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 i ssuer, 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 m onths (or for such shorter period that the Registrant was require d to file such r eports), and (2) has been subject to such filing requi rements for the past 90 days. Yes : No Indicate by check mark whether the registrant has submitted electronica lly and posted on its corporate Web site, if any, every Interactive Data File required to be submitt ed and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) dur ing the preceding 12 months (or for such shorter pe riod 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 containe d, to the best of Registrant’s knowledge, in definitive proxy or information statemen ts incorporated by reference in Part III of this Form 10-K orany amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated f iler, 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 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmIndicate by check mark whether the Regi strant is a shell company (as defined in Rule 12b-2 of the Act). Yes No : The aggregate market value of the Common Stoc k of the Registrant held by non-affiliates (excludes beneficial owners of more than 10% of the Common Stock) of the Registra nt (48,771,300 shares) on June 29, 2012 (the last business da y 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 fo r the 2013 Annual Meeting of Stockholders-Part III. 

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### 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 Co mmon Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 16 Item 6. Selected Financial Data 18 Item 7. Management’s Di scussion and Analysis of Financial Condition and Results of Operations 19 Item 7A. Quantitative and Qualitative Di sclosures About Market Risk 30 Item 8. Consolidated Financial Statements and Supplementary Data 31 Item 9. Changes in and Disagreements with Ac countants 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 Benefici al Owners and Management and Related Stockholder Matters 63 Item 13. Certain Relationships and Related Tran sactions, 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 app lications in Europe. The Company is the second largest carpet and rug manufacturer and one of the largest manufacturers, marketers an d distributors of ceramic tile, natural stone and hardwood flooring in the United States, as well as a leadin g 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 generate d by sales outside North Amer ica. The Company has three reporting segments: the Mohawk segment, the Dal-Tile segment an d 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, distribut es 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 pat terns 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 mark ets and distributes soft and hard surface products throughover 24,000 customers, which include indepe ndent floor covering re tailers, home centers, mass merchandisers, department stores, commercial dealers and commercial end us ers. Some products are also marketed through private labeling pr ograms. The Mohawk segment’s soft surface operations are verticallyintegrated from the extrusion of resin to the manufacturing and distribution of finished carpets and rugs. The Dal-Tile segment designs, manufact ures, 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 specialis ts, commercial dealers and co mmercial end users. The Da lTile segment operations are vertically inte grated 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, mu ltiple length planks and ne w 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. producin g 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 manufact urer 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 ente red into a definitive share purchase agreement (the “Share Purchase Agreement”) to acquire Fi ntiles S.p.A. and its su bsidiaries (collectively, the “Marazzi Group”), a global producer of tile 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmproducts for residential and commercial a pplications 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 approximatel y €1,170 million, or $1,504.4 million, subj ect to certain adjustments set forth in the share purchase agreement and plus transaction expenses. The Comp any expects to complete the transacti on during the first half of 2013 pending customary governmental approvals and the satisfaction of other closing conditions.

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Index to Financial Statements 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 Co mpany expects to comp lete the transacti on 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 (1 2%), hardwood (10%), stone (6%) and lami nate (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, aver age house size and home ownership. In addition, the level of sales in the floor covering indust ry, 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 constructio n industries and the overall strength o f the economy. Domestic carpet and rug sales volume of U.S. manufacturers wa s 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 applicatio ns, 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 commer cial 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 accounte d 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 appli cations and commercial applicat ions, represent 77% and 23% of the 2011 industry total, respectively. Sales of U.S. hardwood ar e 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 mar ket 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 in dustry’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 mark et 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, car pet 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, commer cial dealers and commercial end users. So me products are also marketed through 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmprivate labeling programs. Sales to residential customers repres ent 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. Thes e lines have substantial brand name recognition among carpet dealers and retailers, with th e 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 mark et. The Aladdin and Mohawk Home brands co mpete primarily in th e 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 includ e Mohawk Ceramic, Mohawk Hardwood, Mohawk Laminate, Mohawk LVT and Congoleum, across all price ranges. The Company offers marketing and advertising support thro ugh 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, adve rtising 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 Cont ract. 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 facili ties, retail space and institut ional and government facilities

. Different purchase decision makers and decisi on-making processes exist for each channel. The Company’s sales forces are ge nerally organized by product type and sales ch annels 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 recei ve inbound product di rectly from the source of manufacture. Dal-Tile Segment The Dal-Tile segment designs, manufact ures, 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 re tailers, ceramic specialists and commercial dealers and direct ly to commercial end users. The business is or ganized to address the specific customer needs of each distribution channel, and dedicated sales forces support the various channels. The Company serves as a “one-s top” source that provides cu stomers with one of the ceramic tile industry’s broadest product lines—a complete selection of gl azed floor tile, glazed wall tile, glazed and un glazed ceramic mosaic tile, porcelain t ile, quarry tile and stone products, as well as installation products . In addition to products manuf actured 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 indu stry—Dal-Tile and American Olean. The Dal-Tile and American Olean brand names date back over 50 y ears and are well recognized in the industry. Bo th 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 prim arily the Dal-Tile brand product with a fully integrated marketing program, emphasizing a focus on quality and fashion se rving 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-qua lity 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. operatio ns also manufacture Mohawk branded laminate and hardwood flooring, which sells through the Mohawk channel and also directly 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmthrough home centers and mass merchandisers. The majority of Un ilin’s laminate sales, both in the U.S. and Europe, are for residential replacement. The business is organized to address the specific custom er 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 an d 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 UNI CLIC 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 tele vision, 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 manu facturing operations are ver tically integrated and includ e the extrusion of resin and post-consumer plastics into triexta fiber, polyester, nylon an d polypropylene, and yarn processing, backing manufacturing, tufting, weaving, dyeing, coating and finishing. The Mohawk segm ent continues to invest in capital expenditures, principally in state-of-the-art equipment, to increase manufacturing effici ency, improve overall cost co mpetitiveness and develop new capabilities. Dal-Tile Segment The Company’s tile manuf acturing 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 produ ct 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 an d 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 cap acity, improve efficiency and develop new capabilities. The segment is expanding its international presence through investments in China and Mexico and through the pending acquisi tion of the Marazzi Group in Europe and Russia. Unilin Segment The Company’s laminate flooring manufacturing operations are ve rtically 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 ha s state-of-the-art equipment that results in competitive manufacturing in terms of cost and flexibility. In addition, Unilin has signifi cant manufacturing capabili ty for both engineere d and prefinished solid wood flooring for the U.S. and European markets. The Unilin segment co ntinues to invest in capital expenditures, principally in new plants an d state-of-the-art equipment, to increase manufacturing capacity, improv e efficiency and develop new capabilities. The segment is expanding its inte rnational presence through inve stments in Australia, Brazil, France and Russia, and with the recent acqui sition of Pergo, the Nordic countries and India. The manufactur ing facilities for other activities in the Unilin business (roofing systems, insulation panels and other wood products) are all configured for cos tefficient manufacturing and prod uction flexibility and are compe titive in the European market. Raw Materials and Suppliers Mohawk Segment The principal raw materials used in the production of carpe t and rugs are nylon, triext a, polyester, polypropylene, synthetic backing materials, latex and various dyes and chemical s, 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 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmexternally purchased fibers and resins principally from six major suppliers. If these suppliers were unable to satisfy the requirements, the Company believes that al ternative supply arrangements would be av ailable. Although th e 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 th e production of ceramic t ile are clay, talc, nepheline syenite and glazes. The Company has entered into a long-t erm 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 requirem ents 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 gr ades of clay and that all are readily avai lable from a number of independent sources. The Company has two suppliers for its nepheline syenite requ irements. If these suppliers were unable to satisfy the requirements, the Company believes that alte rnative supply arrangements would be avai lable. Glazes are used on a significant percentage of manufactured tile s. Glazes consist of frit (ground glass), zircon, st ains and other material s, with frit being th e 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 numeroussuppliers. These suppliers provide a wide variety of wood species, varying from fresh round wood to several kinds of byproducts of sawmills and used wood recy cled specifically for chipbo ard 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 contiguous ly 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 lami nate flooring business in both Europe and the U.S. The Company processes most of the paper impregnation internally inits laminate flooring facilities in Europe and the U.S. In Europe, the resins for paper impregnation are manufactured by the Company, which permits great er 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 co mpanies. The Company believe s there are ample sources of supply located within a reasonable distance of Unilin’s facilities. Competition The principal methods of competition within the floor coveringindustry generally are serv ice, style, quality, price, product innovation and technology. In each of the markets, pri ce competition and market coverage are particularly important because there is limited diff erentiation among competing pr oduct lines. The Company’s i nvestments 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, styl e 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 o f sales dollars) in the world based on its 2011 net sales. Dal-Tile Segment The ceramic tile industry is significantly more fragmented th an the carpet industry. The Comp any estimates that over 100 tile manufacturers, more than half of which are based outside th e U.S., compete for sales of ceram ic tile to customers located in the U.S. Although the U.S. ceramic tile industry is highly frag mented at both the manufacturing and distribution levels, the Company believes it is one of the largest manufacturers, distributors and marketers of ceramic ti le 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 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmThe Company faces competition in the laminate and hardwood flooring channel from a large number of domestic and foreign manufacturers. Th e Company estimates that there are over 100 wo od flooring manufactur ers 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 manu facturers and distributors of hardwood flooring in the U.S. In addition, the Company belie ves it has a competitive advant age in the laminate flooring channel as a result of Unilin’s industry leading design, pate nted 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, instal lation 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 busine ss, and the Company relies ona 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 di fferentiation 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, pretensi on, clearance and the beveled edge patent and are not expected to expire until 2017, protecting Unili n's interlocking laminate flooring technology. The recent acquisiti on of Pergo potentially enhan ces 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 UNICL IC 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 variou s expenses such as amortization, devel oping new technologies, filing new patents, supporting existing patents, defe nding patent lawsuits, collection and auditing of receivables, ba d debt and other administrati ve 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 th ose 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 th e 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 approximatel y 25,100 persons consisting of approximate ly 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 collect ive bargaining agreement. Additionally, the Company has no t experienced any strikes or wo rk stoppages in recen t 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 “Inv estor Information”: • annual reports on Form 10-K; • quarterly reports on Form 10-Q; 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htm• current reports on Form 8-K; and • amendments to the foregoing reports.

