<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 1
[Mark One]
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to __________
Commission File Number 01-19826
MOHAWK INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 52-1604305
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
P.O. Box 12069, 160 South Industrial Blvd.,
Calhoun, Georgia 30703
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (706) 629-7721
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, $.01
par value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ______
------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. X
------
The aggregate market value of the Common Stock of the Registrant held by non-
affiliates of the Registrant (22,048,255 shares) on June 11, 1998 was
$705,544,160. The aggregate market value was computed by reference to the
closing price of the Common Stock on such date as reported on the New York Stock
Exchange Composite Tape.
Number of shares of Common Stock outstanding as of June 11, 1998: 52,343,257
shares of Common Stock, $.01 par value.
Exhibit Index starts on sequentially numbered page 4.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
Mohawk Industries, Inc.
Registrant
Date June 19, 1998 By: /s/ David L. Kolb
----------------- -----------------------
David L. Kolb
Chairman and Chief Executive Officer
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports of Form 8-K
(a) 3. Exhibits
EXHIBIT 23.3(A) Independent Auditors' Consent
---------------
EXHIBIT 23.3(B) Independent Auditors' Consent
---------------
EXHIBIT 27 Restated Financial Data Schedules for the Years
---------- ended December 31, 1996 and 1995
EXHIBIT 99.1 Mohawk Carpet Corporation Retirement Savings Plan
------------
Independent Auditors' Report
Statements of Net Assets Available for Plan
Benefits as of December 31, 1997 and 1996
Statement of Changes in Net Assets Available
for Plan Benefits for the Year ended
December 31, 1997
Notes to Financial Statements
Item 27a - Schedule of Assets Held for
Investment Purposes as of December 31,
1997
Item 27d - Schedule of Reportable Transactions
for the Year ended December 31, 1997
EXHIBIT 99.2 Aladdin Retirement Savings Plan
------------
Independent Auditors' Report
Statement of Net Assets Available for Plan
Benefits as of December 31, 1997
Statement of Changes in Net Assets Available
for Plan Benefits For the Six Months
ended December 31, 1997
Notes to Financial Statements
Item 27a - Schedule of Assets Held for
Investment Purposes as of December 31,
1997
Item 27d - Schedule of Reportable Transactions
for the Six Months ended December 31,
1997
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------ -----------------------------------------------------
EXHIBIT 23.3(A) Independent Auditors' Consent
----------------
EXHIBIT 23.3(B) Independent Auditors' Consent
---------------
EXHIBIT 27 Restated Financial Data Schedules for the Years
---------- ended December 31, 1996 and 1995
EXHIBIT 99.1 Mohawk Carpet Corporation Retirement Savings Plan
-------------
Independent Auditors' Report
Statements of Net Assets Available for Plan
Benefits as of December 31, 1997 and 1996
Statement of Changes in Net Assets
Available for Plan Benefits for the
Year ended December 31, 1997
Notes to Financial Statements
Item 27a - Schedule of Assets Held for Investment
Purposes as of December 31, 1997
Item 27d - Schedule of Reportable Transactions for
the Year ended December 31, 1997
EXHIBIT 99.2 Aladdin Retirement Savings Plan
------------
Independent Auditors' Report
Statement of Net Assets Available for Plan
Benefits as of December 31, 1997
Statement of Changes in Net Assets Available for
Plan Benefits For the Six Months ended
December 31, 1997
Notes to Financial Statements
Item 27a - Schedule of Assets Held for Investment
Purposes as of December 31, 1997
Item 27d - Schedule of Reportable Transactions for
the Six Months ended December 31,1997
<PAGE>
EXHIBIT 23.3
<PAGE>
EXHIBIT 23.3(A)
INDEPENDENT AUDITORS' CONSENT
THE BOARD OF DIRECTORS
MOHAWK INDUSTRIES, INC.:
WE CONSENT TO INCORPORATION BY REFERENCE IN THE REGISTRATION STATEMENT (NO. 33-
87998) ON FORM S-8 OF MOHAWK INDUSTRIES, INC. OF OUR REPORT DATED MARCH 27,
1998, RELATING TO THE STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS OF
THE MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN AS OF DECEMBER 31, 1997
AND 1996, AND THE RELATED STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN
BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1997 AND RELATED SUPPLEMENTAL
SCHEDULES, WHICH REPORT APPEARS IN THE DECEMBER 31, 1997 ANNUAL REPORT ON FORM
10-K/A AMENDMENT NO. 1 OF MOHAWK INDUSTRIES, INC.
ATLANTA, GEORGIA
JUNE 19, 1998
<PAGE>
EXHIBIT 23.3(B)
INDEPENDENT AUDITORS' CONSENT
THE BOARD OF DIRECTORS
MOHAWK INDUSTRIES, INC.:
WE CONSENT TO INCORPORATION BY REFERENCE IN THE REGISTRATION STATEMENT ON FORM
S-8 OF MOHAWK INDUSTRIES, INC. OF OUR REPORT DATED MAY 8, 1998, RELATING TO THE
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS OF THE ALADDIN RETIREMENT
SAVINGS PLAN AS OF DECEMBER 31, 1997 AND THE RELATED STATEMENT OF CHANGES IN NET
ASSETS AVAILABLE FOR PLAN BENEFITS FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
AND RELATED SUPPLEMENTAL SCHEDULES, WHICH REPORT APPEARS IN THE DECEMBER 31,
1997 ANNUAL REPORT ON FORM 10-K/A AMENDMENT NO. 1 OF MOHAWK INDUSTRIES, INC.
ATLANTA, GEORGIA
JUNE 19, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM MOHAWK INDUSTRIES,
INC.'S ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0.96<F1>
<EPS-DILUTED> 0.95<F1>
<FN>
<F1>
Basic EPS and diluted EPS are pursuant to FAS No. 128. Also, per share amounts
reflect a 3-for-2 stock split effected during the fourth quarter of 1997.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM MOHAWK INDUSTRIES,
INC.'S ANNUAL REPORT TO STOCKHOLDERS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0.13<F1>
<EPS-DILUTED> 0.13<F1>
<FN>
<F1>
Basic EPS and diluted EPS are pursuant to FAS No. 128. Also, per share amounts
reflect a 3-for-2 stock split effected during the fourth quarter of 1997.
