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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
[Mark One]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
OR 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to      

Commission File Number 01-13697
MohawkIND Logo - FINAL (002).jpg
 __________________________________________
MOHAWK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware52-1604305
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
160 S. Industrial Blvd.CalhounGeorgia30701
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (706629-7721
Former name, former address and former fiscal year, if changed since last report:
__________________________________________ 

Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, $.01 par valueMHKNew York Stock Exchange
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 whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerx  Accelerated filer¨
Non-accelerated filer¨  Smaller reporting company¨
Emerging growth company¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  x
The number of shares outstanding of the issuer’s common stock as of October 25, 2023, the latest practicable date, is as follows: 63,682,156 shares of common stock, $.01 par value.


Table of Contents
MOHAWK INDUSTRIES, INC.
INDEX
 
  Page No
Part I.
Item 1.
Item 2.
Item 3.
Item 4.
Part II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
2

Table of Contents
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 Three Months EndedNine Months Ended
(In thousands, except per share data)September 30, 2023October 1, 2022September 30, 2023October 1, 2022
Net sales$2,766,186 2,917,539 8,522,837 9,086,390 
Cost of sales2,074,179 2,203,878 6,455,479 6,697,404 
Gross profit692,007 713,661 2,067,358 2,388,986 
Selling, general and administrative expenses549,641 523,479 1,646,156 1,510,076 
Impairment of goodwill and indefinite-lived intangibles876,108 695,771 876,108 695,771 
Operating (loss) income (733,742)(505,589)(454,906)183,139 
Interest expense20,144 13,797 60,138 37,337 
Other income, net(8,551)(1,242)(6,902)(1,622)
Earnings (loss) before income taxes(745,335)(518,144)(508,142)147,424 
Income tax expense14,954 15,569 70,657 155,193 
Net earnings (loss) including noncontrolling interests(760,289)(533,713)(578,799)(7,769)
Less: net earnings (loss) attributable to noncontrolling interests170 256 205 440 
Net earnings (loss) attributable to Mohawk Industries, Inc.$(760,459)(533,969)(579,004)(8,209)
Basic earnings (loss) per share attributable to Mohawk Industries, Inc.$(11.94)(8.40)(9.10)(0.13)
Weighted-average common shares outstanding—basic63,682 63,534 63,648 63,923 
Diluted earnings (loss) per share attributable to Mohawk Industries, Inc.$(11.94)(8.40)(9.10)(0.13)
Weighted-average common shares outstanding—diluted63,682 63,534 63,648 63,923 
See accompanying notes to the Condensed Consolidated Financial Statements.

3

Table of Contents
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 
 Three Months EndedNine Months Ended
(In thousands)September 30, 2023October 1, 2022September 30, 2023October 1, 2022
Net earnings (loss) including noncontrolling interests$(760,289)(533,713)(578,799)(7,769)
Other comprehensive income (loss):
Foreign currency translation adjustments(185,583)(254,002)(178,932)(302,384)
Prior pension and post-retirement benefit service cost and actuarial gain (loss), net of tax(12)65 (520)672 
Other comprehensive income (loss)(185,595)(253,937)(179,452)(301,712)
Comprehensive income (loss)(945,884)(787,650)(758,251)(309,481)
Less: comprehensive income (loss) attributable to noncontrolling interests(41)(16)(379)439 
Comprehensive income (loss) attributable to Mohawk Industries, Inc.$(945,843)(787,634)(757,872)(309,920)
See accompanying notes to the Condensed Consolidated Financial Statements.
4

