-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qrb2hTCSTe3nsTeplRm+1EXHicDQO4QmB3oX0H95BBrsBbZWctu2AGjZHGx4TpRB bv/bfqBRaUN0iaBOLQEz/A== 0000931763-99-001992.txt : 19990701 0000931763-99-001992.hdr.sgml : 19990701 ACCESSION NUMBER: 0000931763-99-001992 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOHAWK INDUSTRIES INC CENTRAL INDEX KEY: 0000851968 STANDARD INDUSTRIAL CLASSIFICATION: CARPETS AND RUGS [2273] IRS NUMBER: 521604305 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-13697 FILM NUMBER: 99655883 BUSINESS ADDRESS: STREET 1: 160 S INDUSTRIAL BLVD STREET 2: PO BOX 12069 CITY: CALHOUN STATE: GA ZIP: 30701 BUSINESS PHONE: 7066297721 MAIL ADDRESS: STREET 1: P O BOX 12069 CITY: CALHOUN STATE: GA ZIP: 30703 10-K/A 1 MOHAWK INDUSTRIES, INC. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A Amendment No. 1 [Mark One] [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from Commission File Number to 01-19826 MOHAWK INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Delaware 52-1604305 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P. O. Box 12069, 160 South Industrial Blvd., Calhoun, Georgia 30701 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (706) 629-7721 Securities Registered Pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered - ------------------- ----------------------------------------- Common Stock, $.01 par value New York Stock Exchange Securities Registered Pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. The aggregate market value of the Common Stock of the Registrant held by non- affiliates of the Registrant (37,707,242 shares) on June 22, 1999 was $1,197,204,933. The aggregate market value was computed by reference to the closing price of the Common Stock on such date as reported on the New York Stock Exchange. Number of shares of Common Stock outstanding as of June 22, 1999 60,599,278 shares of Common Stock, $.01 par value. Exhibit Index starts on sequentially numbered page 4. Pursuant to the requirements of Section 13 or 15(D) of the Securities Exchange Act of 1934, the Registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. Date June 28, 1999 By: /s/ David L. Kolb ------------- ------------------------------------ David L. Kolb, Chairman and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Mohawk Industries, Inc. Registrant Date June 28, 1999 By: /s/ David L. Kolb ------------- ------------------------------------ David L. Kolb, Chairman and Chief Executive Officer (principal executive officer) Date June 28, 1999 By: /s/ John D. Swift ------------- ------------------------------------ John D. Swift, Chief Financial Officer, Vice President- Finance and Assistant Secretary (principal financial and accounting officer) Date June 28, 1999 By: /s/ Leo Benatar ------------- ------------------------------------ Leo Benatar, Director Date June 28, 1999 By: /s/ Bruce C. Bruckmann ------------- ------------------------------------ Bruce C. Bruckmann, Director Date June 28, 1999 By: /s/ Alan S. Lorberbaum ------------- ------------------------------------ Alan S. Lorberbaum, Director Date June 28, 1999 By: /s/ Jeffrey S. Lorberbaum ------------- ------------------------------------ Jeffrey S. Lorberbaum, Chief Operating Officer, President and Director Date June 28, 1999 By: /s/ Larry W. McCurdy ------------- ------------------------------------ Larry W. McCurdy, Director Date June 28, 1999 By: /s/ Robert N. Pokelwaldt ------------- ------------------------------------ Robert N. Pokelwaldt, Director Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) 3. Exhibits Exhibit 23.3(a) Independent Auditors' Consent --------------- Exhibit 23.3(b) Independent Auditors' Consent --------------- Exhibit 99.1 Mohawk Carpet Corporation Retirement Savings Plan ------------ Independent Auditors' Report Statements of Net Assets Available for Plan Benefits as of December 31, 1998 and 1997 Statement of Changes in Net Assets Available for Plan Benefits for the Year ended December 31, 1998 Notes to Financial Statements Item 27a - Schedule of Assets Held for Investment Purposes as of December 31, 1998 Item 27d - Schedule of Reportable Transactions for the Year ended December 31, 1998 Exhibit 99.2 Aladdin Retirement Savings Plan ------------ Independent Auditors' Report Statements of Net Assets Available for Plan Benefits as of December 31, 1998 and 1997 Statements of Changes in Net Assets Available for Plan Benefits For the year ended December 31, 1998 and the Six Months ended December 31, 1997 Notes to Financial Statements Item 27a - Schedule of Assets Held for Investment Purposes as of December 31, 1998 Item 27d - Schedule of Reportable Transactions for the Year ended December 31,1998 EXHIBIT INDEX Exhibit Number Description - ------ ------------------------------------------------------------- Exhibit 23.3(a) Independent Auditors' Consent - --------------- Exhibit 23.3(b) Independent Auditors' Consent - --------------- Exhibit 99.1 Mohawk Carpet Corporation Retirement Savings Plan - ------------ Independent Auditors' Report Statements of Net Assets Available for Plan Benefits as of December 31, 1998 and 1997 Statement of Changes in Net Assets Available for Plan Benefits for the Year ended December 31, 1998 Notes to Financial Statements Item 27a - Schedule of Assets Held for Investment Purposes as of December 31, 1998 Item 27d - Schedule of Reportable Transactions for the Year ended December 31, 1998 Exhibit 99.2 Aladdin Retirement Savings Plan ------------ Independent Auditors' Report Statements of Net Assets Available for Plan Benefits as of December 31, 1998 and 1997 Statements of Changes in Net Assets Available for Plan Benefits For the year ended December 31, 1998 and the Six Months ended December 31, 1997 Notes to Financial Statements Item 27a - Schedule of Assets Held for Investment Purposes as of December 31, 1998 Item 27d - Schedule of Reportable Transactions for the Year ended December 31,1998 EX-23.3.