</FN>
</TABLE>
<PAGE>
EXHIBIT 99.1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Administrator
Mohawk Carpet Corporation
Retirement Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Mohawk Carpet Corporation Retirement Savings Plan ("Plan") as of
December 31, 1997 and 1996, and the related statement of changes in net assets
available for plan benefits for the year ended December 31, 1997. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1997 and 1996, and the changes in net assets available for plan
benefits for the year ended December 31, 1997 in conformity with generally
accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and reportable transactions as of or for the year ended
December 31, 1997, are presented for the purpose of additional analysis and are
not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedules have been subjected to auditing procedures
applied in the audit of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
March 27, 1998
<PAGE>
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Assets:
Investments (notes 3 and 4):
Mutual funds, at fair value $27,055,697 16,271,095
Guaranteed investment contracts, at contract value 33,627,717 32,122,563
Mohawk Industries, Inc. common stock, at fair value 7,308,908 6,196,168
Money market funds, at fair value 759,263 258,980
Loans to participants, at fair value 2,546,235 2,442,484
----------- ----------
Total investments 71,297,820 57,291,290
Cash 61,984 -
Accrued investment income 3,386 1,951
Contributions receivable from employer 193,173 162,282
Contributions receivable from participants 698,676 632,067
----------- ----------
Total assets 72,255,039 58,087,590
Liabilities - accounts payable 152,552 202,690
----------- ----------
Net assets available for plan benefits $72,102,487 57,884,900
=========== ==========
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE>
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 1997
<TABLE>
<CAPTION>
Additions:
<S> <C>
Investment income:
Interest and dividends $ 2,983,863
Net appreciation in fair value of investments:
Mutual funds 5,486,515
Mohawk Industries, Inc. common stock 2,731,782
-----------
Net investment income 11,202,160
Contributions from employer 2,072,142
Contributions from participants 6,649,342
-----------
Total additions 19,923,644
-----------
Deductions:
Participants' benefits 5,681,483
Administrative expenses 24,574
-----------
Total deductions 5,706,057
-----------
Increase in net assets available for plan benefits 14,217,587
Net assets available for plan benefits at beginning of year 57,884,900
-----------
Net assets available for plan benefits at end of year $72,102,487
===========
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1997 and 1996
(1) Summary of Significant Accounting Policies
------------------------------------------
The following is a summary of significant accounting policies followed by
the Plan in preparing its financial statements. The policies are in
conformity with generally accepted accounting principles.
(a) Basis of Presentation
---------------------
The records of the Plan are maintained on the cash basis of
accounting. The accompanying financial statements of the Mohawk Carpet
Corporation Retirement Savings Plan (the "Plan") have been prepared on
the accrual basis of accounting and present the net assets available
for plan benefits and changes in those net assets.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities.
Actual results could differ from those estimates.
(b) Investments
-----------
Investments in common trust funds, common stock, money market funds,
and loans to participants are stated at fair value based on quoted
market prices or as determined by SunTrust Bank (Trustee). Securities
transactions are accounted for on a trade date basis.
Investments in guaranteed investment contracts are payable on demand
and are recorded at contract value, which approximates fair value. The
contractual interest rates and crediting interest rates ranged from
5.21% to 7.35% at December 31, 1997 and 1996. The average yield on the
group annuity contracts was 6.86% and 6.05% for the years ended
December 31, 1997 and 1996, respectively. Guaranteed investment
contracts are renegotiated at current rates available from insurance
companies annually on April 1.
Realized and unrealized investment gains and losses are included in
net appreciation in fair value of investments in the statement of
changes in net assets available for plan benefits.
(Continued)
-4-
<PAGE>
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
(2) Description of the Plan
-----------------------
The following description of the Plan provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
(a) General
-------
The Plan is a defined contribution plan and covers all employees of
Mohawk Carpet Corporation (the "Company"), a wholly owned subsidiary
of Mohawk Industries, Inc. The Plan provides for retirement savings to
qualified active participants through both participant and employer
contributions and is subject to certain provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). During 1997, the Plan
was amended to allow employees to become eligible to participate in
the Plan at the beginning of a calendar month after completing one
year of service rather than specific enrollment dates (any January 1,
April 1, July 1, or October 1).
The Plan is administered by an Administrative Committee appointed by
the Company. The Administrative Committee is responsible for the
control, management, and administration of the Plan and the assets
held in trust at SunTrust Bank.
(b) Contributions
-------------
Contributions to the Plan are made by both participants and the
Company. Participants may contribute a maximum of 16% of their gross
compensation, subject to certain limitations. During 1997, the Plan
was amended to allow participants to allocate their contributions in
multiples of 1% to various investment funds of the Plan rather than in
multiples of 10%. The employer makes a 50% matching contribution up to
the first 4% of each participant's gross compensation contributed to
the Plan. The terms of the Plan also provide for discretionary
employer profit sharing contributions to the Mohawk Stock Fund for
plan participants employed on the last day of the plan year or
terminated during the plan year on account of death, disability, or
retirement.
