<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[Mark One]
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 1, 2000
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 Identification No.)
incorporation or organization)
P. O. Box 12069, 160 S. Industrial Blvd., 30701
Calhoun, Georgia
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (706) 629-7721
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[_]
The number of shares outstanding of the issuer's classes of capital stock
as of August 4, 2000, the latest practicable date, is as follows: 53,149,866
shares of Common Stock, $.01 par value.
--------------------------------------------------------------------------------
<PAGE>
MOHAWK INDUSTRIES, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
-------
<S> <C>
Part I. Financial Information:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
July 1, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Earnings -
Three months ended July 1, 2000 and July 3, 1999 5
Condensed Consolidated Statements of Earnings -
Six months ended July 1, 2000 and July 3, 1999 6
Condensed Consolidated Statements of Cash Flows -
Six months ended July 1, 2000 and July 3, 1999 7
Notes to Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risks 13
Part II. Other Information 13
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(In thousands)
<TABLE>
<CAPTION>
July 1, 2000 December 31, 1999
---------------- ---------------------
(Unaudited)
<S> <C> <C>
Current assets:
Receivables $ 396,223 337,824
Inventories 576,653 494,774
Prepaid expenses 12,820 25,184
Deferred income taxes 76,628 76,628
------------ -----------
Total current assets 1,062,324 934,410
------------ -----------
Property, plant and equipment, at cost 1,175,969 1,139,660
Less accumulated depreciation and
amortization 553,067 514,846
------------ -----------
Net property, plant and equipment 622,902 624,814
------------ -----------
Other assets 118,331 123,649
------------ -----------
Total assets $ 1,803,557 1,682,873
============ ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(In thousands)
<TABLE>
<CAPTION>
July 1, 2000 December 31, 1999
---------------- ---------------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 33,893 33,961
Accounts payable and accrued expenses 444,372 340,392
------------ --------------
Total current liabilities 478,265 374,353
Deferred income taxes 53,783 53,783
Long-term debt, less current portion 579,603 562,104
Other long-term liabilities 392 87
------------ --------------
Total liabilities 1,112,043 990,327
------------ --------------
Stockholders' equity:
Preferred stock, $.01 par value; 60 shares
authorized; no shares issued - -
Common stock, $.01 par value; 150,000 shares
authorized; 60,715 and 60,657 shares issued
in 2000 and 1999, respectively 607 607
Additional paid-in capital 181,199 179,993
Retained earnings 677,132 595,932
------------ --------------
858,938 776,532
Less treasury stock at cost; 7,589 in shares in
2000 and 3,952 in 1999 167,424 83,986
------------ --------------
Total stockholders' equity 691,514 692,546
------------ --------------
Total liabilities and stockholders' equity $ 1,803,557 1,682,873
============ ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------------------
July 1, 2000 July 3, 1999
------------ ------------
<S> <C> <C>
Net sales $ 852,808 790,617
Cost of sales 636,926 589,706
--------- --------
Gross profit 215,882 200,911
Selling, general and administrative expenses 126,971 119,997
--------- --------
Operating income 88,911 80,914
--------- --------
Other expense:
Interest expense, net 9,674 7,753
Other expense, net 1,215 280
--------- --------
10,889 8,033
--------- --------
Earnings before income taxes 78,022 72,881
Income taxes 30,819 28,788
--------- --------
Net earnings $ 47,203 44,093
========= ========
Basic earnings per share $ 0.88 0.73
========= ========
Weighted-average common shares outstanding 53,836 60,593
========= ========
Diluted earnings per share $ 0.87 0.72
========= ========
Weighted-average common and dilutive potential
common shares outstanding 54,336 61,257
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
------------------------------
July 1, 2000 July 3, 1999
------------ ------------
<S> <C> <C>
Net sales $ 1,617,891 1,497,784
Cost of sales 1,211,446 1,118,544
----------- -----------
Gross profit 406,445 379,240
Selling, general and administrative expenses 251,828 242,662
----------- -----------
Operating income 154,617 136,578
----------- -----------
Other expense:
Interest expense, net 18,414 15,607
Other expense, net 1,988 1,988
----------- -----------
20,402 17,595
----------- -----------
Earnings before income taxes 134,215 118,983
Income taxes 53,015 46,998
----------- -----------
Net earnings $ 81,200 71,985
=========== ===========
Basic earnings per share $ 1.48 1.19
=========== ===========
Weighted-average common shares outstanding 54,723 60,579
=========== ===========
Diluted earnings per share $ 1.47 1.17
=========== ===========
Weighted-average common and dilutive potential
common shares outstanding 55,217 61,271
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
------------------------------------------------------------
July 1, 2000 July 3, 1999
--------------------------- --------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 81,200 71,985
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 41,819 51,253
Provision for doubtful accounts 8,447 7,500