(A) 2 INDEPENDENT AUDITORS' CONSENT Exhibit 23.3(a) INDEPENDENT AUDITORS' CONSENT The Board of Directors Mohawk Industries, Inc.: We consent to incorporation by reference in the registration statement (No. 33- 87998) on Form S-8 for the Mohawk Carpet Corporation Retirement Savings Plan of Mohawk Industries, Inc. of our report dated March 31, 1999, relating to the statements of net assets available for plan benefits of the Mohawk Carpet Corporation Retirement Savings Plan as of December 31, 1998 and 1997, and the related statement of changes in net assets available for plan benefits for the year ended December 31, 1998 and related supplemental schedules, which report appears in the December 31, 1998 Annual Report on Form 10-K/A Amendment No. 1 of Mohawk Industries, Inc. /s/ KPMG LLP - ---------------- Atlanta, Georgia June 25, 1999 EX-23.3.(B) 3 INDEPENDENT AUDITORS' CONSENT Exhibit 23.3(b) INDEPENDENT AUDITORS' CONSENT The Board of Directors Mohawk Industries, Inc.: We consent to incorporation by reference in the registration statement on Form S-8 of Mohawk Industries, Inc. of our report dated May 14, 1999, relating to the statements of net assets available for plan benefits of the Aladdin Retirement Savings Plan as of December 31, 1998 and 1997 and the related statements of changes in net assets available for plan benefits for the year ended December 31, 1998 and the six months ended December 31, 1997 and related supplemental schedules, which report appears in the December 31, 1998 Annual Report on Form 10-K/A Amendment No. 1 of Mohawk Industries, Inc. /s/ KPMG LLP - ---------------- Atlanta, Georgia June 25, 1999 EX-99.1 4 MOHWAK CARPET CORP RETIREMENT SAVINGS PLAN EXHIBIT 99.1 Independent Auditors' Report The Administrator Mohawk Carpet Corporation Retirement Savings Plan: We have audited the accompanying statements of net assets available for plan benefits of the Mohawk Carpet Corporation Retirement Savings Plan ("Plan") as of December 31, 1998 and 1997, and the related statement of changes in net assets available for plan benefits for the year ended December 31, 1998. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 1998 and 1997, and the changes in net assets available for plan benefits for the year ended December 31, 1998 in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes and reportable transactions as of and for the year ended December 31, 1998, are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ KPMG LLP Atlanta, Georgia March 31, 1999 MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN Statements of Net Assets Available for Plan Benefits December 31, 1998 and 1997 1998 1997 ---- ---- Assets: Investments (notes 3 and 4): Mutual funds, at fair value $34,799,216 27,055,697 Guaranteed investment contracts, at contract value 36,585,191 33,627,717 Mohawk Industries, Inc. common stock, at fair value 17,111,270 7,308,908 Money market funds, at cost 194,825 759,263 Loans to participants, at cost 2,686,268 2,546,235 ----------- ---------- Total investments 91,376,770 71,297,820 Cash -- 61,984 Accrued investment income 300,701 3,386 Contributions receivable from employer 253,002 193,173 Contributions receivable from participants 779,265 698,676 ----------- ---------- Total assets 92,709,738 72,255,039 Liabilities - accounts payable 407,255 152,552 ----------- ---------- Net assets available for plan benefits $92,302,483 72,102,487 =========== ========== See accompanying notes to financial statements. 2 MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN Statement of Changes in Net Assets Available for Plan Benefits Year ended December 31, 1998 Additions: Investment income: Interest and dividends $ 2,796,261 Net appreciation in fair value of investments: Mutual funds 7,035,085 Mohawk Industries, Inc. common stock 7,498,471 ----------- Net investment income 17,329,817 Contributions from employer 2,270,212 Contributions from participants 7,328,929 ----------- Total additions 26,928,958 ----------- Deductions: Participants' benefits 6,705,437 Administrative expenses 23,525 ----------- Total deductions 6,728,962 ----------- Increase in net assets available for plan benefits 20,199,996 Net assets available for plan benefits at beginning of year 72,102,487 ----------- Net assets available for plan benefits at end of year $92,302,483 =========== See accompanying notes to financial statements. 3 MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 1998 and 1997 (1) Summary of Significant Accounting Policies The following is a summary of significant accounting policies followed by the Plan in preparing its financial statements. (a) Basis of Presentation The records of the Plan are maintained on the cash basis of accounting. The accompanying financial statements of the Mohawk Carpet Corporation Retirement Savings Plan (the "Plan") have been prepared on the accrual basis of accounting and present the net assets available for plan benefits and changes in those net assets. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. (b) Investments Investments in mutual funds and common stock are stated at fair value based on quoted market prices or as determined by SunTrust Bank (Trustee). Investments in money market funds and loans to participants are stated at cost which approximate fair value. Securities transactions are accounted for on a trade date basis. Investments in guaranteed investment contracts are payable on demand and are recorded at contract value, which approximates fair value. The contractual interest rates and crediting interest rates ranged from 6.0% to 7.5% and 5.21% to 7.35% at December 31, 1998 and 1997, respectively. The average yield on the guaranteed investment contracts was 6.48% and 6.86% for the years ended December 31, 1998 and 1997, respectively. Guaranteed investment contracts are renegotiated at current rates available from insurance companies annually on April 1. Realized and unrealized investment gains and losses are included in net appreciation in fair value of investments in the statement of changes in net assets available for plan benefits. (2) Description of the Plan The following description of the Plan provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. (a) General The Plan is a defined contribution plan and covers all employees of Mohawk Carpet Corporation (the "Company"), a wholly owned subsidiary of Mohawk Industries, Inc. The Plan provides for retirement savings to qualified active participants through both participant and employer contributions and is subject to certain provisions of the Employee Retirement Income Security Act of 1974 (ERISA). During 