10-Q 1 0001.txt QUARTERLY FINANCIAL REPORT ================================================================================ 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. -------------------------------------------------------------------------------- MOHAWK INDUSTRIES, INC. INDEX
Page No. ------- 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
PART I. FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS (In thousands)
July 1, 2000 December 31, 1999 ---------------- --------------------- (Unaudited) 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 ============ ===========
See accompanying notes to condensed consolidated financial statements. 3 MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY (In thousands)
July 1, 2000 December 31, 1999 ---------------- --------------------- (Unaudited) 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 ============ ==============
See accompanying notes to condensed consolidated financial statements. 4 MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share data) (Unaudited)
Three Months Ended ------------------------------ July 1, 2000 July 3, 1999 ------------ ------------ 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 ========= ========
See accompanying notes to condensed consolidated financial statements. 5 MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share data) (Unaudited)
Six Months Ended ------------------------------ July 1, 2000 July 3, 1999 ------------ ------------ 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 =========== ===========
See accompanying notes to condensed consolidated financial statements. 6 MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Six Months Ended ------------------------------------------------------------ July 1, 2000 July 3, 1999 --------------------------- -------------------------- 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 =========================== ==========================
See accompanying notes to condensed consolidated financial statements. 7 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:
July 1, 2000 December 31, 1999 --------------------------- -------------------------- 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 =========================== ==========================
3. Inventories The components of inventories are as follows:
July 1, 2000 December 31, 1999 --------------------------- -------------------------- 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 =========================== ==========================
4. Other assets Other assets are as follows:
July 1, 2000 December 31, 1999 --------------------------- -------------------------- 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 =========================== ==========================
8 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:
July 1, 2000 December 31, 1999 --------------- ------------------- 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 =============== ===================
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 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 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 . 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 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 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 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 EXHIBIT INDEX No. Description --- ----------- (a) Exhibits 11 Statement re: Computation of Per Share Earnings 27 Financial Data Schedule 16