Loss on sale of property, plant
and equipment 63 3,095
Changes in operating assets and liabilities,
net of effects of acquisitions:
Receivables (66,846) (23,992)
Inventories (81,879) (66,690)
Accounts payable and accrued expenses 85,844 (11,290)
Other assets and prepaid expenses 12,554 16,051
Other liabilities 305 (4,531)
--------------------------- --------------------------
Net cash provided by operating activities 81,507 43,381
--------------------------- --------------------------
Cash flows from investing activities:
Additions to property, plant and equipment, net (34,842) (74,469)
Acquisitions - (162,463)
--------------------------- --------------------------
Net cash used in investing activities (34,842) (236,932)
--------------------------- --------------------------
Cash flows from financing activities:
Net change in revolving line of credit 15,498 190,461
Proceeds (redemption) of IRBs and other,
net of proceeds 1,933 (28,904)
Change in outstanding checks in excess of cash 18,136 21,961
Acquisition of treasury stock (83,438) -
Common stock transactions 1,206 7,649
--------------------------- --------------------------
Net cash (used in) provided by financing
activities (46,665) 191,167
--------------------------- --------------------------
Net change in cash - (2,384)
Cash, beginning of period - 2,384
--------------------------- --------------------------
Cash, end of period $ - -
=========================== ==========================
Net cash paid during the period for:
Interest $ 18,805 18,698
=========================== ==========================
Income taxes $ 37,086 54,255
=========================== ==========================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
(Unaudited)
1. The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with instructions to Form 10-Q and do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. These statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's 1999 Annual Report filed on Form 10-K, as filed with the Securities
and Exchange Commission, which includes consolidated financial statements for
the fiscal year ended December 31, 1999.
The Company's basic earnings per share are computed by dividing net earnings by
the weighted-average common shares outstanding, and diluted earnings per share
are computed by dividing net earnings by the weighted-average common and
dilutive potential common shares outstanding. Dilutive common stock options are
included in the diluted earnings per share calculation using the treasury stock
method.
2. Receivables
Receivables are as follows:
<TABLE>
<CAPTION>
July 1, 2000 December 31, 1999
--------------------------- --------------------------
<S> <C> <C>
Customers, trade $ 476,156 405,477
Other 2,268 2,826
--------------------------- --------------------------
478,424 408,303
Less allowance for discounts, returns, claims
and doubtful accounts 82,201 70,479
--------------------------- --------------------------
Net receivables $ 396,223 337,824
=========================== ==========================
</TABLE>
3. Inventories
The components of inventories are as follows:
<TABLE>
<CAPTION>
July 1, 2000 December 31, 1999
--------------------------- --------------------------
<S> <C> <C>
Finished goods $ 295,314 254,179
Work in process 75,344 65,456
Raw materials 205,995 175,139
--------------------------- --------------------------
Total inventories $ 576,653 494,774
=========================== ==========================
</TABLE>
4. Other assets
Other assets are as follows:
<TABLE>
<CAPTION>
July 1, 2000 December 31, 1999
--------------------------- --------------------------
<S> <C> <C>
Goodwill, net of accumulated amortization of
$14,750 and $13,171, respectively $ 111,981 113,560
Other assets 6,350 10,089
--------------------------- --------------------------
Total other assets $ 118,331 123,649
=========================== ==========================
</TABLE>
8
<PAGE>
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
(Unaudited)
5. Accounts payable and accrued expenses
Accounts payable and accrued expenses are as follows:
<TABLE>
<CAPTION>
July 1, 2000 December 31, 1999
--------------- -------------------
<S> <C> <C>
Outstanding checks in excess of cash $ 60,509 42,373
Accounts payable, trade 211,840 159,812
Accrued expenses 104,404 83,253
Accrued compensation 67,619 54,954
--------------- -------------------
Total accounts payable and accrued expenses $ 444,372 340,392
=============== ===================
</TABLE>
6. Property, Plant and Equipment
Effective January 1, 2000, the Company changed the estimated useful lives of
buildings (25 years to 35 years), tufting equipment (7 years to 10 years),
extrusion equipment (7 years to 15 years) and furniture and fixtures (5 years to
7 years). Management believes the change more accurately reflects the actual
lives of these assets and is more consistent with industry practice. The
prospective change is estimated to reduce annual depreciation expense by
approximately $20,000 in 2000.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Effective January 1, 2000, the Company changed the estimated useful lives
of certain property, plant and equipment. Management believes this change more
accurately reflects the actual lives of these assets and is more consistent with
industry practice. The prospective change is estimated to reduce annual
depreciation expense by approximately $20 million in 2000.