1997, the Plan was amended to allow employees to become eligible to participate in the Plan at the beginning of a calendar month after completing one year of service rather than specific enrollment dates (any January 1, April 1, July 1, or October 1). The Plan is administered by an Administrative Committee appointed by the Company. The Administrative Committee is responsible for the control, management, and administration of the Plan and the assets held in trust at SunTrust Bank. (Continued) 4 MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 1998 and 1997 (b) Contributions Contributions to the Plan are made by both participants and the Company. Participants may contribute a maximum of 16% of their gross compensation, subject to certain limitations. During 1997, the Plan was amended to allow participants to allocate their contributions in multiples of 1% to various investment funds of the Plan rather than in multiples of 10%. The employer makes a 50% matching contribution up to the first 4% of each participant's gross compensation contributed to the Plan. The terms of the Plan also provide for discretionary employer profit sharing contributions to the Mohawk Stock Fund for plan participants employed on the last day of the plan year or terminated during the plan year on account of death, disability, or retirement. (c) Participant Accounts Each participant's account is credited with their contribution for the period as well as the employer's matching contribution and an allocation of any employer profit sharing contribution. Investment income, realized gains, employer profit sharing contributions, and the change in unrealized appreciation or depreciation on plan investments are credited to participants' accounts monthly based on the proportion of each participant's account balance to the total account balance within each investment fund at the beginning of the month. Participant contributions may be invested in one or more of the investment funds available under the Plan at the direction of the participant. During 1997, the Plan was amended to allow monthly valuation of accounts rather than quarterly valuation. As a result of this amendment, several new investment options were available under the Plan. Current investment funds available within the Plan include the following: Investment Fund Fund Objective --------------- -------------- Equity Fund To deliver capital growth through investments in the stocks of large, well-known companies. Stable Value Fund To provide a fixed principal value and generate regular interest payments through investments in a diversified portfolio of investment contracts issued by sound financial institutions. Balanced Fund To provide capital growth and current income while minimizing the risk of principal loss associated with common stocks by investing in a changing mix of high-quality stocks and bonds. Index Fund To track the performance of the Standard and Poor's 500 Composite Stock Price Index, which emphasizes stocks of large U.S. companies. International Fund To provide long-term capital growth through a flexible policy of investing in stocks and debt obligations of companies and governments outside the U.S. Mohawk Stock Fund To provide long-term appreciation through the ownership of Mohawk Industries shares. (Continued) 5 (d) Distributions to Participants Upon termination of employment, the participant's account shall be distributed in a lump-sum cash payment as soon as administratively practicable, unless the participant elects otherwise. A participant may elect to receive his distribution in approximate equal installments over a period designated by the participant, not to exceed the lesser of 15 years or the life expectancy of the last survivor of the participant and his beneficiary. Under the terms of the Plan, participants may make hardship withdrawals from their accounts upon furnishing proof of hardship as specified in the Plan agreement. Participants may also borrow up to 90% of the value of their accounts subject to limitations provided by the Plan. Loans must be paid back to the Plan generally within four years of the loan date. Amounts due to participants who have withdrawn from the Plan but have not been paid at December 31, 1998 and 1997 totaled $657,537 and $1,288,860, respectively. (e) Vesting Participants are immediately vested in their contributions and the Company's matching and discretionary contributions and the income earned on such contributions. (f) Administrative Expenses Certain administrative expenses of the Plan are paid by the Company. These costs include legal, accounting, and certain administrative fees. (3) Transactions with Parties-In-Interest At December 31, 1998 and 1997, the Plan held investments in trust funds and money market accounts sponsored by the trustee with current values of $29,701,669 and $23,151,056, respectively. The Plan also held investments in 406,801 and 333,162 shares of Mohawk Industries, Inc. common stock at December 31, 1998 and 1997, respectively. (Continued) 6 (4) Investments The following table shows the components of investments: 1998 1997 ---- ---- Mutual funds: STI Capital Growth Fund $29,506,844 22,391,793 Dodge & Cox Balanced Fund 1,684,680 2,119,448 Vanguard Index Fund 3,088,218 1,985,222 Templeton Foreign Fund 519,474 559,234 ----------- ---------- Total mutual funds 34,799,216 27,055,697 ----------- ---------- Guaranteed investment contracts: Commonwealth Life Guaranteed Investment Contract -- 3,097,703 Sun Life Guaranteed Investment Contract 1,679,510 3,424,172 CNA Insurance Guaranteed Investment Contracts 6,247,618 6,057,002 New York Life Guaranteed Investment Contract 6,710,388 6,767,385 Met Life Group Annuity Contract 2,735,741 2,766,396 Prudential Insurance Group Annuity Contract 1,571,355 3,203,984 Travelers Insurance Guaranteed Investment Contract 1,540,909 2,337,866 John Hancock Life Guaranteed Investment Contract 5,352,065 5,973,209 Life of Virginia Guaranteed Investment Contract 10,747,605 -- ----------- ---------- Total Guaranteed Investment Contracts 36,585,191 33,627,717 ----------- ---------- Mohawk Industries, Inc. common stock 17,111,270 7,308,908 Money market funds - Trustee 194,825 759,263 Loans to participants 2,686,268 2,546,235 ----------- ---------- Total