The foregoing reports are made available onthe Company’s website as soon as pract icable after they are filed with, or furnished to, the Securities and Exchange Commission (“SEC”).

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Index to Financial Statements

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 factor s should be considered when evaluating an investment in shares of th e 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, financ ial 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 th e residential and commercial markets in such economies, negatively impacted the floor covering industry and the Comp any’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 ef fect 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 th e market. Therefore, economic changes that result in a significant or prolonged decline in spending for remode ling and replacement activ ities could have a material adverse effect on the Company’ s business and results of operations. The floor covering industry is highly dependent on constructio n activity, including new construction, which is cyclical in nature and recently experienced a downturn. The downturn in the U.S. and glob al economies, along with the residential and commercial markets in such eco nomies, negatively impacted the floor covering industry and the Company’s business. Although the impact of a decline in new construc tion activity is typi cally accompanied by an increase in remodeling and replacement activity, these activities lagged during the downturn. Although th e 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 constr uction activity could have a material adverse ef fect on the Company’s business and results of operations. In periods of rising costs, the Company may be unable to pass raw materials, en ergy and fuel-related cost increases on to its customers, which could have a material ad verse effect on the Company’s business. The prices of raw materials and fuel-related costs vary signif icantly with market conditions. Although the Company generally attempts to pass on increases in raw material , energy and fuel-related co sts to its customers, the Company’s ability to do so i s dependent upon the rate and magnitude of any increase, comp etitive pressures and market conditions for the Company’s products. There have been in the past, and may be in the future, periods of time dur ing which increases inthese costs cannot b e recovered. During such periods of time, the Compan y’s business may be materially adversely affected. The Company faces intense competition in th e flooring industry that could decreasedemand for the Company’s products or force it to lower prices, which could have a mate rial adverse effect on the Company’s business. The floor covering industry is highly competitive. The Comp any faces competition from a number of manu facturers and independent distributors. Some of the Co mpany’s competitors are larger and have greater resources and access to capital than the Company does. Maintaining the Company’s competitive posit ion 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 gl obal economy and the Company’ s business could affect the Company’s overall availability and cost of credit. 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmUncertainty in the credit markets could af fect the overall availability and cost of credit. Despite recent improvement in overa ll 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, rema ins 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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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents
Index to Financial Statements credit ratings assessment by Moody’s Invest ors 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, whic h include scale and di versification, 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 expe nse 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 certai n 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 mate rial 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 facil ity in the aggregate principal am ount of $150.0 mil lion. As of December 31, 2012, th e 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 th e 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 D ecember 19, 2012, the Company entered into a three-year on-balance sheet U.S. trade acco unts receivable securitizatio n agreement (the "Securitization Facility") that allows the Company to borrow up to $300 million based on available accounts receivable and is s ecured by the Company's U.S. trade accounts receivable. At Decembe r 31, 2012, the amount utilized under the Securitizatio n Facility was $280.0 million. During the term of the credit facilities, if the Company’s cash flow is worse than expect ed or the U.S. trade accounts receivables are lower than expected, the Co mpany may need to refinance all or a portion of its i ndebtedness 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 mate rially adversely affect the Co mpany’s ability to repay its indebtedness and otherwise have a material adverse effect onthe Company’s financial condition and results of operations. Additionally, the credit f acilities include certa in 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, tr ansactions with affi liates, payments and modifications of certain existing debt, future negative pledges, and changes in the natu re 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 fo r the Senior Cred it Facility, each as of the las t day of any fiscal quarter and as defined inthe Senior Credit Facility. A failure to comply with the obligations contained in o ur current or future cred it facilities or indentures relating to our outstanding public debt could result in an event of default o r an acceleration of debt under other instrument s that may contain cross-accel eration 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 Co mpany’s carpet and rugs business; clay, talc, nepheline syenite and glazes, including frit (g round glass), zircon and stains, which are used exclus ively 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 material s 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 supplie r’s ability to manufacture or de liver such raw materials or so urced products to the Company could lead to an interruption of supply or require the Co mpany 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 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmof suitable substitute materials or products would disrupt th e 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 fi nancial condition and results of operations and may affect the comparability of results be tween the Company’s financial periods.

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Index to Financial Statements
The results of the Company’s foreign subsidiaries reported in th e local currency are translated into U.S. dollars for balance sheet accounts using exchange rates in eff ect as of the balance sheet date and for the statement of oper ations accounts using, principally, the Company’s average rates duri ng the period. The exchange rates between some of these currencies and the U.S. dollar in recent years have fluctuated signi ficantly and may conti nue to do so in the future. Th e Company may not be able to manage effectively the Company’s currency translation risks, an d volatility in currency exchange rates may have a material adverse effect on the Company’s consolidat ed financial statements and affect compar ability of the Company’s results between financial periods. The Company may experience certain risk s associated with acquisitions, join t 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. Th e 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 expect ations because of goodwill and intangible asse t impairment, other asset impairments, increased interest costs and issuance of additio nal securities or incurrence of debt. Th e Company may also face challenges in consolidating functions, integrating the Company’s organizatio ns, procedures, operations and product lines in a timely and efficient manner and retaining key pers onnel. 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 diff erent computer hardware; and • providing different employment and co mpensation arrangem ents 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 revenu es, level of expenses and operating results. Failure to successfully manage and integrate an acquisition with th e 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 potenti al loss of business opportunities or other adverse consequences th at could have a material ad verse 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 materia l adverse effect on the Company’s business, fi nancial 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 th at are inconsistent with ours, and business decisions or other actions or omissions o f 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 opportun ities, to obtain sufficient fi nancing 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. 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmThe Compan ymanu f

actures, sources and sells man yproducts internationall yand is exposed to risk s 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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Index to Financial Statements parts of the world. Currently, th e Company has significant operations in Europe, Malaysia and Australia for its Unilin division (including Belgium, Netherlands, France, Sweden and Russia) and Mexi co for its ceramic tile business, which will expand to Western Europe and Russia following the ac quisition of the Marazzi Group. In addition, the Company has invested in joint ventures in Brazil and China related to laminate flooring and cer amic tile, respectively. The business, regulatory and politica l environments in these countries differ from those in th e U.S. The Company’s international sa les, operations and investments are subject to risks and un certainties, including:
• changes in foreign country regulatory requirements; • differing business practices asso ciated with foreign operations; • various import/export restrictio ns 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 rate s 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 inabili ty to collect accounts receivable; • tax inefficiencies and currency exchange controls that may a dversely 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 deve loping and implementing policies and strategies to counter the foregoing factors effectively in each location where the Company does business and therefore that the fo regoing factors will no t 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, financ ial condition, cash flows or results of operations. We are subject to the tax laws of the many jurisdictions in wh ich 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 thes e many jurisdictions. However, it also includes estimates of additional tax which may be incurred for tax exposures and re flects 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 earnin gs in countries with differing statutory tax rates, changes in the overall profitability of the Company, changes in tax legislation a nd rates, changes in generally accepted accountin g 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 assessm ents 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 mate rial adverse effect on the Company’s business. The Company and its customers and supplier s are subject to various federal, state and local laws, regulations and licensing requirements. The Company faces risks and uncertainties related to compliance with and enforcem ent of increasingly numerous and complex federal, state and local laws an d regulations. In addition, new laws and re gulations may be enact ed in the U.S. or 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmabroad that may require the Comp any 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 environm ental, health and safety laws and regulations, including those governing air emissions, wastewater disc harges, and the use, storage, treatment, recycling and disposal of materials and