Results of Operations
Quarter Ended July 1, 2000 as Compared with Quarter Ended July 3, 1999
----------------------------------------------------------------------
Net sales for the quarter ended July 1, 2000 were $852.8 million,
reflecting an increase of $62.2 million, or approximately 8%, over the $790.6
million reported in the quarter ended July 3, 1999. All major product categories
achieved sales increases for the second quarter of 2000 as compared to 1999. The
Company believes that the second quarter of 2000 net sales increase was
attributable to internal growth.
Gross profit for the second quarter of the current year was $215.9 million
(25.3% of net sales) and represented a $15.0 million increase over the gross
profit of $200.9 million (25.4% of net sales) for the prior year's quarter.
Gross profit as a percentage of net sales was unfavorably impacted by raw
material cost increases, resulting from rising oil prices, which were partially
offset by productivity improvements, selling price increases and an increase in
the estimated useful lives of property, plant and equipment which was effective
January 1, 2000.
Selling, general and administrative expenses for the current quarter were
$127 million (14.9% of net sales) compared to $120 million (15.2% of net sales)
for the prior year's second quarter. The decrease as a percentage of net sales
was primarily due to improved cost controls and the leveraging of these expenses
against higher sales volume in the current quarter.
Interest expense for the current quarter was $9.7 million compared to $7.8
million in the second quarter of 1999. The primary factor contributing to the
increase was an increase in debt levels, which was attributable to the stock
repurchase program, capital expenditures, and an increase in the weighted
average borrowing rate compared to the second quarter of 1999.
Income tax expense was $30.8 million, or 39.5% of earnings before income
taxes in the current quarter compared to $28.8 million, or 39.5% of earnings
before income taxes for the prior year's second quarter.
Six months Ended July 1, 2000 as Compared with Six Months Ended July 3, 1999
----------------------------------------------------------------------------
Net sales for the first six months ended July 1, 2000 were $1,618 million,
reflecting an increase of $120 million, or approximately 8%, over the $1,498
million reported in the six month period ended July 3, 1999. The Company
believes that this increase was attributable to internal growth and the impact
of the acquisition of certain assets of Image Industries, Inc. on January 29,
1999.
Gross profit for the first six months of the current year was $406.4
million (25.1% of net sales) and represented a $27.2 million increase over the
gross profit of $379.2 million (25.3% of net sales) for the first six months of
1999. Gross profit as a percentage of net sales was unfavorably impacted by raw
material cost increases, resulting from rising oil prices, which were partially
offset by productivity improvements, selling price increases and an increase in
the estimated useful lives of property, plant and equipment which was effective
January 1, 2000.
Selling, general and administrative expenses for the current period were
$251.8 million (15.6% of net sales) compared to $242.7 million (16.2% of net
sales) for the prior year's first six months. The decrease as a percentage of
net sales was primarily due to improved cost controls and better leveraging of
these expenses against higher sales volume in the current quarter.
Interest expense for the current period was $18.4 million compared to $15.6
million in the prior year's first six
10
<PAGE>
months. The primary factor contributing to the increase was an increase in debt
levels, which was attributable to the stock repurchase program, capital
expenditures, and an increase in the weighted average borrowing rate compared to
the first six months of 1999.
