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  • 1. Mohawk Industries, Inc. 2004 Annual Report WE COVER Mohawk Industries, Inc. 2004 Annual Report THE MARKET
  • 2. Mohawk Industries, Inc. 2004 Annual Report
  • 3. Business Description Mohawk Industries began covering the market more than 120 years ago as a carpet manufacturer. Since that time, the Company evolved into one of the world’s leading flooring companies. Its product line encompasses tufted and woven carpet, carpet cushion, ceramic tile, wood, stone, laminate, vinyl, rugs and niche home products, such as throws and pillows. Mohawk is headquartered in Calhoun, Georgia. Its shares trade on the New York Stock Exchange under the ticker symbol “MHK.” Financial Highlights For the Years Ended December 31, (in thousands, except per share data) 2004 2003 2002 2001 2000 Net Sales $ 5,880,372 $ 4,999,381 $ 4,516,957 $ 3,441,267 $ 3,400,905 Gross Profit $ 1,620,841 $ 1,393,802 $ 1,269,092 $ 857,598 $ 844,133 Operating Income $ 635,590 $ 542,029 $ 522,065 $ 327,157 $ 310,115 Net Earnings $ 368,622 $ 310,149 $ 284,489 $ 188,592 $ 162,599 Diluted Earnings Per Share $ 5.46 $ 4.62 $ 4.39 $ 3.55 $ 3.00
  • 4. ���� ���� ���� ���� ���� ���� ���� ���� ���� ���� ���� ���� We Cover the Market � ��� ��� As a leading supplier of floorcovering products in North America, Mohawk possesses a breadth and depth of products, brands, customers, service and distribution capabilities � � that are unmatched in the industry. As a result, we possess an equally broad array of opportunities that will enable us to continue the remarkable growth performance that we have enjoyed over the past decade. In Millions In Dollars $6 $6 � 5 5 � 4 4 � 3 3 � 2 2 Market Coverage Produces Results � 1 1 Net Sales EPS � In Millions In Dollars 0 0 � 04 04 00 00 01 01 02 02 03 03 Mohawk’s financial discipline is demonstrated by a 13 percent annual net sales growth rate and a 16 percent annual earnings per share growth rate over the past five years. [1]
  • 5. 5. Area Rugs 6. Home Products 1. Carpet WE COVER A $23 BILLION MARKET
  • 6. 2. Ceramic Tile 4. Stone Surfaces 3. Wood Flooring 7. Carpet Cushion [3]
  • 7. Mohawk Product Categories 1. Carpet Broadloom carpet is a $10+ billion market in the U.S. In 2004, our share of approximately 30 percent is the second largest in the industry. 2. Ceramic Tile Through our Dal-Tile subsidiary, we are the largest supplier in the $2 billion ceramic tile market that includes both residential and com- mercial uses. 3. Hard Surface Floorcovering Hardwood, laminates and vinyl represent some of the fastest-growing categories in flooring and comprise a combined $5 billion market. 4. Stone Surfaces Stone flooring and countertops represent a highly fragmented market. As a result of acquisitions during the past two years, we have rapidly gained the leading share in this category. 5. Area Rugs Mohawk is the largest supplier of area rugs in a market that exceeds $2 billion. 6. Home Products Mohawk is the market leader in product categories such as accent rugs, bath mats and throws and also a supplier of pillows and bedding. 7. Carpet Cushion Mohawk is a leading supplier of carpet cushion and padding, which is engineered to maximize the performance of its carpet products.
  • 8. 5. Area Rugs 6. Home Products 1. Carpet
  • 9. 2. Ceramic Tile 4. Stone Surfaces 3. Wood Flooring 7. Carpet Cushion
  • 10. The Commercial Market Mohawk is a leading supplier of both carpet and ceramic tile to the commercial segment of the market, which includes the corporate, transportation, education, healthcare, retail and hospitality sectors.
  • 11. COVER ETHE OPTIONS LL FASHION BRANDS Karastan, CustomWeave, Ralph Lauren and Helios are among the most highly valued brands in the industry. With Style, color, texture, quality – Mohawk designs ranging from the traditional meets the flooring needs of its resi- to the contemporary, these lines offer options for virtually every style of dé- dential and commercial customers by cor and bring a fashion-forward sense offering the industry’s broadest array to floorcoverings. of products and brands that span all price points. In doing so, we not only provide more choices to satisfy every taste and budget, but we also lever- age our operations across multiple RUGS distribution channels. From Karastan’s luxurious interpre- tations of ancient Persian and Oriental rugs to value-oriented home décor accent rugs and stylish, sumptuous bath mats, Mohawk offers an array of styles and colors that appeals to all homemakers.
