ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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52-1604305
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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160 S. Industrial Blvd.,
Calhoun, Georgia
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30701
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $.01 par value
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New York Stock Exchange
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Floating Rate Notes due 2019
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New York Stock Exchange
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Floating Rate Notes due 2020
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New York Stock Exchange
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2.000% Senior Notes due 2022
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New York Stock Exchange
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page
No.
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Item 15.
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Item 1.
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Business
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•
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Optimizing the Company’s position as the industry’s preferred provider by delivering exceptional value to customers
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•
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Treating employees fairly to retain the best organization
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•
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Driving innovation in all aspects of the business
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•
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Taking reasonable, well considered risks to grow the business
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•
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Enhancing the communities in which the Company operates
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•
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annual reports on Form 10-K;
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•
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quarterly reports on Form 10-Q;
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•
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current reports on Form 8-K; and
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•
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amendments to the foregoing reports.
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Item 1A.
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Risk Factors
|
•
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complex and conflicting laws and regulations, which may be inconsistently or arbitrarily enforced;
|
•
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high incidences of corruption in state regulatory agencies;
|
•
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volatile inflation;
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•
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widespread poverty and resulting political instability;
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•
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compliance with laws governing international relations, including U.S. laws that relate to sanctions and corruption;
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•
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immature legal and banking systems;
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•
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uncertainty with respect to title to real and personal property;
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•
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underdeveloped infrastructure;
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•
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heavy state control of natural resources and energy supplies;
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•
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state ownership of transportation and supply chain assets;
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•
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high protective tariffs and inefficient customs processes; and
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•
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high crime rates.
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•
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facilitate the purchase, management, distribution, and payment for inventory items;
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•
|
manage and monitor the daily operations of the Company’s distribution network;
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•
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receive, process and ship orders on a timely basis;
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•
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manage accurate billing to and collections from customers;
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•
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control logistics and quality control for the Company’s retail operations;
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•
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manage financial reporting; and
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•
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monitor point of sale activity.
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•
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maintaining executive offices in different locations;
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•
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manufacturing and selling different types of products through different distribution channels;
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•
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conducting business from various locations;
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•
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maintaining different operating systems and software on different computer hardware; and
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•
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retaining key employees.
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•
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changes in foreign country regulatory requirements;
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•
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differing business practices associated with foreign operations;
|
•
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various import/export restrictions and the availability of required import/export licenses;
|
•
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imposition of foreign or domestic tariffs and other trade barriers;
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•
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foreign currency exchange rate fluctuations;
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•
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differing inflationary or deflationary market pressures;
|
•
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foreign country tax rules, regulations and other requirements, such as changes in tax rates and statutory and judicial interpretations in tax laws;
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•
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differing labor laws and changes in those laws;
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•
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work stoppages and disruptions in the shipping of imported and exported products;
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•
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government price controls;
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•
|
extended payment terms and the inability to collect accounts receivable;
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•
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potential difficulties repatriating cash from non-U.S. subsidiaries; and
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•
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compliance with laws governing international relations, including those U.S. laws that relate to sanctions and corruption.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Segment and Property Use
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North America
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Europe and Russia
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Other
|
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Total
|
||||
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|
||||
Global Ceramic
|
|
|
|
|
|
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|
||||
Manufacturing
|
|
10
|
|
|
11
|
|
|
2
|
|
|
23
|
|
Distribution / Warehouse
|
|
8
|
|
|
8
|
|
|
2
|
|
|
18
|
|
|
|
|
|
|
|
|
|
|
||||
Flooring North America
|
|
|
|
|
|
|
|
|
||||
Manufacturing
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
Distribution / Warehouse
|
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
||||
Flooring Rest of the World
|
|
|
|
|
|
|
|
|
||||
Manufacturing
|
|
—
|
|
|
17
|
|
|
5
|
|
|
22
|
|
Distribution / Warehouse
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
|
|
|
|
|
|
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|
||||
Total
|
|
|
|
|
|
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||||
Manufacturing
|
|
27
|
|
|
28
|
|
|
7
|
|
|
62
|
|
Distribution / Warehouse
|
|
18
|
|
|
11
|
|
|
2
|
|
|
31
|
|
|
|
|
|
|
|
|
|
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Item 3.
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Legal Proceedings
|
Item 4.
|
Mine Safety Disclosures
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
Period
|
Total Number of Shares Purchased in Millions
|
Average Price Paid per Share
|
Total Number of Shares Purchased as Part of Publicly Announced Plan in Millions
|
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plan in Millions
|
||||||
October 1 through November 2, 2018
|
0.5
|
|
$
|
117.99
|
|
0.5
|
|
$
|
441.1
|
|
November 5 through November 30, 2018
|
0.4
|
|
$
|
122.28
|
|
0.4
|
|
$
|
392.7
|
|
December 3 through December 31, 2018
|
1.4
|
|
$
|
118.27
|
|
1.4
|
|
$
|
225.9
|
|
Total
|
2.3
|
|
$
|
118.90
|
|
2.3
|
|
|
Item 6.
|
Selected Financial Data
|
|
As of or for the Years Ended December 31,
|
||||||||||||||
|
2018
(a)
|
|
2017
(b)
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
(In thousands, except per share data)
|
||||||||||||||
Statement of operations data:
|
|
|
|
|
|
|
|
|
|
||||||
Net sales
|
$
|
9,983,634
|
|
|
9,491,290
|
|
|
8,959,087
|
|
|
8,071,563
|
|
|
7,803,446
|
|
Cost of sales
|
7,145,564
|
|
|
6,494,876
|
|
|
6,146,262
|
|
|
5,660,877
|
|
|
5,649,254
|
|
|
Gross profit
|
2,838,070
|
|
|
2,996,414
|
|
|
2,812,825
|
|
|
2,410,686
|
|
|
2,154,192
|
|
|
Selling, general and administrative expenses
|
1,742,744
|
|
|
1,642,241
|
|
|
1,532,882
|
|
|
1,573,120
|
|
|
1,381,396
|
|
|
Operating income
|
1,095,326
|
|
|
1,354,173
|
|
|
1,279,943
|
|
|
837,566
|
|
|
772,796
|
|
|
Interest expense
|
38,827
|
|
|
31,111
|
|
|
40,547
|
|
|
71,086
|
|
|
98,207
|
|
|
Other expense (income), net
|
7,298
|
|
|
5,205
|
|
|
(1,729
|
)
|
|
17,619
|
|
|
10,698
|
|
|
Earnings from continuing operations before income taxes
|
1,049,201
|
|
|
1,317,857
|
|
|
1,241,125
|
|
|
748,861
|
|
|
663,891
|
|
|
Income tax expense
|
184,346
|
|
|
343,165
|
|
|
307,559
|
|
|
131,875
|
|
|
131,637
|
|
|
Earnings from continuing operations
|
864,855
|
|
|
974,692
|
|
|
933,566
|
|
|
616,986
|
|
|
532,254
|
|
|
Net earnings including noncontrolling interest
|
864,855
|
|
|
974,692
|
|
|
933,566
|
|
|
616,986
|
|
|
532,254
|
|
|
Less: Net earnings attributable to the noncontrolling interest
|
3,151
|
|
|
3,054
|
|
|
3,204
|
|
|
1,684
|
|
|
289
|
|
|
Net earnings attributable to Mohawk Industries, Inc.
|
$
|
861,704
|
|
|
971,638
|
|
|
930,362
|
|
|
615,302
|
|
|
531,965
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Basic earnings from continuing operations per share
|
$
|
11.53
|
|
|
13.07
|
|
|
12.55
|
|
|
8.37
|
|
|
7.30
|
|
Basic earnings per share attributable to Mohawk Industries, Inc.
|
$
|
11.53
|
|
|
13.07
|
|
|
12.55
|
|
|
8.37
|
|
|
7.30
|
|
Diluted earnings from continuing operations per share
|
$
|
11.47
|
|
|
12.98
|
|
|
12.48
|
|
|
8.31
|
|
|
7.25
|
|
Diluted earnings per share attributable to Mohawk Industries, Inc.
|
$
|
11.47
|
|
|
12.98
|
|
|
12.48
|
|
|
8.31
|
|
|
7.25
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Balance sheet data:
|
|
|
|
|
|
|
|
|
|
||||||
Working capital
|
$
|
1,243,057
|
|
|
1,417,612
|
|
|
753,192
|
|
|
(9,056
|
)
|
|
1,033,762
|
|
Total assets
|
13,099,123
|
|
|
12,094,853
|
|
|
10,230,596
|
|
|
9,934,400
|
|
|
8,285,544
|
|
|
Long-term debt (including current portion)
|
3,257,974
|
|
|
2,763,578
|
|
|
2,511,485
|
|
|
3,191,967
|
|
|
2,253,440
|
|
|
Total stockholders’ equity
|
7,440,059
|
|
|
7,067,009
|
|
|
5,783,487
|
|
|
4,860,863
|
|
|
4,422,813
|
|
(a)
|
During 2018, the Company acquired Godfrey Hirst Group, Eliane S/A Revestimentos Ceramicos (“Eliane”) and 3 businesses in Flooring ROW segment as discussed in Note 2 of the Notes to Consolidated Financial Statements.
|
(b)
|
During 2017, the Company acquired Emil as discussed in Note 2 of the Notes to Consolidated Financial Statements.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
For the Years Ended December 31,
|
|||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
|
(In millions)
|
|||||||||||||||||||
Statement of operations data:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Net sales
|
$
|
9,983.6
|
|
|
100.0
|
%
|
|
$
|
9,491.3
|
|
|
100.0
|
%
|
|
$
|
8,959.1
|
|
|
100.0
|
%
|
Cost of sales (1)
|
7,145.6
|
|
|
71.6
|
%
|
|
6,494.9
|
|
|
68.4
|
%
|
|
6,146.3
|
|
|
68.6
|
%
|
|||
Gross profit
|
2,838.1
|
|
|
28.4
|
%
|
|
2,996.4
|
|
|
31.6
|
%
|
|
2,812.8
|
|
|
31.4
|
%
|
|||
Selling, general and administrative expenses (2)
|
1,742.7
|
|
|
17.5
|
%
|
|
1,642.2
|
|
|
17.3
|
%
|
|
1,532.9
|
|
|
17.1
|
%
|
|||
Operating income
|
1,095.3
|
|
|
11.0
|
%
|
|
1,354.2
|
|
|
14.3
|
%
|
|
1,279.9
|
|
|
14.3
|
%
|
|||
Interest expense (3)
|
38.8
|
|
|
0.4
|
%
|
|
31.1
|
|
|
0.3
|
%
|
|
40.5
|
|
|
0.5
|
%
|
|||
Other expense (income) (4)
|
7.3
|
|
|
0.1
|
%
|
|
5.2
|
|
|
0.1
|
%
|
|
(1.7
|
)
|
|
—
|
%
|
|||
Earnings before income taxes
|
1,049.2
|
|
|
10.5
|
%
|
|
1,317.9
|
|
|
13.9
|
%
|
|
1,241.1
|
|
|
13.9
|
%
|
|||
Income tax expense (5)
|
184.3
|
|
|
1.8
|
%
|
|
343.2
|
|
|
3.6
|
%
|
|
307.6
|
|
|
3.4
|
%
|
|||
Earnings from continuing operations
|
864.9
|
|
|
8.7
|
%
|
|
974.7
|
|
|
10.3
|
%
|
|
933.5
|
|
|
10.4
|
%
|
|||
Net earnings including noncontrolling interest
|
864.9
|
|
|
8.7
|
%
|
|
974.7
|
|
|
10.3
|
%
|
|
933.5
|
|
|
10.4
|
%
|
|||
Less: Net earnings attributable to the noncontrolling interest
|
3.2
|
|
|
—
|
%
|
|
3.1
|
|
|
—
|
%
|
|
3.2
|
|
|
—
|
%
|
|||
Net earnings attributable to Mohawk Industries, Inc.
|
$
|
861.7
|
|
|
8.6
|
%
|
|
$
|
971.6
|
|
|
10.2
|
%
|
|
$
|
930.3
|
|
|
10.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
(1) Cost of sales includes:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Restructuring, acquisition and integration-related charges
|
$
|
47.1
|
|
|
0.5
|
%
|
|
$
|
36.0
|
|
|
0.4
|
%
|
|
$
|
38.3
|
|
|
0.4
|
%
|
Acquisition inventory step-up
|
15.4
|
|
|
—
|
%
|
|
13.3
|
|
|
0.1
|
%
|
|
—
|
|
|
—
|
%
|
|||
(2) Selling, general and administrative expenses include:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Restructuring, acquisition and integration-related charges
|
31.6
|
|
|
0.3
|
%
|
|
12.9
|
|
|
0.1
|
%
|
|
12.3
|
|
|
0.1
|
%
|
|||
Legal settlement and reserve
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
(90.0
|
)
|
|
(1.0
|
)%
|
|||
Tradename impairment
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
47.9
|
|
|
0.5
|
%
|
|||
Other charges
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
9.9
|
|
|
0.1
|
%
|
|||
(3) Interest expense includes:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Debt extinguishment costs
|
—
|
|
|
—
|
%
|
|
0.2
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Acquisition interest expense
|
4.3
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
(4) Other expense (income) includes:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Restructuring, acquisition and integration charges
|
(0.2
|
)
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Reversal of uncertain tax position indemnification asset
|
4.6
|
|
|
—
|
%
|
|
4.5
|
|
|
—
|
%
|
|
5.4
|
|
|
0.1
|
%
|
|||
(5) Income tax expense includes:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Tax reform and related, net
|
—
|
|
|
—
|
%
|
|
0.8
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||
Reversal of uncertain tax position
|
(4.6
|
)
|
|
—
|
%
|
|
(4.5
|
)
|
|
—
|
%
|
|
(5.4
|
)
|
|
(0.1
|
)%
|
|
2018
|
|
2017
|
|
Change
|
||||
First quarter
|
$
|
2,412.2
|
|
|
2,220.6
|
|
|
8.6
|
%
|
Second quarter
|
2,577.0
|
|
|
2,453.0
|
|
|
5.1
|
%
|
|
Third quarter
|
2,545.8
|
|
|
2,448.5
|
|
|
4.0
|
%
|
|
Fourth quarter
|
2,448.6
|
|
|
2,369.1
|
|
|
3.4
|
%
|
|
Total year
|
$
|
9,983.6
|
|
|
9,491.3
|
|
|
5.2
|
%
|
|
2017
|
|
2016
|
|
Change
|
||||
First quarter
|
$
|
2,220.6
|
|
|
2,172.0
|
|
|
2.2
|
%
|
Second quarter
|
2,453.0
|
|
|
2,310.3
|
|
|
6.2
|
%
|
|
Third quarter
|
2,448.5
|
|
|
2,294.1
|
|
|
6.7
|
%
|
|
Fourth quarter
|
2,369.1
|
|
|
2,182.6
|
|
|
8.5
|
%
|
|
Total year
|
$
|
9,491.3
|
|
|
8,959.1
|
|
|
5.9
|
%
|
|
Total
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
||||||||
Contractual obligations and commitments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt, including current maturities and capital leases
|
$
|
3,263.1
|
|
|
1,742.4
|
|
|
344.3
|
|
|
0.6
|
|
|
572.6
|
|
|
600.4
|
|
|
2.8
|
|
Interest payments on long-term debt and capital leases
(1)
|
150.2
|
|
|
54.2
|
|
|
34.7
|
|
|
34.7
|
|
|
24.2
|
|
|
2.1
|
|
|
0.4
|
|
|
Operating leases
|
366.5
|
|
|
116.1
|
|
|
93.7
|
|
|
66.1
|
|
|
42.2
|
|
|
22.2
|
|
|
26.1
|
|
|
Purchase commitments
(2)
|
574.9
|
|
|
184.5
|
|
|
81.1
|
|
|
54.3
|
|
|
25.5
|
|
|
25.5
|
|
|
204.0
|
|
|
Expected pension contributions
(3)
|
2.6
|
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Uncertain tax positions
(4)
|
3.0
|
|
|
3.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Guarantees
(5)
|
8.8
|
|
|
8.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
$
|
4,369.1
|
|
|
2,111.5
|
|
|
553.8
|
|
|
155.7
|
|
|
664.5
|
|
|
650.2
|
|
|
233.3
|
|
(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, 2018
to these balances.
|
(2)
|
Includes volume commitments for natural gas, electricity and raw material purchases.
|
(3)
|
Includes the estimated pension contributions for
2019
only, as the Company is unable to estimate the pension contributions beyond
2019
. The Company’s projected benefit obligation and plan assets as of
December 31, 2018
were
$63.6 million
and
$54.3 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
$27.7 million
of non-current accrued income tax liabilities and related interest and penalties for uncertain tax positions. These liabilities have not been presented in the table above due to uncertainty as to amounts and timing regarding future payments.
|
(5)
|
Includes bank guarantees and letters of credit.
|
•
|
Accounts receivable and revenue recognition.