Income tax expense was $53 million, or 39.5% of earnings before income
taxes in the current period compared to $47 million, or 39.5% of earnings before
income taxes for the prior year's first six months.
Liquidity and Capital Resources
The Company's primary capital requirements are for working capital, capital
expenditures and acquisitions. The Company's capital needs are met through a
combination of internally generated funds, bank credit lines and credit terms
from suppliers.
The level of accounts receivable increased from $337.8 million at the
beginning of 2000 to $396.2 million at July 1, 2000. The $58.4 million increase
was attributable to strong sales growth. Inventories increased from $494.8
million at the beginning of 2000 to $576.7 million at July 1, 2000, due
primarily to the need for a higher level of inventory to meet the increased
sales volume and seasonal demand.
Capital expenditures totaled $34.8 million for the first six months of
2000, and were incurred primarily to modernize and expand manufacturing
facilities and equipment. The Company's capital projects are primarily focused
on increasing capacity, improving productivity and reducing costs. Capital
spending during 2000 is expected to range from $70 million to $85 million, the
majority of which will be used to purchase equipment to increase production
capacity and productivity.
During 1999, the Company's Board of Directors authorized the repurchase of
up to 10 million shares of its outstanding common shares. During the quarter
ended July 1, 2000, the Board of Directors authorized an additional repurchase
of 5 million outstanding shares bringing the total authorized repurchase to 15
million. For the quarter ended July 1, 2000, a total of approximately 1,514,000
shares of the Company's common stock has been purchased at an aggregate cost of
approximately $37.6 million. Since the inception of the program, a total of
approximately 7,589 million shares has been purchased at an aggregate cost of
approximately $167.4 million. All of this repurchase has been financed through
the Company's operations and revolving line of credit.
Impact of Inflation
Inflation affects the Company's manufacturing costs and operating expenses.
The carpet industry has experienced moderate inflation in the prices of raw
materials and outside processing for the last three years. The Company has
generally passed along nylon fiber price increases to its customers.
Seasonality
The carpet business is seasonal, with the Company's second, third and
fourth quarters typically producing higher net sales and operating income. By
comparison, results for the first quarter tend to be the weakest. This
seasonality is primarily attributable to consumer residential spending patterns
and higher installation levels during the spring and summer months.
Certain factors affecting the Company's performance
In addition to the other information provided in this Form 10-Q, the
following risk factors should be considered when evaluating an investment in
shares of Mohawk common stock.
A failure by Mohawk to complete acquisitions and successfully integrate acquired
--------------------------------------------------------------------------------
operations could materially and adversely affect its business.
-------------------------------------------------------------
Management intends to pursue acquisitions of complementary businesses as
part of its business and growth strategies. Although management regularly
evaluates acquisition opportunities, it cannot offer assurance that it will be
able to:
. successfully identify suitable acquisition candidates;
11
<PAGE>
. obtain sufficient financing on acceptable terms to fund acquisitions;
. complete acquisitions;
. integrate acquired operations into Mohawk's existing operations; or
. profitably manage acquired businesses.
Acquired operations may not achieve levels of sales, operating income or
productivity comparable to those of Mohawk's existing operations, or otherwise
perform as expected. Acquisitions may also involve a number of special risks,
some or all of which could have a material adverse effect on Mohawk's business,
results of operations and financial condition, including, among others:
. possible adverse effects on Mohawk's operating results;
. diversion of Mohawk management's attention and its resources; and
. dependence on retaining and training acquired key personnel.
The carpet industry is cyclical and a downturn in the overall economy could
---------------------------------------------------------------------------
lessen the demand for Mohawk's products and impair growth and profitability.
---------------------------------------------------------------------------
The carpet industry is cyclical and is influenced by a number of general
economic factors. Prevailing interest rates, consumer confidence, spending for
durable goods, disposable income, turnover in housing and the condition of the
residential and commercial construction industries (including the number of new
housing starts and the level of new commercial construction) all have an impact
on Mohawk's growth and profitability. In addition, sales of Mohawk's principal
products are related to construction and renovation of commercial and
residential buildings. Any adverse cycle could lessen the overall demand for
Mohawk's products and could, in turn, impair Mohawk's growth and profitability.