  • 12. STONE PRODUCTS BROADLOOM Granite, marble and limestone are just The Aladdin, Horizon and Wunda some of the materials that comprise our Weve brands offer an astounding stone product offerings. These materials product selection at all price points. are among the most popular in residen- The three lines connect Mohawk to tial and commercial design today. Their the value-oriented consumer, the natural beauty and durability make fashion-conscious homemaker and them suitable for widespread use in the individual for whom everyday kitchens and bathrooms, as well as deco- luxury is a must. rative accents in other living spaces. DAL-TILE CERAMIC The leading name in ceramic tile offers comprehensive lines of fashionable, high-quality tile products in a range of colors, textures and finishes. Ceramic products are sold through tile and floor- ing contractors, tile and flooring retail- ers, independent distributors and home center retailers. MOHAWK HARDWOOD, MOHAWK CUSHION LAMINATE AND VINYL Mohawk is a leading manufacturer of Mohawk offers beautifully handcrafted carpet cushion, all of which is specifically hardwood flooring in a full range of wood designed to maximize carpet perfor- species, as well as a full line of attractive mance. Products include molded ure- laminate products that feature precision thane, premium white bonded, rebond engineered construction. Mohawk is also and synthetic cushions. Mohawk’s carpet a national distributor of Congoleum vinyl cushion is the perfect foundation for a products, which offer versatility, dura- high-performance floor. bility and an unparalleled selection of colors and styles. COMMERCIAL AND CARPET TILE Bigelow, Mohawk Commercial, Durkan, Karastan Contract and Lees are among the most respected names in the commer- cial carpet segment. The addition of Lees carpet tile has helped Mohawk earn new business opportunities. These products grace the nation’s hotels, schools, airports and retail environments. [5] [5]
  • 13. 2. New Home Construction 1. Commercial 3. Residential Replacement [6]
  • 14. E COVER 0K CUSTOMERS ���� ���� ���� Diversified Customer Base ���� 1 Mohawk enjoys an exceptionally broad and diversified 3 Commercial Contract customer base. Approximately 85 percent of our sales Residential 27% ���� Replacement are made to independently owned dealers, contrac- 56% tors and distributors. The balance is sold to large Industry national chains, home centers and mass merchants. ���� End-Use Market Similarly, end-use purchases of our products are broad and varied. Residential replacement accounts for over half of our sales, with commercial and new residential � construction representing other major purchasing cat- 2 New Construction egories. This diversity brings increased stability to our 17% business and helps to balance the inherent business cycles in each area. [7]
  • 15. WE COVER 240 Ceramic Service Centers 1,000 Trucks 2,000 Trailers AN ENTIRE ATION
  • 16. 15 Regional Warehouses 20 Factory Warehouses 42 Satellite Warehouses Backward and forward integration of our manufacturing, distribution and marketing operations provides a tremendous competitive advantage for our products in the marketplace and brings powerful scale to our business model. Fiber extrusion assets provide over 50 percent of our carpet and rug fibers, including nylon, polyester and olefin. We control manufacturing for carpet, rug and carpet cushion products, as well as a majority of ceramic tile. Mohawk’s Real Time Visibility (RTV), the industry’s most accurate and reliable order tracking system, ensures on-time delivery of the right products. With over 1,000 trucks and 300 distribution points, we understand the importance of staying connected with our customers. We also stay connected closely with the retail marketing of our products through several merchandising programs. These include Mohawk Floorscapes, which offers dealers a total merchandising solution featuring our complete line of products; Mohawk ColorCenter, a store-within-a-store concept; and Floorz by Mohawk, a merchandising system aimed at larger-format retailers that have a heavier inventory commitment. [9]
  • 17. Jeffrey S. Lorberbaum, Chairman, President and Chief Executive Officer [10]
  • 18. A Letter to Our Stockholders As you have read on the preceding pages, Mohawk required several price increases. The leveraging of fixed covers the market by every measure – products, costs against sales increases, demonstrating the strong brands, market share, customers, manufacturing scale inherent to our business, allowed us to maintain and distribution. This position not only makes our overall margins. Mohawk an industry leader, but also a great busi- We invested $107 million in capital expenditures during ness capable of exceptional performance. The 2004 and expect to increase investments in the business in past year certainly underscores this point. 