The Company recognizes revenues when it satisfies performance obligations as evidenced by the transfer of control of the promised goods to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods. The nature of the promised goods are ceramic, stone, carpet, resilient, laminate, wood and other flooring products. Payment is typically received 90 days or less from the invoice date. The Company adjusts the amounts of revenue for expected cash discounts, sales allowances, returns, and claims, based upon historical experience. The Company adjusts accounts receivable for doubtful account allowances based upon historical bad debt, claims experience, periodic evaluation of specific customer accounts, and the aging of accounts receivable. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. A 10% change in the Company’s allowance for discounts, returns, claims and doubtful accounts would have affected net earnings by approximately
$5 million
for the year ended
December 31, 2018
.
|
•
|
Inventories are stated at the lower of cost or market (net realizable value).
Cost has been determined using the first-in first-out method (“FIFO”). Costs included in inventory include raw materials, direct and indirect labor and employee benefits, depreciation, general manufacturing overhead and various other costs of manufacturing. Market, with respect to all inventories, is replacement cost or net realizable value. Inventories on hand are compared against anticipated future usage, which is a function of historical usage, anticipated future selling price, expected sales below cost, excessive quantities and an evaluation for obsolescence. Actual results could differ from assumptions used to value obsolete inventory, excessive inventory or inventory expected to be sold below cost, and a 10% change in the Company’s assumptions for excess or obsolete inventory would have affected net earnings by approximately
$8 million
for the year ended
December 31, 2018
.
|
•
|
Acquisition Accounting.
The fair value of the consideration the Company pay for each new acquisition is allocated to tangible assets and identifiable intangible assets, liabilities assumed, any non-controlling interest in the acquired entity and goodwill. The accounting for acquisitions involves a considerable amount of judgment and estimate, including the fair value of certain forms of consideration; fair value of acquired intangible assets involving projections of future revenues and cash flows that are then either discounted at an estimated discount rate or measured at an estimated royalty rate; fair value of other acquired assets and assumed liabilities, including potential contingencies; and the useful lives of the acquired assets. The assumptions used are determined at the time of the acquisition in accordance with accepted valuation models. Projections are developed using internal forecasts, available industry and market data and estimates of long-term rates of growth for the business. The impact of prior or future acquisitions on the Company’s financial position or results of operations may be materially impacted by the change in or initial selection of assumptions and estimates. See Note 2-Acquisitions for further discussion of business combination accounting valuation methodology and assumptions.
|
•
|
Goodwill and other intangibles.
Goodwill is tested annually for impairment on the first day of the fourth quarter or earlier upon the occurrence of certain events or substantive changes in circumstances. The Company considers the relationship between its market capitalization and its book value, among other factors, when reviewing for indicators of impairment. The goodwill impairment tests are based on determining the fair value of the specified reporting units based on management judgments and assumptions using the discounted cash flows and comparable company market valuation approaches. The Company has identified Global Ceramic, Flooring NA and Flooring ROW as its reporting units for the purposes of allocating goodwill and intangibles as well as assessing impairments. The valuation approaches are subject to key judgments and assumptions that are sensitive to change such as judgments and assumptions about appropriate sales growth rates, operating margins, weighted average cost of capital (“WACC”), and comparable company market multiples. When developing these key judgments and assumptions, the Company considers economic, operational and market conditions that could impact the fair value of the reporting unit. However, estimates are inherently uncertain and represent only management’s reasonable expectations regarding future developments. These estimates and the judgments and assumptions upon which the estimates are based will, in all likelihood, differ in some respects from actual future results. Should a significant or prolonged deterioration in economic conditions occur, such as declines in spending for new construction, remodeling and replacement activities; the inability to pass increases in the costs of raw materials and fuel on to customers; or a decline in comparable company market multiples, then key judgments and assumptions could be impacted. Generally, a decline in estimated after tax cash flows of more than
35%
or a more than
26%
increase in WACC or a significant or prolonged decline in market capitalization could result in an additional indication of impairment.
|
•
|
Income taxes.
The Company’s effective tax rate is based on its income, statutory tax rates and tax planning opportunities available in the jurisdictions in which it operates. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining the Company’s tax expense and in evaluating the Company’s tax positions. Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in a future period. The Company evaluates the recoverability of these future tax benefits by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of income inherently rely on estimates, including business forecasts and other projections of financial results over an extended period of time. In the event that the Company is not able to realize all or a portion of its deferred tax assets in the future, a valuation allowance is provided. The Company would recognize such amounts through a charge to income in the period in which that determination is made or when tax law changes are enacted. For further information regarding the Company’s valuation allowances, see Note 13-Income Taxes.
|
•
|
Environmental and legal accruals.
Environmental and legal accruals are estimates based on judgments made by the Company relating to ongoing environmental and legal proceedings, as disclosed in the Company’s consolidated financial statements. In determining whether a liability is probable and reasonably estimable, the Company consults with its internal experts. The Company believes that the amounts recorded in the accompanying financial statements are based on the best estimates and judgments available to it.
|
Item 7A.
|
Quantitative and Qualitative Disclosures about Market Risk
|
Item 8.
|
Consolidated Financial Statements and Supplementary Data
|
|
|
/s/ KPMG LLP
|
/s/ KPMG LLP
|
|
2018
|
|
2017
|
|||
|
(In thousands, except per share data)
|
|||||
ASSETS
|
|
|
|
|||
Current assets:
|
|
|
|
|||
Cash and cash equivalents
|
$
|
119,050
|
|
|
84,884
|
|
Receivables, net
|
1,606,159
|
|
|
1,558,159
|
|
|
Inventories
|
2,287,615
|
|
|
1,948,663
|
|
|
Prepaid expenses
|
421,553
|
|
|
376,836
|
|
|
Other current assets
|
74,919
|
|
|
104,425
|
|
|
Total current assets
|
4,509,296
|
|
|
4,072,967
|
|
|
Property, plant and equipment, net
|
4,699,902
|
|
|
4,270,790
|
|
|
Goodwill
|
2,520,966
|
|
|
2,471,459
|
|
|
Tradenames
|
707,380
|
|
|
644,208
|
|
|
Other intangible assets, net
|
254,430
|
|
|
247,559
|
|
|
Deferred income taxes and other non-current assets
|
407,149
|
|
|
387,870
|
|
|
|
$
|
13,099,123
|
|
|
12,094,853
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|||
Current liabilities:
|
|
|
|
|||
Current portion of long-term debt
|
$
|
1,742,373
|
|
|
1,203,683
|
|
Accounts payable and accrued expenses
|
1,523,866
|
|
|
1,451,672
|
|
|
Total current liabilities
|
3,266,239
|
|
|
2,655,355
|
|
|
Deferred income taxes
|
413,740
|
|
|
328,103
|
|
|
Long-term debt, less current portion
|
1,515,601
|
|
|
1,559,895
|
|
|
Other long-term liabilities
|
463,484
|
|
|
455,028
|
|
|
Total liabilities
|
5,659,064
|
|
|
4,998,381
|
|
|
Commitments and contingencies (Note 14)
|
|
|
|
|||
Redeemable noncontrolling interest
|
—
|
|
|
29,463
|
|
|
Stockholders’ equity:
|
|
|
|
|||
Preferred stock, $.01 par value; 60 shares authorized; no shares issued
|
—
|
|
|
—
|
|
|
Common stock, $.01 par value; 150,000 shares authorized; 79,656 and 81,771 shares issued in 2018 and 2017, respectively
|
797
|
|
|
818
|
|
|
Additional paid-in capital
|
1,852,173
|
|
|
1,828,131
|
|
|
Retained earnings
|
6,588,197
|
|
|
6,004,506
|
|
|
Accumulated other comprehensive loss
|
(791,608
|
)
|
|
(558,527
|
)
|
|
|
7,649,559
|
|
|
7,274,928
|
|
|
Less: treasury stock at cost; 7,349 and 7,350 shares in 2018 and 2017, respectively
|
215,745
|
|
|
215,766
|
|
|
Total Mohawk Industries, Inc. stockholders’ equity
|
7,433,814
|
|
|
7,059,162
|
|
|
Noncontrolling interest
|
6,245
|
|
|
7,847
|
|
|
Total stockholders’ equity
|
7,440,059
|
|
|
7,067,009
|
|
|
|
$
|
13,099,123
|
|
|
12,094,853
|
|
|
2018
|
|
2017
|
|
2016
|
||||
|
(In thousands, except per share data)
|
||||||||
Net sales
|
$
|
9,983,634
|
|
|
9,491,290
|
|
|
8,959,087
|
|
Cost of sales
|
7,145,564
|
|
|
6,494,876
|
|
|
6,146,262
|
|
|
Gross profit
|
2,838,070
|
|
|
2,996,414
|
|
|
2,812,825
|
|
|
Selling, general and administrative expenses
|
1,742,744
|
|
|
1,642,241
|
|
|
1,532,882
|
|
|
Operating income
|
1,095,326
|
|
|
1,354,173
|
|
|
1,279,943
|
|
|
Interest expense
|
38,827
|
|
|
31,111
|
|
|
40,547
|
|
|
Other expense (income)
|
7,298
|
|
|
5,205
|
|
|
(1,729
|
)
|
|
Earnings before income taxes
|
1,049,201
|
|
|
1,317,857
|
|
|
1,241,125
|
|
|
Income tax expense
|
184,346
|
|
|
343,165
|
|
|
307,559
|
|
|
Net earnings including noncontrolling interest
|
864,855
|
|
|
974,692
|
|
|
933,566
|
|
|
Net earnings attributable to noncontrolling interest
|
3,151
|
|
|
3,054
|
|
|
3,204
|
|
|
Net earnings attributable to Mohawk Industries, Inc.
|
$
|
861,704
|
|
|
971,638
|
|
|
930,362
|
|
|
|
|
|
|
|
||||
Basic earnings per share attributable to Mohawk Industries, Inc.
|
|
|
|
|
|
||||
Basic earnings per share attributable to Mohawk Industries, Inc.
|
$
|
11.53
|
|
|
13.07
|
|
|
12.55
|
|
Weighted-average common shares outstanding—basic
|
74,413
|
|
|
74,357
|
|
|
74,104
|
|
|
|
|
|
|
|
|
||||
Diluted earnings per share attributable to Mohawk Industries, Inc.
|
|
|
|
|
|
|
|||
Diluted earnings per share attributable to Mohawk Industries, Inc.
|
$
|
11.47
|
|
|
12.98
|
|
|
12.48
|
|
Weighted-average common shares outstanding—diluted
|
74,773
|
|
|
74,839
|
|
|
74,568
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||
|
|
(in thousands)
|
||||||||
Net earnings including noncontrolling interest
|
|
$
|
864,855
|
|
|
974,692
|
|
|
933,566
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
||||
Foreign currency translation adjustments
|
|
(237,339
|
)
|
|
281,655
|
|
|
(36,702
|
)
|
|
Prior pension and post-retirement benefit service cost and actuarial loss
|
|
1,094
|
|
|
(2,927
|
)
|
|
(2,757
|
)
|
|
Other comprehensive income (loss)
|
|
(236,245
|
)
|
|
278,728
|
|
|
(39,459
|
)
|
|
Comprehensive income
|
|
628,610
|
|
|
1,253,420
|
|
|
894,107
|
|
|
Comprehensive (loss) income attributable to the non-controlling interest
|
|
(13
|
)
|
|
7,282
|
|
|
3,204
|
|
|
Comprehensive income attributable to Mohawk Industries, Inc.