Table of Contents
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) 
(In thousands, except per share data)September 30, 2023December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents$518,452 509,623 
Short-term investments 158,000 
Receivables, net1,943,147 1,904,786 
Inventories2,519,709 2,793,765 
Prepaid expenses500,603 498,222 
Other current assets22,414 30,703 
Total current assets5,504,325 5,895,099 
Property, plant and equipment9,989,442 9,647,779 
Less: accumulated depreciation5,200,617 4,986,601 
Property, plant and equipment, net4,788,825 4,661,178 
Right of use operating lease assets404,477 387,816 
Goodwill1,125,434 1,927,759 
Tradenames683,801 668,328 
Other intangible assets subject to amortization, net170,626 189,620 
Deferred income taxes and other non-current assets461,007 390,632 
Total assets$13,138,495 14,120,432 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt$922,697 840,571 
Accounts payable and accrued expenses2,159,499 2,124,448 
Current operating lease liabilities106,378 105,266 
Total current liabilities3,188,574 3,070,285 
Deferred income taxes347,629 444,660 
Long-term debt, less current portion1,675,590 1,978,563 
Non-current operating lease liabilities314,984 296,136 
Other long-term liabilities340,328 312,874 
Total liabilities5,867,105 6,102,518 
Commitments and contingencies (Note 17)
Stockholders’ equity:
Preferred stock, $.01 par value; 60 shares authorized; no shares issued
  
Common stock, $.01 par value; 150,000 shares authorized; 71,020 and 70,875 shares issued and outstanding in 2023 and 2022, respectively
710 709 
Additional paid-in capital1,942,574 1,930,789 
Retained earnings6,830,756 7,409,760 
Accumulated other comprehensive loss(1,293,126)(1,114,258)
Less: treasury stock at cost; 7,338 and 7,341 shares in 2023 and 2022, respectively
215,397 215,491 
Total Mohawk Industries, Inc. stockholders’ equity7,265,517 8,011,509 
Noncontrolling interests5,873 6,405 
          Total stockholders’ equity7,271,390 8,017,914 
Total liabilities and stockholders’ equity$13,138,495 14,120,432 
See accompanying notes to the Condensed Consolidated Financial Statements.
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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) 
 Nine Months Ended
(In thousands)September 30, 2023October 1, 2022
Cash flows from operating activities:
Net earnings (loss) including noncontrolling interests$(578,799)(7,769)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Restructuring77,681 21,673 
Impairment of goodwill and indefinite-lived intangibles876,108 695,771 
Depreciation and amortization476,112 436,449 
Deferred income taxes(121,440)(47,846)
Loss on disposal of property, plant and equipment3,012 591 
Stock-based compensation expense15,733 17,488 
Changes in operating assets and liabilities, net of effects of acquisitions:
Receivables, net9,187 (267,546)
Inventories260,953 (548,711)
Accounts payable and accrued expenses(4,357)162,841 
Other assets and prepaid expenses(4,457)(41,678)
Other liabilities23,174 6,172 
Net cash provided by operating activities1,032,907 427,435 
Cash flows from investing activities:
Additions to property, plant and equipment(372,565)(430,084)
Acquisitions, net of cash acquired(515,405)(157,274)
Purchases of short-term investments(775,000)(2,233,000)
Redemption of short-term investments933,000 2,446,000 
Net cash used in investing activities(729,970)(374,358)
Cash flows from financing activities:
Payments on Senior Credit Facilities(1,052,315)(5,000)
Proceeds from Senior Credit Facilities1,043,936 5,000 
Payments on commercial paper(15,810,415)(12,542,311)
Proceeds from commercial paper14,986,843 12,866,175 
Proceeds from Senior Notes issuance600,000  
Net payments of other financing activities(34,318)(16,061)
Debt issuance costs(5,592)(1,621)
Purchase of Mohawk common stock (307,572)
Change in outstanding checks in excess of cash(1,895)(1,588)
Net cash provided by (used in) financing activities(273,756)(2,978)
Effect of exchange rate changes on cash and cash equivalents(20,352)7,977 
Net change in cash and cash equivalents8,829 58,076 
Cash and cash equivalents, beginning of period509,623 268,895 
Cash and cash equivalents, end of period$518,452 326,971 
See accompanying notes to the Condensed Consolidated Financial Statements.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)

1. General

Unless this Form 10-Q indicates otherwise or the context otherwise requires, the terms “we,” “our,” “us,” “Mohawk,” or “the Company” as used in this Form 10-Q refer to Mohawk Industries, Inc.

