,486 —

Liabilities assumed in acquisition — (13,389) —

$ — 24,097 —

(16) Segment Reporting

The Company has three reporting segments: the Mohawk segment, the Dal-Tile segment and the Unilin segment. The 

Mohawk segment designs, manufactures, sources, distributes and markets its floor covering product lines, which include 

carpets, ceramic tile, laminate, rugs, carpet pad, hardwood and resilient, primarily in North America through its network of 

regional distribution centers and satellite warehouses using company-operated trucks, common carrier or rail transportation. 

The segment’s product lines are sold through various selling channels, which include independent floor covering retailers, home

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centers, mass merchandisers, department stores, commercial dealers and commercial end users. The Dal-Tile segment designs, 

manufactures, sources, distributes and markets a broad line of ceramic tile, porcelain tile, natural stone and other products, 

primarily in North America through its network of regional distribution centers and Company-operated service centers using 

company-operated trucks, common carriers or rail transportation. The segment’s product lines are sold through Companyowned service centers, independent distributors, home center retailers, tile and flooring retailers and contractors. The Unilin

segment designs, manufactures, sources, licenses, distributes and markets laminate, hardwood flooring, roofing systems, 

insulation panels and other wood products, primarily in North America and Europe through various selling channels, which 

include retailers, independent distributors and home centers.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

Amounts disclosed for each segment are prior to any elimination or consolidation entries. Corporate general and 

administrative expenses attributable to each segment are estimated and allocated accordingly. Segment performance is 

evaluated based on operating income. No single customer accounted for more than 5% of net sales for the years ended 

December 31, 2012, 2011 or 2010.

Segment information is as follows:

2012 2011 2010

Net sales:

Mohawk $ 2,912,055 2,927,674 2,844,876

Dal-Tile 1,616,383 1,454,316 1,367,442

Unilin 1,350,349 1,344,764 1,188,274

Intersegment sales (90,807) (84,496) (81,520)

$ 5,787,980 5,642,258 5,319,072

Operating income (loss):

Mohawk $ 158,196 109,874 122,904

Dal-Tile 120,951 101,298 97,334

Unilin 126,409 127,147 114,298

Corporate and intersegment eliminations (26,048) (22,777) (20,367)

$ 379,508 315,542 314,169

Depreciation and amortization:

Mohawk $ 95,648 90,463 91,930

Dal-Tile 41,176 42,723 45,578

Unilin 132,183 151,884 145,941

Corporate 11,286 12,664 13,324

$ 280,293 297,734 296,773

Capital expenditures (excluding acquisitions):

Mohawk $ 97,972 125,630 84,013

Dal-Tile 49,426 66,419 37,344

Unilin 56,605 78,615 29,439

Corporate 4,291 4,909 5,384

$ 208,294 275,573 156,180

Assets:

Mohawk $ 1,721,214 1,769,065 1,637,319

Dal-Tile 1,731,258 1,732,818 1,644,448

Unilin 2,672,389 2,533,070 2,475,049

Corporate and intersegment eliminations 178,823 171,275 342,110

$ 6,303,684 6,206,228 6,098,926

Geographic net sales:

North America $ 4,798,804 4,619,771 4,447,965

Rest of world 989,176 1,022,487 871,107

$ 5,787,980 5,642,258 5,319,072

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Long-lived assets (1):

North America $ 1,968,561 1,996,517 1,971,612

Rest of world 1,110,062 1,090,812 1,084,906

$ 3,078,623 3,087,329 3,056,518

Net sales by product categories (2):

Soft surface $ 2,696,462 2,722,113 2,645,952

Tile 1,676,971 1,513,210 1,428,571

Wood 1,414,547 1,406,935 1,244,549

$ 5,787,980 5,642,258 5,319,072

(1) Long-lived assets are composed of property, plant and equipment, net, and goodwill.

(2) The Soft surface product category includes carpets, rugs, carpet pad and resilient. The Tile product category includes 

ceramic tile, porcelain tile and natural stone. The Wood product category includes laminate, hardwood, roofing panels, 

wood-based panels and licensing.