|
|
$
|
628,623
|
|
|
1,246,138
|
|
|
890,903
|
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders’ Equity
|
||||||||||||||||||||||||||||||||||
|
Redeemable
Noncontrolling
Interest
|
|
Common Stock
|
|
Additional
Paid-in
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Treasury Stock
|
|
Noncontrolling Interest
|
|
Total
Stockholders’
Equity
|
||||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
|
|
|
Shares
|
|
Amount
|
|
|
||||||||||||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||||||||||||
Balances at December 31, 2015
|
$
|
21,952
|
|
|
81,280
|
|
|
$
|
813
|
|
|
$
|
1,760,016
|
|
|
$
|
4,102,707
|
|
|
$
|
(793,568
|
)
|
|
(7,351
|
)
|
|
$
|
(215,795
|
)
|
|
$
|
6,690
|
|
|
$
|
4,860,863
|
|
Shares issued under employee and director stock plans
|
—
|
|
|
239
|
|
|
2
|
|
|
(8,232
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
(8,226
|
)
|
||||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
35,059
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,059
|
|
||||||||
Tax benefit from stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
4,697
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,697
|
|
||||||||
Accretion of redeemable noncontrolling interest
|
123
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(123
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(123
|
)
|
||||||||
Noncontrolling earnings
|
2,864
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
340
|
|
|
340
|
|
||||||||
Currency translation adjustment on noncontrolling interests
|
(1,243
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26
|
)
|
|
(26
|
)
|
||||||||
Acquisition of noncontrolling interest, net of taxes
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32
|
|
|
—
|
|
||||||||
Currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36,702
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36,702
|
)
|
||||||||
Prior pension and post-retirement benefit service cost and actuarial loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,757
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,757
|
)
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
930,362
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
930,362
|
|
||||||||
Balances at December 31, 2016
|
23,696
|
|
|
81,519
|
|
|
815
|
|
|
1,791,540
|
|
|
5,032,914
|
|
|
(833,027
|
)
|
|
(7,351
|
)
|
|
(215,791
|
)
|
|
7,036
|
|
|
5,783,487
|
|
||||||||
Shares issued under employee and director stock plans
|
—
|
|
|
252
|
|
|
3
|
|
|
269
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
25
|
|
|
—
|
|
|
297
|
|
||||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
36,322
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,322
|
|
||||||||
Distribution to noncontrolling interest, net of adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(750
|
)
|
|
(750
|
)
|
||||||||
Accretion of redeemable noncontrolling interest
|
46
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
||||||||
Noncontrolling earnings
|
2,544
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
510
|
|
|
510
|
|
||||||||
Currency translation adjustment on non-controlling interests
|
3,177
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,051
|
|
|
1,051
|
|
||||||||
Currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
277,427
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
277,427
|
|
||||||||
Prior pension and post-retirement benefit service cost and actuarial loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,927
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,927
|
)
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
971,638
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
971,638
|
|
||||||||
Balances at December 31, 2017
|
29,463
|
|
|
81,771
|
|
|
818
|
|
|
1,828,131
|
|
|
6,004,506
|
|
|
(558,527
|
)
|
|
(7,350
|
)
|
|
(215,766
|
)
|
|
7,847
|
|
|
7,067,009
|
|
||||||||
Shares issued under employee and director stock plans
|
—
|
|
|
191
|
|
|
2
|
|
|
(8,400
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|
21
|
|
|
—
|
|
|
(8,377
|
)
|
||||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
—
|
|
|
31,382
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,382
|
|
||||||||
Repurchases of common stock
|
—
|
|
|
(2,306
|
)
|
|
(23
|
)
|
|
—
|
|
|
(274,121
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(274,144
|
)
|
||||||||
Accretion of redeemable noncontrolling interest
|
3,892
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,892
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,892
|
)
|
||||||||
Noncontrolling earnings
|
2,474
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
677
|
|
|
677
|
|
||||||||
Currency translation adjustment on non-controlling interests
|
(1,945
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,219
|
)
|
|
(1,219
|
)
|
||||||||
Purchase of redeemable noncontrolling interest and noncontrolling interest, net of taxes
|
(33,884
|
)
|
|
—
|
|
|
—
|
|
|
1,060
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,060
|
)
|
|
—
|
|
||||||||
Currency translation adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(234,175
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(234,175
|
)
|
||||||||
Prior pension and post-retirement benefit service cost and actuarial gain
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,094
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,094
|
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
861,704
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
861,704
|
|
||||||||
Balances as of December 31, 2018
|
$
|
—
|
|
|
79,656
|
|
|
$
|
797
|
|
|
$
|
1,852,173
|
|
|
$
|
6,588,197
|
|
|
$
|
(791,608
|
)
|
|
(7,349
|
)
|
|
$
|
(215,745
|
)
|
|
$
|
6,245
|
|
|
$
|
7,440,059
|
|
|
2018
|
|
2017
|
|
2016
|
||||
|
(In thousands)
|
||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||
Net earnings
|
$
|
864,855
|
|
|
974,692
|
|
|
933,566
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
|
|
||||
Restructuring
|
58,991
|
|
|
37,085
|
|
|
38,463
|
|
|
Intangible asset impairment
|
—
|
|
|
—
|
|
|
47,905
|
|
|
Depreciation and amortization
|
521,765
|
|
|
446,672
|
|
|
409,467
|
|
|
Deferred income taxes
|
88,456
|
|
|
(75,591
|
)
|
|
(34,009
|
)
|
|
Loss on disposal of property, plant and equipment
|
(205
|
)
|
|
4,303
|
|
|
3,932
|
|
|
Stock-based compensation expense
|
31,382
|
|
|
36,322
|
|
|
35,059
|
|
|
Changes in operating assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
||||
Receivables, net
|
13,856
|
|
|
(60,566
|
)
|
|
(158,888
|
)
|
|
Inventories
|
(255,391
|
)
|
|
(153,245
|
)
|
|
(81,923
|
)
|
|
Accounts payable and accrued expenses
|
(69,847
|
)
|
|
25,365
|
|
|
85,572
|
|
|
Other assets and prepaid expenses
|
(79,482
|
)
|
|
(52,115
|
)
|
|
54,267
|
|
|
Other liabilities
|
6,964
|
|
|
10,673
|
|
|
11,878
|
|
|
Net cash provided by operating activities
|
1,181,344
|
|
|
1,193,595
|
|
|
1,345,289
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
||||
Additions to property, plant and equipment
|
(794,110
|
)
|
|
(905,998
|
)
|
|
(672,125
|
)
|
|
Acquisitions, net of cash acquired
|
(568,960
|
)
|
|
(250,799
|
)
|
|
—
|
|
|
Purchases of short-term investments
|
(664,133
|
)
|
|
(83,904
|
)
|
|
—
|
|
|
Redemption of short-term investments
|
695,000
|
|
|
—
|
|
|
—
|
|
|
Net cash used in investing activities
|
(1,332,203
|
)
|
|
(1,240,701
|
)
|
|
(672,125
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
||||
Payments on Senior Credit Facilities
|
(813,182
|
)
|
|
(454,637
|
)
|
|
(707,129
|
)
|
|
Proceeds from Senior Credit Facilities
|
809,287
|
|
|
447,884
|
|
|
631,807
|
|
|
Payments on Commercial Paper
|
(16,756,404
|
)
|
|
(15,584,017
|
)
|
|
(20,210,585
|
)
|
|
Proceeds from Commercial Paper
|
16,988,398
|
|
|
15,761,954
|
|
|
20,301,372
|
|
|
Proceeds from Floating Rate Notes
|
353,649
|
|
|
357,569
|
|
|
—
|
|
|
Repayment of senior notes
|
—
|
|
|
—
|
|
|
(645,555
|
)
|
|
Payments on asset securitization borrowings
|
—
|
|
|
(500,000
|
)
|
|
—
|
|
|
Payments on acquired debt and other financings
|
(69,571
|
)
|
|
(18,811
|
)
|
|
—
|
|
|
Debt issuance costs
|
(890
|
)
|
|
(1,478
|
)
|
|
(1,336
|
)
|
|
Purchase of redeemable non-controlling and non-controlling interest
|
(34,944
|
)
|
|
—
|
|
|
—
|
|
|
Repurchases of common stock
|
(274,144
|
)
|
|
—
|
|
|
—
|
|
|
Change in outstanding checks in excess of cash
|
5,753
|
|
|
(3,402
|
)
|
|
(1,754
|
)
|
|
Shares redeemed for taxes
|
(9,925
|
)
|
|
(13,902
|
)
|
|
(13,039
|
)
|
|
Proceeds and net tax benefit from stock transactions
|
2
|
|
|
1,845
|
|
|
4,583
|
|
|
Net cash (used in) provided by financing activities
|
198,029
|
|
|
(6,995
|
)
|
|
(641,636
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents
|
(13,004
|
)
|
|
17,320
|
|
|
8,445
|
|
|
Net change in cash and cash equivalents
|
34,166
|
|
|
(36,781
|
)
|
|
39,973
|
|
|
Cash and cash equivalents, beginning of year
|
84,884
|
|
|
121,665
|
|
|
81,692
|
|
|
Cash and cash equivalents, end of year
|
$
|
119,050
|
|
|
84,884
|
|
|
121,665
|
|
|
2018
|
|
2017
|
|
2016
|
||||
Earnings attributable to Mohawk Industries, Inc.
|
$
|
861,704
|
|
|
971,638
|
|
|
930,362
|
|
Accretion of redeemable noncontrolling interest
(a)
|
(3,892
|
)
|
|
(46
|
)
|
|
(123
|
)
|
|
Net earnings available to common stockholders
|
$
|
857,812
|
|
|
971,592
|
|
|
930,239
|
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding-basic and diluted:
|
|
|
|
|
|
||||
Weighted-average common shares outstanding - basic
|
74,413
|
|
|
74,357
|
|
|
74,104
|
|
|
Add weighted-average dilutive potential common shares - options and RSUs to purchase common shares, net
|
360
|
|
|
482
|
|
|
464
|
|
|
Weighted-average common shares outstanding-diluted
|
74,773
|
|
|
74,839
|
|
|
74,568
|
|
|
Earnings per share attributable to Mohawk Industries, Inc.
|
|
|
|
|
|
||||
Basic
|
$
|
11.53
|
|
|
13.07
|
|
|
12.55
|
|
Diluted
|
$
|
11.47
|
|
|
12.98
|
|
|
12.48
|
|
|
Foreign currency translation adjustments
|
|
Pensions and post-retirement benefits
|
|
Total
|
||||
Balance as of December 31, 2015
|
$
|
(788,652
|
)
|
|
(4,916
|
)
|
|
(793,568
|
)
|
Current period other comprehensive income (loss) before reclassifications
|
(36,702
|
)
|
|
(2,757
|
)
|
|
(39,459
|
)
|
|
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
Balance as of December 31, 2016
|
(825,354
|
)
|
|
(7,673
|
)
|
|
(833,027
|
)
|
|
Current period other comprehensive income (loss) before reclassifications
|
277,427
|
|
|
(2,927
|
)
|
|
274,500
|
|
|
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
Balance as of December 31, 2017
|
(547,927
|
)
|
|
(10,600
|
)
|
|
(558,527
|
)
|
|
Current period other comprehensive income (loss) before reclassifications
|
(234,175
|
)
|
|
1,094
|
|
|
(233,081
|
)
|
|
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
Balance as of December 31, 2018
|
$
|
(782,102
|
)
|
|
(9,506
|
)
|
|
(791,608
|
)
|
•
|
Incremental costs of obtaining a contract is recorded as an expense when incurred in selling, general and administrative expenses if the amortization period is less than
one year
.
|
•
|
Shipping and handling activities performed after control has been transferred is accounted for as a fulfillment cost in cost of sales.
|
December 31, 2018
|
Global Ceramic segment
|
|
Flooring NA segment
|
|
Flooring ROW segment
|
|
Intersegment sales
|
|
Total
|
||||||
Geographical Markets
|
|
|
|
|
|
|
|
|
|
||||||
United States
|
$
|
2,251,233
|
|
|
3,851,267
|
|
|
1,289
|
|
|
—
|
|
|
6,103,789
|
|
Europe
|
714,315
|
|
|
6,487
|
|
|
1,861,890
|
|
|
—
|
|
|
2,582,692
|
|
|
Russia
|
245,867
|
|
|
2
|
|
|
103,351
|
|
|
—
|
|
|
349,220
|
|
|
Other
|
341,441
|
|
|
171,392
|
|
|
435,100
|
|
|
—
|
|
|
947,933
|
|
|
Total
|
$
|
3,552,856
|
|
|
4,029,148
|
|
|
2,401,630
|
|
|
—
|
|
|
9,983,634
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product Categories
|
|
|
|
|
|
|
|
|
|
||||||
Ceramic & Stone
|
$
|
3,552,856
|
|
|
68,337
|
|
|
—
|
|
|
—
|
|
|
3,621,193
|
|
Carpet & Resilient
|
—
|
|
|
3,258,029
|
|
|
645,669
|
|
|
—
|
|
|
3,903,698
|
|
|
Laminate & Wood
|
—
|
|
|
702,782
|
|
|
850,250
|
|
|
—
|
|
|
1,553,032
|
|
|
Other
(1)
|
—
|
|
|
—
|
|
|
905,711
|
|
|
—
|
|
|
905,711
|
|
|
Total
|
$
|
3,552,856
|
|
|
4,029,148
|
|
|
2,401,630
|
|
|
—
|
|
|
9,983,634
|
|
December 31, 2017
|
Global Ceramic segment
|
|
Flooring NA segment
|
|
Flooring ROW segment
|
|
Intersegment sales
|
|
Total
|
||||||
Geographical Markets
|
|
|
|
|
|
|
|
|
|
||||||
United States
|
$
|
2,223,998
|
|
|
3,809,211
|
|
|
2,111
|
|
|
(120
|
)
|
|
6,035,200
|
|
Europe
|
645,341
|
|
|
19,100
|
|
|
1,698,628
|
|
|
—
|
|
|
2,363,069
|
|
|
Russia
|
235,043
|
|
|
(1
|
)
|
|
91,033
|
|
|
—
|
|
|
326,075
|
|
|
Other
|
300,718
|
|
|
182,548
|
|
|
283,680
|
|
|
—
|
|
|
766,946
|
|
|
Total
|
$
|
3,405,100
|
|
|
4,010,858
|
|
|
2,075,452
|
|
|
(120
|
)
|
|
9,491,290
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product Categories
|
|
|
|
|
|
|
|
|
|
||||||
Ceramic & Stone
|
$
|
3,405,100
|
|
|
80,145
|
|
|
—
|
|
|
—
|
|
|
3,485,245
|
|
Carpet & Resilient
|
—
|
|
|
3,219,971
|
|
|
435,931
|
|
|
—
|
|
|
3,655,902
|
|
|
Laminate & Wood
|
—
|
|
|
710,742
|
|
|
808,675
|
|
|
—
|
|
|
1,519,417
|
|
|
Other
(1)
|
—
|
|
|
—
|
|
|
830,846
|
|
|
(120
|
)
|
|
830,726
|
|
|
Total
|
$
|
3,405,100
|
|
|
4,010,858
|
|
|
2,075,452
|
|
|
(120
|
)
|
|
9,491,290
|
|
December 31, 2016
|
Global Ceramic segment
|
|
Flooring NA segment
|
|
Flooring ROW segment
|
|
Intersegment sales
|
|
Total
|
||||||
Geographical Markets
|
|
|
|
|
|
|
|
|
|
||||||
United States
|
$
|
2,168,693
|
|
|
3,670,153
|
|
|
3,319
|
|
|
—
|
|
|
5,842,165
|
|
Europe
|
533,339
|
|
|
15,628
|
|
|
1,565,005
|
|
|
—
|
|
|
2,113,972
|
|
|
Russia
|
180,420
|
|
|
12
|
|
|
75,304
|
|
|
—
|
|
|
255,736
|
|
|
Other
|
292,254
|
|
|
179,953
|
|
|
275,007
|
|
|
—
|
|
|
747,214
|
|
|
Total
|
$
|
3,174,706
|
|
|
3,865,746
|
|
|
1,918,635
|
|
|
—
|
|
|
8,959,087
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Product Categories
|
|
|
|
|
|
|
|
|
|
||||||
Ceramic & Stone
|
$
|
3,174,706
|
|
|
83,431
|
|
|
—
|
|
|
—
|
|
|
3,258,137
|
|
Carpet & Resilient
|
—
|
|
|
3,042,729
|
|
|
370,117
|
|
|
—
|
|
|
3,412,846
|
|
|
Laminate & Wood
|
—
|
|
|
739,586
|
|
|
754,409
|
|
|
—
|
|
|
1,493,995
|
|
|
Other
(1)
|
—
|
|
|
—
|
|
|
794,109
|
|
|
—
|
|
|
794,109
|
|
|
Total
|
$
|
3,174,706
|
|
|
3,865,746
|
|
|
1,918,635
|
|
|
—
|
|
|
8,959,087
|
|
•
|
In connection with acquisition activity, the Company typically incurs costs associated with executing the transactions, integrating the acquired operations (which may include expenditures for consulting and the integration of systems and processes), and restructuring the combined company (which may include charges related to employees, assets and activities that will not continue in the combined company); and
|
•
|
In connection with the Company’s cost-reduction/productivity initiatives, it typically incurs costs and charges associated with site closings and other facility rationalization actions including accelerated depreciation and workforce reductions.