investments $91,376,770 71,297,820 =========== ========== (5) Income Tax Status The Internal Revenue Service made a favorable ruling on the application for determination of qualification submitted by the Company in September 1995. The Plan has been amended since receiving the determination letter and the Plan has filed an application for an updated determination letter. The administrative committee of the Plan is not aware of any course of action or series of events that might adversely affect the Plan's qualification under Section 401(a) of the Internal Revenue Code, and under which the Plan would be subject to tax under present income tax law. (6) Plan Termination While it is the Company's intention to continue the Plan indefinitely, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA and the Plan agreement. (Continued) 7 MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN Notes to Financial Statements (7) Investment by Fund The net assets available for plan benefits and the changes in net assets available for plan benefits at December 31, 1998 and for the year then ended by investment fund are as follows:
Statement of Net Assets Available for Plan Benefits by Fund Participant Directed ------------------------------------------------------------------------------------------------------- Stable Equity Participant Mohawk Balanced Index International Value Fund Fund Loan Fund Stock Fund Fund Fund Fund Total ---------- ------ ----------- ---------- -------- ----- ------------- ----- Assets: Investments: Mutual funds $ -- 29,506,844 -- -- 1,684,680 3,088,218 519,474 34,799,216 Guaranteed investment contracts 36,585,191 -- -- -- -- -- -- 36,585,191 Mohawk Industries, Inc. common stock -- -- -- 17,111,270 -- -- -- 17,111,270 Money market funds 45 77,249 -- 49,580 24,730 30,862 12,359 194,825 Loans to participants -- -- 2,686,268 -- -- -- -- 2,686,268 ----------- ---------- --------- ---------- --------- --------- ------- ---------- Total investments 36,585,236 29,584,093 2,686,268 17,160,850 1,709,410 3,119,080 531,833 91,376,770 Accrued investment income 203,208 17,140 -- 253 79,982 82 36 300,701 Contributions receivable from employer 123,971 70,841 -- 32,890 10,120 12,650 2,530 253,002 Contributions receivable from participants 385,794 217,659 -- 107,032 26,830 37,076 4,874 779,265 ----------- ---------- --------- ---------- --------- --------- ------- ---------- Total assets 37,298,209 29,889,733 2,686,268 17,301,025 1,826,342 3,168,888 539,273 92,709,738 Liabilities - accounts payable 236,654 58,843 -- 17,276 89,762 4,843 (123) 407,255 ----------- ---------- --------- ---------- --------- --------- ------- ---------- Net assets available for plan benefits $37,061,555 29,830,890 2,686,268 17,283,749 1,736,580 3,164,045 539,396 92,302,483 =========== ========== ========= ========== ========= ========= ======= ========== (Continued)
8 MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN Notes to Financial Statements
Statement of Changes in Net Assets Available for Plan Benefits by Fund Participant Directed ------------------------------------------------------------------------------------------------------ Stable Equity Participant Mohawk Balanced Index International Value Fund Fund Loan Fund Stock Fund Fund Fund Fund Total ---------- ------ ----------- ---------- -------- ----- ------------- ----- Additions: Investment income: Interest and dividends $ 2,315,201 139,544 230,126 5,287 57,000 34,561 14,542 2,796,261 Net appreciation (depreciation) in fair value of investments: Mutual funds -- 6,348,685 -- -- 91,069 616,492 (21,161) 7,035,085 Mohawk Industries, Inc. common stock -- -- -- 7,498,471 -- -- -- 7,498,471 Contributions from employer 1,184,579 637,352 -- 264,408 72,579 88,436 22,858 2,270,212 Contributions from participants 3,417,041 2,287,326 -- 907,328 283,758 357,882 75,594 7,328,929 ----------- ---------- --------- ---------- --------- --------- ------- ---------- Total additions 6,916,821 9,412,907 230,126 8,675,494 504,406 1,097,371 91,833 26,928,958 ----------- ---------- --------- ---------- --------- --------- ------- ---------- Deductions: Participants' benefits 3,278,249 2,240,420 125,861 777,809 83,275 96,333 103,490 6,705,437 Administrative expenses 23,525 -- -- -- -- -- -- 23,525 ----------- ---------- --------- ---------- --------- --------- ------- ---------- Total deductions 3,301,774 2,240,420 125,861 777,809 83,275 96,333 103,490 6,728,962 ----------- ---------- --------- ---------- --------- --------- ------- ---------- Fund transfers, net (971,951) (188,689) 35,768 1,894,569 (866,036) 121,981 (25,642) -- Increase (decrease) in net assets available for plan benefits 2,643,096 6,983,798 140,033 9,792,254 (444,905) 1,123,019 (37,299) 20,199,996 Net assets available for plan benefits at beginning of year 34,418,459 22,847,092 2,546,235 7,491,495 2,181,485 2,041,026 576,695 72,102,487 ----------- ---------- --------- ---------- --------- --------- ------- ---------- Net assets available for plan benefits at end of year $37,061,555 29,830,890 2,686,268 17,283,749 1,736,580 3,164,045 539,396 92,302,483 =========== ========== ========= ========== ========= ========= ======= ========== (Continued)
9 MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN Notes to Financial Statements The net assets available for plan benefits at December 31, 1997 by investment fund are as follows:
Statement of Net Assets Available for Plan Benefits by Fund Participant Directed ------------------------------------------------------------------------------------------------------ Stable Equity Participant Mohawk Balanced Index International Value Fund Fund Loan Fund Stock Fund Fund Fund Fund Total ---------- ------ ----------- ---------- -------- ----- ------------- ----- Assets: Investments: Mutual funds $ -- 22,391,793 -- -- 2,119,448 1,985,222 559,234 27,055,697 Guaranteed investment contracts 33,627,717 -- -- -- -- -- -- 33,627,717 Mohawk Industries, Inc. common stock -- -- -- 7,308,908 -- -- -- 7,308,908 Money market funds 392,330 224,266 -- 62,152 44,369 27,106 9,040 759,263 Loans to participants -- -- 2,546,235 -- -- -- -- 2,546,235 ----------- ---------- --------- --------- --------- --------- ------- ---------- Total investments 34,020,047 22,616,059 2,546,235 7,371,060 2,163,817 2,012,328 568,274 71,297,820 Cash 1,976 -- -- 60,007 (3,516) -- 3,517 61,984 Accrued investment income 1,792 1,047 -- 298 115 105 29 3,386 Contributions receivable from employer 110,542 52,157 -- 17,604 5,664 5,431 1,775 193,173 Contributions receivable from participants 375,412 199,767 -- 60,680 25,754 28,520 8,543 698,676 ----------- ---------- --------- --------- --------- --------- ------- ---------- Total assets 34,509,769 22,869,030 2,546,235 7,509,649 2,191,834 2,046,384 582,138 72,255,039 Liabilities - accounts payable 91,310 21,938 -- 18,154 10,349 5,358 5,443 152,552 ----------- ---------- --------- --------- --------- --------- ------- ---------- Net assets available for plan benefits $34,418,459 22,847,092 2,546,235 7,491,495 2,181,485 2,041,026 576,695 72,102,487 =========== ========== ========= ========= ========= ========= ======= ==========