(c) Participant Accounts
--------------------
Each participant's account is credited with their contribution for the
period as well as the employer's matching contribution and an
allocation of any employer profit sharing contribution. Investment
income, realized gains, employer profit sharing contributions, and the
change in unrealized appreciation or depreciation on plan investments
are credited to participants' accounts monthly based on the proportion
of each participant's account balance to the total account balance
within each investment fund at the beginning of the month.
Participant contributions may be invested in one or more of the
investment funds available under the Plan at the direction of the
participant. During 1997, the Plan was amended to allow monthly
valuation of accounts rather than quarterly valuation. As a result of
this amendment, several new investment options were available under
the Plan. Current investment funds available within the Plan include
the following:
<TABLE>
<CAPTION>
Investment Fund Fund Objective
--------------- --------------
<S> <C>
Equity Fund To deliver capital growth through investments
in the stocks of large, well-known companies.
Stable Value Fund To provide a fixed principal value and generate
regular interest payments through investments
in a diversified portfolio of investment
contracts issued by sound financial institutions.
Balanced Fund To provide capital growth and current income
while minimizing the risk of principal loss
associated with common stocks by investing in
a changing mix of high-quality stocks and
bonds.
Index Fund To track the performance of the Standard and
Poor's 500 Composite Stock Price Index,
which emphasizes stocks of large U.S.
companies.
International Fund To provide long-term capital growth through a
flexible policy of investing in stocks and debt
obligations of companies and governments
outside the U.S.
Mohawk Stock Fund To provide long-term appreciation through the
ownership of Mohawk Industries shares.
(Continued)
</TABLE>
-5-
<PAGE>
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
(d) Distributions to Participants
-----------------------------
Amounts due to participants who have withdrawn from the Plan but have
not been paid at December 31, 1997 and 1996 totaled $1,288,860 and
$1,032,134, respectively.
Under the terms of the Plan, participants may make hardship
withdrawals from their accounts upon furnishing proof of hardship as
specified in the Plan agreement. Participants may also borrow up to
90% of the value of their accounts subject to limitations provided by
the Plan. Loans must be paid back to the Plan generally within four
years of the loan date.
Upon termination of employment, the participant's account shall be
distributed in a lump-sum cash payment as soon as administratively
practicable, unless the participant elects otherwise. A participant
may elect to receive his distribution in approximate equal
installments over a period designated by the participant, not to
exceed the lesser of 15 years or the life expectancy of the last
survivor of the participant and his beneficiary.
(e) Vesting
-------
Participants are immediately vested in their contributions and the
Company's matching and discretionary contributions and the income
earned on such contributions.
(f) Administrative Expenses
-----------------------
Certain administrative expenses of the Plan are paid by the Company.
These costs include legal, accounting, and certain administrative
fees.
(3) Transactions with Parties-In-Interest
-------------------------------------
At December 31, 1997 and 1996, the Plan held investments in trust funds and
money market accounts sponsored by the trustee with current values of
$23,151,056 and $16,530,075, respectively. The Plan also held investments
in 333,162 and 281,644 shares of Mohawk Industries, Inc. common stock at
December 31, 1997 and 1996, respectively.
(Continued)
-6-
<PAGE>
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
(4) Investments
-----------
The following table shows the components of investments:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Mutual funds:
STI Capital Growth Fund $22,391,793 16,271,095
Dodge & Cox Balanced Fund 2,119,448 -
Vanguard Index Fund 1,985,222 -
Templeton Foreign Fund 559,234 -
----------- ----------
Total mutual funds 27,055,697 16,271,095
----------- ----------
Guaranteed investment contracts:
Commonwealth Life Guaranteed Investment Contract 3,097,703 3,155,840
Principal Mutual Life Guaranteed Investment Contract - 4,037,196
Sun Life Guaranteed Investment Contract 3,424,172 3,455,584
Northwestern National Life Guaranteed
Investment Contract - 1,475,629
Confederation Life Guaranteed Investment Contract - 2,386,373
CNA Insurance Guaranteed Investment Contact 6,057,002 4,852,712
New York Life Guaranteed Investment Contract 6,767,385 6,756,126
Met Life Group Annuity Contract 2,766,396 2,769,323
Prudential Insurance Group Annuity Contract 3,203,984 3,233,780
Travelers Insurance Guaranteed Investment Contract 2,337,866 -
John Hancock Life Guaranteed Investment Contract 5,973,209 -
----------- ----------
Total guaranteed investment contracts 33,627,717 32,122,563
----------- ----------
Mohawk Industries, Inc. common stock 7,308,908 6,196,168
Money market funds - Trustee 759,263 258,980
Loans to participants 2,546,235 2,442,484
----------- ----------
Total investments $71,297,820 57,291,290
=========== ==========
</TABLE>
(Continued)
-7-
<PAGE>
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