Interim Reporting

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 U.S. generally accepted accounting principles (“U.S. GAAP”) 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 Consolidated Financial Statements and notes thereto, and the Company’s description of critical accounting policies, included in the Company’s 2022 Annual Report on Form 10-K, as filed with the Securities and Exchange Commission. Results for interim periods are not necessarily indicative of the results for the year.

2. Acquisitions

2023 Acquisitions

During the first quarter of 2023, the Company completed the acquisitions of two ceramic tile businesses in Brazil and Mexico within Global Ceramic for $515,509. The Company’s acquisitions resulted in a goodwill allocation of $85,892. A portion of the goodwill is expected to be deductible for tax purposes. The factors contributing to the recognition of the amount of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the acquisitions. These benefits include opportunities to improve the Company’s ceramic performance by leveraging best practices, operational expertise, product innovation and manufacturing assets across the segment. The following table presents the preliminary allocation of the purchase price by major class of assets acquired and liabilities assumed as of the acquisition date.

Amounts recognized
as of the acquisition date
Working capital$95,336 
Property, plant and equipment333,495 
Tradenames38,539 
Customer relationships4,040 
Goodwill85,892 
Long-term debt, including current portion(26,072)
Deferred tax, net(8,460)
522,770 
Less: cash acquired(7,261)
Net consideration transferred (net of cash acquired)$515,509 

The purchase price allocation is preliminary until the Company obtains information necessary to finalize its valuation of the fair value of net assets acquired during the measurement period. The supplemental pro forma information is immaterial to the Company's financial statements.







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2022 Acquisitions

During the third and fourth quarters of 2022, the Company completed two acquisitions in Flooring North America (“Flooring NA”) for $164,475. The Company’s acquisitions resulted in a goodwill allocation of $55,954 and intangible assets subject to amortization of $19,900. Substantially all of the goodwill is deductible for tax purposes. During the third and fourth quarters of 2022, the Company also completed three acquisitions in Flooring Rest of the World (“Flooring ROW”) for $47,964, which resulted in a goodwill allocation of $14,759 and intangible assets subject to amortization of $3,376. An immaterial amount of goodwill is deductible for tax purposes.

3. Revenue from Contracts with Customers

Contract Liabilities

The Company records contract liabilities when it receives payment prior to fulfilling a performance obligation. Contract liabilities related to revenues are recorded in accounts payable and accrued expenses on the accompanying Condensed Consolidated Balance Sheets. The Company had contract liabilities of $68,932 and $72,572 as of September 30, 2023 and December 31, 2022, respectively.

Performance Obligations

Substantially all of the Company’s revenue is recognized at a point in time when the product is either shipped or received from the Company’s facilities and control of the product is transferred to the customer. Accordingly, the Company does not recognize a significant amount of revenue from performance obligations satisfied, or partially satisfied, in prior periods, and the amount of such revenue recognized during the three and nine months ended September 30, 2023 and October 1, 2022 was immaterial.

Costs to Obtain a Contract

The Company incurs certain incremental costs to obtain revenue contracts. These costs relate to marketing display structures and are capitalized when the amortization period is greater than one year, with the amount recorded in other assets on the accompanying Condensed Consolidated Balance Sheets. Capitalized costs to obtain contracts were $70,260 and $59,015 as of September 30, 2023 and December 31, 2022, respectively. Straight-line amortization expense recognized during the nine months ended September 30, 2023 and October 1, 2022 related to these capitalized costs were $45,714 and $38,394, respectively.