(8) Subsequent Event Effective March 1, 1999, the assets from the Galaxy Carpet Mills, Inc. Deferred Income Retirement Plan and the Aladdin Retirement Savings Plan were merged with the Plan. (Continued) 10 Schedule 1 Mohawk Industries 401(k) Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1998
Current Identity of the issuer Description of investments Cost value - -------------------------------- --------------------------------------------- ----------- ---------- Mutual funds: STI Capital Growth Fund* 1,787,210 mutual fund units $29,085,728 29,506,844 Dodge & Cox Balanced Fund 25,831 mutual fund units 1,768,952 1,684,680 Vanguard Index Trust Fund 27,102 mutual fund units 2,443,255 3,088,218 Templeton Foreign Fund 61,916 mutual fund units 619,569 519,474 Guaranteed investment contracts: Sunlife of America Guaranteed Investment Contract due March 31, 1998 at 6.20% 1,679,510 1,679,510 New York Life Guaranteed Investment Contract due April 1, 2000 at 7.35% 6,710,388 6,710,388 CNA Insurance Guaranteed Investment Contract due April 2, 2001 at 6.43% 2,428,870 2,428,870 CNA Insurance Guaranteed Investment Contract due April 2, 2002 at 7.15% 3,818,748 3,818,748 Travelers Insurance Company Guaranteed Investment Contract due April 1, 2002 at 7.03% 1,540,909 1,540,909 Prudential Insurance Guaranteed Investment Contract due March 31, 1998 at rates from 6.0% to 7.5% 1,571,355 1,571,355 John Hancock Life Guaranteed Investment Contract due April 2, 2002 at 7.0% 5,352,065 5,352,065 Met Life Guaranteed Investment Contract due April 1, 1999 at 7.06% 2,735,741 2,735,741 Life of Virginia Guaranteed Investment Contract due April 2, 2002 at 6.0% 10,747,605 10,747,605 Mohawk Industries, Inc. - common stock* 406,801 shares of common stock 5,890,427 17,111,270 Money Market Funds - Trustee* Money Market Fund 194,825 194,825 Loans to participants (1) 2,686,268 2,686,268 ----------- ---------- Total $79,274,215 91,376,770 =========== ==========
* SunTrust Bank, Trustee, and Mohawk Industries, Inc. are parties-in-interest to the Plan. (1) Loans are consummated at a fixed rate (then current prime rate plus 1%) for terms up to four years or 20 years for a residence. See accompanying independent auditors' report. 11 Schedule 2 MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN Item 27d - Schedule of Reportable Transactions (A) Year ended December 31, 1998
Current value Expense of asset on Identity of party involved Purchase Selling Lease incurred with Cost of transaction Net gain and description of asset price price rental transaction asset date or (loss) - ------------------------------------------ -------- ------- ------ ------------- ------- ------------- --------- Life of Virginia Guaranteed Investment Contract $11,212,496 N/A -- -- 11,212,496 11,212,496 -- Life of Virginia Guaranteed Investment Contract N/A 515,271 -- -- 515,271 515,271 -- John Hancock Life Guaranteed Investment Contract 2,348,342 N/A -- -- 2,348,342 2,348,342 -- John Hancock Life Guaranteed Investment Contract N/A 2,951,078 -- -- 2,951,078 2,951,078 -- SunTrust Retirement Reserve Fund* 8,167,331 N/A -- -- 8,167,331 8,167,331 -- SunTrust Retirement Reserve Fund* N/A 8,326,920 -- -- 8,326,920 8,326,920 -- STI Capital Growth Fund* 5,979,216 N/A -- -- 5,979,216 5,979,216 -- STI Capital Growth Fund* N/A 2,069,406 -- -- 1,988,999 2,069,406 80,407 SunTrust Money Market Funds, Trustee* 21,248,768 N/A -- -- 21,248,768 21,248,768 -- SunTrust Money Market Funds, Trustee* N/A 21,653,617 -- -- 21,653,617 21,653,617 --
* SunTrust Bank is a party-in-interest to the Plan. (A) Represents transactions or a series of transactions in securities of the same issue or with the same person in excess of 5% of the current value of the Plan's assets as of the beginning of the year. See accompanying independent auditors' report. 12 EX-99.2 5 ALADDIN RETIREMENT SAVINGS PLAN EXHIBIT 99.2 Independent Auditors' Report The Administrator Aladdin Retirement Savings Plan: We have audited the accompanying statements of net assets available for plan benefits of the Aladdin Retirement Savings Plan ("Plan") as of December 31, 1998 and 1997, and the related statements of changes in net assets available for plan benefits for the year ended December 31, 1998 and the six months ended December 31, 1997. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 1998 and 1997, and the changes in net assets available for plan benefits for the year ended December 31, 1998 and the six months ended December 31, 1997 in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes and reportable transactions as of or for the year ended December 31, 1998, are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ KPMG LLP Atlanta, Georgia May 14, 1999 ALADDIN RETIREMENT SAVINGS PLAN Statements of Net Assets Available for Plan Benefits December 31, 1998 and 1997 1998 1997 ---- ---- Assets: Investments, at fair value (notes 3, 4, and 5): Mutual funds, at fair value $25,876,545 18,738,803 Money market funds, at cost 692,760 360,878 Mohawk Industries, Inc. common stock, at fair value 717,721 -- Loans to participants, at cost 203,204 -- ----------- ---------- 27,490,230 19,099,681 Cash -- 103,391 Accrued investment income 44,349 2,660 Contributions receivable from employer 259,199 2,109,464 Contributions receivable from participants 672,282 266,042 Other receivable from employer 15,743 36,893 ----------- ---------- Total assets 28,481,803 