The carpet business is seasonal and this seasonality causes Mohawk's results of
-------------------------------------------------------------------------------
operations to fluctuate on a quarterly basis.
--------------------------------------------
Mohawk is a calendar year end company and its results of operations for the
first quarter tend to be the weakest. Mohawk's second, third and fourth quarters
typically produce higher net sales and operating income. These results are
primarily due to consumer residential spending patterns and more carpet being
installed in the spring and summer months.
Mohawk's business is competitive and a failure by Mohawk to compete effectively
-------------------------------------------------------------------------------
could have a material and adverse impact on Mohawk's results of operations.
--------------------------------------------------------------------------
Mohawk operates in a highly competitive industry. Mohawk and other
manufacturers in the carpet industry compete on the basis of price, style,
quality and service. Some of Mohawk's competitors may have greater financial
resources at their disposal. Mohawk has one competitor whose size could allow it
certain manufacturing cost advantages compared to other industry participants.
If competitors substantially increase production and marketing of competing
products, then Mohawk might be required to lower its prices or spend more on
product development, marketing and sales, which could adversely affect Mohawk's
profitability.
An increase in the cost of raw materials could negatively impact Mohawk's
-------------------------------------------------------------------------
profitability.
-------------
The cost of raw materials has a significant impact on the profitability of
Mohawk. In particular, Mohawk's business requires it to purchase large volumes
of nylon fiber and polypropylene resin, which is used to manufacture fiber. The
cost of these raw materials is related to oil prices. Mohawk does not have any
long-term supply contracts for any of these products. While Mohawk generally
attempts to match cost increases with price increases, large increases in the
cost of such raw materials could adversely affect its business, results of
operations and financial condition if it is unable to pass these costs through
to its customers.
Mohawk may be responsible for environmental cleanup, which could negatively
---------------------------------------------------------------------------
impact profitability.
--------------------
Various federal, state and local environmental laws govern the use of
Mohawk's facilities. Such laws govern:
. discharges to air and water;
. handling and disposal of solid and hazardous substances and waste; and
. remediation of contamination from releases of hazardous substances in
Mohawk's facilities and off-site
12
<PAGE>
disposal locations.
Mohawk's operations are also governed by the laws relating to workplace safety
and worker health, which, among other things, establish asbestos and noise
standards and regulate the use of hazardous chemicals in the workplace. Mohawk
has taken and will continue to take steps to comply with these laws. Based upon
current available information, Mohawk believes that complying with environmental
and safety and health requirements will not require material capital
expenditures in the foreseeable future. However, Mohawk cannot provide assurance
that complying with these environmental or health and safety laws and
requirements will not adversely affect its business, results of operations and
financial condition. Future laws, ordinances or regulations could give rise to
additional compliance or remediation costs, which could have a material adverse
effect on its business, results of operations and financial condition.
Forward-Looking Information
Certain of the matters discussed in the preceding pages, particularly
regarding anticipating future financial performance, business prospects, growth
and operating strategies, proposed acquisitions, new products and similar
matters, and those preceded by, followed by or that otherwise include the words
"believes," "expects," "anticipates," "intends," "estimates" or similar
expressions constitute "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended. For those statements,
Mohawk claims the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995. Forward-
looking statements involve a number of risks and uncertainties. The following
important factors, in addition to those discussed elsewhere in this document,
affect the future results of Mohawk and could cause those results to differ
materially from those expressed in the forward-looking statements: materially
adverse changes in economic conditions generally in the carpet, rug and
floorcovering markets served by Mohawk; competition from other carpet, rug and
floorcovering manufacturers; oil price increases; raw material prices; timing
and level of capital expenditures; the successful integration of acquisitions,
including the challenges inherent in diverting Mohawk management's attention and
resources from other strategic matters and from operational matters for an
extended period of time; the successful introduction of new products; the
successful rationalization of existing operations; and other risks identified
from time to time in the Company's SEC reports and public announcements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company's market risk-sensitive instruments do not subject the Company
to material market risk exposures.