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Revenue Disaggregation

In the second quarter of 2023, the Company updated the geographical markets for its disaggregated revenue. The Company added Latin America and combined Russia into Europe to more closely align with its current business. The Company has reflected this change in all historical periods presented. The following table presents the Company’s segment revenues disaggregated by the geographical market location of customer sales and product categories for the three months ended September 30, 2023 and October 1, 2022:

September 30, 2023Global Ceramic Flooring NA Flooring ROW Total
Geographical Markets
United States$586,496 931,678 1,286 1,519,460 
Europe258,863 1,370 532,738 792,971 
Latin America201,632 1,346 9,684 212,662 
Other44,681 27,828 168,584 241,093 
Total$1,091,672 962,222 712,292 2,766,186 
Product Categories
Ceramic & Stone$1,081,322 8,767  1,090,089 
Carpet & Resilient10,350 757,441 223,209 991,000 
Laminate & Wood 196,014 222,451 418,465 
Other (1)
  266,632 266,632 
Total$1,091,672 962,222 712,292 2,766,186 

October 1, 2022Global Ceramic Flooring NA Flooring ROW Total
Geographical Markets
United States$614,460 1,056,596 3,784 1,674,840 
Europe314,412 2,079 544,292 860,783 
Latin America122,723 1,309 7,838 131,870 
Other45,061 29,650 175,335 250,046 
Total$1,096,656 1,089,634 731,249 2,917,539 
Product Categories
Ceramic & Stone$1,089,593 9,642  1,099,235 
Carpet & Resilient7,063 842,069 220,320 1,069,452 
Laminate & Wood 237,923 235,461 473,384 
Other (1)
  275,468 275,468 
Total$1,096,656 1,089,634 731,249 2,917,539 
(1) Other includes roofing elements, insulation boards, chipboards and IP contracts.

The following table presents the Company’s segment revenues disaggregated by the geographical market location of customer sales and product categories for the nine months ended September 30, 2023 and October 1, 2022:

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September 30, 2023Global Ceramic Flooring NA Flooring ROW Total
Geographical Markets
United States$1,794,740 2,831,014 4,787 4,630,541 
Europe829,633 1,662 1,775,624 2,606,919 
Latin America543,963 2,912 24,259 571,134 
Other138,032 81,749 494,462 714,243 
  Total$3,306,368 2,917,337 2,299,132 8,522,837 
Product Categories
Ceramic & Stone$3,276,681 27,267  3,303,948 
Carpet & Resilient29,687 2,299,216 466,669 2,795,572 
Laminate & Wood 590,854 942,921 1,533,775 
Other (1)
  889,542 889,542 
  Total$3,306,368 2,917,337 2,299,132 8,522,837 

October 1, 2022Global Ceramic Flooring NA Flooring ROW Total
Geographical Markets
United States$1,825,304 3,153,752 10,802 4,989,858 
Europe986,010 5,955 1,904,193 2,896,158 
Latin America367,978 3,467 23,163 394,608 
Other140,690 97,908 567,168 805,766 
  Total$3,319,982 3,261,082 2,505,326 9,086,390 
Product Categories
Ceramic & Stone$3,302,446 28,685  3,331,131 
Carpet & Resilient17,536 2,547,184 709,148 3,273,868 
Laminate & Wood 685,213 836,756 1,521,969 
Other (1)
  959,422 959,422 
  Total$3,319,982 3,261,082 2,505,326 9,086,390 
(1) Other includes roofing elements, insulation boards, chipboards and IP contracts.

4. Restructuring, Acquisition and Integration-Related Costs

The Company incurs costs in connection with acquiring, integrating and restructuring acquisitions and in connection with its global cost-reduction/productivity initiatives. For example:

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 (“Asset write-downs”) and workforce reductions.

Restructuring, acquisition transaction and integration-related costs consisted of the following during the three and nine months ended September 30, 2023 and October 1, 2022:

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Three Months EndedNine Months Ended
September 30, 2023October 1, 2022September 30, 2023October 1, 2022
Cost of sales
Restructuring costs$42,605 30,421 101,225 31,722 
Acquisition integration-related costs55  932 349 
  Restructuring and acquisition integration-related costs$42,660 30,421 102,157 32,071 
Selling, general and administrative expenses
Restructuring costs$1,126 2,949 6,929 3,035 
Acquisition transaction-related costs696 481 2,000 1,508 
Acquisition integration-related costs2,598 687 9,779 1,741 
  Restructuring, acquisition transaction and integration-related costs$4,420 4,117 18,708 6,284 