The net assets available for plan benefits and the changes in net assets
available for plan benefits at December 31, 1997 and for the year then ended by
investment fund are as follows:
Statement of Net Assets Available for Plan Benefits by Fund
<TABLE>
<CAPTION>
Participant Directed
----------------------------------------------------
Stable Equity Participant
Value Fund Fund Loan Fund
---------- ---- ---------
<S> <C> <C> <C>
Assets:
Investments:
Mutual funds $ - 22,391,793 -
Guaranteed investment contracts 33,627,717 - -
Mohawk Industries, Inc. common stock - - -
Money market funds 392,330 224,266 -
Loans to participants - - 2,546,235
------------- ------------ -------------
34,020,047 22,616,059 2,546,235
Cash 1,976 - -
Accrued investment income 1,792 1,047 -
Contributions receivable from employer 110,542 52,157 -
Contributions receivable from participants 375,412 199,767 -
------------- ------------ -------------
Total assets 34,509,769 22,869,030 2,546,235
Liabilities - accounts payable 91,310 21,938 -
------------- ------------ -------------
Net assets available for plan benefits $ 34,418,459 22,847,092 2,546,235
============= ============ =============
<CAPTION>
Participant Directed
------------------------------------------------------
Mohawk Balanced Index
Stock Fund Fund Fund
---------- ---- ----
<S> <C> <C> <C>
Assets:
Investments:
Mutual funds $ - 2,119,448 1,985,222
Guaranteed investment contracts - - -
Mohawk Industries, Inc. common stock 7,308,908 - -
Money market funds 62,152 44,369 27,106
Loans to participants - - -
-------------- --------- ---------
7,371,060 2,163,817 2,012,328
Cash 60,007 (3,516) -
Accrued investment income 298 115 105
Contributions receivable from employer 17,604 5,664 5,431
Contributions receivable from participants 60,680 25,754 28,520
-------------- --------- ---------
Total assets 7,509,649 2,191,834 2,046,384
Liabilities - accounts payable 18,154 10,349 5,358
---------------- --------- ---------
Net assets available for plan benefits $ 7,491,495 2,181,485 2,041,026
================ ========= =========
<CAPTION>
Participant Directed
---------------------------------------------------
International
Fund Total
---- -----
<S> <C> <C>
Assets:
Investments:
Mutual funds $ 559,234 27,055,697
Guaranteed investment contracts - 33,627,717
Mohawk Industries, Inc. common stock - 7,308,908
Money market funds 9,040 759,263
Loans to participants - 2,546,235
------------ ----------
568,274 71,297,820
Cash 3,517 61,984
Accrued investment income 29 3,386
Contributions receivable from employer 1,775 193,173
Contributions receivable from participants 8,543 698,676
------------ ----------
Total assets 582,138 72,255,039
Liabilities - accounts payable 5,443 152,552
------------ ----------
Net assets available for plan benefits $ 576,695 72,102,487
============ ==========
</TABLE>
(Continued)
-8-
<PAGE>
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
Statement of Changes in Net Assets Available for Plan Benefits by Fund
<TABLE>
<CAPTION>
Participant Directed
---------------------------------------------------------
Stable Equity Participant
Value Fund Fund Loan Fund
---------- ---- ---------
<S> <C> <C> <C>
Additions:
Investment income:
Interest and dividends $ 2,633,360 71,111 219,636
Net appreciation in fair value of investments:
Mutual funds - 5,388,937 -
Mohawk Industries, Inc. common stock - - -
Contributions from employer 1,197,474 604,386 -
Contributions from participants 3,583,997 2,058,425 -
------------------ ----------------- -----------------
Total additions 7,414,831 8,122,859 219,636
------------------ ----------------- -----------------
Deductions:
Participants' benefits 2,981,944 1,837,998 261,879
Administrative expenses 24,574 - -
------------------ ----------------- -----------------
Total deductions 3,006,518 1,837,998 261,879
------------------ ----------------- -----------------
Fund transfers (2,369,442) (245,691) 145,994
Increase in net assets available
for plan benefits 2,038,871 6,039,170 103,751
Net assets available for plan benefits at beginning 32,379,588 16,807,922 2,442,484
------------------ ----------------- -----------------
of year
Net assets available for plan benefits at end of year $ 34,418,459 22,847,092 2,546,235
================== ================= =================
<CAPTION>
Participant Directed
-----------------------------------------------------
Mohawk Balanced Index
Stock Fund Fund Fund
---------- ---- ----
<S> <C> <C> <C>
Additions:
Investment income:
Interest and dividends 5,827 28,776 16,820
Net appreciation in fair value of investments:
Mutual funds - 23,628 91,944
Mohawk Industries, Inc. common stock 2,731,782 - -
Contributions from employer 222,763 20,514 20,280
Contributions from participants 797,928 80,317 89,120
----------------- ----------------- ----------------
Total additions 3,758,300 153,235 218,164
----------------- ----------------- ----------------
Deductions:
Participants' benefits 598,161 15 1,374
Administrative expenses - - -
----------------- ----------------- ----------------
Total deductions 598,161 15 1,374
----------------- ----------------- ----------------
Fund transfers (1,923,550) 2,028,265 1,824,236
Increase in net assets available
for plan benefits 1,236,589 2,181,485 2,041,026
Net assets available for plan benefits at beginning 6,254,906 - -
----------------- ----------------- ----------------
of year
Net assets available for plan benefits at end of year 7,491,495 2,181,485 2,041,026
================= ================= ================