|
|
|
2018
|
|
2017
|
|
2016
|
||||
Cost of sales
|
|
|
|
|
|
|
||||
Restructuring costs
|
|
$
|
43,733
|
|
|
33,109
|
|
|
33,582
|
|
Acquisition integration-related costs
|
|
3,330
|
|
|
2,916
|
|
|
4,722
|
|
|
Restructuring and integration-related costs
|
|
$
|
47,063
|
|
|
36,025
|
|
|
38,304
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative expenses
|
|
|
|
|
|
|
||||
Restructuring costs
|
|
$
|
15,259
|
|
|
3,976
|
|
|
4,881
|
|
Acquisition transaction-related costs
|
|
4,977
|
|
|
2,751
|
|
|
—
|
|
|
Acquisition integration-related costs
|
|
11,351
|
|
|
6,188
|
|
|
7,438
|
|
|
Restructuring, acquisition and integration-related costs
|
|
$
|
31,587
|
|
|
12,915
|
|
|
12,319
|
|
|
Lease
impairments
|
|
Asset write-downs
|
|
Severance
|
|
Other
restructuring
costs
|
|
Total
|
||||||
Balance as of December 31, 2016
|
$
|
—
|
|
|
—
|
|
|
5,183
|
|
|
6,243
|
|
|
11,426
|
|
Provision - Global Ceramic segment
|
492
|
|
|
—
|
|
|
1,082
|
|
|
(32
|
)
|
|
1,542
|
|
|
Provision - Flooring NA segment
|
316
|
|
|
6,849
|
|
|
2,500
|
|
|
22,131
|
|
|
31,796
|
|
|
Provision - Flooring ROW segment
|
—
|
|
|
650
|
|
|
1,518
|
|
|
1,465
|
|
|
3,633
|
|
|
Provision - Corporate
|
—
|
|
|
—
|
|
|
—
|
|
|
114
|
|
|
114
|
|
|
Cash payments
|
(449
|
)
|
|
(190
|
)
|
|
(9,469
|
)
|
|
(29,725
|
)
|
|
(39,833
|
)
|
|
Non-cash items
|
—
|
|
|
(7,309
|
)
|
|
(230
|
)
|
|
(44
|
)
|
|
(7,583
|
)
|
|
Balance as of December 31, 2017
|
359
|
|
|
—
|
|
|
584
|
|
|
152
|
|
|
1,095
|
|
|
Provision - Global Ceramic segment
|
528
|
|
|
1,131
|
|
|
7,113
|
|
|
337
|
|
|
9,109
|
|
|
Provision - Flooring NA segment
|
236
|
|
|
2,940
|
|
|
4,985
|
|
|
33,807
|
|
|
41,968
|
|
|
Provision - Flooring ROW segment
|
—
|
|
|
—
|
|
|
4,741
|
|
|
(104
|
)
|
|
4,637
|
|
|
Provision - Corporate
|
—
|
|
|
—
|
|
|
3,278
|
|
|
—
|
|
|
3,278
|
|
|
Cash payments
|
(726
|
)
|
|
—
|
|
|
(12,605
|
)
|
|
(30,385
|
)
|
|
(43,716
|
)
|
|
Non-cash items
|
—
|
|
|
(4,071
|
)
|
|
(230
|
)
|
|
(3,557
|
)
|
|
(7,858
|
)
|
|
Balance as of December 31, 2018
|
$
|
397
|
|
|
—
|
|
|
7,866
|
|
|
250
|
|
|
8,513
|
|
|
December 31,
2018 |
|
December 31,
2017 |
|||
Customers, trade
|
$
|
1,562,284
|
|
|
1,538,348
|
|
Income tax receivable
|
17,217
|
|
|
9,835
|
|
|
Other
|
101,376
|
|
|
96,079
|
|
|
|
1,680,877
|
|
|
1,644,262
|
|
|
Less allowance for discounts, returns, claims and doubtful accounts
|
74,718
|
|
|
86,103
|
|
|
Receivables, net
|
$
|
1,606,159
|
|
|
1,558,159
|
|
|
Balance at
beginning
of year
|
|
Acquisitions
|
|
Additions
charged to
net sales or
costs and
expenses
|
|
Deductions(1)
|
|
Balance
at end
of year
|
||||||
2016
|
$
|
78,947
|
|
|
—
|
|
|
296,419
|
|
|
297,031
|
|
|
78,335
|
|
2017
|
78,335
|
|
|
6,510
|
|
|
308,507
|
|
|
307,249
|
|
|
86,103
|
|
|
2018
|
86,103
|
|
|
4,240
|
|
|
317,716
|
|
|
333,341
|
|
|
74,718
|
|
(1)
|
Represents charge-offs, net of recoveries.
|
|
December 31,
2018 |
|
December 31,
2017 |
|||
Finished goods
|
$
|
1,582,112
|
|
|
1,326,038
|
|
Work in process
|
165,616
|
|
|
159,921
|
|
|
Raw materials
|
539,887
|
|
|
462,704
|
|
|
Total inventories
|
$
|
2,287,615
|
|
|
1,948,663
|
|
|
Global Ceramic
|
|
Flooring NA
|
|
Flooring ROW
|
|
Total
|
|||||
Balances as of December 31, 2016
|
|
|
|
|
|
|
|
|||||
Goodwill
|
$
|
1,482,226
|
|
|
869,764
|
|
|
1,249,861
|
|
|
3,601,851
|
|
Accumulated impairments losses
|
(531,930
|
)
|
|
(343,054
|
)
|
|
(452,441
|
)
|
|
(1,327,425
|
)
|
|
|
950,296
|
|
|
526,710
|
|
|
797,420
|
|
|
2,274,426
|
|
|
Goodwill recognized during the year
|
60,493
|
|
|
—
|
|
|
—
|
|
|
60,493
|
|
|
Currency translation during the year
|
25,153
|
|
|
—
|
|
|
111,387
|
|
|
136,540
|
|
|
Balances as of December 31, 2017
|
|
|
|
|
|
|
|
|||||
Goodwill
|
1,567,872
|
|
|
869,764
|
|
|
1,361,248
|
|
|
3,798,884
|
|
|
Accumulated impairments losses
|
(531,930
|
)
|
|
(343,054
|
)
|
|
(452,441
|
)
|
|
(1,327,425
|
)
|
|
|
1,035,942
|
|
|
526,710
|
|
|
908,807
|
|
|
2,471,459
|
|
|
Goodwill recognized during the year
|
19,821
|
|
|
4,434
|
|
|
95,483
|
|
|
119,738
|
|
|
Currency translation during the year
|
(22,706
|
)
|
|
—
|
|
|
(47,525
|
)
|
|
(70,231
|
)
|
|
Balances as of December 31, 2018
|
|
|
|
|
|
|
|
|||||
Goodwill
|
1,564,987
|
|
|
874,198
|
|
|
1,409,206
|
|
|
3,848,391
|
|
|
Accumulated impairments losses
|
(531,930
|
)
|
|
(343,054
|
)
|
|
(452,441
|
)
|
|
(1,327,425
|
)
|
|
|
$
|
1,033,057
|
|
|
531,144
|
|
|
956,765
|
|
|
2,520,966
|
|
|
Tradenames
|
||
Indefinite life assets not subject to amortization:
|
|
||
Balance as of December 31, 2016
|
$
|
580,147
|
|
Intangible assets acquired during the year
|
16,196
|
|
|
Intangible assets impaired during the year
|
—
|
|
|
Currency translation during the year
|
47,865
|
|
|
Balance as of December 31, 2017
|
644,208
|
|
|
Intangible assets acquired during the year
|
91,782
|
|
|
Intangible assets impaired during the year
|
—
|
|
|
Currency translation during the year
|
(28,610
|
)
|
|
Balance as of December 31, 2018
|
$
|
707,380
|
|
|
Customer
relationships
|
|
Patents
|
|
Other
|
|
Total
|
|||||
Intangible assets subject to amortization:
|
|
|
|
|
|
|
|
|||||
Balances as of December 31, 2016
|
$
|
235,704
|
|
|
13,424
|
|
|
5,331
|
|
|
254,459
|
|
Intangible assets acquired during the year
|
3,175
|
|
|
—
|
|
|
—
|
|
|
3,175
|
|
|
Amortization during the year
|
(26,602
|
)
|
|
(7,543
|
)
|
|
(134
|
)
|
|
(34,279
|
)
|
|
Currency translation during the year
|
22,558
|
|
|
1,180
|
|
|
466
|
|
|
24,204
|
|
|
Balances as of December 31, 2017
|
234,835
|
|
|
7,061
|
|
|
5,663
|
|
|
247,559
|
|
|
Intangible assets acquired during the year
|
47,361
|
|
|
—
|
|
|
7
|
|
|
47,368
|
|
|
Amortization during the year
|
(28,389
|
)
|
|
(2,272
|
)
|
|
(84
|
)
|
|
(30,745
|
)
|
|
Currency translation during the year
|
(9,179
|
)
|
|
(294
|
)
|
|
(279
|
)
|
|
(9,752
|
)
|
|
Balances as of December 31, 2018
|
$
|
244,628
|
|
|
4,495
|
|
|
5,307
|
|
|
254,430
|
|
|
December 31, 2018
|
||||||||||
|
Cost
|
Acquisitions
|
Currency translation
|
Accumulated amortization
|
Net Value
|
||||||
Customer Relationships
|
$
|
625,263
|
|
47,361
|
|
(21,610
|
)
|
406,386
|
|
244,628
|
|
Patents
|
266,969
|
|
—
|
|
(12,486
|
)
|
249,988
|
|
4,495
|
|
|
Other
|
6,825
|
|
7
|
|
(298
|
)
|
1,227
|
|
5,307
|
|
|
Total
|
$
|
899,057
|
|
47,368
|
|
(34,394
|
)
|
657,601
|
|
254,430
|
|
|
|
|
|
|
|
|
December 31, 2017
|
||||||||||
|
Cost
|
Acquisitions
|
Currency translation
|
Accumulated amortization
|
Net Value
|
||||||
Customer Relationships
|
$
|
569,980
|
|
3,175
|
|
52,108
|
|
390,428
|
|
234,835
|
|
Patents
|
234,022
|
|
—
|
|
32,947
|
|
259,908
|
|
7,061
|
|
|
Other
|
6,330
|
|
—
|
|
495
|
|
1,162
|
|
5,663
|
|
|
Total
|
$
|
810,332
|
|
3,175
|
|
85,550
|
|
651,498
|
|
247,559
|
|
|
Years Ended December 31,
|
||||||||
|
2018
|
|
2017
|
|
2016
|
||||
Amortization expense
|
$
|
30,745
|
|
|
34,279
|
|
|
39,545
|
|
|
December 31,
2018 |
|
December 31,
2017 |
|||
Land
|
$
|
407,780
|
|
|
385,027
|
|
Buildings and improvements
|
1,584,240
|
|
|
1,413,877
|
|
|
Machinery and equipment
|
5,334,060
|
|
|
4,603,911
|
|
|
Furniture and fixtures
|
230,644
|
|
|
211,730
|
|
|
Leasehold improvements
|
94,683
|
|
|
78,803
|
|
|
Construction in progress
|
575,667
|
|
|
792,936
|
|
|
|
8,227,074
|
|
|
7,486,284
|
|
|
Less accumulated depreciation and amortization
|
3,527,172
|
|
|
3,215,494
|
|
|
Net property, plant and equipment
|
$
|
4,699,902
|
|
|
4,270,790
|
|
|
December 31, 2018
|
|
December 31, 2017
|
|||||||||
|
Fair Value
|
|
Carrying
Value
|
|
Fair Value
|
|
Carrying
Value
|
|||||
3.85% senior notes, payable February 1, 2023; interest payable semiannually
|
$
|
599,904
|
|
|
600,000
|
|
|
622,752
|
|
|
600,000
|
|
Floating Rate Notes, payable May 18, 2020; interest payable quarterly
|
343,004
|
|
|
343,289
|
|
|
—
|
|
|
—
|
|
|
2.00% senior notes, payable January 14, 2022; interest payable annually
|
587,487
|
|
|
572,148
|
|
|
634,193
|
|
|
600,096
|
|
|
Floating Rate Notes, payable September 11, 2019, interest payable quarterly
|
343,560
|
|
|
343,289
|
|
|
360,807
|
|
|
360,058
|
|
|
U.S. commercial paper
|
632,668
|
|
|
632,668
|
|
|
228,500
|
|
|
228,500
|
|
|
European commercial paper
|
707,175
|
|
|
707,175
|
|
|
912,146
|
|
|
912,146
|
|
|
Five-year senior secured credit facility, due March 26, 2022
|
57,896
|
|
|
57,896
|
|
|
62,104
|
|
|
62,104
|
|
|
Capital leases and other
|
6,664
|
|
|
6,664
|
|
|
6,934
|
|
|
6,934
|
|
|
Unamortized debt issuance costs
|
(5,155
|
)
|
|
(5,155
|
)
|
|
(6,260
|
)
|
|
(6,260
|
)
|
|
Total debt
|
3,273,203
|
|
|
3,257,974
|
|
|
2,821,176
|
|
|
2,763,578
|
|
|
Less current portion of long term debt and commercial paper
|
1,742,373
|
|
|
1,742,373
|
|
|
1,203,683
|
|
|
1,203,683
|
|
|
Long-term debt, less current portion
|
$
|
1,530,830
|
|
|
1,515,601
|
|
|
1,617,493
|
|
|
1,559,895
|
|
2019
|
$
|
1,742,373
|
|
2020
|
344,323
|
|
|
2021
|
617
|
|
|
2022
|
572,568
|
|
|
2023
|
600,420
|
|
|
Thereafter
|
2,828
|
|
|
|
$
|
3,263,129
|
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
|||
Outstanding checks in excess of cash
|
$
|
14,624
|
|
|
8,879
|
|
Accounts payable, trade
|
811,879
|
|
|
810,034
|
|
|
Accrued expenses
|
430,431
|
|
|
363,919
|
|
|
Product warranties
|
47,511
|
|
|
39,035
|
|
|
Accrued interest
|
21,908
|
|
|
22,363
|
|
|
Accrued compensation and benefits
|
197,513
|
|
|
207,442
|
|
|
Total accounts payable and accrued expenses
|
$