The restructuring activity for the three months ended September 30, 2023 is as follows:
Asset write-
downs and
gains on
disposals
SeveranceOther
restructuring
costs
Total
Balance as of July 1, 2023$ 11,740  11,740 
Restructuring costs
Global Ceramic 12,569 2,135 75 14,779 
Flooring NA 24,722 (766)3,367 27,323 
Flooring ROW 383 (335)1,419 1,467 
Corporate 162  162 
Total restructuring costs37,674 1,196 4,861 43,731 
Cash payments (2,861)(741)(3,602)
Non-cash items(37,674)(181)(4,120)(41,975)
Balances as of September 30, 2023$ 9,894  9,894 
Restructuring costs recorded in:
Cost of sales$37,648 1,636 3,321 42,605 
Selling, general and administrative expenses26 (440)1,540 1,126 
Total restructuring costs$37,674 1,196 4,861 43,731 
    

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The restructuring activity for the nine months ended September 30, 2023 is as follows:
Lease
impairments
Asset write-
downs and
gains on
disposals
SeveranceOther
restructuring
costs
Total
Balances as of December 31, 2022$  10,037  10,037 
Restructuring costs
Global Ceramic 255 14,702 7,818 118 22,893 
Flooring NA  30,828 787 21,110 52,725 
Flooring ROW  30,135 (334)2,573 32,374 
Corporate  162  162 
Total restructuring costs255 75,665 8,433 23,801 108,154 
Cash payments  (8,446)(14,865)(23,311)
Non-cash items(255)(75,665)(130)(8,936)(84,986)
Balances as of September 30, 2023$  9,894  9,894 
Restructuring costs recorded in:
Cost of sales$ 75,516 4,700 21,009 101,225 
Selling, general and administrative expenses255 149 3,733 2,792 6,929 
Total restructuring costs$255 75,665 8,433 23,801 108,154 

The Company expects the remaining severance and other restructuring costs to be paid over the next 12 months.

5. Fair Value

The Company’s wholly-owned captive insurance company may invest in the Company’s commercial paper. These short-term commercial paper investments are classified as trading securities and carried at fair value based upon the Level 2 fair value hierarchy.

Items Measured at Fair Value

September 30, 2023December 31, 2022
Short-term investments:
Commercial paper (Level 2)$ 158,000 

The fair values and carrying values of the Company’s debt are disclosed in Note 18, Debt.

6. Receivables, net
September 30, 2023December 31, 2022
Customers, trade$1,846,374 1,699,130 
Income tax receivable24,625 60,080 
Other143,513 219,355 
Less: allowance for discounts, claims and doubtful accounts71,365 73,779 
Receivables, net$1,943,147 1,904,786 


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7. Inventories
September 30, 2023December 31, 2022
Finished goods$1,757,527 1,986,005 
Work in process168,314 160,757 
Raw materials593,868 647,003 
Total inventories$2,519,709 2,793,765 

8. Goodwill and Intangible Assets

The Company performs its annual testing of goodwill and indefinite-lived intangibles in the fourth quarter of each year. Between annual testing dates, the Company monitors factors such as its market capitalization, comparable company market multiples and macroeconomic conditions to identify conditions that could impact the Company’s assumptions utilized in the determination of the estimated fair values of the Company’s reporting units and indefinite-lived intangible assets significantly enough to trigger an 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 under the income approach classified in Level 3 of the fair value hierarchy and comparable company market valuation classified in Level 2 of the fair value hierarchy 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.

As a result of a decrease in the Company’s market capitalization, macroeconomic conditions and an increase in the WACC, the Company determined that a triggering event occurred requiring goodwill impairment testing for each of its reporting units as of September 30, 2023. The impairment test indicated a pre-tax, non-cash goodwill impairment charge related to all 3 reporting units of $869,115 ($858,090 net of tax) which the Company recorded during the three months ended September 30, 2023.