21,618,131 Liabilities - accounts payable 281,754 261,164 ----------- ---------- Net assets available for plan benefits $28,200,049 21,356,967 =========== ========== See accompanying notes to financial statements. (Continued) 2 ALADDIN RETIREMENT SAVINGS PLAN Statements of Changes in Net Assets Available for Plan Benefits Year ended December 31, 1998 and the Six Months ended December 31, 1997 1998 1997 ---- ---- Additions: Investment income: Interest and dividends $ 198,254 213,965 Net appreciation in fair value of investments: Mutual funds 2,281,454 496,400 Mohawk Industries, Inc. common stock 181,623 -- ----------- ---------- Total investment income 2,661,331 710,365 Contributions from employer 1,800,975 535,742 Contributions from participants 4,226,857 1,560,444 Transfer (to) from Aladdin Mills, Inc. Profit Sharing Plan and Trust (36,893) 18,550,416 ----------- ---------- Total additions 8,652,270 21,356,967 Deductions from net assets attributed to - benefits paid to participants 1,809,188 -- ----------- ---------- Increase in net assets available for plan benefits 6,843,082 21,356,967 Net assets available for plan benefits at beginning of period 21,356,967 -- ----------- ---------- Net assets available for plan benefits at end of period $28,200,049 21,356,967 =========== ========== See accompanying notes to financial statements. 3 ALADDIN RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 1998 and 1997 (1) Summary of Significant Accounting Policies The following is a summary of significant accounting policies followed by the Plan in preparing its financial statements. (a) Basis of Presentation The records of the Plan are maintained on the cash basis of accounting. The accompanying financial statements of the Aladdin Retirement Savings Plan (the "Plan") have been prepared on the accrual basis of accounting and present the net assets available for plan benefits and changes in those net assets. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. (b) Investments Investments in mutual funds and common stock are stated at fair value based on quoted market prices or as determined by SunTrust Bank (Trustee). Investments in money market funds and loans to participants are stated at cost which approximates fair value. Securities transactions are accounted for on a trade date basis. Realized and unrealized investment gains and losses are included in net appreciation (depreciation) in fair value of investments in the statement of changes in net assets available for plan benefits. (2) Description of the Plan The following description of the Plan provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. (a) General Prior to June 30, 1998, Aladdin Mills, Inc. (the "Company"), a wholly owned subsidiary of Mohawk Industries, Inc., maintained the Aladdin Mills, Inc. Profit Sharing Plan and Trust. Effective July 1, 1998, the Company amended the Plan to add a 401(k) feature to permit employer- matching contributions, employee pretax contributions, and for other purposes. The amendment also changed the Plan's year-end from June 30 to December 31. The Plan is a defined contribution plan and covers all employees of the Company. The Plan provides for retirement savings to qualified active participants through both participant and employer contributions and is subject to certain provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Employees are eligible to participate in the Plan at the beginning of a calendar month after completing one year of service. The Plan is administered by an Administrative Committee appointed by the Company. The Administrative Committee is responsible for the control, management, and administration of the Plan and the assets held in trust at SunTrust Bank. (Continued) 4 ALADDIN RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 1998 and 1997 (b) Contributions Contributions to the Plan are made by both participants and the Company. Participants may contribute a maximum of 16% of their gross compensation, subject to certain limitations. The Plan allows participants to allocate their contributions in multiples of 1% to the various investment funds available under the Plan. The employer makes a 50% matching contribution up to the first 4% of each participant's gross compensation contributed to the Plan. The terms of the Plan also provide for discretionary employer profit sharing contributions to the Mohawk Stock Fund for plan participants employed on the last day of the plan year or terminated during the plan year on account of death, disability, or retirement. In addition, the Company may contribute an additional amount of profit sharing contributions at the Company's discretion. The Company provided $240,000 in 1998 for profit sharing contributions. (c) Participant Accounts Each participant's account is credited with their contribution for the period as well as the employer's matching contribution and an allocation of any employer profit sharing contribution. Investment income, realized gains, employer profit sharing contributions, and the change in unrealized appreciation or depreciation on plan investments are credited to participants' accounts monthly based on the proportion of each participant's account balance to the total account balance within each investment fund at the beginning of the month. Participant contributions may be invested in one or more of the investment funds available under the Plan at the direction of the participant. The Plan allows for monthly valuation of accounts. Current investment funds available within the Plan include the following: Investment fund Fund objective ---------- -------------- Growth Fund To deliver capital growth through investments in the stocks of large, well-known companies. Stable Asset Fund To provide a fixed principal value and generate regular interest payments through investments in a diversified portfolio of investment contracts issued by sound financial institutions. Balanced Fund To track the performance of the Standard and Poors' 500 Composite Stock Price Index, which emphasizes stocks of large U.S. companies. Mohawk Stock Fund To provide long-term appreciation through the ownership of Mohawk Industries shares. Index Fund To track the performance of the Standard and Poors' 500 Composite Stock Price Index, which