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Index to Financial Statements finished product. The applicable requir ements under these laws ar e subject to amendment, to the imposition of new or additional requirements and to changing interpretations of ag encies or courts. The Company c ould incur material expenditures to comply with new or existing regulations, including fines an d 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 adoptio n of regulations by the Environmental Protectio n Agency and analogous stat e 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 greenho use 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 disast ers, 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 une xpected events. The Company co uld 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 l itigation, claims and other legal proceedings in the ordinary cou rse of business relating to its products, which could have a material ad verse 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 pr oduct liability, product warr anty, product recall, person al injury, and other matter s 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, re sults of operations and financial condition if the Company is unable to successfully defend against or resolve these matters or if its insura nce 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, th e Company may not be able to ma intain insurance at commercially acceptable premium levels. Moreover, adverse publicity arising fr om claims made against the Company, even if th e 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 intell ectual property rights or collect license revenues, particularly with respect to t he Company’s patented laminate flooring technology and its regist ered trademarks, could have a ma terial adverse effect on the Company’s business. The future success and competitiv e position of certain of the Company’s busine sses, 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 laminat e 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 ch allenge 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 re nder the Company’s intellectual property less valuable. 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmFurthermore, 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 authorizatio n 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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Index to Financial Statements obtain sufficient protection for the Company’s intellectual prope rty, the Company’s competitivene ss 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 trad emark registrations and will continue to evaluate the registration of additional service marks and trademarks, as appropriat e. 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 applicat ions 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 coul d have a material effect on the Company’s business. The Company generates license revenue from certain patents in th e 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 alte rnative revenues could have a material adverse effect on the Company’s business. The Company generally requires third partie s with access to the Company’s trade secr ets to agree to keep such information confidential. While such measur es are intended to protect the Company’s trade secrets, there can be no assurance that these agreements will not be breached, that th e Company will have adequate remedies for any br each 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 circumstan ces, the Company’s competitiven ess could be significantly impaired, which would limit the Company’s growth and future revenue. Companies may claim that the Company infringed their intellect ual 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 th e Company will not receive no tices 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. Historicall y, 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 aw are of currently filed patent applications that relate to the Company’s products or processes. If patents are later issued onthese applications, the Company may be liable for infringement. Furthermore, the Company may initiate claims or litigation agai nst parties for infringement of the Company’s proprietary rights or to establish the invali dity, noninfringement, or unenforceability of the proprietary rights of othe rs. Likewise, the Company may have similar claims brought against it by competitors. Litigati on, either as plaintiff or de fendant, could result in signif icant expense to the Company and divert the effo rts of the Company’s technical and management personnel from operations, whether or not such litigation is resolved in the Company’s favor. In th e 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), di scontinue the use and sale of infringing products, expend significant resources to develop non-infringing technology or obtain licenses authorizing the use o f 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 cl aim 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 Compan y’s business relies on its ability to attract, develop and retain talented management. To be successful, the Company mu st 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 th ese employees and invests 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmresources in recruiting, developing, motivating and retaining th em. 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 regu lation of corporate governance and publicdisclosure that have increased both costs and the risk of noncompliance.

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Index to Financial Statements The Company’s stock is publicly traded. As a result, the Company is subj ect to the rules and regulations of federal and state agencies and financial market exchange entities charged with th e protection of investors and the oversight of companies whose securities are publicly traded. These entities, including the Public Company A ccounting 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 ma terial non-cash charge. A significant or prolonged decreasein the Company’s market capital ization, including a decline instock 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 “co uld,” “should,” “believes,” “anticipates,” “expects” and “estimates” or similar expressions co nstitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Secur ities Exchange Act of 1934, as amended. For those statements, Mohawk claims the pr otection of the safe harbor for forward- looking statements cont ained in the Private Securities Litigation Reform Act of 1995. There can be no a ssurance that the forward-looking statements will be accurate because they are based on many assumptio ns, which involve risks and uncertainties. The followi ng important factors could cause future results to differ: changes in economic or industry conditions; competition; inflation in raw material prices and o ther input costs; energy costs and supply; timing and level of capita l expenditures; timing and implem entation of price increases fo r 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 aneight-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 Monter ey, Mexico and a 1.0 million square foot manufacturing facility located in Muskogee, Oklahoma us ed by the Dal-Tile segment, an d 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 Comp any’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 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmThe Company’s properties are in good condition and adequate for its requir ements. 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 fac ilities to ensure that they remain adequate to meet long-term sales goals and production plans.

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Index to Financial Statements Item 3. Legal Proceedings The Company is involved in litigation from time to time in th e 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 initi ated 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 name d as a defendant in a number of the individual cases (the first filed on August 26, 2010), as well as in two consolidated amen ded class action complaints, the first filed on February 28, 2011 , on behalf of a class of all direct purchas ers 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 th e Company has been named as a de fendant have been filed in or transferred to the U.S. District Court for the Northe rn District of Ohio for consolidated pre-trial proceedings under the name In re: Polyurethane Foam Antitrust Li tigation, Case No. 1:10-MDL-02196. In these actions, the plaintiffs, on behalf of themselves and/or a class of purc hasers, 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 an d 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 th at are reasonably estimable. Th ese contingencies are subject to significant uncertainties and w e are unable to estimate the amount or range of loss, if any, in excess of amounts accrue d. The Company does not believe that the ultimate outcome of these actions will have a material adverse effect on its financ ial condition but could have a material adve rse effect on its results of oper ations, 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, wa stewater discharges, the use, storage, tr eatment, recycling and disposal of solid an d hazardous materials and finished product, and the cleanup of cont amination associated therewith. Because of the nature of the Company’s business, the Company has incurred , and will continue to in cur, 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 hav e 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 Comm on Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market for the Common Stock 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmThe 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 Composit e Tape, for each fis cal period indicated.

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmMohawk 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 2012First 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 divi dends 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 div idends on the Common Stock in the foreseeable futu re. The payment of future cash dividends wi ll 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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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmItem 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 stat ements 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 stat ements and notes thereto in cluded 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 5,642,25 8 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 1,416,87 9 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 3 04,492 199,874 192,648 (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 1,199,6 99 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 incr eased number of warranty cla ims related to the performa nce of commercial carpet t iles that used a newer carpet backing technol ogy. 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 include d $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. gove rnment in reference to settle ment of customs disputes dati ng back to 1986. (d) In 2008, the Company recorded a valuation allowance of appr oximately $253,000 against the defe rred tax asset recorded in 200 7 as a result of a change in residency the Company im plemented in one of its foreign subsidiaries.

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents
Index to Financial Statements
Item 7. Management’s Discussion a nd Analysis of Financial Conditi on 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 (1 2%), hardwood (10%), stone (6%) and lami nate (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, aver age house size and home ownership. In addition, the level of sales in the floor covering indust ry, 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 constructio n industries and the overall strength o f the economy. The Company has three reporting segments: the Mohawk segm ent, 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 dealer s and commercial end users. Th e 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 se gment’s product lines ar e sold through Companyowned service centers, independent distributors, home center re tailers, tile and flooring retailers and contractors. The Unilin segment designs, manufactures, sources, licenses, distributes and markets lami nate, 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 inEPS 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 generate d $587.6 million of cash from op erating activities which itpartially 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 St ates 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 Fintil es S.p.A. and its subsidiaries (collectively, the “Marazzi Group”), for an estimated transaction value of approx imately €1,170 million, or $1,504.4 million. The Company expects to complete the tr ansaction 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 trans action is expected to close in the second half of 2013 pending customary governmental approvals and the satisfaction of other closing conditions. 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmThe 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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Index to Financial Statements Results of Operations Following are the results of oper ations 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 Compar ed with Year Ended December 31, 2011
Net sales Net sales for 2012 were $5,788.0 million, reflecting an increas e 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 imp act of price and produc t mix of approximately $146 million and higher volume of approximately $92 million, partially offset by the net impact of unfavorable foreign exchange rates of appr oximately $92 million. Mohawk Segment —Net sales decreased $15.6 millio n, 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 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmattributable to the timing of carpet product transitions in th e 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 wa s primarily driven by volume increases of approximately $157 million and the favorable net

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Index to Financial Statements 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 primar ily driven by volume increases of approximately $84 million and the favorable net impact of price and product mix of approximately $8 million, partially of fset 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 byquarter 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 wa s primarily attributable to th e 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 ad ministrative 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 prim arily due to increased sales vo lume. The increase in selling, ge neral and administrative expense s 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 sa les) 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 suppor t new product introductions, ge ographic 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 increas e 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 cost s of approximately $15 million, partially offset by lower sales volume of approximately $36 million and higher input costs of approximately $18 million. 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmDal-Tile Segment —Operating income was $121.0 million (7.5% of segm ent net sales) for 2012 re flecting an increase of $19.7 million compared to operating income of $101.3 million (7.0% of segment net sales) for 2011. The increas e 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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Index to Financial Statements
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 approxi mately $18 million, increases in costs to support new product introductions and geographic expansion of approximately $11 mil lion and unfavorable foreign exch ange 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 decr ease 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 Facil ity and the rating agency up grades discussed in "Liquidity and Capital Resources". Other expense Other expense was $0.3 million for 2012, re flecting a change of $13.7 million compared to other expense of $14.1 million for 2011. The change was primarily attributable to net foreig n currency losses of approximate ly $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. Effect ive April 1, 2012, the Company changed th e functional curren cy of its Mexico operations to the Mexican peso. S ee 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 co mpared 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% fo r 2011. The difference in the eff ective tax rate for the comparat ive period is primarily due to the geographical dispersion of earni ngs and losses, a favorable IRS audit settlement in 2011, and th e expiration of statutes of limitations for both Federal and State tax purposes. Year Ended December 31, 2011, as Compar ed with Year Ended December 31, 2010
Net sales Net sales for 2011 were $5,642.3 million, reflecting an increas e of $323.2 million, or 6.1%, from the $5,319.1 million reported for 2010. The increase was primarily due to higher sa les 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 $2,9 27.7 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 millio n, 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 pric e and product mix of approximately $55 million, the impact of favorable foreign exchange rates of ap proximately $51 million and higher sales volume of approximately $51 million.