2005. During the first quarter of 2005, we acquired one of our carpet backing vendors, which will allow us to manu- Ongoing profitable investment in every aspect of our facture carpet backing internally. Our capital expendi- business allowed us to capitalize on a rebounding econ- tures for 2005 include capacity expansion projects at our omy and flooring market. This rebound was led by the Monterrey, Mexico, and Muskogee, Oklahoma, ceramic residential replacement channel of our business, and tile manufacturing facilities and at our nylon extrusion further strengthened by a continued high level of new and yarn processing operations. Much of this will not housing construction. The commercial side of the mar- be fully operational until 2006. Additionally, we are con- ket, down by more than 30 percent in some channels, solidating several leased warehouse facilities in North began its own upturn later in the year as non-residential Georgia for our hard surface and home products into construction spending began to increase. Our sales of owned facilities. Each of these investments supports hard surface products also continued to enjoy signifi- our ongoing efforts to sustain the company’s history of cant growth. profitable growth. With a 25 percent debt-to-capitaliza- The combined sales momentum from all areas of our tion ratio and Mohawk’s investment grade rating, our business helped to offset record-high raw material and ability to finance capital investments and explore other energy costs that impacted our business during the opportunities remains solid. year. The industry’s response to these rising costs has been a rational one and a series of price increases, un- Experiencing Success across Every Surface precedented in the history of the industry, have been sub- One of the most gratifying aspects of our performance stantially absorbed in an orderly manner. Fortunately, in 2004 was that it reflected growth in every aspect of consumers continue to recognize that carpet and other our business. Innovation and investment in products, flooring options remain one of the best values for home marketing and service continue to keep our core car- or office improvement, which helps to support industry pet business at the forefront of the industry. Our in- sales in a cost-pressured environment. vestments in technology are enabling us to introduce Against this market scenario, Mohawk’s year was, exclusive new products such as SmartStrand™, made quite simply, an exceptional one. Sales grew 18 percent from a proprietary DuPont™ polymer that combines to $5.9 billion, with growth in both the Mohawk and the softness of nylon with enhanced stain resistance Dal-Tile segments exceeding our expectations. Our and wear characteristics. SmartStrand™, made with acquisition of Lees Carpet in late 2003 also contributed DuPont™ Sorona® polymer, is an engineered-in prod- to the sales growth. Net earnings rose 19 percent over uct, not a topical treatment, so the stain resistant prop- 2003 to $369 million in 2004, which translated into an erties are a part of the entire fiber, not just the surface. 18 percent increase over 2003 in diluted earnings per Innovation also extends to the marketing front. We’ve share of $5.46. This earnings growth was achieved in had an extremely positive response to our new regional a very difficult environment with increasing costs that [11]
  • 19. Broadening Distribution marketing shows, where we bring our sales force and our dealers together to view product lines in a smaller, more Dal-Tile also has quickly built a commanding position productive setting. (DuPont™ and Sorona® are regis- in stone surfaces through a series of acquisitions and tered trademarks of DuPont.) strong internal growth. This is a strategy Dal-Tile in- Our commercial carpet business has a great story to tends to pursue further in this rapidly growing and tell this year. The acquisition of Lees in 2003 proved to highly fragmented market. The benefits are two-fold: be perfectly timed to catch the beginning of the 2004 up- Stone surfaces are growing as a stand-alone business turn in the commercial sector, where Lees has allowed and, we have discovered, stone and tile perform even us to significantly increase our market share. Perhaps better when sold together. even more importantly, Lees allowed us to expand a For Mohawk, hard surfaces represent a compelling new line of business, modular carpet, which is current- growth front. In addition, these surfaces create opportu- ly one of the fastest growing categories in the flooring nity and demand for area and accent rugs. We currently industry. We are leveraging Lees’ expertise in this area enjoy market strength in the specialty retail distribu- by extending modular product into our Mohawk com- tion channel, where our highly prized Karastan brand mercial line, which is focused on a more value-oriented is sold, and in the mass merchant retail channel, where segment of the market. the Mohawk brand is popular. Mohawk has recently Carpet is and will continue, in the foreseeable future, introduced two new rug lines, Studio by Karastan and to be our largest product category, but our presence is Mohawk Select, to floorcovering