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Index to Financial Statements

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements—(Continued) 

(17) Quarterly Financial Data (Unaudited)

The supplemental quarterly financial data are as follows:

Quarters Ended

March 31, 

2012

June 30, 

2012

September 29, 

2012

December 31, 

2012

Net sales $ 1,409,035 1,469,793 1,473,493 1,435,659

Gross profit 359,426 388,464 372,837 369,331

Net earnings 40,377 73,188 70,304 66,389

Basic earnings per share 0.59 1.06 1.02 0.96

Diluted earnings per share 0.58 1.06 1.01 0.96

Quarters Ended

April 2, 

2011

July 2, 

2011

October 1, 

2011

December 31, 

2011 (1)

Net sales $ 1,343,595 1,477,854 1,442,512 1,378,297

Gross profit 341,592 382,247 357,623 335,417

Net earnings 23,442 60,903 46,646 42,931

Basic earnings per share 0.34 0.89 0.68 0.62

Diluted earnings per share 0.34 0.88 0.68 0.62

(1) During the fourth quarter of 2011, the Company corrected an immaterial error in its consolidated financial statements. 

The error related to accounting for operating leases. The correction of $6,035 resulted in an additional charge to selling, 

general and administrative expense in the Company’s 2011 fourth quarter consolidated statement of operations. The 

Company believes the correction of this error to be both quantitatively and qualitatively immaterial to its quarterly 

results for 2011 or to any of its previously issued consolidated financial statements. The correction had no impact on the 

Company’s cash flows as previously presented.

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 

13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended), which have been designed to provide 

reasonable assurance that such controls and procedures will meet their objectives, as of the end of the period covered by this 

report, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that such controls and procedures 

were effective at a reasonable assurance level for the period covered by this report.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial 

reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). The Company’s management 

assessed the effectiveness of its internal control over financial reporting as of December 31, 2012. In making this assessment,

the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway 

Commission (“COSO”) in Internal Control-Integrated Framework. The Company’s management has concluded that, as of 

December 31, 2012, its internal control over financial reporting is effective based on these criteria. The Company’s independent 

registered public accounting firm, KPMG LLP, has issued an attestation report on the Company’s internal control over financial 

reporting, which is included herein.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the period covered by this report 

that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial 

reporting.

Limitations on the Effectiveness of Controls

The Company’s management recognizes that a control system, no matter how well conceived and operated, can provide 

only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control 

system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their 

costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all 

control issues and instances of fraud, if any, within the Company have been detected.

Item 9B. Other Information

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item is incorporated by reference to information contained in the Company’s Proxy 

Statement for the 2013 Annual Meeting of Stockholders under the following headings: “Election of Directors—Director, 

Director Nominee and Executive Officer Information,” “—Nominees for Director,” “—Continuing Directors,” “—Executive 

Officers,” “—Meetings and Committees of the Board of Directors,” “Section 16(a) Beneficial Ownership Reporting 

Compliance,” “Audit Committee” and “Corporate Governance.” The Company has adopted the Mohawk Industries, Inc. 

Standards of Conduct and Ethics, which applies to all of its directors, officers and employees. The standards of conduct and 

ethics are publicly available on the Company’s website at http://www.mohawkind.com and will be made available in print to 

any stockholder who requests them without charge. If the Company makes any substantive amendments to the standards of 

conduct and ethics, or grants any waiver, including any implicit waiver, from a provision of the standards required by 

regulations of the Commission to apply to the Company’s chief executive officer, chief financial officer or chief accounting 

officer, the Company will disclose the nature of the amendment or waiver on its website. The Company may elect to also 

disclose the amendment or waiver in a report on Form 8-K filed with the SEC. The Company has adopted the Mohawk 

Industries, Inc. Board of Directors Corporate Governance Guidelines, which are publicly available on the Company’s website 

and will be made available to any stockholder who requests it.