|
1,523,866
|
|
|
1,451,672
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||
Options outstanding at beginning of year
|
63
|
|
|
91
|
|
|
169
|
|
|
Options exercised
|
—
|
|
|
(28
|
)
|
|
(78
|
)
|
|
Options forfeited and expired
|
—
|
|
|
—
|
|
|
—
|
|
|
Options outstanding at end of year
|
63
|
|
|
63
|
|
|
91
|
|
|
Options exercisable at end of year
|
63
|
|
|
63
|
|
|
90
|
|
|
Option prices per share:
|
|
|
|
|
|
||||
Options exercised during the year
|
$
|
—
|
|
|
57.34-66.14
|
|
|
28.37-93.65
|
|
Options forfeited and expired during the year
|
$
|
—
|
|
|
—
|
|
|
—
|
|
Options outstanding at end of year
|
57.34-66.14
|
|
|
57.34-66.14
|
|
|
57.34-66.14
|
|
|
Options exercisable at end of year
|
57.34-66.14
|
|
|
57.34-66.14
|
|
|
57.34-66.14
|
|
|
Shares
|
|
Weighted
average
exercise
price
|
|
Weighted
average
remaining
contractual
term (years)
|
|
Aggregate
intrinsic
value
|
|||||
Options outstanding, December 31, 2017
|
63
|
|
|
$
|
62.86
|
|
|
|
|
|
||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
—
|
|
|
—
|
|
|
|
|
|
|||
Forfeited and expired
|
—
|
|
|
—
|
|
|
|
|
|
|||
Options outstanding, December 31, 2018
|
63
|
|
|
$
|
62.86
|
|
|
2.8
|
|
$
|
3,415
|
|
Vested and expected to vest as of December 31, 2018
|
63
|
|
|
$
|
62.86
|
|
|
2.8
|
|
$
|
3,415
|
|
Exercisable as of December 31, 2018
|
63
|
|
|
$
|
62.86
|
|
|
2.8
|
|
$
|
3,415
|
|
|
Outstanding
|
|
Exercisable
|
||||||||||||
Exercise price range
|
Number of
shares
|
|
Average
life
|
|
Average
price
|
|
Number of
shares
|
|
Average
price
|
||||||
$57.34-$57.34
|
23
|
|
|
2.15
|
|
57.34
|
|
|
23
|
|
|
57.34
|
|
||
$66.14-$66.14
|
40
|
|
|
3.14
|
|
66.14
|
|
|
40
|
|
|
66.14
|
|
||
Total
|
63
|
|
|
2.77
|
|
$
|
62.86
|
|
|
63
|
|
|
$
|
62.86
|
|
|
Shares
|
|
Weighted
average grant date fair value
|
|
Weighted
average
remaining
contractual
term (years)
|
|
Aggregate
intrinsic value
|
|||||
Restricted Stock Units outstanding, December 31, 2017
|
555
|
|
|
$
|
147.28
|
|
|
|
|
|
||
Granted
|
136
|
|
|
231.25
|
|
|
|
|
|
|||
Released
|
(235
|
)
|
|
156.56
|
|
|
|
|
|
|||
Forfeited
|
(10
|
)
|
|
211.16
|
|
|
|
|
|
|||
Restricted Stock Units outstanding, December 31, 2018
|
446
|
|
|
$
|
166.56
|
|
|
1.1
|
|
$
|
51,501
|
|
Expected to vest as of December 31, 2018
|
440
|
|
|
|
|
1.1
|
|
$
|
50,746
|
|
|
2018
|
|
2017
|
|
2016
|
|||
Restricted Stock Units outstanding, January 1
|
555
|
|
|
695
|
|
|
750
|
|
Granted
|
136
|
|
|
154
|
|
|
187
|
|
Released
|
(235
|
)
|
|
(284
|
)
|
|
(226
|
)
|
Forfeited
|
(10
|
)
|
|
(10
|
)
|
|
(16
|
)
|
Restricted Stock Units outstanding, December 31
|
446
|
|
|
555
|
|
|
695
|
|
Expected to vest as of December 31
|
440
|
|
|
546
|
|
|
682
|
|
|
2018
|
|
2017
|
|
2016
|
||||
Foreign currency losses
|
$
|
9,613
|
|
|
8,395
|
|
|
1,099
|
|
Release of indemnification asset
|
4,606
|
|
|
4,459
|
|
|
5,371
|
|
|
All other, net
|
(6,921
|
)
|
|
(7,649
|
)
|
|
(8,199
|
)
|
|
Total other expense (income)
|
$
|
7,298
|
|
|
5,205
|
|
|
(1,729
|
)
|
|
2018
|
|
2017
|
|
2016
|
||||
United States
|
$
|
387,564
|
|
|
754,562
|
|
|
627,567
|
|
Foreign
|
661,637
|
|
|
563,295
|
|
|
613,558
|
|
|
Earnings before income taxes
|
$
|
1,049,201
|
|
|
1,317,857
|
|
|
1,241,125
|
|
|
2018
|
|
2017
|
|
2016
|
||||
Current income taxes:
|
|
|
|
|
|
||||
U.S. federal
|
$
|
22,700
|
|
|
327,697
|
|
|
247,917
|
|
State and local
|
14,521
|
|
|
17,811
|
|
|
31,939
|
|
|
Foreign
|
58,669
|
|
|
73,248
|
|
|
61,712
|
|
|
Total current
|
95,890
|
|
|
418,756
|
|
|
341,568
|
|
|
Deferred income taxes:
|
|
|
|
|
|
||||
U.S. federal
|
54,983
|
|
|
(17,419
|
)
|
|
(16,167
|
)
|
|
State and local
|
19,076
|
|
|
(3,046
|
)
|
|
(22,115
|
)
|
|
Foreign
|
14,397
|
|
|
(55,126
|
)
|
|
4,273
|
|
|
Total deferred
|
88,456
|
|
|
(75,591
|
)
|
|
(34,009
|
)
|
|
Total
|
$
|
184,346
|
|
|
343,165
|
|
|
307,559
|
|
|
2018
|
|
2017
|
|
2016
|
||||
Income taxes at statutory rate
|
$
|
220,332
|
|
|
461,250
|
|
|
434,394
|
|
State and local income taxes, net of federal income tax benefit
|
22,315
|
|
|
10,133
|
|
|
6,298
|
|
|
Foreign income taxes
(a)
|
(39,915
|
)
|
|
(113,520
|
)
|
|
(111,217
|
)
|
|
Change in valuation allowance
|
2,472
|
|
|
10,008
|
|
|
(21,106
|
)
|
|
Manufacturing deduction
|
—
|
|
|
(11,911
|
)
|
|
(15,186
|
)
|
|
2017 revaluation of deferred tax assets and liabilities
(b)
|
—
|
|
|
(150,546
|
)
|
|
—
|
|
|
Transition Tax
|
28,201
|
|
|
105,165
|
|
|
—
|
|
|
Transition tax planning initiatives
|
(18,706
|
)
|
|
14,825
|
|
|
3,881
|
|
|
Tax contingencies and audit settlements, net
|
(31,874
|
)
|
|
23,097
|
|
|
2,496
|
|
|
Other, net
|
1,521
|
|
|
(5,336
|
)
|
|
7,999
|
|
|
|
$
|
184,346
|
|
|
343,165
|
|
|
307,559
|
|
|
2018
|
|
2017
|
|||
Deferred tax assets:
|
|
|
|
|||
Accounts receivable
|
$
|
8,312
|
|
|
18,481
|
|
Inventories
|
47,212
|
|
|
41,169
|
|
|
Employee benefits
|
37,335
|
|
|
42,191
|
|
|
Accrued expenses and other
|
71,621
|
|
|
52,635
|
|
|
Deductible state tax and interest benefit
|
2,904
|
|
|
2,087
|
|
|
Intangibles
|
16,134
|
|
|
22,119
|
|
|
Federal, foreign and state net operating losses and credits
|
575,625
|
|
|
530,978
|
|
|
Gross deferred tax assets
|
759,143
|
|
|
709,660
|
|
|
Valuation allowance
|
(347,786
|
)
|
|
(362,963
|
)
|
|
Net deferred tax assets
|
411,357
|
|
|
346,697
|
|
|
Deferred tax liabilities:
|
|
|
|
|||
Inventories
|
(18,332
|
)
|
|
(14,423
|
)
|
|
Plant and equipment
|
(477,734
|
)
|
|
(397,668
|
)
|
|
Intangibles
|
(181,436
|
)
|
|
(170,817
|
)
|
|
Other liabilities
|
(96,134
|
)
|
|
(31,702
|
)
|
|
Gross deferred tax liabilities
|
(773,636
|
)
|
|
(614,610
|
)
|
|
Net deferred tax liability
|
$
|
(362,279
|
)
|
|
(267,913
|
)
|
|
2018
|
|
2017
|
|||
Balance as of January 1
|
$
|
65,631
|
|
|
46,434
|
|
Additions based on tax positions related to the current year
(a)
|
1,304,447
|
|
|
28,663
|
|
|
Additions for tax positions of acquired companies
|
1,413
|
|
|
1,776
|
|
|
Additions for tax positions of prior years
|
5,098
|
|
|
876
|
|
|
Transition tax planning initiatives
|
(27,470
|
)
|
|
—
|
|
|
Reductions resulting from the lapse of the statute of limitations
|
(8,110
|
)
|
|
(14,502
|
)
|
|
Settlements with taxing authorities
|
(9,773
|
)
|
|
(655
|
)
|
|
Effects of foreign currency translation
|
(523
|
)
|
|
3,039
|
|
|
Balance as of December 31
|
$
|
1,330,713
|
|
|
65,631
|
|
|
Capital
|
|
Operating
|
|
Total Future
Payments
|
||||
2019
|
$
|
1,494
|
|
|
116,110
|
|
|
117,604
|
|
2020
|
1,195
|
|
|
93,724
|
|
|
94,919
|
|
|
2021
|
766
|
|
|
66,129
|
|
|
66,895
|
|
|
2022
|
562
|
|
|
42,247
|
|
|
42,809
|
|
|
2023
|
555
|
|
|
22,207
|
|
|
22,762
|
|
|
Thereafter
|
3,215
|
|
|
26,097
|
|
|
29,312
|
|
|
Total payments
|
7,787
|
|
|
366,514
|
|
|
374,301
|
|
|
Less amount representing interest
|
1,123
|
|
|
|
|
|
|||
Present value of capitalized lease payments
|
$
|
6,664
|
|
|
|
|
|
|
2018
|
|
2017
|
|
2016
|
||||
Net cash paid (received) during the years for:
|
|
|
|
|
|
||||
Interest
|
$
|
46,186
|
|
|
33,952
|
|
|
57,269
|
|
Income taxes
|
$
|
196,193
|
|
|
373,900
|
|
|
276,789
|
|
|
|
|
|
|
|
||||
Supplemental schedule of non-cash investing and financing activities:
|
|
|
|
|
|
||||
Additions to property, plant and equipment
|
$
|
(4,672
|
)
|
|
30,643
|
|
|
—
|
|
|
|
|
|
|
|
||||
Fair value of net assets acquired in acquisition
|
$
|
831,760
|
|
|
369,956
|
|
|
—
|
|
Liabilities assumed in acquisition
|
(257,515
|
)
|
|
(119,157
|
)
|
|
—
|
|
|
|
$
|
574,245
|
|
|
250,799
|
|
|
—
|
|
|
2018
|
|
2017
|
|
2016
|
||||
Assets:
|
|
|
|
|
|
||||
Global Ceramic
|
$
|
5,194,030
|
|
|
4,838,310
|
|
|
4,024,859
|
|
Flooring NA
|
3,938,639
|
|
|
3,702,137
|
|
|
3,410,856
|
|
|
Flooring ROW
|
3,666,617
|
|
|
3,245,424
|
|
|
2,689,592
|
|
|
Corporate and intersegment eliminations
|
299,837
|
|
|
308,982
|
|
|
105,289
|
|
|
Total
|
$
|
13,099,123
|
|
|
12,094,853
|
|
|
10,230,596
|
|
|
|
|
|
|
|
||||
Geographic net sales:
|
|
|
|
|
|
||||
United States
|
$
|
6,103,789
|
|
|
6,035,200
|
|
|
5,842,165
|
|
Europe
|
2,582,692
|
|
|
2,363,069
|
|
|
2,113,972
|
|
|
Russia
|
349,220
|
|
|
326,075
|
|
|
255,736
|
|
|
Other
|
947,933
|
|
|
766,946
|
|
|
747,214
|
|
|
Total
|
$
|
9,983,634
|
|
|
9,491,290
|
|
|
8,959,087
|
|
|
|
|
|
|
|
||||
Long-lived assets:
(1)
|
|
|
|
|
|
||||
United States
|
$
|
3,485,046
|
|
|
3,339,363
|
|
|
3,092,902
|
|
Belgium
|
1,663,470
|
|
|
1,705,947
|
|
|
1,371,397
|
|
|
Other
|
2,072,353
|
|
|
1,696,939
|
|
|
1,180,475
|
|
|
Total
|
$
|
7,220,869
|
|
|
6,742,249
|
|
|
5,644,774
|
|
|
|
|
|
|
|
||||
Net sales by product categories:
|
|
|
|
|
|
||||
Ceramic & Stone
|
$
|
3,621,193
|
|
|
3,485,245
|
|
|
3,258,137
|
|
Carpet & Resilient
|
3,903,698
|
|
|
3,655,902
|
|
|
3,412,846
|
|
|
Laminate & Wood
|
1,553,032
|
|
|
1,519,417
|
|
|
1,493,995
|
|
|
Other
(2)
|
905,711
|
|
|
830,726
|
|
|
794,109
|
|
|
Total
|
$
|
9,983,634
|
|
|
9,491,290
|
|
|
8,959,087
|
|
|
|
|
|
|
|
||||
Net sales:
|
|
|
|
|
|
||||
Global Ceramic
|
$
|
3,552,856
|
|
|
3,405,100
|
|
|
3,174,706
|
|
Flooring NA
|
4,029,148
|
|
|
4,010,858
|
|
|
3,865,746
|
|
|
Flooring ROW
|
2,401,630
|
|
|
2,075,452
|
|
|
1,918,635
|
|
|
Intersegment sales
|
—
|
|
|
(120
|
)
|
|
—
|
|
|
Total
|
$
|
9,983,634
|
|
|
9,491,290
|
|
|
8,959,087
|
|
(1)
|
Long-lived assets are composed of property, plant and equipment - net, and goodwill.
|
(2)
|
Other includes roofing elements, insulation boards, chipboards and IP contracts.