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Index to Financial Statements
Quarterly net sales and the percentage changes in net sales byquarter 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 gr oss profit of $1,402.6 million (26.4% of net sales) for 2010. Gross profit dollars were impacted by favorable price and pr oduct mix of approximately $124 million, lower manufacturing costs of approximat ely $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 materi als, and approximately $7 million of higher restructuring charges. The lower manufacturing costs are primarily a result of cost savings ini tiatives implemented and various restructuring activities taken b y the Company, including facilityconsolidations, workforce reductions and productivity improvements resulting from capital investments. In addition, the gross profit fo r 2010 included insurance settlement pro ceeds of approximately $9 million related to a flood in the Company’s Mexican manufacturing facility. Selling, general and ad ministrative 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 decrease d 1.0% compared to the prior year as a result of the Company’s ab ility to leverage its various cost savings initiatives. The doll ar 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 immate rial error in its consolid ated financial statements. The error related to accounting fo r operating leases. The correction of $6.0 mil lion resulted in an ad ditional charge (“lease charge”) to selling, general and administ rative expense in the Company’s 2011 consolidated stat ement of operations. The Company believes the correction of this error to be both quantitatively and qualitatively immaterial to its quarterly results f or 2011 or to any of its previously issued consolidated financia l 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 sa les), reflecting a $1.4 million increase, compared to an operating income of $314.2 million (5.9% of net sales) for 20 10. The increase in operating in come 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 in flationary 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 pro ductivity improvements resulting from capital investments. In addition, the operating income for 2010 included insurance settle ment proceeds of approximately $9 million related to a flood in the Company’s Mexican manufacturing facility. 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmMohawk 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 millio n (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 leas e charge (discussed in selling, general and administrative expenses) of approximately $3 million, substantially offset by lower manufacturing costs and selling, general and administrativ e expenses of approximately $76 million and favorable pr ice and product mix of approximately $64 million. The

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Index to Financial Statements
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 Co mpany, including facility consolidations, workforce reductions and productivity improvements resulting from capital investments. Dal-Tile Segment —Operating income was $101.3 million (7.0% of segm ent 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 char ge (discussed in selling, general and administrative expenses) of approximately $3 million. Th e lower manufacturing costs and selling, general and administrative expe nses are primarily a result of cost savings initiatives implemented and various restructuring actions taken by the Company, including workfo rce reductions and productivity improvements resulting from capital investments. In addition , the operating income for 2010 included insurance settlement proceeds of appr oximately $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 mil lion (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 selli ng, 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, includin g facility consolidations and productivity im provements resulting from capital investments. Interest expense Interest expense was $101.6 million for 2011, reflecting a d ecrease of $31.5 million compar ed 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 pr imarily a result of unfavorable changes innet 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 fromcustoms refunds partially offset by acquisitions purchase accounting adjustments of $1.7 mill ion. The unrealized foreign currency losses ar e attributable to certain of the Company’s consolidated foreign subsidiari es that measure financial conditions and result s 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 wi ll 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 effect ive tax rate for the comparativ e 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 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmThe Company’s primary capital requirements are for working capital, capital expendi tures and acquisitions. The Company’s capital needs are met primarily through a combinati on 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 impr ovements in working capital. As discussed in note 13 to the consolidated financial statements, on December 28, 20 12, the Company received the re fund of the deposit related to the tax assessment by the Belgium taxing authority of €23.8 million. On January 30, 2 013, 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 milli on compared to $299.7 million for 2011. The decrease in investing activities primarily relates to lower capital expenditu res and lower acquisition expenditures in 2012. Capital spendi ng during 2013, excluding pending acquisition expenditures, is exp ected to range from approximately $275 million to $295 million and is intended to be used primarily to purchase equipm ent, 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 a ttributable to the purchase of the non-controlling interest with in 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, se nior, secured revolving credit facility (the “Senior Credit Facility”). The Senior Credit F acility provides for a maximum of $900.0 millio n of revolving credit, including limited amounts of credit in the form of letter s of credit and swingline loans. The Company paid financing costs of $8.3 million in connection with its Senior Credit Facility. These co sts were deferred and, along with unamor tized costs of $12.3 million related to the Company’s prior senior, secured revolving credit facility, are being amortized over th e term of the Senior Credit Facility. On January 20, 2012, the Company entered into an amendmen t to the Senior Credit Faci lity 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 deferr ed and are being amortized over the remaining term of the Senior Credit F acility. The incremental term loan facilityprovides 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 quarter ly principal payments of $5.625 million prior to maturity. The Senior Credit Facility is scheduled to mature on July8, 2016. The Company can term inate and prepay the Senior Credit Facility at any time without payment of any termination or prepayment penalty (other th an customary breakage costs in respect of loans bearing interest at a rate based on LIBOR). At the Company’s election, revolv ing loans under the Senior CreditFacility 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. prim e 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 whic h the aggregate commitment s 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 Co nsolidated Net Leverage Ratio (with app licable margins and the commitment fee increasing as the ratio increases). All obligations of the Company and the other borrowers under th e Senior Credit Facility are required to be guaranteed by all of the Company’s material domestic subs idiaries and all obligations of borrowers that are foreign subs idiaries are guarante ed by those foreign subsidiaries of the Company which the Company design ates 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 borr owers’ and domestic guarantors’ subsidiaries, and proceeds of any of the foregoing securing obligations under the Senior Credit Facilitywere released. The Company will be require d to reinstate such security interests i f there is a ratings downgrade such that: (a) both (i) the Moody’s Investor’s Service, Inc. (“Moody’s”) rating is Ba2 and (ii) th e 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 stab le outlook or better) and (ii) the S&P rating is BB- or lower. 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmThe Senior Credit Facility in cludes certain affirmative and negative covena nts 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, tr ansactions with affi liates, payments and modifications of certain existing debt, future negative pledges, and changes in the natu re 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, a s defined in the Senior Credit F acility. The Senior Cred it Facility also contains customary representations and warranties and events of default, subjectto 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 th e 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 entere d into a three-year on-balance sheet trade accounts receivable securitization agreement (the "Securitization F acility"). The Securitization Facility allows th e Company to borrow up to $300 million based on available accounts receivabl e and is secured by the Company's U.S. trad e accounts receivable. Borrowings under the Securitization Facility bear interest at commercial paper interest rates, in the case of lenders that are commercial paper cond uits, or LIBOR, in the case of lenders that ar e 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 Fa cility 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 Mar azzi Group on or prior to January 25, 2014 or if, prior to that date, the Share Purchase Agreement with respect to the acqui sition is terminated, the Company will be required to redeem all of the notes on the special mandatoryredemption 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 ina 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 incr ease 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 a nd 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 accrue d interest of $12.1 mil lion, 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 th e Company’s plans are to perman ently reinvest the cash held in Europe, the estimated cost of repatriation for the cash in vested in Europe would be ap proximately $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 tw elve 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 repurchase s, 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 re purchase 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 co st 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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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents
Index to Financial Statements

Contractual obligations The following is a summary of the Company’s future minimum payments under contractual obligations as of December 31, 20 12 (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, 20 12 to these balances. (2) Includes commitments for natural gas, electricity and raw material purchases. (3) Includes the estimated pension contributions for 2013 onl y, as the Company is unable to estimate the pension contributions beyond 2013. The Company’s projected benefit obligatio n 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 re lated interest and pena lties for uncertain tax positions. These liabilities have not been presented in th e 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 accepte d accounting principles, the Company must make decisions wh ich impact the reported amounts of assets, li abilities, revenues and expenses, and related disclosures. Such decisions include the selection of appropriate acco unting principles to be ap plied and the assumptions on which to base accounting estimates. In r eaching such decisions, the Company applies judgment based on it s understanding and analysis of the relevant circumstances and historical experience. Actual amounts coul d differ from those estimated at the time the consolidated financial statements are prepared. 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmThe Company’s significant accounting policies are described in Note 1 to the Consolidated Financial Statements included elsewhere in this report. Some of thos e significant accounting policies require the Company to make su bjective or complex judgments or estimates. Critical accounting po licies 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 inherentlyuncertain and may change in subsequent periods. The Company believes the following accounting policies requir e it to use judgments and estimates in preparing its consolidated financial statements an d represent critical accounting policies.