<CAPTION>
Participant Directed
-------------------------------------
International
Fund Total
---- -----
<S> <C> <C>
Additions:
Investment income:
Interest and dividends 8,333 2,983,863
Net appreciation in fair value of investments:
Mutual funds (17,994) 5,486,515
Mohawk Industries, Inc. common stock - 2,731,782
Contributions from employer 6,725 2,072,142
Contributions from participants 39,555 6,649,342
----------------- ------------------
Total additions 36,619 19,923,644
----------------- ------------------
Deductions:
Participants' benefits 112 5,681,483
Administrative expenses - 24,574
----------------- ------------------
Total deductions 112 5,706,057
----------------- ------------------
Fund transfers 540,188 -
Increase in net assets available
for plan benefits 576,695 14,217,587
Net assets available for plan benefits at beginning - 57,884,900
----------------- ------------------
of year
Net assets available for plan benefits at end of year 576,695 72,102,487
================= ==================
</TABLE>
(Continued)
-9-
<PAGE>
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
Statement of Net Assets Available for Plan Benefits by Fund
The net assets available for plan benefits at December 31, 1996 by
investment fund are as follows:
<TABLE>
<CAPTION>
Participant Directed
--------------------------------------------------------------
Interest Rate
Contract Equity Participant Mohawk
Fund Fund Loans Stock Fund Total
------------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Assets:
Investments:
Common trust fund $ - 16,271,095 - - 16,271,095
Group annuity contracts 32,122,563 - - - 32,122,563
Mohawk Industries, Inc. common stock - - - 6,196,168 6,196,168
Money market funds - 258,980 - - 258,980
Loans to participants - - 2,442,484 - 2,442,484
---------- ---------- --------- --------- ----------
32,122,563 16,530,075 2,442,484 6,196,168 57,291,290
---------- ---------- --------- --------- ----------
Accrued investment income 445 1,312 - 194 1,951
Contributions receivable from employer 98,620 45,283 - 18,379 162,282
Contributions receivable from participants 297,960 281,341 - 52,766 632,067
----------- ---------- --------- --------- ----------
Total assets 32,519,588 16,858,011 2,442,484 6,267,507 58,087,590
Liabilities - accounts payable 140,000 50,089 - 12,601 202,690
----------- ---------- --------- --------- ----------
Net assets available for plan benefits $32,379,588 16,807,922 2,442,484 6,254,906 57,884,900
=========== ========== ========= ========= ==========
</TABLE>
(Continued)
-10-
<PAGE>
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
(5) Income Tax Status
-----------------
The Internal Revenue Service made a favorable ruling on the application
for determination of qualification submitted by the Company in May 1992.
The Plan has been amended since receiving the determination letter and
the Plan has filed an application for an updated determination letter.
The administrative committee of the Plan is not aware of any course of
action or series of events that might adversely affect the Plan's
qualification under Section 401(a) of the Internal Revenue Code, and
under which the Plan would be subject to tax under present income tax
law.
(6) Plan Termination
----------------
While it is the Company's intention to continue the Plan indefinitely, the
Company has the right under the Plan to discontinue its contributions at
any time and to terminate the Plan subject to the provisions of ERISA and
the Plan agreement.
-11-
<PAGE>
Schedule 1
----------
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN
Item 27a -- Schedule of Assets Held for Investment Purposes
December 31, 1997
<TABLE>
<CAPTION>
Current
Identity of the issuer Description Cost value
---------------------- ----------- ---- -------
<S> <C> <C> <C>
Mutual funds:
STI Capital Growth Fund* 1,533,684 mutual fund units $ 24,813,319 22,391,793
Dodge & Cox Balanced Fund 31,738 mutual fund units 2,190,776 2,119,448
Vanguard Index Trust Fund 22,041 mutual fund units 1,905,500 1,985,222
Templeton Foreign Fund 56,204 mutual fund units 595,738 559,234
Guaranteed investment contracts:
Commonwealth Life Guaranteed Investment Contract due March 31,
1998 at 5.21% 3,097,703 3,097,703
Sunlife of America Guaranteed Investment Contract due March 31,
1998 at 6.20% 3,424,172 3,424,172
New York Life Guaranteed Investment Contract due April 1,
2000 at 7.35% 6,767,385 6,767,385
CNA Insurance Guaranteed Investment Contract due April 2,
2001 at 6.43% 2,470,366 2,470,366
CNA Insurance Guaranteed Investment Contract due April 2,
2002 at 7.15% 3,586,636 3,586,636
Travelers Insurance Company Guaranteed Investment Contract due April 1,
2002 at 7.03% 2,337,866 2,337,866
Prudential Insurance Guaranteed Investment Contract due March 31,
1998 at rates from 6.0% to 7.5% 3,203,984 3,203,984
John Hancock Life Guaranteed Investment Contract due April 2,
2002 at 7.0% 5,973,209 5,973,209
Met Life Guaranteed Investment Contract due April 1,
1999 at 7.06% 2,766,396 2,766,396
Mohawk Industries, Inc. - common
stock* 333,162 shares of common stock 3,375,913 7,308,908
Money Market Funds - Trustee* Money Market Fund 759,263 759,263
Loans to participants (1) 2,546,235 2,546,235
---------- ----------
Total $ 69,814,461 71,297,820
========== ==========
</TABLE>
*SunTrust Bank, Trustee, and Mohawk Industries, Inc. are parties-in-interest to
the Plan.
(1) Loans are consummated at a fixed rate (then current current prime rate
plus 1%) for terms up to four years or 20 years for a residence.