The Company compared the estimated fair values of its indefinite-lived intangibles to their carrying values and determined that there were impairment charges of $6,994 ($5,181 net of tax) in all 3 reporting units during the three months ended September 30, 2023.

A significant or prolonged deterioration in economic conditions, continued increases in the costs of raw materials and energy combined with an inability to pass these costs on to customers, a further decline in the Company’s market capitalization or comparable company market multiples, projected future cash flows, or increases in the WACC, could impact the Company’s assumptions and require a reassessment of goodwill or indefinite-lived intangible assets for impairment in future periods. Future declines in estimated after tax cash flows, increases in the WACC or a decline in market capitalization could result in an additional indication of impairment in one or more of the Company’s reporting units.

The components of goodwill and other intangible assets are as follows:

Goodwill:
Global CeramicFlooring NAFlooring ROWTotal
Balance as of December 31, 2022 (1)
$339,834 591,985 995,940 1,927,759 
Goodwill adjustments related to acquisitions (4,888)3,217 (1,671)
Goodwill recognized during the period85,892   85,892 
Impairment charges during the period(422,651)(214,830)(231,634)(869,115)
Currency translation during the period(3,075) (14,356)(17,431)
Balance as of September 30, 2023$ 372,267 753,167 1,125,434 
(1) Net of accumulated impairment losses of $2,015,939 ($1,220,444 in Global Ceramic, $343,054 in Flooring NA and $452,441 in Flooring ROW).


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Intangible assets not subject to amortization:    
Tradenames
Balance as of December 31, 2022$668,328 
Intangible assets acquired during the period37,530 
Impairment charges(6,994)
Currency translation during the period(15,063)
Balance as of September 30, 2023$683,801 

Intangible assets subject to amortization:
Customer
relationships
PatentsOtherTotal
Balance as of December 31, 2022
Gross carrying amount$673,586 242,089 8,511 924,186 
Accumulated amortization(493,361)(239,010)(2,195)(734,566)
Net intangible assets subject to amortization180,225 3,079 6,316 189,620 
Balance as of September 30, 2023
Gross carrying amount670,800 239,113 8,514 918,427 
Accumulated amortization(509,162)(236,535)(2,104)(747,801)
Net intangible assets subject to amortization$161,638 2,578 6,410 170,626 

 Three Months EndedNine Months Ended
 September 30, 2023October 1, 2022September 30, 2023October 1, 2022
Amortization expense$6,975 6,918 21,197 20,917 

9. Accounts Payable and Accrued Expenses
September 30, 2023December 31, 2022
Outstanding checks in excess of cash$911 2,791 
Accounts payable, trade1,082,398 1,094,038 
Accrued expenses741,120 742,099 
Product warranties38,262 38,425 
Accrued interest13,270 8,748 
Accrued compensation and benefits283,538 238,347 
Total accounts payable and accrued expenses$2,159,499 2,124,448 

10. Accumulated Other Comprehensive Income (Loss)
 Foreign currency
translation adjustments
Prior pension and post-
retirement benefit service
 cost and actuarial gain (loss)
Total
Balance as of December 31, 2022$(1,114,629)371 (1,114,258)
Current period other comprehensive income (loss)(178,348)(520)(178,868)
Balance as of September 30, 2023$(1,292,977)(149)(1,293,126)



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11. Stock-Based Compensation

The Company recognizes compensation expense for all share-based payments granted based on the grant-date fair value estimated in accordance with the provisions of ASC 718-10. Compensation expense is recognized on a straight-line basis over the awards’ estimated lives for fixed awards with ratable vesting provisions.