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Index to Financial Statements

• Accounts receivable a nd revenue recognition. Revenues are recognized when th ere is persuasive evidence of an arrangement, delivery has occurr ed, the price has been fixed or is determin able, and collectability can be reasonably assured. The Company provides allowances for expected cash discounts, sales allo wances, returns, cl aims and doubtful accounts based upon historical bad debt and claims experience and periodic ev aluation of specific customer accounts and the aging of accounts receivable. If the financial c ondition of the Company’s custom ers 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 di scounts, returns, claims an d doubtful accounts would have affected net earnings by approximately $2 million for th e 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 includ e 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 onhand are compared against anticipated future usage, which is a function of hi storical usage, anticipate d future selling price, expected sales below cost, excessive quantities and an evaluation fo r obsolescence. Actual results could di ffer 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 th e 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 certainevents or substantive chan ges in circumstances. The Comp any 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 ap proaches are subject to key judgments and assumptions that are sensitive to change such as judgments and assumptions about appropriate sales growth rates, operating margin s, weighted average cost of capital (“WACC”), and comparab le 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 esti mates and the judgments and assumptions upon which the estimates are based will, in all likelihoo d, differ in some respects from actua l 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 flow s of more than 25% or a more than 15% increase in WACC or a significant or prolonged decline in market capit alization could result in an additional indication of impairment. The impairment test for intangible assets not subject to am ortization involves a comparison of the estimated fair value of the intangible asset with it s carrying value. If the carryin g value of the intangible asse t exceeds its fair value, an impairment loss is recognized in an amount equal to that ex cess. Significant judgments inhere nt 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 intangibleassets, which for the Comp any are its trademarks, is conducted during the fourth quarter of each year, or more freque ntly if events or changes incircumstances 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 ownershi p 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 va lue are generally consistent with past performance and are also consistent w ith the projections and assumptions that are used in operating plans. Such assumptions are subject to change as a result of changing economic and compe titive conditions. The determination of fair value is highly sensitive to diff erences between estimated and actual cash fl ows and changes in the related discount 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmrate used to evaluate the fair value of the trademarks. Estimated cash flows are sensit ive to changes in the economy among other things. The Company reviews its long-lived asse t 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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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents
Index to Financial Statements
held and used is measured by a comparis on 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 consid ered 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 comple x and subject to different interpretations by the taxpayer and re spective governmental taxing authorities. Significant judgment is required in determining the Company’s tax expense and in evaluating th e Company’s tax positions. Deferred tax assets represent amounts available to reduce income taxes payable on taxabl e income in a future period . The Company evaluates the recoverability of these future tax benefits by assessing th e adequacy of future expect ed taxable income from all sources, including reversal of taxable temporary differences, forecasted operatin g earnings and available tax planning strategies. These sources of income inherently rely on estim ates, 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 inthe period in which that determination is made or when tax law changes are enacted. The Company had valuation allowances of $321.6 million in 20 12, $334.2 million in 2011 and $325.1 million in 2010. For further information regarding the Company’s valuation al lowances, 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 po sitions and records tax benefits for al l years subject to examination based upon the Company’s evaluation of the f acts, circumstances and information avai lable 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% lik elihood of being realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant in formation, 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 th at a tax benefit will be sustained, no tax benefit has been recognized in the consolidated financ ial 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 es timates based on judgments made by the Company relating to ongoingenvironmental and legal proceedings, as disclosed in the Company’s consolidated financial statements. In determining whether a liability is probable and reasonably es timable, the Company consults with its internal experts. Th e Company believes that the amounts recorded in the accomp anying financial statements are based on the best estimates and judgments available to it. Recent AccountingPronouncements 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 consecuti ve statements. The option of presenting othe r 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 an d operating expenses. The Company expects raw material prices, many of which are petroleum based, to fluctuate based upon worldwide supply and demand of commodities 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmutilized in the Company’s production processes. Although the Co mpany attempts to pass on in creases 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 increas e, 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 th ese costs cannot be fully recovered. In th e past, the Company has often been able t o 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, th ird and fourth quarters typically produce higher net sal es and operating income in these se gments. These results are primar ily due to consumer residential spending patterns for floor covering, which histor ically 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 quarte r is traditionally the weakest due to the European holiday in late summer. Item 7A. Quantitative an d Qualitative Disclosu res about Market Risk The Company’s market risk is impacted by changes in fore ign currency exchange rates, interest rates and certain commodity prices. Financial exposures to th ese risks are monitored as an integral part of the Company’s risk management program, which seeks to reduce the potentia lly adverse effect that the volatility of these markets may have on its operating results. From time to time, the Company ente rs into derivative contracts to manage th ese 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 Decembe r 31, 2012 and 2011. As of D ecember 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 floati ng-rate debt would not have a material imp act on the Company’s re sults of operations.

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmItem 8. Consolidated Financial St atements 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 Statem ents of Operations fo r the Years ended Decembe r 31, 2012, 2011 and 2010 35 Consolidated Statements of Comprehensive Income for the Y ears ended December 31 , 2012, 2011 and 2010 36 Consolidated Statements of Stockholders’ Equity for the Year s ended December 31 , 2012, 2011 and 2010 37 Consolidated Statem ents of Cash Flows for the Years ended December 31, 2012, 2011 and 2010 38 Notes to Consolidated Financial Statements 39

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmReport of Independent Regi stered Public Accounting Firm The Board of Directors and Stockholders Mohawk Industries, Inc.: We have audited the accompanying conso lidated balance sheets of Mohawk Indu stries, Inc. and subsidiaries as of December 31, 2012 and 2011, and the relate d consolidated statements of operatio ns, comprehensive income, stockholders’ equity, and cash flows for each of the year s in the three-year period ended December 31, 2012. These cons olidated financial statements are the responsibility of th e Company’s management. Our responsibility is to express an opinion on these consolidated financial statem ents based on our audits.
We conducted our audits in accordance wi th the standards of the Public Comp any Accounting Oversi ght Board (United States). Those standards require that we plan and perform the audit to obtain reason able assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, ev idence supporting the amounts and disclosures in the financial statements. An audit also includes asse ssing the accounting principles used an d significant estimates made by management, as well as evaluating the overall financia l statement presentation. We beli eve 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 su bsidiaries 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, 20 12, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance wi th the standards of the Public Comp any Accounting Oversi ght Board (United States), Mohawk Industries, Inc.’s inte rnal control over financial reporting as of December 31, 20 12, based on criteria established in Internal Control—Integrat ed 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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Index to Financial Statements Report of Independent Regi stered 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 mana gement is responsible for maintaining effective internal control over financial reporting and for its assessment of the ef fectiveness of internal control over financial reporting, as s et 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 w ith the standards of the Public Comp any Accounting Oversi ght Board (United States). Those standards require that we plan and perform the audit to obtain reas onable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understandin g of internal control over financial reporting, assessing the riskthat a material weakness exis ts, and testing and evaluating th e design and operating effectiveness of internal control based on th e assessed risk. Our audit also included performing such othe r procedures as we considered necessary inthe 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 reas onable assurance regarding the reliability of financial reporting and the preparation of financial statem ents for external purposes in accordance with general ly accepted accounting principles. A company’s internal control ov er financial reporting includes those policies and procedures that (1) pertain to the maintenance of r ecords that, in reasonable de tail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that trans actions are recorded as necessary to perm it 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 mana gement 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 prev ent or detect misstatements. Also, projections of any evaluation of eff ectiveness to future periods are subject to the risk that controls may become inadequate because of changes inconditions, or that th e degree of compliance with the polic ies 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 Cont rol—Integrated Framew ork issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance wi th the standards of the Public Comp any Accounting Oversi ght Board (United States), the consolidated balan ce sheets of Mohawk Industries, Inc. and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of operat ions, comprehensive income, st ockholders’ equity, and cash flows for each of the years in the three-year pe riod ended December 31, 2012, and our report dated Febr uary 27, 2013 expressed anunqualified opinion on those consolidated financial statements.

/s/ KPMG LLP Atlanta, Georgia February 27, 2013

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents
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 accr ued 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 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmSee accompanying notes to conso lidated financial statements.

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents
Index to Financial Statements 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 administrativ e 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 attributab le to Mohawk Industries, Inc. $ 3.63 2.53 2.66 Diluted earnings per share attribut able to Mohawk Industries, Inc. $ 3.61 2.52 2.65
See accompanying notes to conso lidated 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 conso lidated financial statements.

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Index to Financial Statements 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’

Equity Shares Amount Shares Amount (In thousands) Balances at December 31, 2009 $ 33,459 79,518 $ 795 $1,2 27,856 $1,998,616 $ 2 96,917 (11,034) $(3 23,361) $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 servi ce cost and actuarial gain or loss — — — — — 380 — — 380 Net income — — — — 185,471 — — — 185,471 Balances at December 31, 2010 35,441 79,666 797 1,2 35,445 2,180,843 1 78,097 (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 servi ce cost and actuarial gain or loss — — — — — (452) — — (452) Net income — — — — 173,922 — — — 173,922 Balances at December 31, 2011 33,723 79,815 798 1,2 48,131 2,354,765 1 35,639 (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 servi ce cost and actuarial gain or loss (1,591) (1,591) 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmNet 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 conso lidated financial statements.

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Index to Financial Statements 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 earni ngs 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 i nvesting 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 se curitization 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) 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmEffect of exchange rate changes on cashand cash equivalents 10,269 (10,471) (10,272) Net change in cash and cash equivalents 165,727 (42,272) (177,241) Cash and cash equivale nts, 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 conso lidated financial statements.