-12-
<PAGE>
SCHEDULE 2
----------
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN
Item 27d - Schedule of Reportable Transactions (A)
Year ended December 31, 1997
<TABLE>
<CAPTION>
Expenses
Purchase Selling incurred with Cost of
Description price price transaction asset
----------- ----- ----- ----------- -----
<S> <C> <C> <C>
Principal Mutual Life Guaranteed Investment Contract $ 73,025 N/A - 73,025
Principal Mutual Life Guaranteed Investment Contract N/A 4,110,221 - 4,110,221
CNA Insurance Guaranteed Investment Contract 3,781,183 N/A - 3,781,183
CNA Insurance Guaranteed Investment Contract N/A 193,868 - 193,868
John Hancock Life Guaranteed Investment Contract 6,296,125 N/A - 6,296,125
John Hancock Life Guaranteed Investment Contract N/A 322,916 - 322,916
Confederation Life Guaranteed Investment Contract 514,155 N/A - 514,155
Confederation Life Guaranteed Investment Contract N/A 2,900,528 - 2,900,528
SunTrust Retirement Reserve Fund* 9,174,325 N/A - 9,174,325
SunTrust Retirement Reserve Fund* N/A 9,146,887 - 9,146,887
STI Capital Growth Fund* 26,230,178 N/A - 26,230,178
STI Capital Growth Fund* N/A 1,447,546 - 1,447,546
SunTrust Corporate Equity Fund* 770,423 N/A - 770,423
SunTrust Corporate Equity Fund* N/A 21,487,208 - 21,487,208
SunTrust Money Market Funds, Trustee* 15,694,070 N/A - 15,694,070
SunTrust Money Market Funds, Trustee* N/A 15,221,225 - 15,221,225
<CAPTION>
Current value
of asset on
transaction Net gain
date (loss)
---- ------
<S> <C> <C>
Principal Mutual Life Guaranteed Investment Contract 73,025 -
Principal Mutual Life Guaranteed Investment Contract 4,110,221 -
CNA Insurance Guaranteed Investment Contract 3,781,183 -
CNA Insurance Guaranteed Investment Contract 193,868 -
John Hancock Life Guaranteed Investment Contract 6,296,125 -
John Hancock Life Guaranteed Investment Contract 322,916 -
Confederation Life Guaranteed Investment Contract 514,155 -
Confederation Life Guaranteed Investment Contract 2,900,528 -
SunTrust Retirement Reserve Fund* 9,174,325 -
SunTrust Retirement Reserve Fund* 9,146,887 -
STI Capital Growth Fund* 26,230,178 -
STI Capital Growth Fund* 1,478,233 30,687
SunTrust Corporate Equity Fund* 770,423 -
SunTrust Corporate Equity Fund* 31,110,828 9,623,620
SunTrust Money Market Funds, Trustee* 15,694,070 -
SunTrust Money Market Funds, Trustee* 15,221,225 -
</TABLE>
*SunTrust Bank is a party-in-interest to the Plan.
(A) Represents transactions or a series of transactions in securities of the
same issue or with the same person in excess of 5% of the current value of
the Plan's assets as of the beginning of the year.
-13-
<PAGE>
EXHIBIT 99.2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Administrator
Aladdin Retirement Savings Plan:
We have audited the accompanying statement of net assets available for plan
benefits of the Aladdin Retirement Savings Plan ("Plan") as of December 31,
1997, and the related statement of changes in net assets available for plan
benefits for the six months ended December 31, 1997. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 1997, and the changes in net assets available for plan benefits
for the six months ended December 31, 1997 in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
held for investment purposes and reportable transactions as of or for the six
months ended December 31, 1997, are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedules have been subjected to
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
May 8, 1998
<PAGE>
ALADDIN RETIREMENT SAVINGS PLAN
Statement of Net Assets Available for Plan Benefits
December 31, 1997
<TABLE>
<CAPTION>
Assets:
<S> <C>
Investments, at fair value (notes 3 and 4):
Mutual funds, at fair value $18,738,803
Money market funds 360,878
-----------
19,099,681
Cash 103,391
Accrued investment income 2,660
Contributions receivable from employer 2,109,464
Contributions receivable from participants 266,042
Other receivable from employer 36,893
-----------
Total assets 21,618,131
Liabilities - accounts payable 261,164
-----------
Net assets available for plan benefits $21,356,967
===========
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE>
ALADDIN RETIREMENT SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Six Months ended December 31, 1997
<TABLE>
<CAPTION>
Additions:
<S> <C>
Investment income:
Interest and dividends $ 213,965
Net appreciation in fair value of mutual funds 496,400
-----------
Total investment income 710,365
-----------
Contributions from employer 535,742
Contributions from participants 1,560,444
Transfer from Aladdin Mills, Inc. Profit Sharing Plan and Trust 18,550,416
-----------
Total additions 20,646,602
-----------
Increase in net assets available for plan benefits 21,356,967
Net assets available for plan benefits at beginning of period
Net assets available for plan benefits at end of period $21,356,967
===========
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
ALADDIN RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1997
(1) Summary of Significant Accounting Policies
------------------------------------------
The following is a summary of significant accounting policies followed by
the Plan in preparing its financial statements. The policies are in
conformity with generally accepted accounting principles.
(a) Basis of Presentation
---------------------
The records of the Plan are maintained on the cash basis of
accounting. The accompanying financial statements of the Aladdin
Retirement Savings Plan (the "Plan") have been prepared on the accrual
basis of accounting and present the net assets available for plan
benefits and changes in those net assets.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities.
(b) Investments
-----------
Investments in mutual funds and money market funds are stated at fair
value based on quoted market prices or as determined by SunTrust Bank
(Trustee). Securities transactions are accounted for on a trade date
basis.
Realized and unrealized investment gains and losses are included in
net appreciation (depreciation) in fair value of investments in the
statement of changes in net assets available for plan benefits.