|
|
2018
|
|
2017
|
|
2016
|
||||
Operating income:
|
|
|
|
|
|
||||
Global Ceramic
|
$
|
442,898
|
|
|
525,401
|
|
|
478,448
|
|
Flooring NA
|
347,937
|
|
|
540,337
|
|
|
505,115
|
|
|
Flooring ROW
|
345,801
|
|
|
329,054
|
|
|
333,091
|
|
|
Corporate and intersegment eliminations
|
(41,310
|
)
|
|
(40,619
|
)
|
|
(36,711
|
)
|
|
Total
|
$
|
1,095,326
|
|
|
1,354,173
|
|
|
1,279,943
|
|
|
|
|
|
|
|
||||
Depreciation and amortization:
|
|
|
|
|
|
||||
Global Ceramic
|
$
|
189,904
|
|
|
161,913
|
|
|
135,370
|
|
Flooring NA
|
184,455
|
|
|
159,980
|
|
|
148,067
|
|
|
Flooring ROW
|
135,350
|
|
|
114,794
|
|
|
116,048
|
|
|
Corporate
|
12,056
|
|
|
9,985
|
|
|
9,982
|
|
|
Total
|
$
|
521,765
|
|
|
446,672
|
|
|
409,467
|
|
|
|
|
|
|
|
||||
Capital expenditures (excluding acquisitions):
|
|
|
|
|
|
||||
Global Ceramic
|
$
|
281,125
|
|
|
310,650
|
|
|
263,401
|
|
Flooring NA
|
262,676
|
|
|
355,941
|
|
|
248,843
|
|
|
Flooring ROW
|
232,949
|
|
|
221,763
|
|
|
144,207
|
|
|
Corporate
|
17,360
|
|
|
17,644
|
|
|
15,674
|
|
|
Total
|
$
|
794,110
|
|
|
905,998
|
|
|
672,125
|
|
|
Quarters Ended
|
|||||||||||
|
March 31,
2018 |
|
June 30,
2018 |
|
September 29,
2018 |
|
December 31,
2018 |
|||||
Net sales
|
$
|
2,412,202
|
|
|
2,577,014
|
|
|
2,545,800
|
|
|
2,448,618
|
|
Gross profit
|
704,692
|
|
|
766,555
|
|
|
1,825,367
|
|
|
646,390
|
|
|
Net earnings
|
208,766
|
|
|
196,586
|
|
|
227,013
|
|
|
229,339
|
|
|
Basic earnings per share
|
2.80
|
|
|
2.64
|
|
|
3.03
|
|
|
3.07
|
|
|
Diluted earnings per share
|
2.78
|
|
|
2.62
|
|
|
3.02
|
|
|
3.05
|
|
|
Quarters Ended
|
|||||||||||
|
April 1,
2017 |
|
July 1,
2017 |
|
September 30,
2017 |
|
December 31,
2017 |
|||||
Net sales
|
$
|
2,220,645
|
|
|
2,453,038
|
|
|
2,448,510
|
|
|
2,369,097
|
|
Gross profit
|
680,353
|
|
|
779,136
|
|
|
783,301
|
|
|
753,624
|
|
|
Net earnings
|
200,554
|
|
|
260,681
|
|
|
270,025
|
|
|
240,378
|
|
|
Basic earnings per share
|
2.70
|
|
|
3.51
|
|
|
3.63
|
|
|
3.23
|
|
|
Diluted earnings per share
|
2.68
|
|
|
3.48
|
|
|
3.61
|
|
|
3.21
|
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Item 15.
|
Exhibits, Financial Statement Schedules
|
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.)
|
|
|
|
*3.1
|
|
Restated Certificate of Incorporation of Mohawk, as amended. (Incorporated herein by reference to Exhibit 3.1 in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1998.)
|
|
|
|
*3.2
|
|
|
|
|
|
*4.4
|
|
|
|
|
|
*4.2
|
|
|
|
|
|
*4.3
|
|
|
|
|
|
*4.4
|
|
|
|
|
|
*4.5
|
|
|
|
|
|
*4.6
|
|
|
|
|
|
*10.1
|
|
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.)
|
|
|
*10.2
|
|
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.)
|
|
|
|
*10.3
|
|
|
|
|
|
*10.4
|
|
|
|
|
|
*10.5
|
|
|
|
|
|
*10.6
|
|
|
|
|
|
*10.7
|
|
|
|
|
|
*10.8
|
|
|
|
|
|
*10.9
|
|
|
|
|
|
*10.10
|
|
|
|
|
|
*10.11
|
|
|
|
|
|
*10.12
|
|
|
|
|
|
*10.13
|
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
95.1
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Indicates exhibit incorporated by reference.
|
Mohawk Industries, Inc.
|
|
|
|
By:
|
/s/ J
EFFREY
S. L
ORBERBAUM
|
February 28, 2019
|
|
Jeffrey S. Lorberbaum,
|
|
|
Chairman and Chief Executive Officer
|
February 28, 2019
|
/s/ J
EFFREY
S. L
ORBERBAUM
|
|
Jeffrey S. Lorberbaum,
|
|
Chairman and Chief Executive Officer
(principal executive officer)
|
February 28, 2019
|
/s/ F
RANK
H. B
OYKIN
|
|
Frank H. Boykin,
|
|
Chief Financial Officer and Vice President-Finance
(principal financial officer)
|
February 28, 2019
|
/s/ J
AMES
F. B
RUNK
|
|
James F. Brunk,
|
|
Vice President and Corporate Controller
(principal accounting officer)
|
February 28, 2019
|
/s/ F
ILIP
B
ALCAEN
|
|
Filip Balcaen,
Director
|
February 28, 2019
|
/s/ B
RUCE
C. B
RUCKMANN
|
|
Bruce C. Bruckmann,
Director
|
February 28, 2019
|
/s/ R
ICHARD
C. I
LL
|
|
Richard C. Ill,
Director
|
February 28, 2019
|
/s/ J
OSEPH
A. O
NORATO
|
|
Joseph A. Onorato,
Director
|
February 28, 2019
|
/s/ W
ILLIAM
H. R
UNGE
III
|
|
William Henry Runge III
Director
|
February 28, 2019
|
/s/ K
AREN
A. S
MITH
B
OGART
|
|
Karen A. Smith Bogart,
Director
|
February 28, 2019
|
/s/ W. C
HRISTOPHER
W
ELLBORN
|
|
W. Christopher Wellborn,
Director
|
BETWEEN:
|
MOHAWK INTERNATIONAL SERVICES BVBA
with registered office at B-8710 Wielsbeke-Belgium, Ooigemstraat 3 hereinafter referred to as “the Company”;
|
AND:
|
Comm
. V. “Bernard Thiers”
, with a registered office at Grote Heerweg 159, B-8791 Beveren-Leie, Belgium hereinafter referred to as “the Service Provider”.
|
1.1
|
The Service Provider shall provide all necessary and appropriate services (hereinafter the Services) concerning (i) daily management of the Company as President-Flooring Rest of World, (ii) strategy definition, (iii) lead an executive management team, (iv) succession planning for executives and (v) providing advice and support to Flooring Rest of World segment.
|
1.2
|
The Service Provider shall perform the Services with the diligence, loyalty, seriousness and competence that the Company is entitled to expect from an experienced specialist in this position. The Service Provider shall comply with the general guidelines and policy of the Company. The Service Provider is bound by an obligation of best result.
|
1.3
|
Taking into account the skills, reputation, expertise and capabilities of Mr. Bernard Thiers, being director / manager of the Service Provider, it has been agreed that Mr. Bernard Thiers will render the services on behalf of the Service Provider at least 5 days per week. It being understood that Mr. Thiers may be replaced at any time by the Service Provider to the extent the replacement provides the same level of skills, reputation, expertise and capabilities as mutually agreed upon by the parties.
|
1.4
|
The Company will grant the Service Provider all powers necessary to execute the Services in a good manner.
|
1.5
|
Moreover, the Service Provider can be appointed as a member of the Management Committee of the Company, if any.
|
2.2
|
The present agreement can be terminated at any time by the Company upon notice of 22 (twenty two) months. Notice shall be given by registered mail. However, the Company can also terminate the present agreement at any time by payment of a lump sum allowance equal to the Base Amount (as defined below) multiplied by 1.85. The present agreement can be terminated at any time by the Service Provider upon notice of 6 (six) months.
|
3.1
|
The Services as described above are compensated by the Company on the basis of a basic lump sum amount of EUR 603,200 (excl. VAT) per annum, which amount may be subsequently modified by the parties upon mutual agreement (hereinafter the “Annual Fee”). The Annual Fee, initially, shall consist of a base amount of EUR 566,000 (“Base Amount”) and a retainer amount of EUR 37,200 (“Retainer”). Said Annual Fee has been determined based on an expected average volume of work corresponding to 5 days per week.
|
3.2
|
An advanced payment representing 1/12 of the Annual Fee shall be paid each month into the bank account of the Service Provider, against remittance of a detailed monthly invoice which meets all applicable legal & tax requirements and is payable within 15 days from the date of issuance.
|
3.3
|
In addition to the Annual Fee as set forth in 3.1 and subject to approval of the Compensation Committee of the Board of Directors of Mohawk Industries, Inc., the Service Provider shall be eligible to receive an annual bonus ranging from 0 to 112.5% of the Base Amount of the year concerned.
|
3.4
|
The Service provider shall not be entitled to any other compensation or benefits other than those set forth under sections 3.1, 3.2 and 3.3 above.
|
5.2
|
Without prejudice to its obligation to perform the management of the Company’s subsidiaries or branch offices in good faith, the Service Provider shall freely determine its work organization, work agenda and vacation arrangements with full respect for the needs of the business.
|
5.3
|
All documents and correspondences between the Company and the Service Provider must be considered as necessary tools to enable the parties to execute their tasks according to their obligations. These documents can in no way be interpreted as an indication of any relationship of authority towards the directors, representatives, officers or employees of the Service Provider.
|
5.4
|
The Service Provider, its directors, managers, representatives, employees, officers, etc. are entirely responsible for complying with all statutory and legal requirements (including, but without limiting the general nature of the foregoing, paying taxes and social security contributions) and will indemnify and agree to keep indemnified in full the Company in respect of any claims that may be made by the relevant authorities against the Company in respect of social security contributions and/or income tax in relation to any payment made pursuant to this Service Agreement.
|
6.1
|
The Service Provider acknowledges and agrees that any information disclosed to the Service Provider or its directors, managers, officers or employees by the Company in relation with the present agreement and/or the Service Provider’ duties is confidential. The Service Provider also
|
6.2
|
The Service Provider acknowledges and agrees that any information the Service Provider its directors, managers, officers, representatives or employees develop under or as a result of the performance of his duties is confidential and that any such information will be held in strict confidence and not revealed in any way whatsoever, either directly or indirectly, to any third parties.
|
6.3
|
The confidentiality undertakings of articles 6.2 and 6.3 will end when the confidential information falls in the public domain, without fault of the Service Provider or its directors, managers, officers or employees.
|
6.4
|
The Service Provider must not make any publicity or media releases in the framework of the present agreement, using the name of the Company, without its prior written consent.
|
7.1
|
All records, files, memoranda, reports, price lists, customer lists, drawings, plans, sketches, documents and the like (together with all copies thereof) relating to the business of the Company and all other property of the Company related to the Service Provider’ duties (including but not limited to documents, notes, memoranda, floppy disks, computer programs, reports, software and all other information and data), which the Service Provider or directors, managers, officers or employees uses or prepares or comes in contact with in the course of executing this agreement remains, as between the Parties to the present agreement, the sole property of the Company.
|
7.2
|
Upon the termination of the present agreement (however caused), the Service Provider will immediately return to the Company all the Company’s property in its possession or under its control without keeping copies of such items or passing them (or the copies) to any third party, whatever the importance of it may be.
|
8.1
|
The Service Provider explicitly agrees and undertakes that it shall not, except with the prior written consent of the Company, whether directly or indirectly, whether remunerated or not, for a period of 2 (two) years following the termination of the present agreement by the Company or by itself and for whatsoever reason:
|
8.2
|
The Service Provider agrees that it will exclusively act in the interest of the Company and its shareholders.
|
9.1
|
The Service Provider undertakes to inform the Company about any work, invention, discovery or improvement, patentable or protectable by any other intellectual right, including copyright or not, which it may create, design or produce, either alone or in conjunction with others, including but not limited to all documents, drawings, plants, designs and models, printed circuit boards, software programs and semi-conductor chips and related documentation, in the course of his employment or relating to, or which is likely to become connected with, any matter whatsoever constituting or which might constitute a Company’s activity, or which has been or may be investigated by the latter.
|
9.2
|
The Service Provider agrees that such work, inventions, discoveries or improvements belong exclusively to the Company and hereby assigns and transfers any and all right including the copyright therein to the Company. The Service Provider shall refrain from any act which would infringe the Company’s rights, shall execute and deliver all documents or statements necessary to implement such assignment or transfer and shall not register any patent relating to these inventions without the approval of the Company.
|
9.3
|
The Service Provider acknowledges that such assignment and transfer of rights are adequately compensated by the remuneration as provided in the present agreement.
|
11.1
|
The Service Provider shall procure that each company under his control, its directors, managers, officers, representatives or employees and former directors, managers, officers, representatives or employees comply with the obligations imposed on the Service Provider under articles 6, 7, 8, 9 and 12 above.
|
For the Company
|
|
The Service Provider
|
[read and approved]
|
|
[read and approved]
|
|
|
|
/s/ Sven De Smet
|
|
/s/ Bernard Thiers
|
Mr. Sven De Smet
|
|
Bernard Thiers/CEO
|
SDS Manco bvba
|
|
Permanent representative of
|
Permanently represented by
|
|
Bernard Thiers Comm. V.
|
Sven De Smet
|
|
|
I.
|
Release.
|
•
|
Title VII of the Civil Rights Act of 1964;
|
•
|
Sections 1981 through 1988 of Title 42 of the United States Code;
|
•
|
The Family and Medical Leave Act ("FMLA");
|
•
|
The Fair Labor Standards Act ("FLSA");
|
•
|
The Equal Pay Act ("EPA");
|
•
|
The Employee Retirement Income Security Act of 1974 ("ERISA");
|
•
|
The Immigration Reform and Control Act;
|
•
|
The Americans with Disabilities Act of 1990 ("ADA");
|
•
|
The Age Discrimination in Employment Act of 1967 ("ADEA'');
|
•
|
The Worker Adjustment and Retraining Notification Act;
|
•
|
The Fair Credit Reporting Act;
|
•
|
Any other federal, state, or local law, rule, regulation, or ordinance;
|
•
|
Any public policy, contract, tort, or common law; and/or
|
•
|
Any basis for recovering costs, fees, or other expenses, including attorneys' fees incurred in these matters.
|
a)
|
Mohawk shall pay Employee an amount equal to $1,000,000, payable in four (4) equal payments, with the first payment to be made on or about January 15, 2019 and subsequent payments to be made on or about April 15, 2019, July 15, 2019 and October 15, 2019. These payments are subject to such deductions and withholdings as required by law or Mohawk policies.
|
b)
|
Those stock awards set forth on Exhibit A will continue to vest, subject to the conditions in this Agreement.
|
c)
|
If
Employee breaches any of his obligations under this Agreement, any remaining payments under subsection 2(a) and unvested RSUs under subsection 2(b) shall be forfeited automatically without any further action on the part of Mohawk.
|
d)
|
Additionally, Mohawk agrees to provide Executive Outplacement Service through Challenger Gray & Christmas.
|
e)
|
Employee acknowledges that the severance benefits exceed those which Employee would otherwise be entitled to receive, if any, upon Employee's termination of employment with the Company. In addition, in accordance with Mohawk's policy, Employee will be paid for any untaken, accrued vacation days earned in this current calendar year of 2018.
|
(a)
|
Non-competition.