Item 11. Executive Compensation

The information required by this item is incorporated by reference to information contained in the Company’s Proxy 

Statement for the 2013 Annual Meeting of Stockholders under the following headings: “Compensation, Discussion and 

Analysis,” “Executive Compensation and Other Information—Summary Compensation Table,” “—Grants of Plan Based 

Awards,” “—Outstanding Equity Awards at Fiscal Year End,” “—Option Exercises and Stock Vested,” “—Nonqualified 

Deferred Compensation,” “—Certain Relationships and Related Transactions,” “—Compensation Committee Interlocks and 

Insider Participation,” “—Compensation Committee Report” and “Director Compensation.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is incorporated by reference to information contained in the Company’s Proxy 

Statement for the 2013 Annual Meeting of Stockholders under the following headings: “Executive Compensation and Other 

Information—Equity Compensation Plan Information,” and “—Principal Stockholders of the Company.”

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporated by reference to information contained in the Company’s Proxy 

Statement for the 2013 Annual Meeting of Stockholders under the following heading: “Election of Directors—Meetings and 

Committees of the Board of Directors,” and “Executive Compensation and Other Information—Certain Relationships and 

Related Transactions.”

Item 14. Principal Accounting Fees and Services

The information required by this item is incorporated by reference to information contained in the Company’s Proxy 

Statement for the 2013 Annual Meeting of Stockholders under the following heading: “Audit Committee—Principal 

Accountant Fees and Services” and “Election of Directors—Meetings and Committees of the Board of Directors.”

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PART IV

Item 15.Exhibits, Financial Statement Schedules

(a) 1. Consolidated Financial Statements

The Consolidated Financial Statements of Mohawk Industries, Inc. and subsidiaries listed in Item 8 of Part II are 

incorporated by reference into this item.

2. Consolidated Financial Statement Schedules

Schedules not listed above have been omitted because they are not applicable or the required information is included in 

the consolidated financial statements or notes thereto.

3. Exhibits

The exhibit number for the exhibit as originally filed is included in parentheses at the end of the description.

Mohawk Exhibit 

Number Description

*2.1 Agreement and Plan of Merger dated as of December 3, 1993 and amended as of January 17, 1994 

among Mohawk, AMI Acquisition Corp., Aladdin and certain Shareholders of Aladdin. (Incorporated 

herein by reference to Exhibit 2.1(a) in the Company's Registration Statement on Form S-4, Registration 

No. 333-74220.)

*2.2 Share Purchase Agreement, dated as of December 20, 2012, by and among LuxELIT S.a r.l., Finceramica 

S.p.A, Mohawk Industries, Inc. and Mohawk International Holdings (DE) Corporation (Incorporated 

herein by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K dated December 21, 

2012.)

*3.1 Restated Certificate of Incorporation of Mohawk, as amended. (Incorporated herein by reference to 

Exhibit 3.1 in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 

1998.)

*3.2 Restated Bylaws of Mohawk. (Incorporated herein by reference to Exhibit 3.2 in the Company's Report 

on Form 8-K dated December 4, 2007.)

*4.1 See Article 4 of the Restated Certificate of Incorporation of Mohawk. (Incorporated herein by reference 

to Exhibit 3.1 in the Company's Annual Report on Form 10-K (File No. 001-13697) for the fiscal year 

ended December 31, 1998.)

*4.2 See Articles 2, 6, and 9 of the Restated Bylaws of Mohawk. (Incorporated herein by reference to Exhibit 

3.2 in the Company's Current Report on Form 8-K dated December 4, 2007.)

*4.4 Indenture dated as of January 9, 2006, between Mohawk Industries, Inc. and SunTrust Bank, as trustee. 

(Incorporated herein by reference to Exhibit 4.4 in the Company's Registration Statement on Form S-3, 

Registration Statement No. 333-130910.)

*4.5 First Supplemental Indenture, dated as of January 17, 2006, by and between Mohawk Industries, Inc., 

and SunTrust Bank, as trustee. (Incorporated by reference to Exhibit 4.1 in the Company's Current 

Report on form 8-K dated January 17, 2006.)