(2) Description of the Plan
-----------------------
The following description of the Plan provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
(a) General
-------
Prior to June 30, 1997, Aladdin Mills, Inc. (the "Company"), a wholly
owned subsidiary of Mohawk Industries, Inc., maintained the Aladdin
Mills, Inc. Profit Sharing Plan and Trust. Effective July 1, 1997, the
Company amended the Plan to add a 401(k) feature to permit employer
matching contributions, employee pretax contributions, and for other
purposes. The amendment also changed the Plan's year-end from June 30
to December 31.
The Plan is a defined contribution plan and covers all employees of
the Company. The Plan provides for retirement savings to qualified
active participants through both participant and employer
contributions and is subject to certain provisions of the Employee
Retirement Income Security Act of 1974 (ERISA). Employees are eligible
to participate in the Plan at the beginning of a calendar month after
completing one year of service.
The Plan is administered by an Administrative Committee appointed by
the Company. The Administrative Committee is responsible for the
control, management, and administration of the Plan and the assets
held in trust at SunTrust Bank.
(Continued)
-4-
<PAGE>
ALADDIN RETIREMENT SAVINGS PLAN
Notes to Financial Statements
(b) Contributions
-------------
Contributions to the Plan are made by both participants and the
Company. Participants may contribute a maximum of 16% of their gross
compensation, subject to certain limitations. The Plan allows
participants to allocate their contributions in multiples of 1% to the
various investment funds available under the Plan. The employer makes
a 50% matching contribution up to the first 4% of each participant's
gross compensation contributed to the Plan. The terms of the Plan also
provide for discretionary employer profit sharing contributions to the
Mohawk Stock Fund for plan participants employed on the last day of
the plan year or terminated during the plan year on account of death,
disability, or retirement.
(c) Participant Accounts
--------------------
Each participant's account is credited with their contribution for the
period as well as the employer's matching contribution and an
allocation of any employer profit sharing contribution. Investment
income, realized gains, employer profit sharing contributions, and the
change in unrealized appreciation or depreciation on plan investments
are credited to participants' accounts monthly based on the proportion
of each participant's account balance to the total account balance
within each investment fund at the beginning of the month.
Participant contributions may be invested in one or more of the
investment funds available under the Plan at the direction of the
participant. The Plan allows for monthly valuation of accounts.
Current investment funds available within the Plan include the
following:
<TABLE>
<CAPTION>
Investment
fund Fund objective
---- --------------
<S> <C>
Equity Fund To deliver capital growth through investments in the stocks
of large, well-known companies.
Stable Value Fund To provide a fixed principal value and generate regular
interest payments through investments in a diversified portfolio
of investment contracts issued by sound financial institutions.
Balanced Fund To track the performance of the Standard and Poor's 500 Composite
Stock Price Index, which emphasizes stocks of large U.S. companies.
Mohawk Stock Fund To provide long-term appreciation through the ownership
of Mohawk Industries shares.
</TABLE>
(d) Distributions to Participants
-----------------------------
Amounts due to participants who have withdrawn from the Plan but have
not been paid at December 31, 1997 totaled $721,239.
(Continued)
-5-
<PAGE>
ALADDIN RETIREMENT SAVINGS PLAN
Notes to Financial Statements
Under the terms of the Plan, participants may make hardship
withdrawals from their accounts upon furnishing proof of hardship as
specified in the Plan agreement. Participants may also borrow up to
90% of the value of their employee contribution account subject to
limitations provided by the Plan. Loans must be paid back to the Plan
generally within five years of the loan date. As of December 31, 1997,
there were no participant loan balances due to the Plan.
Upon termination of employment, the participant's account shall be
applied toward the purchase of a Qualified Fifty Percent Joint and
Survivor Annuity, or a Straight-Life Annuity, if the Participant does
not have a spouse, unless the participant elects otherwise. A
participant may elect to receive his distribution in approximate equal
installments over a period designated by the participant, not to
exceed the life expectancy of the participant.
(e) Vesting
-------
Participants are immediately vested in their contributions and the
Company's matching contributions and the income earned on such
contributions. Participants become vested in the Company's
discretionary contributions according to the following schedule:
<TABLE>
<CAPTION>
Years of Percent
eligible service vested
---------------- ------
<S> <C>
Less than 3 0%
3 25
4 40
5 60
6 80
7 100
</TABLE>
A participant who reaches normal retirement age, becomes permanently
disabled, or dies will become 100% vested in their account regardless
of the years of service.
(f) Administrative Expenses
-----------------------
Certain administrative expenses of the Plan are paid by the Company.
These costs include legal, accounting, and certain administrative
fees.
(3) Transactions with Parties-In-Interest
-------------------------------------
At December 31, 1997, the Plan held investments in trust funds and
money market accounts sponsored by the trustee with current values of
$15,229,663.