To protect the Trade Secrets, Confidential Information, customer relationships and goodwill of Mohawk, Employee agrees that, during employment and for twenty-four (24) months after Employee's employment ends, Employee will not, without the prior written permission of Mohawk, directly (including without limitation as a board member, officer or employee) or indirectly (including without limitation as an independent contractor, consultant, advisor, board member, agent, shareholder, investor, joint venturer or partner, or by assisting another company or individual), provide or perform any services simi1ar to those Employee performed for Mohawk within two years prior to termination for a Competitor anywhere where Mohawk operates. For purposes of this Agreement,
a,
"Competitor" means Shaw Industries Group, Inc., Engineered Floors, LLC or any of their respective affiliates.
|
(b)
|
Non-Solicitation of Customers.
To protect the Trade Secrets, Confidential Information, goodwill, and customer relationships of Mohawk, Employee agrees that, during employment and twenty-four
|
(c)
|
Non-Solicitation of Employees.
Employee agrees that during employment and for a period of thirty-six (36) months after Employee's employment ends, Employee will not, directly or indirectly, solicit, hire, recruit, attempt to hire or recruit, assist in recruiting or induce the termination of employment of any employee of Mohawk.
|
(d)
|
Notification.
Prior to accepting or commencing employment during the period of twenty-four (24) months after Employee's employment ends, whether directly (including without limitation as a board member, officer or employee) or indirectly (including without limitation as an independent contractor, consultant, advisor, board member; agent, shareholder, investor, joint venturer or partner, or by assisting another company or individual), Employee agrees to: (1) notify any prospective employer of the restrictive covenants section contained in this Agreement; and (2) notify Mohawk of the prospective employment and discuss whether the employment violates the noncompete or any other provision of this Agreement.
|
(e)
|
Irreparable Harm.
In the event of any breach or threatened breach of any of Sections 4, 5 or 6 of this Agreement, Employee acknowledges and agrees that Mohawk would be irreparably harmed thereby and that any remedies at law would be inadequate. Accordingly, Employee agrees that in
|
(f)
|
Reasonable Restrictions.
Employee agrees that the time, geographic area, scope of prohibited activities and other limitations in Sections 5 and 6 are reasonable and properly required for the adequate protection of Mohawk's legitimate business interests including its Trade Secrets and Confidential Business Information; customer, client, and employee relationships and goodwill; customer and prospective customer and client relationships; employee training and development. If any provision of this Agreement is found unreasonable or overbroad by a court of competent jurisdiction, then Employee and Mohawk agree that the court shall modify such provision to make it reasonable and enforce it as modified as set forth below in Section 7.
|
Brian Carson
|
|
Mohawk Carpet Corporation, LLC
|
/s/ Brian Carson
|
|
/s/ Philip Brown
|
|
|
|
November 12, 2018
|
|
Vice President Human Resources
|
|
|
November 16, 2018
|
|
|
|
Unvested Stock
|
|
||||
|
|
|
Vest Year
|
|
|
Grant Date
|
Shares
|
2019
|
2020
|
2021
|
|
8/7/2015
|
5,000
|
|
5,000
|
|
|
3/1/2016
|
7,039
|
2,346
|
|
|
|
3/7/2017
|
3,916
|
1,305
|
1,305
|
|
|
3/7/2017
|
1,768
|
589
|
589
|
|
|
3/5/2018
|
4,829
|
1,610
|
1,610
|
1,609
|
|
Total
|
|
5,850
|
8,504
|
1,609
|
|
|
|
|
|
|
|
BETWEEN:
|
MOHAWK CARPET, LLC
, a Delaware limited liability company with its principal place of business located at 160 S. Industrial Boulevard, Calhoun, Georgia 30701, hereinafter referred to as “the Company”;
|
AND:
|
PAUL F. DE COCK,
an individual, hereinafter referred to as “the Executive”.
|
1.1
|
The Executive shall be employed as President—Flooring North America. In his capacity as President—Flooring North America, Executive will report directly to W. Christopher Wellborn, President and Chief Operating Officer of Mohawk, or his designee or successor (the “COO”).
|
1.2
|
During his employment, Executive shall have the duties, responsibilities and authority commensurate with such position and such other duties as may be assigned to him by the COO.
|
1.3
|
During his employment, and excluding any periods of vacation or sick leave to which Executive is entitled, Executive agrees to (i) devote substantially all of his business effort, time, energy, and skill to fulfill his employment duties; (ii) faithfully, loyally and diligently perform such duties, subject to the control and supervision of the COO; and (iii) diligently follow and implement all lawful management policies and decisions of the Company or of Mohawk that are communicated to Executive.
|
1.4
|
During his employment with the Company, Executive shall not be engaged in or provide services to any other business or enterprise (whether engaged in for profit or not) which interfere with his obligations to the Company under this Agreement.
|
2.1
|
This Agreement is for an indefinite term and the employment of the Executive is at-will. The Company may terminate the Agreement at any time by providing written notice to the Executive. The Executive may terminate the agreement by providing six months’ prior written notice to the Company.
|
2.2
|
If the Company terminates the Agreement for any reason other than as set forth in Section 2.3 or if the Executive terminates the Agreement for Good Reason, the Company shall pay an amount equal to two times the Base Salary (as defined below) plus two times the Target Bonus Amount (the “Termination Payment”). The Target Bonus Amount means the Annual Cash Bonus that would have been paid to the Executive at the target level for the year of termination if the termination had not occurred. The Termination Payment shall be payable quarterly in 8 equal installments, beginning on the date of such termination. “Good Reason” shall mean (i) a reduction in the Base Salary or Annual Cash Bonus opportunity as specified in Section 3.1 or 3.2, respectively (ii) a material diminution in Executive’s duties or responsibilities, or (iii) a material breach of this Agreement by the Company.
|
2.3
|
This contract may, immediately and without notice or indemnity, be terminated by the Company for serious cause.
|
(iii)
|
the failure to comply with or the breach of any of the material terms and conditions of the Agreement and/or the Company’s or Mohawk’s policies within thirty (30) days after written notification of such non-compliance if such failures or breaches are capable of remedy. If the default or breach is not capable of remedy, the Agreement can be terminated without prior notification;
|
(iv)
|
the willful or gross neglect of the duties under the Agreement and/or the willful or gross misconduct in the performance of such duties.
|
2.4
|
In order to receive the Termination Payment, Executive must comply with his obligations set forth in Section 8 and execute a full and general release in favor of the Company and its affiliates within approximately 21 days of the termination of his employment.
|
2.5
|
Subject to Section 3.6, Executive’s employment shall terminate automatically upon Executive’s death, in which case the Company shall have no further obligations to Executive or Executive’s legal representatives under this Agreement, other than for payment of any accrued portion of the Base Salary.
|
2.6
|
If the company determines in good faith that the Executive has a Disability (as defined below), it may give Executive written notice of its intent to terminate Executive’s employment. In such event, Executive’s employment with the Company shall terminate effective on the 30th day alter receipt of such written notice by Executive, provided that, within the thirty (30) days after such receipt, Executive shall not have returned to work performing his essential job functions, with or without reasonable accommodation. As used in this Agreement, Disability shall mean the inability of Executive to perform the essential functions of his job, with or without reasonable accommodation, due to a medically determinable physical or mental illness which has lasted (or can reasonably be expected to last) for a period of six (6) consecutive months. At the request of Executive or his personal representative, the Company’s determination that the Disability of Executive has occurred shall be
|
3.
|
Compensation and Benefits
|
3.1
|
The Company will pay to Executive a base salary at the rate of U.S. $640,000 per year (“Base Salary”), less normal withholdings, payable twice monthly in 24 equal installments or other installments as are or become customary under the Company’s payroll practices. The Company shall review Executive’s Base Salary annually, and it may increase from year to year. Such adjusted salary then shall become Executive’s Base Salary for purposes of this Agreement.
|
3.2
|
Executive shall also be eligible to receive an Annual Cash Bonus, based on the financial goals of the business. For the first year of the Agreement, the Executive will be eligible to receive an Annual Cash Bonus ranging from 45% (threshold) to 75% (target) to 112.5% (maximum) of the Base Salary. In subsequent years, goals and bonus opportunity will be reviewed and established each year in collaboration with business needs, provided that the bonus opportunity will not be less in the aggregate than the amounts set forth in this agreement.
|
3.3
|
On December 1, 2018 Executive received a grant of 7,809 (Seven Thousand Eight Hundred Nine) restricted stock units (“RSUs”), each of which will convert into one share of Mohawk common stock on the 5
th
anniversary of the grant date (the “Special Award”). In addition, Executive shall be eligible to receive an annual Long-Term Incentive payment, paid in the form of RSUs based on the financial goals of the business (the “Long-Term Incentive Payment”). The RSUs that the Executive receives as the Long-Term Incentive Payment vest over a period of three (3) years, at 33% per year. For the first year of the Agreement, the dollar value of the Long-Term Incentive Payment that the Executive will be eligible to receive will range from 75% (threshold) to 120% (target) to 210% (maximum) of the Base Salary. The amount of the award at target will be based on three components; 30% Fixed, 40% Business Unit Performance and 50% 3 Year Relative Total Shareholder Return (TSR). The Long-Term Incentive Payment is granted pursuant to and subject to the terms and conditions of the Mohawk 2017 Incentive Plan or any successor plan thereto. In subsequent years, goals and incentive opportunity will be reviewed and established each year in collaboration with business needs, provided that the incentive opportunity will not be less in the aggregate than the amounts set forth in this agreement.
|
3.4
|
Notwithstanding anything in the 2017 Incentive Plan to the contrary, if the Agreement is terminated by the Company for any reason other than pursuant to Section 2.3 hereof, the Special Award will continue to vest as if this Agreement had not terminated, provided that the Executive complies with the obligations set forth in Section 8. If the Executive breaches any of its obligations under Section 8 after the termination of this Agreement, the Special Award shall be forfeited automatically without any further action on the part of the Company or Mohawk. The terms and conditions governing the Special Award are hereby amended to incorporate the foregoing special vesting conditions.
|
3.5
|
The Executive shall be entitled to participate in the retirement and welfare benefit plans, practices and programs provided by the Company to similarly-situated employees and subject to eligibility requirements and terms and conditions of each such plan; provided, however, that nothing herein shall limit the ability of the Company to amend, modify or terminate any such benefit plans, policies or programs at any time and from time to time. Without limiting the foregoing, Executive shall be entitled to 4 weeks paid vacation.
|
3.6.
|
If this Agreement is terminated by either party for any reason other than by the Company pursuant to Section 2.3, then the Company shall reimburse the Executive for any reasonable and documented expenses incurred by the Executive to relocate himself and his family from the United States to Belgium.
|
6.1
|
The Executive acknowledges and agrees that any information disclosed to the Executive by the Company or its affiliates in relation with the present agreement and/or the Executive’ duties is confidential. The Executive also acknowledges and accepts that any such information will be treated and held in strict confidence and not used by the Executive nor revealed in any way whatsoever, either directly or indirectly, to any third parties during the course of the present agreement or after its termination.
|
6.2
|
The Executive acknowledges and agrees that any information the Executive develops under or as a result of the performance of his duties is confidential and that any such information will be held in strict confidence and not revealed in any way whatsoever, either directly or indirectly, to any third parties.
|
6.3
|
The confidentiality undertakings of articles 6.1 and 6.2 will end when the confidential information falls in the public domain, without fault of the Executive.
|
6.4
|
The Executive must not make any publicity or media releases in the framework of the Agreement, using the name of Mohawk or the Company, without its prior written consent.
|
7.1
|
All records, files, memoranda, reports, price lists, customer lists, drawings, plans, sketches, documents and the like (together with all copies thereof) relating to the business of the Company or its affiliates and all other property of the Company or its affiliates related to the Executive’ duties (including but not limited to documents, notes, memoranda, floppy disks, computer programs, reports, software and all other information and data), which the Executive uses or prepares or comes
|
7.2
|
Upon the termination of the Agreement (however caused), the Executive will immediately return to the Company all the Company’s property in his possession or under his control without keeping copies of such items or passing them (or the copies) to any third party, whatever the importance of it may be.
|
8.1
|
The Executive explicitly agrees and undertakes that he shall not, except with the prior written consent of the Company, whether directly or indirectly, whether remunerated or not, for a period of 2 (two) years following the termination of the present agreement by the Company or by himself and for whatsoever reason and in any country in which Mohawk and its affiliates conduct business:
|
(i)
|
engage himself or through a third party, be employed by, consult for, have an interest in or in any way assist any person or company directly or indirectly engaged in the business of the Company or its affiliates or any related activities;
|
(ii)
|
solicit or endeavour to entice away from or discourage from being employed by the Company any Manager or client of the Company or its affiliates, whether or not such person would commit a breach of contract by reason of leaving employment.
|
9.1
|
The Executive undertakes to inform the Company about any work, invention, discovery or improvement, patentable or protectable by any other intellectual right, including copyright or not, which it may create, design or produce, either alone or in conjunction with others, including but not limited to all documents, drawings, plants, designs and models, printed circuit boards, software programs and semi-conductor chips and related documentation, in the course of his employment or relating to, or which is likely to become connected with, any matter whatsoever constituting or which might constitute a Company’s activity, or which has been or may be investigated by the latter.
|
9.2
|
The Executive agrees that such work, inventions, discoveries or improvements belong exclusively to the Company and hereby assigns and transfers any and all right including the copyright therein to the Company. The Executive shall refrain from any act which would infringe the Company’s rights, shall execute and deliver all documents or statements necessary to implement such assignment or transfer and shall not register any patent relating to these inventions without the approval of the Company.
|
9.3
|
The Executive acknowledges that such assignment and transfer of rights are adequately compensated by the remuneration as provided in the present agreement.
|
12.1
|
Except as provided in Article 12.2, this Agreement is confidential and prior consent of both parties must be obtained before communicating about this Agreement or its contents.
|
12.2
|
The provisions in Article 8 must be disclosed to any entity or person with whom or which Executive is in contact regarding employment or engagement for professional services during the Restricted Period.
|
14.1.1
|
The Agreement shall be governed by and interpreted according the law of the state of Georgia, United States, without regard to its conflict of law provisions.