*4.6 Indenture, dated as of January 31, 2013, by and between Mohawk Industries, Inc. and U.S. Bank 

National Association, as Trustee (Incorporated herein by reference to Exhibit 4.1 of the Company's 

Current Report on Form 8-K dated January 31, 2013.)

*4.7

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First Supplemental Indenture, dated as of January 31, 2013, by and between Mohawk Industries, Inc. and 

U.S. Bank National Association, as Trustee (Incorporated herein by reference to Exhibit 4.2 of the 

Company's Current Report on Form 8-K dated January 31, 2013.)

*10.1 Registration Rights Agreement by and among Mohawk, Citicorp Investments, Inc., ML-Lee Acquisition 

Fund, L.P. and Certain Management Investors. (Incorporated herein by reference to Exhibit 10.14 of the 

Company's Registration Statement on Form S-1, Registration No. 33-45418.)

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*10.2 Voting Agreement, Consent of Stockholders and Amendment to 1992 Registration Rights Agreement 

dated December 3, 1993 by and among Aladdin, Mohawk, Citicorp Investments, Inc., ML-Lee 

Acquisition Fund, L.P., David L. Kolb, Donald G. Mercer, Frank A. Procopio and John D. Swift. 

(Incorporated herein by reference to Exhibit 10(b) of the Company's Registration Statement on Form 

S-4, Registration No. 33-74220.)

*10.3 Registration Rights Agreement by and among Mohawk and the former shareholders of Aladdin. 

(Incorporated herein by reference to Exhibit 10.32 of the Company's Annual Report on Form 10-K (File 

No. 001-13697) for the fiscal year ended December 31, 1993.)

*10.4 Waiver Agreement between Alan S. Lorberbaum and Mohawk dated as of March 23, 1994 to the 

Registration Rights Agreement dated as of February 25, 1994 between Mohawk and those other persons 

who are signatories thereto. (Incorporated herein by reference to Exhibit 10.3 of the Company's 

Quarterly Report on Form 10-Q (File No. 001-13697) for the quarter ended July 2, 1994.)

*10.5 Credit Agreement by and among the Company and certain of its subsidiaries, as Borrowers, certain of its 

subsidiaries, as Guarantors, Bank of America, N.A. as administrative Agent, Swing Line Leader, and a 

L/C Issuer, the other lenders party thereto, and the other parties thereto. (Incorporated by reference to the 

Company’s Current Report on Form 8-K dated July 12, 2011.)

*10.6 Amendment No. 1 to Credit Agreement dated as of January 20, 2012, by and among the Company and 

certain of its subsidiaries, as Borrowers, certain of its subsidiaries, as Guarantors, Bank of America, N.A. 

as administrative Agent, Swing Line Leader, and a L/C Issuer, the other lenders party thereto, and the 

other parties thereto. (Incorporated by reference to the Company’s Current Report on Form 8-K dated 

January 20, 2012.)

*10.7 Amendment No. 2 to Credit Agreement dated as of November 16, 2012 by and among the Company and 

certain of its subsidiaries, as Borrowers, certain of its subsidiaries, as Guarantors, Bank of America, 

N.A., as Administrative Agent, Swing Line Lender, and a L/C Issuer, the other lenders party thereto, and 

the other parties thereto (Incorporated herein by reference to Exhibit 10.1 of the Company's Current 

Report on Form 8-K dated November 21, 2012.)

*10.8 Amendment No. 3 to the Credit Agreement, dated January 28, 2013, by and among Mohawk Industries, 

Inc. and certain of its subsidiaries, as Borrowers, Bank of America, N.A., as Administrative Agent, 

Swing Line Lender and a L/C Issuer, the other lenders party thereto and the other parties thereto 

(Incorporated herein by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K dated 

January 30, 2013.)

*10.9 Credit and Security Agreement, dated as of December 19, 2012, by and among Mohawk Factoring, LLC, 

as borrower, Mohawk Servicing, LLC, as servicer, the lenders from time to time party thereto, the 

liquidity banks from time to time party thereto, the co-agents from time to time party thereto and 

SunTrust Bank, as administrative agent (Incorporated herein by reference to Exhibit 10.2 of the 

Company's Current Report on Form 8-K dated December 21, 2012.)