emphasizes stocks of large U.S. companies. International Fund To provide long-term capital growth through a flexible policy of investing in stocks and debt obligations of companies and governments outside the U.S. (Continued) 5 ALADDIN RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 1998 and 1997 (d) Distributions to Participants Upon termination of employment, the participant's account shall be applied toward the purchase of a Qualified Fifty Percent Joint and Survivor Annuity, or a Straight-Life Annuity, if the Participant does not have a spouse, unless the participant elects otherwise. A participant may elect to receive his distribution in approximate equal installments over a period designated by the participant, not to exceed the life expectancy of the participant. Under the terms of the Plan, participants may make hardship withdrawals from their accounts upon furnishing proof of hardship as specified in the Plan agreement. Participants may also borrow up to 90% of the value of their employee contribution account subject to limitations provided by the Plan. Loans must be paid back to the Plan generally within five years of the loan date. Amounts due to participants who have withdrawn from the Plan but have not been paid at December 31, 1998 and 1997 totaled $477,842 and $721,239, respectively. (e) Vesting Participants are immediately vested in their contributions and the Company's matching contributions and the income earned on such contributions. Participants become vested in the Company's discretionary contributions according to the following schedule: Years of Percent eligible service vested ---------------- ------- Less than 3 0% 3 25 4 40 5 60 6 80 7 100 A participant who reaches normal retirement age, becomes permanently disabled, or dies will become 100% vested in their account regardless of the years of service. (f) Administrative Expenses Certain administrative expenses of the Plan are paid by the Company. These costs include legal, accounting, and certain administrative fees. (3) Transactions with Parties-In-Interest At December 31, 1998 and 1997, the Plan held investments in trust funds and money market accounts sponsored by the trustee with current values of $21,146,649 and $15,229,663, respectively. (Continued) 6 ALADDIN RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 1998 and 1997 (4) Investments The following table shows the components of investments: 1998 1997 ---- ---- Mutual funds: STI Capital Growth Fund $ 7,664,010 4,864,229 Dodge & Cox Balanced Fund 4,704,400 3,870,018 STI Stable Value Fund 12,789,879 10,004,556 Vanguard Index Trust Fund 490,712 -- Templeton Foreign Fund 227,544 -- ----------- ---------- Total mutual funds 25,876,545 18,738,803 Money market funds - Trustee 692,760 360,878 Mohawk Industries, Inc. common stock 717,721 -- Loans to Participants 203,204 -- ----------- ---------- Total investments $27,490,230 19,099,681 =========== ========== (Continued) 7 ALADDIN RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 1998 and 1997 (5) Investment by Fund The Plan permits participants to contribute to various types of investment funds. The net assets available for plan benefits at December 31, 1998 and 1997 by investment fund are as follows:
1998 Participant Directed ------------------------------------------------------------------------------------------- Stable STI Capital Dodge & Cox Asset Growth Balanced Index Stock International Loan Fund Fund Fund Fund Fund Fund Fund Total ------ ----------- ------------ ------- ----- ------------- ----- ---------- Assets: Investments: Mutual Funds $12,789,879 7,664,010 4,704,400 490,712 -- 227,544 -- 25,876,545 Mohawk Industries, Inc. common stock -- -- -- -- 717,721 -- -- 717,721 Money market funds 439,640 134,834 73,616 16,958 22,584 5,128 -- 692,760 Loans to participants -- -- -- -- -- -- 203,204 203,204 ----------- --------- --------- ------- ------- ------- ------- ---------- Total investments 13,229,519 7,798,844 4,778,016 507,670 740,305 232,672 203,204 27,490,230 Accrued investment income 935 4,697 38,566 53 81 17 -- 44,349 Contributions receivable from employer 67,488 95,958 62,359 14,053 15,552 3,789 -- 259,199 Contributions receivable from employee 174,798 248,751 161,185 36,392 41,233 9,923 -- 672,282 Other receivable -- -- 15,743 -- -- -- -- 15,743 ----------- --------- --------- ------- ------- ------- ------- ---------- Total assets 13,472,740 8,148,250 5,055,869 558,168 797,171 246,401 203,204 28,481,803 Liabilities - accounts payable 3,190 22,296 246,881 4,717 4,244 426 -- 281,754 ----------- --------- --------- ------- ------- ------- ------- ---------- Net assets available for plan benefits $13,469,550 8,125,954 4,808,988 553,451 792,927 245,975 203,204 28,200,049 =========== ========= ========= ======= ======= ======= ======= ==========
(Continued) 8 ALADDIN RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 1998 and 1997
1997 Participant Directed --------------------------------------------------- Stable STI Capital Dodge & Cox Asset Growth Balanced Fund Fund Fund Total ------ ----------- ------------ ----- Assets: Investments: Mutual funds $10,004,556 4,864,229 3,870,018 18,738,803 Money market funds 348,359 7,119 5,400 360,878 ----------- --------- --------- ---------- Total investments 10,352,915 4,871,348 3,875,418 19,099,681 Cash -- -- 103,391 103,391 Accrued investment income 2,622 22 16 2,660 Contributions receivable from employer 2,029,555 47,070 32,839 2,109,464 Contributions receivable from participants 63,850 122,379 79,813 266,042 Other receivable from employer 36,893 -- -- 36,893 ----------- --------- --------- ---------- Total assets 12,485,835 5,040,819 4,091,477 21,618,131 Liabilities - accounts payable 254,045 7,119 -- 261,164 ----------- --------- --------- ---------- Net assets available for plan benefits $12,231,790 5,033,700 4,091,477 21,356,967 =========== ========= ========= ==========
(Continued) 9 ALADDIN RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 1998 and 1997 The changes in net assets available for plan benefits for the year ended December 31, 1998 and the six months ended December 31, 1997 are as follows:
1998 Participant Directed ------------------------------------------------------------------------------------------- Stable STI Capital Dodge & Cox Asset Growth Balanced Index Stock International Loan Fund Fund Fund Fund Fund Fund Fund Total ------ ----------- ------------ ------- ----- ------------- ----- ---------- Additions: Investment Income: Interest and dividends $ 9,301 34,184 148,155 3,658 853 2,103 -- 198,254 Net appreciation (depreciation) in fair value of investments: Mutual funds 774,117 1,516,766 (57,667) 51,519 -- (3,281) -- 2,281,454 Mohawk Industries, Inc. common stock -- -- -- -- 181,623 -- -- 181,623 Contributions from employer 796,678 530,050 332,814 51,827 75,024 14,582 -- 1,800,975 Contributions from employee 1,381,897 1,465,242 909,648 178,077 224,363 67,630 -- 4,226,857 Transfer from Aladdin Mills, Inc. Profit Sharing Plan (36,893) -- -- -- -- -- -- (36,893) ----------- --------- --------- ------- ------- ------- ------- ---------- Total additions 2,925,100 3,546,242 1,332,950 285,081 481,863 81,034 -- 8,652,270 Deductions from net assets attributed to - benefits paid to participants 1,406,821 169,757 222,320 2,029 7,777 484 -- 1,809,188 Fund transfers, net (280,519) (284,231) (393,119) 270,399 318,841 165,425 203,204 -- ----------- --------- --------- ------- ------- ------- ------- ---------- Increase in net assets available for plan benefits 1,237,760 3,092,254 717,511 553,451 792,927 245,975 203,204 6,843,082 Net assets available for plan benefits at beginning of year 12,231,790 5,033,700 4,091,477 -- -- -- -- 21,356,967 ----------- --------- --------- ------- ------- ------- ------- ---------- Net assets available for plan benefits at end of year $13,469,550 8,125,954 4,808,988 553,451 792,927 245,975 203,204 28,200,049 =========== ========= ========= ======= ======= ======= ======= ==========
(Continued) 10 ALADDIN RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 1998 and 1997
1997 Participant Directed -------------------------------------------------------------- Stable STI Capital Dodge & Cox Asset Growth Balanced Fund Fund Fund Total ------------ ----------- ----------- --------- Additions: Investment income: Interest and dividends $ 5,893 6,925 201,147 213,965 Net appreciation (depreciation) in fair value of mutual funds 508,807 129,038 (141,445) 496,400 Contributions from employer 227,119 177,872 130,751 535,742 Contributions from participants 630,713 560,626 369,105 1,560,444 Transfer from Aladdin Mills, Inc. Profit Sharing Plan and Trust 10,859,258 4,159,239 3,531,919 18,550,416 ----------- --------- --------- ---------- Total additions 12,231,790 5,033,700 4,091,477 21,356,967 Net assets available for plan benefits at beginning of period -- -- -- -- ----------- --------- --------- ---------- Net assets available for plan benefits at end of period $12,231,790 5,033,700 4,091,477 21,356,967 =========== ========= ========= ==========
(Continued) 11 ALADDIN RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 1998 and 1997 (6) Income Tax Status The Internal Revenue Service has determined and informed the Company by a letter dated March 3, 1999, that the Plan and related trust are designed in accordance with applicable Sections of the Internal Revenue Code. The administrative committee of the Plan is not aware of any course of action or series of events that might adversely affect the Plan's qualification under Section 401(a) of the Internal Revenue Code, and under which the Plan would be subject to tax under present income tax law. (7) Plan Termination While it is the Company's intention to continue the Plan indefinitely, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA and the Plan agreement. In the event of Plan termination, participants will become 100% vested in their accounts. (8) Subsequent Event Effective March 1, 1999, the Plan was merged with the Mohawk Carpet Corporation Retirement Savings Plan. 12 Schedule 1 ALADDIN RETIREMENT SAVINGS PLAN Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1998
Current Identity of issuer Description of investment Cost value - --------------------------------------------- ------------------------- ----------- ----------- Mutual funds: STI Capital Growth Fund* 464,204 mutual fund units $ 6,972,253 7,664,010 Dodge & Cox Balanced Fund 72,131 mutual fund units 4,958,380 4,704,400 STI Stable Value Fund* 487,605 mutual fund units 11,761,072 12,789,879 Vanguard Index Trust Fund 4,306 mutual fund units 440,475 490,712 Templeton Foreign Fund 27,121 mutual fund units 236,663 227,544 Money market funds - SunTrust Bank* Money Market Fund 692,760 692,760 Mohawk Industries, Inc. common stock 17,063 shares of common stock 536,083 717,721 Loans to participants (1) 203,204 203,204 ----------- ---------- $25,800,890 27,490,230 =========== ==========
- ---------------- * SunTrust Bank, Trustee, is a party-in-interest to the Plan. (1) Loans are consummated at a fixed rate (then current prime rate plus 1%) for terms up to four years. See accompanying independent auditors' report. 13 Schedule 2 ALADDIN RETIREMENT SAVINGS PLAN Item 27d - Schedule of Reportable Transactions(A) Year ended December 31, 1998
Current Expense value of Net incurred Cost asset on gain Identity of party involved and Purchase Selling Lease with of transaction or description of asset price price rental transaction asset date (loss) - -------------------------------------------- ---------- --------- ------- ----------- --------- ----------- -------- SunTrust Money Market Funds, Trustee* $12,021,971 N/A -- -- $12,021,971 $12,021,971 -- SunTrust Money Market Funds, Trustee* N/A 11,690,089 -- -- 11,690,089 11,690,089 -- STI Stable Value Fund* 2,955,368 N/A -- -- 2,955,368 2,955,368 -- STI Stable Value Fund* N/A 944,161 -- -- 908,353 944,161 35,808 STI Capital Growth Fund* 2,118,580 N/A -- -- 2,118,580 2,118,580 -- STI Capital Growth Fund* N/A 19,097 -- -- 18,041 19,097 1,056 Dodge & Cox Balanced Fund 1,167,020 N/A -- -- 1 ,167,020 1,167,020 -- Dodge & Cox Balanced Fund N/A 210,970 -- -- 220,102 210,970 (9,132)
- ---------------- * SunTrust Bank is a party-in-interest to the Plan. (A) Represents transactions or a series of transactions in securities of the same issue or with the same person in excess of 5% of the current value of the Plan's assets as of the beginning of the year. See accompanying independent auditors' report. 14 -----END PRIVACY-ENHANCED MESSAGE-----