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Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements Years Ended December 31, 2012, 2011 and 2010 (In thousands, excep t per share data) (1) Summary of Signific ant Accounti ng Policies (a) Basis of Presentation Mohawk Industries, Inc. (“Mohawk” or the “Company”), a term which includes th e Company and its subsidiaries, is a leading producer of floor covering products for residential and commercial applications in th e 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 leadin g 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. generallyaccepted accounting prin ciples requires management to make estimates and assumptio ns that affect the reported amounts of a ssets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financ ial statements and the reported amounts of revenues and expenses during the reporting period. Actual resu lts 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 Eu rope and $1,664 was in North America an d 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 laminateflooring products in the U.S. principally for residential and commercial use. In addi tion, the Company manufactures laminate and sells carpet, rugs, hardwood and laminate flooring products in Europe principally for resident ial and commercial use. The Company grants credit to customers, most of whom are retail-flooring dealers, home centers and commercial end users, under credit te rms that the Company be lieves 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 o ccurred, the price has been fixed or is determin able, and collectability can be reasonably assure d. The Company provides allowances for expected cash disc ounts, returns, claims, sales al lowances 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 revenu es received from third parties for patents are recognized base d on contractual agreements. (d) Inventories The Company accounts for a ll inventories on the firs t-in, first-ou t (“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, depr eciation, general manufacturing overhead and various other cost s of manufacturing. Market, wi th respect to all inventories, is replacement cost or net realizable value. Inventories on hand are compared against anticipate d future usage, which is a function of historical usage, anticipated future selling price, expected sales below cost, excessive quantities and an evaluation for obsole scence. Actual results could di ffer from assumptions used to value obsolete inventory, excessive inventory or inventory expected to be sold below cost and additional reserves may be required. 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htm(e) Property, Plant and Equipment Property, plant and equipment are stated at cost, including capitalized interest. Depr eciation 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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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial Statements—(Continued)

machinery and equipment, the shorter of th e estimated useful life or lease term fo r 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") A ccounting 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 ba sis if an event occurs that m ight reduce the fair value of the reporting unit below its carrying va lue). The Company cons iders the relationship between its marke t capitalization and its book value, among other factors, when re viewing 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 comp arable company market valuation appro aches. The Company ha s 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 se nsitive to change such as judgme nts and assumptions about appropriate sales growth rates, operating margins, weighted average cost of capital (“WACC”), and compar able company market multiples. When developing these key judgments and assumptions, th e Company considers economic, operational and market conditions that could impact the fair value of the reporting uni t. However, estimates are inherently uncertain and represent on ly management’s reasonable expectations re garding future developments. These esti mates 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 signif icant or prolonged deterioration in economic conditions occur, such as continued declines in spending for new construction, remodeling and replacement activitie s; the inability to pass increases in the costs of raw materials and fuel on to customers; or a decline in comparable company mark et multiples, then key judgments and assumptions could be impacted. The impairment evaluation for indefinite lived intangible as sets, 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 b e 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 test s for our indefinite lived intangible assets is a thorough asse ssment of qualitative factors to determine the exis tence of events or circumstances that woul d indicate that it is not more likely than not that the fair value of these assets is le ss than their carrying amounts. If the qualitative test indicates it is not more likel y than not that the fair value of these assets is less than their carrying amounts , a quantitative assessment is not required. If a quanti tative test is necessary, the second step of our impairment test involv es comparing the estim ated fair value of a reporting unit to it s 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 rate s, WACC and the amount of exp ected 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 operati ng plans. Such assumptions are subject to chang e as a result of changing economic and compe titive conditions. The determination of fair value is highly sensitive to differences between estimated and actual cashflows 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 am ount 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 me thod. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statem ent carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilitie s are measured using enacted tax rates expected to apply to taxable income in the years in which those tempor ary differences are 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmexpected to be recovered or settl ed. The effect on deferred tax assets and liabil ities of a change in tax rates is recognized i n income in the period that includes the enactment date. Change s 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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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial Statements—(Continued)

The Company’s financial instruments consist primarily of r eceivables, accounts payable, accrued expenses and long-term debt. The carrying amount of r eceivables, accounts payable and accrued expenses a pproximates 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 issu ance 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 admi nistrative expenses were $29,175 in 2012, $35,847 in 2011 and $38,553 in 2010. Vendor consideration, generally cash, is classified as a reduc tion of net sales, unless speci fic criteria are met regarding goods or services that the vendor may r eceive in return for this consideration. The Company makes various payments to customers, including slotting f ees, 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 classi fied as a selling, gene ral and administrative expense in accordance withASC 605-50. Co-op advertising expenses, a com ponent of advertising an d 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 expe rience and periodicallyadjusts these provis ions to reflect actua l experience. (k) Impairment of Long-Lived Assets The Company reviews its long-lived asset groups, which includ e 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 amou nt of long-lived assets to future undiscounted net cash flows expected to be generated by these asset groups. If such as set 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 th e lower of the carrying amount or fair value less estimat ed 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 Co mpany changed the functional currency of its Mexico operations to the Mexican peso. The Company believes that the completi on of a second plant in Mexico and growth in sales to the local Mexi can market indicated a significant change in the economi c facts and circumstances that justified the ch ange in the functional currency. The effects of the change in functional currency we re not significant to the Company's consolidated financial statements. The Company’s subsidiaries thatoperate outside the United States use their local currency as th e functional currency, with the exception of operations carried out in Canada in which case the functional cu rrency is the U.S. dollar. Other than Canada, the functional currency is translat ed into U.S. dollars for balance sheet acco unts 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’ equi ty, within accumulated other comprehensive income. Gains or losses resulting from trans actions 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 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmexchange 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 th at are re-measured using historical exch ange rates. The resulting re-measurement adjustment is reported in th e 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 outstandin g during the year. Diluted EPS is similar to basic EPS except

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial 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 d ilutive 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 unv ested restricted shares (units) that were not includ ed in the diluted EPS com putation because the price wa s 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 pe r 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 attributab le to Mohawk Industries, Inc. $ 3.63 2.53 2.66 Diluted earnings per share attribut able to Mohawk Industries, Inc. $ 3.61 2.52 2.65 (1) Amount represents the adjustment to fa ir value of a redeemable noncontrolling inte rest 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 transl ation 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 17 6,982 1,115 178,097 2011 activity (42,006) (452) (42,458) December 31, 2011 134,976 663 135,639 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htm2012 activity 25,685 (1,591) 24,094 December 31, 2012 $ 160,661 (928) 159,733 (p) Recent Accounting Pronouncements

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial 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 consecuti ve statements. The option of presenting othe r 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 y ear 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 $24,09 7 in 2011. The Company acquired a 34% equity investment in a leading manufacturer and distri butor of ceramic tile in China in the Dal-Tile segment for $79,917 in 2010. In June 2012, the Company increased its equity me thod ownership in the China joint venture to 49% through a restructuring transaction in which the majority equity owner acquired certain assets of the joint ve nture. 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 acqui sition was approximately $150 million in cash. On December 20, 2012, the Company entered into a definitive share purchase agreem ent to acquire Fintiles S.p.A and its subsidiaries (collectively, the "Marazzi Gr oup"), 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 pendin g 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 di scounts, returns, claims and doubtful accounts for the years ended December 31:

Balance at Additions Deductions(1) Balance 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmbeginning 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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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial Statements—(Continued)
(1) Represents charge-offs, net of recoveries. (4) Inventories The components of invent ories 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 impairme nt assessment in the fourth quarter of 2012 and determined the fair values of its reporting units and trademarks ex ceeded their carrying values. As a re sult, 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 duri ng 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 duri ng 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 translatio n during the year (6,458) 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmBalance as of December 31, 2011 450,432 Currency translatio n during the year 5,071 Balance as of December 31, 2012 $ 455,503

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial Statements—(Continued)

Customer relationships Patents Other Total Intangible assets subject to amortization: Balance as of December 31, 2 010 $ 106,432 112,52 0 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 translatio n 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 translatio n 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 expe nse for the years ending D ecember 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, $22 0,580 and $218,649 for 2012, 2011 and 2010, respectively. 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmIncluded 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 Decem ber 31, 2012 and 2011, respectively. (7) Long-Term Debt On July 8, 2011, the Company entered into a 5-year, seni or, secured revolving credit facility (the “Senior Credit Facility”). The Senior Credit F acility 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. Th e Company paid financing costs of $8,285 in connection with its

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial 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 f acility, are being amortized over the term of the Senior Credit Facility. On January 20, 2012, the Company entered into an amendmen t to the Senior Credit Faci lity 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 te rm loan facility provides for ei ght scheduled quarterly princip al 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 July8, 2016. The Company can term inate and prepay the Senior Credit Facility at any time without payment of any termination or prepayment penalty (other th an customary breakage costs in respect of loans bearing interest at a rate based on LIBOR). At the Company’s election, revolv ing loans under the Senior CreditFacility 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. prim e 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 whic h the aggregate commitment s 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 Co nsolidated Net Leverage Ratio (with app licable margins and the commitment fee increasing as the ratio increases). All obligations of the Company and the other borrowers under th e Senior Credit Facility are required to be guaranteed by all of the Company’s material domestic subs idiaries and all obligations of borrowers that are foreign subs idiaries are guarante ed by those foreign subsidiaries of the Company which the Company design ates 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 borr owers’ and domestic guarantors’ subsidiaries, and proceeds of any of the foregoing securing obligations under the Senior Credit Facilitywere released. The Company will be require d to reinstate such security interests i f there is a ratings downgrade such that: (a) both (i) the Moody’s Investor’s Service, Inc. (“Moody’s”) rating is Ba2 and (ii) th e 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 stab le outlook or better) and (ii) the S&P rating is BB- or lower. The Senior Credit Facility in cludes certain affirmative and negative covena nts 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, tr ansactions with affi liates, payments and modifications of certain existing debt, future negative pledges, and changes in the natu re 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, a s defined in the Senior Credit F acility. The Senior Cred it Facility also contains customary representations and warranties and events of default, subjectto customary grace periods. As of December 31, 2012, the amount ut ilized under the Senior Credit Facility including the term lo an 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 entere d into a three-year on-balance sheet trade accounts receivable securitization agreement (the "Securitization F acility"). The Securitization Facility allows th e Company to borrow up to $300,000 based on 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmavailable accounts receivable and is secured by the Company's U.S. trade accounts receivable. Borr owings under the Securitization Facility bear interest at commercial paper interest rates, in the case of lenders that are commercial paper cond uits, or LIBOR, in the case of lenders that ar e 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 Securitizati on Facility was $280,000.