10.10 First Amendment to Credit and Security Agreement, dated as of January 22, 2013, by and among 

Mohawk Factoring, LLC, as borrower, Mohawk Servicing, LLC, as servicer, the lenders from time to 

time party thereto, the liquidity banks from time to time party thereto, the co-agents from time to time 

party thereto and SunTrust Bank, as administrative agent.

*10.11 Receivables Purchase and Sale Agreement, dated December 19, 2012, by and among Mohawk Carpet 

Distribution, Inc., and Dal-Tile Distribution, Inc., as originators, and Mohawk Factoring, LLC, as buyer 

(Incorporated herein by reference to Exhibit 10.3 of the Company's Current Report on Form 8-K dated 

December 21, 2012.)

Exhibits Related to Executive Compensation Plans, Contracts and other Arrangements:

*10.12

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Service Agreement dated February 24, 2009, by and between Unilin Industries BVBA and BVBA “F. De 

Cock Management” (Incorporated by reference to the Company’s Current Report on Form 8-K dated 

February 24, 2009.)

*10.13 Service Agreement dated February 9, 2009, by and between Unilin Industries BVBA and Comm. V. 

“Bernard Thiers” (Incorporated herein by reference to Exhibit 10.7 in the Company's Annual Report on 

Form 10-K (File No. 001-13697) for the fiscal year ended December 31, 2009.)

*10.14 Second Amended and Restated Employment Agreement, dated as of November 4, 2009, by and between 

the Company and W. Christopher Wellborn (Incorporated by reference to the Company’s Current Report 

on Form 8-K dated November 4, 2009.)

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10.15 Amendment No. 1 to Second Amended and Restated Employment Agreement, dated as of December 20, 

2012, by and between the Company and W. Christopher Wellborn.

*10.16 Mohawk Carpet Corporation Supplemental Executive Retirement Plan, as amended. (Incorporated herein 

by reference to Exhibit 10.2 of the Company's Registration Statement on Form S-1, Registration No. 33-

45418.)

*10.17 Mohawk Industries, Inc. 1992 Stock Option Plan. (Incorporated herein by reference to Exhibit 10.8 of 

the Company's Registration Statement on Form S-1, Registration No. 33-45418.)

*10.18 Amendment dated July 22, 1993 to the Mohawk Industries, Inc. 1992 Stock Option Plan. (Incorporated 

herein by reference to Exhibit 10.2 in the Company's quarterly report on Form 10-Q (File No. 001-

13697) for the quarter ended July 3, 1993.)

*10.19 Second Amendment dated February 17, 2000 to the Mohawk Industries, Inc. 1992 Stock Option Plan. 

(Incorporated herein by reference to Exhibit 10.35 of the Company's Annual Report on Form 10-K (File 

No. 001-13697) for the fiscal year ended December 31, 1999.)

*10.20 Mohawk Industries, Inc. 1992 Mohawk-Horizon Stock Option Plan. (Incorporated herein by reference to 

Exhibit 10.15 of the Company's Registration Statement on Form S-1, Registration Number 33-53932.)

*10.21 Amendment dated July 22, 1993 to the Mohawk Industries, Inc. 1992 Mohawk-Horizon Stock Option 

Plan. (Incorporated herein by reference to Exhibit 10.1 of the Company's quarterly report on Form 10-Q 

(File No. 001-13697) for the quarter ended July 3, 1993.)

*10.22 Second Amendment dated February 17, 2000 to the Mohawk Industries, Inc. 1992 Mohawk-Horizon 

Stock Option Plan. (Incorporated herein by reference to Exhibit 10.38 of the Company's Annual Report 

on Form 10-K (File No. 001-13697) for the fiscal year ended December 31, 1999.)