(Continued)
-6-
<PAGE>
ALADDIN RETIREMENT SAVINGS PLAN
Notes to Financial Statements
(4) Investments
-----------
The following table shows the components of investments:
<TABLE>
<S> <C>
Mutual funds:
STI Capital Growth Fund $ 4,864,229
Dodge & Cox Balanced Fund 3,870,018
STI Stable Value Fund 10,004,556
-----------
Total mutual funds 18,738,803
Money market funds - Trustee 360,878
-----------
Total investments $19,099,681
===========
</TABLE>
(Continued)
-7-
<PAGE>
ALADDIN RETIREMENT SAVINGS PLAN
Notes to Financial Statements
The Plan permits participants to contribute to three types of investment
funds. The net assets available for plan benefits and the changes in net assets
available for plan benefits at December 31, 1997 and for the six months then
ended by investment fund are as follows:
Statement of Net Assets Available for Plan Benefits by Fund
<TABLE>
<CAPTION>
Participant Directed
---------------------------------------------
Stable
Value Equity Balanced
Fund Fund Fund Total
----------- --------- --------- ----------
<S> <C> <C> <C> <C>
Assets:
Investments:
Mutual funds $10,004,556 4,864,229 3,870,018 18,738,803
Money market funds 348,359 7,119 5,400 360,878
----------- --------- --------- ----------
10,352,915 4,871,348 3,875,418 19,099,681
Cash - - 103,391 103,391
Accrued investment income 2,622 22 16 2,660
Contributions receivable from employer 2,029,555 47,070 32,839 2,109,464
Contributions receivable from participants 63,850 122,379 79,813 266,042
Other receivable from employer 36,893 - - 36,893
----------- --------- --------- ----------
Total assets 12,485,835 5,040,819 4,091,477 21,618,131
Liabilities - accounts payable 254,045 7,119 - 261,164
----------- --------- --------- ----------
Net assets available for plan benefits $12,231,790 5,033,700 4,091,477 21,356,967
=========== ========= ========= ==========
</TABLE>
(Continued)
-8-
<PAGE>
ALADDIN RETIREMENT SAVINGS PLAN
Notes to Financial Statements
Statement of Changes in Net Assets Available for Plan Benefits by Fund
<TABLE>
<CAPTION>
Participant Directed
-------------------------------------------------
Stable
Value Equity Balanced
Fund Fund Fund Total
----- ---- ---- -----
<S> <C> <C> <C> <C>
Additions:
Investment income:
Interest and dividends $ 5,893 6,925 201,147 213,965
Net appreciation (depreciation) in fair value
of mutual funds 508,807 129,038 (141,445) 496,400
Contributions from employer 227,119 177,872 130,751 535,742
Contributions from participants 630,713 560,626 369,105 1,560,444
Contributions from Aladdin Mills, Inc. Profit Sharing
Plan and Trust 10,859,258 4,159,239 3,531,919 18,550,416
----------- --------- --------- ----------
Total additions 12,231,790 5,033,700 4,091,477 21,356,967
Net assets available for plan benefits at
beginning of period - - - -
----------- --------- --------- ----------
Net assets available for plan benefits at
end of period $ 12,231,790 5,033,700 4,091,477 21,356,967
=========== ========= ========= ==========
</TABLE>
(Continued)
-9-
<PAGE>
ALADDIN RETIREMENT SAVINGS PLAN
Notes to Financial Statements
(5) Income Tax Status
-----------------
An application for determination of qualification has been submitted to the
Internal Revenue Service. Although a favorable ruling on this application
has not yet been received, the Plan is designed and being operated in
compliance with Section 401(a) of the Internal Revenue Code. The
administrative committee of the Plan is not aware of any course of action
or series of events that might adversely affect the Plan's qualification
under Section 401(a) of the Internal Revenue Code, and under which the Plan
would be subject to tax under present income tax law.
(6) Plan Termination
----------------
While it is the Company's intention to continue the Plan indefinitely, the
Company has the right under the Plan to discontinue its contributions at
any time and to terminate the Plan subject to the provisions of ERISA and
the Plan agreement. In the event of Plan termination, participants will
become 100% vested in their accounts.
-10-
<PAGE>
Schedule 1
----------
ALADDIN RETIREMENT SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1997
<TABLE>
<CAPTION>
Current
Identity of issuer Description of investment Cost value
------------------ ------------------------- ----- -----
<S> <C> <C> <C>
Mutual funds:
STI Capital Growth Fund* 333,166 mutual fund units $ 4,798,418 4,864,229
Dodge & Cox Balanced Fund 57,952 mutual fund units 4,011,463 3,870,018
STI Stable Value Fund* 406,524 mutual fund units 9,714,057 10,004,556
Money market funds - SunTrust
Bank* Money Market Fund 360,878 360,878
----------- ----------
$18,884,816 19,099,681
=========== ==========
</TABLE>
*SunTrust Bank, Trustee, is a party-in-interest to the Plan.
-11-
<PAGE>
Schedule 2
----------
ALADDIN RETIREMENT SAVINGS PLAN
Item 27d - Schedule of Reportable Transactions (A)
Six Months ended December 31, 1997
<TABLE>
<CAPTION>
Expenses Current value
incurred Cost of asset on Net
Purchase Selling with of transaction gain
Description price price transaction asset date (loss)
----------- ------- ----- ----------- ----- ------------ ------
<S> <C> <C> <C> <C> <C> <C>
SunTrust Money Market Funds, Trustee* $26,361,216 N/A - 26,361,216 26,361,216 -
SunTrust Money Market Funds, Trustee* N/A 26,000,338 - 26,000,338 26,000,338 -
STI Stable Value Fund* 17,974,968 N/A - 17,974,968 17,974,968 -
STI Stable Value Fund* N/A 8,479,219 - 8,260,911 8,479,219 218,308
STI Capital Growth Fund* 4,798,418 N/A - 4,798,418 4,798,418 -
Dodge & Cox Balanced Fund 4,011,463 N/A - 4,011,463 4,011,463 -
</TABLE>
*SunTrust Bank is a party-in-interest to the Plan.
/(A)/ Represents transactions or a series of transactions in securities of the
same issue or with the same person in excess of 5% of the current value of
the Plan's assets as of the beginning of the year.
-12-