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial 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 it s acquisition of the Marazzi Gr oup on or prior to January 25, 2014 or if, prior to that date, the Share Purchase Agreement with respect to the acqui sition is terminated, the Company will be required to redeem all of the notes on the special mandatoryredemption 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 agencydowngrade 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 incr ease 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 a nd 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 prin cipal amount of outstanding senior 7.20% notes, together with accrued interest of $1 2,106, at maturity using av ailable borrowings under it s 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 debtinstruments were estimated using mark et observable inputs, including quoted prices in active markets, marketindices and interest rate measurements. Within the hierarchy of fair va lue measurements, these are Level 2 fair values. The aggregate maturities of l ong-term debt as of Decembe r 31, 2012 are as follows:

2013 $ 55,213 2014 13,653 2015 300,944 2016 1,012,864 2017 229 Thereafter 39 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htm$ 1,382,942

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial 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 ex cess 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 pr oducts for up to 50 years. Th e Company records a provision for estimated warranty and related costs in accrued expenses, ba sed on historical experience an d 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 adju stment during th e year — 4,473 2,261 Warranty expens e 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 r ecognized 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 pri ce equal to the market price of the Company’s common stock on the date of the grant and generally vest be tween three and five years with a 10-year contractual term. Restricted stock and RSU s are granted with a price equal to the market price of the Co mpany’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 appr oved the 2012 Long- Term Incentive Plan (“2012 Plan”), which allows the Company to reserve up to a maximum of 3,200 shar es 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. 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htm48 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial 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, resp ectively, 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 th ese programs and related compensation expense was not significant for any of the years ended D ecember 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. Fo r the years ended December 31, 2012 and 2011, no shar es 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 sh ares have been repurchased at an aggregate cost of approx imately $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 opt ion exercise and forfei ture rates within the valuation model. Optionees that exhibit similar option exercisebehavior are segregated into separate groups within the valuation model. The expected te rm 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 ineffect at the time of the gr ant for the expected term of th e 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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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial Statements—(Continued)

A summary of the Company’s op tions under the 2 002 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, Decem ber 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 ve st 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 optio n 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 Decembe r 31, 2012, 2011, and 2009 was $4,226, $1,148 and $1,714, respectivel y. 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, ne t of tax) and $2,436 ($1,543, net of tax), respectively, which was allocated to selling, general and admi nistrative expenses. The remaining unamor tized expense for non- vested compensation expense as of December 31, 2012 was $2,096 with a we ighted average remain ing life of 1.4 years. The following table summarizes information about the Comp any’s stock options outstand ing 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 RS Us 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 outstandi ng, December 31, 2011 495 $ 50.76 Granted 260 65.98 Released (140) 43.55 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmForfeited (10) 59.07 Restricted Stock Units out standing, 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 Decembe r 31, 2012, 2 011 and 2010,

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial Statements—(Continued)

respectively, which has been allocated to selling, general and administrative e xpenses. Pre-tax unrecognized compensation expense for unvested RSU’s grante d 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 an d 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 electi on. Employee and employer contributions to the Mohawk Plan were $35,986 and $15,046 in 2012, $34,595 and $14,541 in2011 and $33,071 and $13,062 in 2010, respectively. The Company also has various pension plans covering em ployees 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 accord ance with local regulations. Th e Company uses December 31 as the measurement date fo r 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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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial Statements—(Continued)

The obligations, plan assets and funding stat us 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 oblig ation 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 recogni zed in consolidated balance sheets: Accrued benefit liability (non-c urrent 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, 201 2, 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 th e 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 yiel d on investments. The rate of compensation increase for the Non-U.S. Plans is based upon the Company’s annual reviews. 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htm52 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial 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 esti mated 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 an d 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 pe nsion plan assets combines an analysis of historical investment performance by a sset class, the Company’s investment guid elines and current an d 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) 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htm53 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial 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 th e years ended December 31 , 2012, 2011 and 2010 cons ists 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

54 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial Statements—(Continued)

The tax effects of temporary diff erences that give rise to sign ificant portions of the deferred tax assets and deferred tax liabilities as of December 31, 201 2 and 2011 are presented below:
2012 2011 Deferred tax assets: Accounts receiva ble $ 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 ne t 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 deferr ed tax assets which are in deferred income taxes and other non-current assets and $6,309 and $8,760 current deferredtax liabilities which are included in accounts payable and accrued expenses in the consolidat ed balance sheets as of Decembe r 31, 2012 and 201 1, respectively.

The Company evaluates its ab ility to realize the tax benefits associated with deferred tax as sets by analyzing its forecasted taxable income using both historic and projected future operating results, the reversal of ex isting temporary differences, taxa ble 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 $32 5,127, respectively. The va luation allowance as of December 31, 2012 relates to the net deferred tax assets of one of the Company’s foreign subsidiari es as well as certain state net operating losses and tax credits. The total change in the 2012 valuation allowance was a decreas e of $12,630 which includes $5,863 related to foreign currency transl ation. The total change in the 2011 valu ation allowance was an increase of $9,088, which includes $7,040 related to foreign currency translation. The tota l change in the 2010 valuat ion 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 Compan y will realize the benefits of its deferred tax assets, net of valuation allowances, based upon the expectedreversal of deferred tax liabilities an d the level of historic and forecasted tax able income over periods in which the de ferred tax assets are deductible. As of December 31, 2012, the Co mpany has state net operating loss carry forwar ds and state tax credits with potential tax benefits of $49,081, net of federal income tax benefit; thes e 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 ad dition, 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 agains t these deferred tax assets as of December 31, 2012. 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmThe Company does not provide for U.S. federal and state in come taxes on the cumulative undistributed earnings of its foreign subsidiaries because such earning s are deemed to be permanently reinvest ed. 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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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial 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 believe s 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 probabi lity threshold in accordance w ith ASC 740-10. Changes in recognition or meas urement are reflected in the period in wh ich the change in ju dgment occurs. The Company records intere st related to unrecognized tax benefits in intere st 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, assertin g that the Company had understated its Belgian taxable income for that year. The Company filed a formal protest in the first quarter of 201 2 refuting the Belgian tax authority's posi tion and in order to eliminate the accrualof 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 Co mpany received notification of the Belgian tax authority's intention to extend the statute of lim itations back to and including th e 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 notificat ion 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, th e Company received th e refund of the Depo sit of €23,789. On January 30, 2013, the Company recei ved a refund of the interest Deposit of €2,9 12 and interest income of €1,583 earned on the Deposit. On December 28, 2012, the Belgian taxing authority issued assessments under a revi sed theory related to the years ended December 31, 2005 and December 31, 2009, in the amounts of €4 6,135 and €35,567, re spectively, excluding potential interest and penalties. The Company intends to file a formal protest duri ng the first quarter of 2013 relating to the new assessments. T he 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 Co mpany believes the ultimate outcome of th ese 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 c ash flows in a given quarter or year. As of December 31, 2012, the Company’s gross amount of unr ecognized tax benefits is $5 3,835, 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 th e statute of limitations (1,764) (1,391) Settlements with taxing authorities (7,065) (9,752) Balance as of December 31 $ 53,835 46,087 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmThe 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, th e 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 penaltie s through the consolidated statements of operations of $1,585, $3,755 and $9,852, respectively.

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial Statements—(Continued)

The Company believes that it s unrecognized tax benefits could decrease by $7,499 within the next twelve months. The Company has effectively settled all Federal income tax matters re lated 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 retu rns. The results of the federa l income tax examination were submitted to the Congressional Jo int Committee on Taxation for re view. Subsequent to the quar ter ended December 31, 2012, the Company received notice that the Co ngressional Joint Committ ee on Taxation had completed its review and took no exception to the conclusion s reached by the IRS.
(14) Commitments and Contingencies The Company is obligated under various operating leases for office and manuf acturing space, machiner y, and equipment. Future minimum lease payments under non- cancelable capital and operat ing 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 capit alized 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 foreig n vendors that expire within two years. The Company is involved in litigation from time to time in th e 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 initi ated 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 name d as a defendant in a number of the individual cases (the first filed on August 26, 2010), as well as in two consolidated amen ded class action complaints, the first filed on February 28, 2011 , on behalf of a class of all direct purchas ers 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 th e Company has been named as a de fendant have been filed in or transferred to the U.S. District Court for the Northe rn District of Ohio for consolidated pre-trial proceedings under the name In re: Polyurethane Foam Antitrust Li tigation, Case No. 1:10-MDL-02196. In these actions, the plaintiffs, on behalf of themselves and/or a class of purc hasers, 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 an d 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 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmaction, 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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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial Statements—(Continued)
The Company believes that adequate provisions for resolution of all contingencies, claims and pending litigation have been made for probable losses th at are reasonably estimable. Th ese contingencies are subject to significant uncertainties and w e are unable to estimate the amount or range of loss, if any, in excess of amounts accrue d. The Company does not believe that the ultimate outcome of these actions will have a material adverse effect on its financ ial condition but could have a material adve rse effect on its results of oper ations, 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 ceram ic tile production facility. The plant was fully operational in the latter part of th e 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 an d equipment and approx imately $5,000 to recover lost margin from lost sales. The settlement with the in surance carrier is recorded in co st of sales in the Company’s 20 10 consolidated statem ent of operations. As a result of the insurance settle ment, the flooding did not have a material impact on t he 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 Co mpany realized a gain of $7,730 in other expense (income) in the Company’s 2010 consolidated statemen t of operations. The Company is pursuing additional recoveries for prior years but th ere 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, wa stewater discharges, the use, storage, tr eatment, recycling and disposal of solid an d hazardous materials and finished product, and the cleanup of cont amination associated therewith. Because of the nature of the Company’s business, the Company has incurred , and will continue to in cur, 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 hav e 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, th e Company has entered into various coll ective bargaining agreements with its workforce in Europe, Mexico and Malaysia, ei ther locally or within its industry sect or. The Company believ es 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 ad ministrative expenses. The Comp any 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 r ecorded as selling, general an d administrative expenses. The charges primarily relate to the Company’s actions taken to lower its cost structure and im prove the efficiency of its manufacturing and distribution operations as it adjusts to current economic conditions.