PART II. OTHER INFORMATION
Item 1. Legal Procedings
The Company is involved in routine litigation from time to time in the
regular course of its business. Except as noted below, there are no material
legal proceedings pending or known to be contemplated to which the Company is a
party or to which any of its property is subject.
In December 1995, the Company and four other carpet manufacturers were
added as defendants in a purported class action lawsuit, In re Carpet Antitrust
Litigation, pending in the United States District Court for the Northern
District of Georgia, Rome Division. The amended complaint alleges price-fixing
regarding polypropylene products in violation of Section One of the Sherman Act.
In September 1997, the Court determined that the plaintiffs met their burden of
establishing the requirements for class certification and granted the
plaintiffs' motion to certify the class. The Company is a party to two
consolidated lawsuits captioned Gaehwiler v. Sunrise Carpet Industries, Inc. et
al. and Patco Enterprises, Inc. v. Sunrise Carpet Industries, Inc. et al., both
of which were filed in the Superior Court of the State of California, City and
County of San Francisco, in 1996. Both complaints were brought on behalf of a
purported class of indirect purchasers of carpet in the State of California and
seek damages for alleged violations of California antitrust and unfair
competition laws. The complaints filed do not specify any amount of damages but
do request for any unlawful conduct to be enjoined and treble damages plus
reimbursement for fees and costs. In October 1998, two plaintiffs, on behalf of
an alleged class of purchasers of nylon carpet products, filed a complaint in
the United States District Court for the Northern District of Georgia against
the Company and two of its subsidiaries, as well as a competitor and one of its
subsidiaries. The complaint alleges that the Company acted in concert with other
carpet manufacturers to restrain competition in the sale of certain nylon carpet
products. The Company has filed an
13
<PAGE>
answer, denied the allegations in the complaint and set forth its defenses. In
February 1999, a similar complaint was filed in the Superior Court of the State
of California, City and County of San Francisco, on behalf of a purported class
based on indirect purchases of nylon carpet in the State of California and
alleges violations of California antitrust and unfair competition laws. The
complaints described above do not specify any specific amount of damages but do
request injunctive relief and treble damages plus reimbursement for fees and
costs. The Company believes it has meritorious defenses and intends to
vigorously defend against these actions.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of stockholders was held on May 18, 2000, at which time
stockholders were asked to elect a class of directors to serve a three-year
term beginning in 2000.
Bruce C. Bruckmann, Larry W. McCurdy and Sylvestor H. Sharpe were elected
Class II directors of the Company for a term expiring in 2003. Mr. Bruckman
was elected by stockholders owning 42,439,065 shares of common stock, with
stockholders owning 2,804,754 shares withholding authority. With respect to
Mr. Bruckman's election there were no broker nonvotes. Mr. Mccurdy was
elected by stockholders owning 44,987,621 shares of common stock, with
stockholders owning 256,198 shares withholding authority. With respect to Mr.
Mccurdy's election there were no broker nonvotes. Mr. Sharpe was elected by
stockholders owning 44,878,054 shares of common stock, with stockholders
owning 365,765 shares withholding authority. With respect to Mr. Sharpe's
election there were no broker nonvotes. Messrs. David L. Kolb, Jeffrey S.
Lorberbaum, Leo Benatar and Robert N. Pokelwaldt continued their terms of
office as directors.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
No. Description
--- -----------
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
Current Report on Form 8-K: First quarter 2000 earnings announcement, dated
April 18, 2000.
Current Report on Form 8-K: Appointment of Monte Thornton and retirement of
Frank Procopio, dated April 27, 2000.
Current Report on Form 8-K: Second increase in stock repurchase program,
dated May 18, 2000.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MOHAWK INDUSTRIES, INC.
Dated: August 4, 2000 By: /s/ David L. Kolb
-----------------
DAVID L. KOLB, Chairman of the Board and
Chief Executive Officer (principal executive
officer)
Dated: August 4, 2000 By: /s/ John D. Swift
-----------------
JOHN D. SWIFT, Chief Financial Officer,
Vice President-Finance and Assistant Secretary
(principal financial and accounting officer)
15
<PAGE>
EXHIBIT INDEX
No. Description
--- -----------
(a) Exhibits
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
16