|
14.1.2
|
The parties agree that the exclusive forum for any action to enforce this Agreement, as well as any action relating to or arising out of this Agreement, shall be the Superior Court of Whitfield County, Georgia or the United States District Court for the Northern District of Georgia, Rome Division. With respect to any such court action, Executive hereby (i) irrevocably submits to the personal jurisdiction of such courts; (ii) consents to service of process; (iii) consents to venue; and (iv) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction, service of process, or venue. The parties further agree that the courts listed above are convenient forums for any dispute that may arise herefrom and that neither party shall raise as a defense that such courts are not convenient forums.
|
Executive
|
|
Mohawk Carpet, LLC
|
|
|
|
/s/ Paul F. De Cock
|
|
/s/ W. Christopher Wellborn
|
Paul F. De Cock
|
|
W. Christopher Wellborn
|
|
|
Chief Operating Officer
|
December 29, 2018
|
|
December 20, 2018
|
|
|
|
A&S Energie NV
|
Belgium
|
A&U Energie NV
|
Belgium
|
Aladdin Manufacturing Corporation
|
Delaware
|
Aladdin Manufacturing of Alabama, LLC
|
Alabama
|
Aladdin Manufacturing Of New York, LLC
|
New York
|
Alsace Logistique S.A.
|
France
|
Avelgem Green Power CVBA
|
Belgium
|
Avon Pacific Holdings Ltd
|
New Zealand
|
B&M NV
|
Belgium
|
Berghoef GmbH
|
Germany
|
Berghoef-Hout B.V.
|
Netherlands
|
BGE Mexico, S. de R. L. de C.V.
|
Mexico
|
Bienes Raices y Materiales del Centro, S. de R.L. de C.V.
|
Mexico
|
C.F. Marazzi S.A.
|
Luxembourg
|
Canterbury Spinners Ltd
|
New Zealand
|
Carpet Foundation Ltd
|
New Zealand
|
Cevotrans BV
|
Netherlands
|
Céramus Bahia S/A – Produtos Cerâmicos
|
Brazil
|
Dal Italia LLC
|
Delaware
|
Dal-Elit, LLC
|
Texas
|
Dal-Tile Chile Comercial Limitada
|
Chile
|
Dal-Tile Colombia S.A.S.
|
Colombia
|
Dal-Tile Corporation
|
Pennsylvania
|
Dal-Tile Distribution, Inc.
|
Delaware
|
Dal-Tile Group Inc.
|
Delaware
|
Dal-Tile I, LLC
|
Delaware
|
Dal-Tile Industrias, S. de R.L. de C.V.
|
Mexico
|
Dal-Tile International Inc.
|
Delaware
|
Dal-Tile Mexico Comercial S. de R.L. de C.V.
|
Mexico
|
Dal-Tile Mexico, S. de R.L. de C.V.
|
Mexico
|
Dal-Tile of Canada ULC
|
BC, Canada
|
Dal-Tile Operaciones Mexico S. De R.L. De C.V.
|
Mexico
|
Dal-Tile Perú SRL
|
Peru
|
Dal-Tile Puerto Rico, Inc.
|
Puerto Rico
|
Dal-Tile Services, Inc.
|
Delaware
|
Dal-Tile Shared Services, Inc.
|
Delaware
|
Dal-Tile Tennessee, LLC
|
Delaware
|
Dekaply NV
|
Belgium
|
DT Mex Holdings, LLC
|
Delaware
|
DTM/CM Holdings, LLC
|
Delaware
|
Dynea NV
|
Belgium
|
Eliane Argentina Sociedad Anonima
|
Argentina
|
Eliane S/A - Revestimentos Cerâmicos
|
Brazil
|
Emilceramica India Pvt Ltd.
|
India
|
Emilceramica S.r.l
|
Italy
|
Emilgermany GmbH
|
Germany
|
Emilgroup Asia Ltd
|
Hong Kong
|
Explorer S.r.l.
|
Italy
|
F.I.L.S. Investments Unlimited Company
|
Ireland
|
Feltex Carpets Ltd
|
New Zealand
|
Feltex Carpets Pty Ltd
|
Australia
|
Feltex New Zealand Ltd
|
New Zealand
|
Fibremakers Australia Pty Ltd
|
Australia
|
Flooring Foundation Ltd
|
New Zealand
|
Flooring Industries Limited S.à r.l.
|
Luxembourg
|
Flooring XL B.V.
|
Netherlands
|
Floorscape Limited
|
New Zealand
|
Godfrey Hirst & Co Pty Ltd
|
Australia
|
Godfrey Hirst (Singapore) Pte Ltd
|
Singapore
|
Godfrey Hirst Australia Pty Ltd
|
Australia
|
Godfrey Hirst NZ Ltd
|
New Zealand
|
Hytherm (Ireland) Limited
|
Ireland
|
International Flooring Systems S.à r.l.
|
Luxembourg
|
International Vinyl Company - Vostok OOO
|
Russian Federation
|
IVC BVBA
|
Belgium
|
IVC Far-East Trading (Shanghai) Co. Ltd.
|
China
|
IVC France S.à r.l.
|
France
|
IVC Green Power NV
|
Belgium
|
IVC Group GmbH
|
Germany
|
IVC GROUP LIMITED
|
United Kingdom
|
IVC Luxembourg S.à r.l.
|
Luxembourg
|
IVC Rus OOO
|
Russian Federation
|
IVC US, Inc.
|
Georgia
|
KAI Keramica Ltd
|
Greece
|
KAI Mining EOOD
|
Bulgaria
|
Kerama Baltics OOO
|
Latvia
|
KERAMA CENTER OOO
|
Russian Federation
|
Kerama Export OOO
|
Russian Federation
|
Kerama Marazzi OOO
|
Russian Federation
|
Kerampromservis (LLC)
|
Ukraine
|
Khan Asparuh - Transport EOOD
|
Bulgaria
|
Khan Asparuh AD
|
Bulgaria
|
Khan Omurtag AD
|
Bulgaria
|
Koninklijke Peitsman B.V.
|
Netherlands
|
Kraj Kerama OOO
|
Ukraine
|
Management Co EAD
|
Bulgaria
|
Marazzi Acquisition S.r.l.
|
Italy
|
Marazzi Deutschland G.m.b.H.
|
Germany
|
Marazzi France Trading S.A.S.
|
France
|
Marazzi Group F.Z.E.
|
United Arab Emirates
|
Marazzi Group S.r.l.
|
Italy
|
Marazzi Group Trading (Shanghai) Co. Ltd.
|
China
|
Marazzi Iberia S.L.U.
|
Spain
|
Marazzi Japan Co., Ltd.
|
Japan
|
Marazzi Middle East FZ LLC
|
Dubai
|
Marazzi Schweiz S.A.G.L.
|
Switzerland
|
Marazzi UK Ltd.
|
United Kingdom
|
MG China Trading Ltd.
|
Hong Kong
|
MI Finance SRL
|
Barbados
|
Mohawk Assurance Services, Inc.
|
Georgia
|
Mohawk Australia Pty Ltd
|
Australia
|
Mohawk Canada Corporation
|
NS, Canada
|
Mohawk Capital Finance S.A.
|
Luxembourg
|
Mohawk Capital Luxembourg SA
|
Luxembourg
|
Mohawk Carpet Distribution, Inc.
|
Delaware
|
Mohawk Carpet Foundation, Inc.
|
Georgia
|
Mohawk Carpet Transportation Of Georgia, LLC
|
Delaware
|
Mohawk Carpet, LLC
|
Delaware
|
Mohawk Commercial, Inc.
|
Delaware
|
Mohawk ESV, Inc.
|
Delaware
|
Mohawk Europe BVBA
|
Belgium
|
Mohawk Factoring II, Inc.
|
Delaware
|
Mohawk Factoring, LLC
|
Delaware
|
Mohawk Finance S.à r.l.
|
Luxembourg
|
Mohawk Foreign Acquisitions S.à r.l.
|
Luxembourg
|
Mohawk Foreign Funding S.a.r.l
|
Luxembourg
|
Mohawk Foreign Holdings S.à r.l.
|
Luxembourg
|
Mohawk Foreign Investments, Inc.
|
Delaware
|
Mohawk Global Investments S.à r.l.
|
Luxembourg
|
Mohawk Holdings International B.V.
|
Netherlands
|
Mohawk Industries, Inc.
|
Delaware
|
Mohawk International (Europe) S.à r.l.
|
Luxembourg
|
Mohawk International (Hong Kong) Limited
|
Hong Kong
|
Mohawk International Capital N.V.
|
Netherlands
|
Mohawk International Financing S.a.r.l
|
Luxembourg
|
Mohawk International Holdings (DE), LLC
|
Delaware
|
Mohawk International Holdings S.à r.l.
|
Luxembourg
|
Mohawk International Luxembourg S.à r.l.
|
Luxembourg
|
Mohawk International Netherlands B.V.
|
Netherlands
|
Mohawk International Services BVBA
|
Belgium
|
Mohawk KAI Luxembourg Holding S.à r.l.
|
Luxembourg
|
Mohawk KAI Luxembourg S.à r.l.
|
Luxembourg
|
Mohawk Luxembourg Capital S.A.
|
Luxembourg
|
Mohawk Luxembourg Financing S.à r.l.
|
Luxembourg
|
Mohawk Luxembourg Holdings S.à r.l.
|
Luxembourg
|
Mohawk Luxembourg Investments S.à r.l.
|
Luxembourg
|
Mohawk Luxembourg Pacific S.à r.l.
|
Luxembourg
|
Mohawk Marazzi International BV
|
Netherlands
|
Mohawk Marazzi Russia BV
|
Netherlands
|
Mohawk New Zealand Limited
|
New Zealand
|
Mohawk Operaciones Mexicali S. de R.L. de C.V.
|
Mexico
|
Mohawk Operations Luxembourg S.à r.l.
|
Luxembourg
|
Mohawk Pacific Investments S.à r.l.
|
Luxembourg
|
Mohawk Resources, LLC
|
Delaware
|
Mohawk Servicing, LLC
|
Delaware
|
Mohawk Singapore Private Limited
|
Singapore
|
Mohawk Trading (Shanghai) Co., Ltd
|
China
|
Mohawk Unilin Luxembourg S.à r.l.
|
Luxembourg
|
Mohawk United Finance B.V.
|
Netherlands
|
Mohawk United International B.V.
|
Netherlands
|
Mohawk Vinyl Financing S.à r.l.
|
Luxembourg
|
Molber Beheer B.V.
|
Netherlands
|
Monarch Ceramic Tile, Inc.
|
Texas
|
MUD (Holding) Brazil Ltda.
|
Brazil
|
P.F. Onroerend Goed B.V.
|
Netherlands
|
Pergo (Europe) AB
|
Sweden
|
Pergo Holding BV
|
Netherlands
|
Pergo India Pvt Ltd
|
India
|
PF Beheer B.V.
|
Netherlands
|
Polcolorit S.A.
|
Poland
|
Premium Floors Australia Pty Limited
|
Australia
|
Rata International Pty Ltd
|
Australia
|
Recubrimientos Interceramica, S. de R.L. de C.V.
|
Mexico
|
Riverside Textiles Pty Ltd
|
Australia
|
RR Apex, LLC
|
Delaware
|
S.C. KAI Ceramics SRL
|
Romania
|
Sibir Kerama OOO
|
Russian Federation
|
SimpleSolutions USA LLC
|
Delaware
|
Soft Step (Australia) Pty Ltd
|
Australia
|
Spano Invest BVBA
|
Belgium
|
Spano NV
|
Belgium
|
Stroyagromekhzapchast ChaO
|
Ukraine
|
Stroytrans OAO Orelstroy
|
Russian Federation
|
Summit Wool Spinners Ltd
|
New Zealand
|
The Flooring Federation Ltd
|
New Zealand
|
Tiles Co OOD
|
Bulgaria
|
Unilin (Malaysia) Sdn. Bhd.
|
Malaysia
|
Unilin ApS
|
Denmark
|
Unilin Arauco Pisos Ltda.
|
Brazil
|
Unilin Beheer BV
|
Netherlands
|
Unilin BVBA
|
Belgium
|
Unilin Distribution Ukraine LLC
|
Ukraine
|
Unilin Distribution, Ltd.
|
United Kingdom
|
Unilin Finland OY
|
Finland
|
Unilin Flooring India Private Limited
|
India
|
Unilin Flooring SAS
|
France
|
Unilin GmbH
|
Germany
|
Unilin Holding BVBA
|
Belgium
|
Unilin Insulation BV
|
Netherlands
|
Unilin Insulation SAS
|
France
|
Unilin Insulation Sury SAS
|
France
|
Unilin Italia S.R.L.
|
Italy
|
Unilin North America, LLC
|
Delaware
|
Unilin Norway AS
|
Norway
|
Unilin OOO
|
Russian Federation
|
Unilin Panels SAS
|
France
|
Unilin Poland Sp.Z.o.o.
|
Poland
|
Unilin s.r.o.
|
Czechia
|
Unilin SAS
|
France
|
Unilin Spain SL
|
Spain
|
Unilin Swiss GmbH
|
Switzerland
|
World International, Inc.
|
Barbados
|
Xtratherm Limited
|
Ireland
|
Xtratherm S.A.
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Belgium
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Xtratherm UK Limited
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United Kingdom
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/s/ KPMG LLP
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1.
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I have reviewed this quarterly report on Form 10-K of Mohawk Industries, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Jeffrey S. Lorberbaum
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Jeffrey S. Lorberbaum
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Chairman and Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-K of Mohawk Industries, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Frank H. Boykin
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Frank H. Boykin
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Chief Financial Officer
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Jeffrey S. Lorberbaum
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Jeffrey S. Lorberbaum
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Chairman and Chief Executive Officer
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Frank H. Boykin
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Frank H. Boykin
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Chief Financial Officer
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Mine
(Federal Mine Safety and Health Administration (MSHA) ID)
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Total # of Significant & Substantial violations under §104(a)
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Total # of orders under §104(b)
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Total # of unwarrantable failure citations and orders under §104(d)
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Total # of violations under §110(b)(2)
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Total # of orders under §107(a)
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Total dollar value of proposed assessments from MSHA ($ in thousands)
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Total # of mining related fatalities
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Received Notice of Pattern of Violations under §104(e) (yes/no)?
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Received Notice of Potential to have Pattern under §104(e) (yes/no)?
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Total # of Legal Actions Pending with the Mine Safety and Health Review Commission as of the Last Day of Period
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Legal Actions Initiated or Resolved During Period
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TP Claims 1&2/Rosa Blanca (4100867)
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—
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—
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—
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—
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—
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$—
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—
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No
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No
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—
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—
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Allamore Mill (4100869)
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—
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—
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—
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—
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—
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118
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—
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No
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No
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—
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—
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Wild Horse Plant (4101527)
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—
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—
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—
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—
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—
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—
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—
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No
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No
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—
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—
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