*10.23 Mohawk Industries, Inc. 1993 Stock Option Plan. (Incorporated herein by reference to Exhibit 10.39 of 

the Company's Annual Report on Form 10-K (File No. 001-13697) for the fiscal year ended December 

31, 1992.)

*10.24 First Amendment dated February 17, 2000 to the Mohawk Industries, Inc. 1993 Stock Option Plan. 

(Incorporated herein by reference to Exhibit 10.40 of the Company's Annual Report on Form 10-K (File 

No. 001-13697) for the fiscal year ended December 31, 1999.)

*10.25 The Mohawk Industries, Inc. Senior Management Deferred Compensation Plan (Incorporated herein by 

reference to Exhibit 10.21 of the Company's Annual Report on Form 10-K (File No. 001-13697) for the 

fiscal year ended December 31, 2010.)

*10.26 Mohawk Industries, Inc. 1997 Non-Employee Director Stock Compensation Plan (Amended and 

Restated as of January 1, 2009) (Incorporated herein by reference to Exhibit 10.32 in the Company's 

Annual Report on Form 10-K for the fiscal year ended December 31, 2008.)

*10.27 Mohawk Industries, Inc. 2012 Non-Employee Director Stock Compensation Plan (Incorporated herein by 

reference to Exhibit 10.2 of the Company's Quarterly Report on Form 10-Q dated August 3, 2012.)

*10.28 2002 Long-Term Incentive Plan. (Incorporated herein by reference to Appendix A in the 2002 Mohawk 

Industries, Inc. Proxy Statement dated March 29, 2002.)

*10.29 Mohawk Industries, Inc. 2007 Incentive Plan (Incorporated herein by reference to Appendix A of the 

Company’s Definitive Proxy Statement on Schedule 14A (File No. 001-13697) filed with the Securities 

and Exchange Commission on April 9, 2007.)

*10.30 Mohawk Industries, Inc. 2012 Incentive Plan (incorporated herein by reference to Appendix A of the 

Company’s Definitive Proxy Statement on Schedule 14A (File No. 001-13697) filed with the Securities 

and Exchange Commission on April 3, 2012.)

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21 Subsidiaries of the Registrant.

23.1 Consent of Independent Registered Public Accounting Firm (KPMG LLP).

31.1 Certification Pursuant to Rule 13a-14(a).

31.2 Certification Pursuant to Rule 13a-14(a).

32.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

* Indicates exhibit incorporated by reference.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly 

caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Mohawk Industries, Inc.

February 27, 2013 By: /s/ JEFFREY S. LORBERBAUM 

Jeffrey S. Lorberbaum,

Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the 

following persons on behalf of the registrant and in the capacities and on the dates indicated.

February 27, 2013 /s/ JEFFREY S. LORBERBAUM 

Jeffrey S. Lorberbaum,

Chairman and Chief Executive Officer

(principal executive officer)

February 27, 2013 /s/ FRANK H. BOYKIN 

Frank H. Boykin,

Chief Financial Officer and Vice President-Finance

(principal financial officer)

February 27, 2013 /s/ JAMES F. BRUNK 

James F. Brunk,

Vice President and Corporate Controller

(principal accounting officer)

February 27, 2013 /s/ PHYLLIS O. BONANNO 

Phyllis O. Bonanno,

Director

February 27, 2013 /s/ BRUCE C. BRUCKMANN 

Bruce C. Bruckmann,

Director

February 27, 2013 /s/ FRANS DE COCK 

Frans De Cock,

Director

February 27, 2013 /s/ JOHN F. FIEDLER 

John F. Fiedler,

Director

February 27, 2013 /s/ RICHARD C. ILL 

Richard C. Ill,

Director

February 27, 2013 /s/ DAVID L. KOLB 

David L. Kolb,

Director

February 27, 2013 /s/ JOSEPH A. ONORATO 

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Joseph A. Onorato,

Director

February 27, 2013 /s/ KAREN A. SMITH BOGART 

Karen A. Smith Bogart,

Director

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February 27, 2013 /s/ W. CHRISTOPHER WELLBORN 

W. Christopher Wellborn,

Director

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