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial 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 — 2,37 8 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 co njunction with the Pergo acquisition, th e 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) Segmen t Reporting The Company has three reporting segments: the Mohawk segm ent, 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 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmcenters, mass merchandisers, department stores, commercial dealer s and commercial end users. Th e 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 se gment’s product lines ar e sold through Companyowned service centers, independent distributors, home center re tailers, tile and flooring retailers and contractors. The Unilin segment designs, manufactures, sources, licenses, distributes and markets lami nate, 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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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial Statements—(Continued)

Amounts disclosed for each segment are prior to any elimination or consolid ation entries. Corp orate 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 inters egment 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 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmLong-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 prop erty, plant and equipment, net, and goodwill. (2) The Soft surface product category incl udes 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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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmTable of Contents Index to Financial Statements MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES Notes to Consolidated Financ ial 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 immate rial error in its consolid ated financial statements. The error related to accounting fo r operating leases. The correc tion 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 qu antitatively and qualitatively immaterial to its quarterly results for 2011 or to any of its previously issued consolid ated financial statements. The correction had no impact on the Company’s cash flows as previously presented.

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmItem 9. Changes in and Disagreemen ts with Accountants on Acco unting and Financ ial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures Based on an evaluation of the effectiven ess 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 cont rols 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 su ch 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 crit eria set forth by the Committee of S ponsoring Organizations of the Treadway Commission (“COSO”) in Internal Contro l-Integrated Framework. The Company’s management has concluded that, as of December 31, 2012, its inte rnal control over financial report ing is effective based on these criteria. The Company’s independent registered public acco unting firm, KPMG LLP, has issued an attestation report on the Company’ s internal control over financial reporting, which is included herein. Changes in Internal Contro l 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 mate rially affect, the Co mpany’s internal control over financial reporting.
Limitations on the Eff ectiveness of Controls The Company’s management recognizes th at a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance th at 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 t heir costs. Because of the inherent limitations in all control systems, no evaluation of controls can pr ovide 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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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmPART III
Item 10. Directors, Executive Of ficers and Corporate Governance
The information required by this item is incorporated by reference to information cont ained in the Company’s Proxy Statement for the 2013 Annual Meeting of Stockholders under the following headings: “Elec tion of Directors—Director, Director Nominee and Executive Officer Information,” “—Nomin ees for Director,” “—Continui ng Directors,” “—Executive Officers,” “—Meetings and Committees of the Board of Director s,” “Section 16(a) Benefi cial Ownership Reporting Compliance,” “Audit Committ ee” and “Corporate Governance. ” The Company has adopted th e 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 Co mpany makes any substantive ame ndments 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 wi ll disclose the nature of the am endment 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 Dir ectors Corporate Governance Guide lines, which are publicly availa ble 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 cont ained 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 Informatio n—Summary Compensation Table, ” “—Grants of Plan Based Awards,” “—Outstanding Equity Awards atFiscal Year End,” “—Option Exerci ses and Stock Vested,” “—Nonqualified Deferred Compensation,” “—Certain Relationships and Related Transactions,” “—Compensation Committee Interlocks and Insider Participation,” “—Co mpensation Committee Report” an d “Director Compensation.”
Item 12. Security Ownership of Certain Beneficial Ow ners and Management and Re lated Stockholder Matters
The information required by this item is incorporated by reference to information cont ained 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 Stockhol ders of the Company.”
Item 13. Certain Relationship s and Related Transactions, and Director Independence
The information required by this item is incorporated by reference to information cont ained 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 Boar d of Directors,” and “Executive Compensation and Other Information—Certain Relationships and Related Transactions.”
Item 14. Principal Accoun ting Fees and Services
The information required by this item is incorporated by reference to information cont ained in the Company’s Proxy Statement for the 2013 Annual Meeting of Stockholders under the following heading: “Audit Committee—Principal Accountant Fees an d Services” and “Election of Di rectors—Meetings and Committees of the Board of Directors.”

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### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmPART IV Item 15.Exhibits, Financ ial Statement Schedules
(a) 1. Consolidated Financial Statements The Consolidated Financial Statements of Mohawk Industries, Inc. and subsidiari es 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 omi tted because they are not applicable or the required informatio n is included in the consolidated financial st atements 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, date d as of December 20, 2012, by and am ong 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 Compan y's Current Report on Fo rm 8-K dated December 21, 2012.) *3.1 Restated Certificate of Incorpor ation of Mohawk, as amended. (Incorporated herein by reference to Exhibit 3.1 in the Company's Annu al 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 Curr ent Report on Form 8-K dated December 4, 2007.) *4.4 Indenture dated as of January 9, 2006, between Moha wk Industries, Inc. and Su nTrust 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 Januar y 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 an d 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 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmFirst Supplemental Indenture, dated as of January 31, 2013, by and between Mohawk Industries, Inc. and U.S. Bank National Association, as Trustee (Incorpo rated 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 Ag reement by and among Mohawk , Citicorp Investments, Inc., ML-Lee Acquisition Fund, L.P. and Certain Management Investors. (Incor porated 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 an d Amendment to 1992 Registration Rights Agreement dated December 3, 1993 by and among Aladdin, Mohawk, Citicor p 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 th ereto, 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 Borrow ers, certain of its subsidiaries, as Guarantors, Bank of America, N.A. as administrative Agent, Swing Li ne Leader, and a L/C Issuer, the ot her 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 Borr owers, certain of its subsidiaries , as Guarantors, Bank of America, N.A., as Administrative Agent, Swing Line Lender, an d a L/C Issuer, the other le nders 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 subsidiari es, as Borrowers, Bank of Ameri ca, 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 an d Security Agreement, dated as of January 22, 2013, by and among Mohawk Factoring, LLC, as borrower, Mohawk Servic ing, 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, da ted December 19, 2012, by an d 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 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmService 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 Agreem ent, 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 Am ended and Restated Employment Agr eement, 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 amende d. (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 In dustries, 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 Stoc k 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. 00 1-13697) for the fi scal 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 th e 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.) 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htm21 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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Index to Financial Statements

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 incorp orated by reference.

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Index to Financial Statements
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchan ge Act of 1934, the registrant has duly caused this report to be signed on its beha lf by the undersigned, thereunto duly authorized.

Mohawk Industries, Inc.
February 27, 2013 By: /s/ J EFFREYS. L ORBERBAUM Jeffrey S. Lorberbaum, Chairman and Chief Executive Officer Pursuant to the requirements of the Secu rities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant an d in the capacities and on the dates indicated.
February 27, 2013 /s/ J EFFREYS. L ORBERBAUM Jeffrey S. Lorberbaum, Chairman and Chief Executive Officer (principal executive officer) February 27, 2013 /s/ F RANK H. B OYKIN Frank H. Boykin, Chief Financial Officer an d Vice President-Finance (principal financial officer) February 27, 2013 /s/ JAMES F. B RUNK James F. Brunk, Vice President and Corporate Controller (principal accounting officer) February 27, 2013 /s/ P HYLLIS O. B ONANNO Phyllis O. Bonanno, Director February 27, 2013 /s/ B RUCEC. B RUCKMANN Bruce C. Bruckmann, Director February 27, 2013 /s/ F RANS D E C OCK Frans De Cock, Director February 27, 2013 /s/ J OHNF. F IEDLER John F. Fiedler, Director February 27, 2013 /s/ RICHARD C. I LL Richard C. Ill, Director February 27, 2013 /s/ D AVID L. K OLB David L. Kolb, Director February 27, 2013 /s/ J OSEPH A. O NORATO 

### http://www.sec.gov/Archives /edgar/data/851968/000085196813000027/a201210k.htmJoseph A. Onorato, Director February 27, 2013 /s/ K AREN A. S MITHB OGART Karen A. Smith Bogart, Director

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February 27, 2013 /s/ W. C HRISTOPHER W ELLBORN W. Christopher Wellborn, Director

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