The Company granted 1 restricted stock unit (“RSU”) at a weighted average grant-date fair value of $103.07 per unit for the three months ended September 30, 2023. The Company granted 263 RSUs at a weighted average grant-date fair value of $102.09 per unit for the nine months ended September 30, 2023. The Company granted no RSUs for the three months ended October 1, 2022. The Company granted 189 RSUs at a weighted average grant-date fair value of $137.99 per unit for the nine months ended October 1, 2022. The Company recognized stock-based compensation expense related to the issuance of RSUs of $5,349 ($3,958 net of taxes) and $6,179 ($4,572 net of taxes) for the three months ended September 30, 2023 and October 1, 2022, respectively, which has been allocated to cost of sales and selling, general and administrative expenses. The Company recognized stock-based compensation costs related to the issuance of RSUs of $15,733 ($11,642 net of taxes) and $17,488 ($12,941 net of taxes) for the nine months ended September 30, 2023 and October 1, 2022, respectively, which has been allocated to cost of sales and selling, general and administrative expenses. Pre-tax unrecognized compensation expense for unvested RSUs granted to employees, net of estimated forfeitures, was $23,786 as of September 30, 2023, and will be recognized as expense over a weighted-average period of approximately 1.70 years.

12. Other (Income) Expense, net
 Three Months EndedNine Months Ended
 September 30, 2023October 1, 2022September 30, 2023October 1, 2022
Foreign currency (gains) losses, net$(142)6,032 11,644 6,476 
Release of indemnification asset   7,324 
All other, net(8,409)(7,274)(18,546)(15,422)
Total other (income) expense, net$(8,551)(1,242)(6,902)(1,622)

13. Income Taxes

For the three months ended September 30, 2023, the Company recorded income tax expense of $14,954 on loss before income taxes of $745,335 for an effective tax rate of (2.0)%. For the three months ended October 1, 2022, the Company recorded income tax expense of $15,569 on loss before income taxes of $518,144, for an effective tax rate of (3.0)%. The increase in the effective tax rate was primarily driven by larger losses before income tax and an increase in the impairment of non-deductible goodwill.

For the nine months ended September 30, 2023, the Company recorded income tax expense of $70,657 on loss before income taxes of $(508,142) for an effective tax rate of (13.9)%, as compared to income tax expense of $155,193 on earnings before income taxes of $147,424, for an effective tax rate of 105.3% for the nine months ended October 1, 2022. The decrease in the effective tax rate was primarily driven by a shift from earnings before income taxes to losses before income taxes and an increase in the impairment of non-deductible goodwill.
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14. Stockholders’ Equity

The following tables reflect the changes in stockholders’ equity for the three months ended September 30, 2023 and October 1, 2022 (in thousands).
 Total Stockholders’ Equity
 Common StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury StockNoncontrolling
Interests
Total
Stockholders’
Equity
 SharesAmountSharesAmount
Balance as of July 1, 202371,018 $710 $1,937,320 $7,591,215 ($1,107,742)(7,338)($215,397)$5,914 $8,212,020 
Shares issued under employee and director stock plans, net of shares withheld to pay taxes on employees’ equity awards2  (96)     (96)
Stock-based compensation expense  5,350      5,350 
Net earnings attributable to noncontrolling interests       170 170 
Currency translation adjustment on noncontrolling interests       (211)(211)
Currency translation adjustment    (185,372)   (185,372)
Prior pension and post-retirement benefit service cost and actuarial loss    (12)   (12)
Net earnings   (760,459)    (760,459)
Balances as of September 30, 202371,020 $710 $1,942,574 $6,830,756 ($1,293,126)(7,338)($215,397)$5,873 $7,271,390 

 Total Stockholders’ Equity
 Common StockAdditional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Treasury StockNoncontrolling
Interests
Total
Stockholders’
Equity
 SharesAmountSharesAmount
Balances as of July 2, 202270,878 $709 $1,919,742 $7,910,657 ($1,014,999)(7,341)($215,491)$6,320 $8,606,938 
Shares issued under employee and director stock plans, net of shares withheld to pay taxes on employees’ equity awards— — (27)— — — — — (27)
Stock-based compensation expense— — 6,179 — — — — — 6,179 
Repurchases of common stock(3)— — (384)— — — — (384)
Net earnings attributable to noncontrolling interests