retailers. These rug expanding in hard surfaces, which is the fastest grow- lines are machine woven area rugs in the medium price ing area of the flooring industry. Indeed, hard surfaces range that complement our other products. Mohawk’s now comprise over 30 percent of Mohawk’s total reve- line of accent and area rugs, bath mats and home acces- nues, up from approximately 5 percent just three years sories continues to expand and to offer products across ago. Our ceramic tile, wood, vinyl and laminate prod- a broad range of price points. Product innovation and ucts are enjoying sales momentum due to increasing design are focused on creating value while meeting the consumer demand for those surfaces. changing demands of the retail consumer. The growth trends for ceramic tile and stone are Covering the Market strong and we are reaping the benefits of this growth through Dal-Tile. Three years after our acquisition of In closing, it is important to note that Mohawk not this ceramic market leader, we continue to be extremely only covers the flooring market, but also that the floor- pleased with its performance. We have invested in this ing market itself is one well worth covering. Relative to business by increasing manufacturing capacity, im- many other sectors, our industry enjoys many solid fun- proving inventory availability and increasing product damentals – strong recurring demand from end-users, a selection with higher style products. Additional invest- consolidating manufacturing base, a wide and diversified ments included remodeling the showrooms in over half customer base and relatively little competition from for- of Dal-Tile’s service centers, adding sales personnel and eign imports. It’s a great foundation upon which to grow opening design centers in five markets. Investments in our business and create value for our shareholders. As Dal-Tile have paid off with average sales growth of ap- this year has demonstrated, we’re doing exactly that. proximately 15 percent since our purchase. Improved Many thanks for your continued support, as well as sales strength is helping Dal-Tile increase its share in to our employees and customers. the residential market to complement its historically strong share in the commercial arena. Jeffrey S. Lorberbaum Chairman, President and Chief Executive Officer [12]
  • 20. John Swift, Retiring Chief Financial Officer Honoring Two Decades of Leadership John Swift retired as Chief Financial Officer at the end By 1992, Mohawk was strong enough to go public and of 2004. To recount his career at Mohawk is essentially quickly began what has been a trajectory growth pattern. to recount the evolution of our Company over the past John and Mohawk’s management team worked diligently two decades. John arrived at Mohawk as Vice President over the next decade to complete 18 acquisitions. Sales of Finance in 1984, after 18 years at GE. At the time, grew to over $5 billion. The Company climbed to No. 349 Mohawk was an unprofitable subsidiary of Mohasco on the Fortune 500 list. And, by the time John announced Corporation. But, this didn’t last. John and a group of his intention to retire in 2004, Mohawk’s enterprise value fellow executives turned around the business within four was approximately $6 billion. years and decided to go for a leveraged buyout. Mohawk While John’s accomplishments at Mohawk comprise became an independent company in 1988 and John be- an impressive list, his leadership, character and work came its Chief Financial Officer, Treasurer and Corporate ethic have left an equally impressive mark on our organi- Secretary. Sales were under $300 million and the busi- zation. We honor and thank John for his years of service ness was limited in its product offerings. This didn’t last and wish him a rewarding retirement. long either. [13]
  • 21. Jeff Lorberbaum, Chairman, President and Chief Executive Officer (left) and Frank Boykin, Chief Financial Officer [14]
  • 22. Dealer programs are the centerpiece of our marketing initiatives. Q&A Discussion More Ways to Cover the Market and Grow Our Business A conversation with Mohawk Chairman, President the business so that we can react more quickly to busi- and Chief Executive Officer Jeff Lorberbaum and ness changes and effectively manage our costs. Chief Financial Officer Frank Boykin Q: How can you push growth in the residential replace- Q: Your growth strategy encompasses both acquisitions ment segment of the carpet market? and internal growth. What have been and are likely to be A: Jeff: We do it in several ways – service, quality, the key internal drivers? product design and marketing. A major part of under- A: Jeff: From standing Mohawk is to understand our commitment a top-line perspective, market share to improving our customers’ sales and profitability. Our gains are one of the most obvious and our broadloom success is a function of their success. Dealer programs, carpet business is a good example. Our business has such as Floorscapes, ColorCenter and Floorz, are key exceeded the industry growth rate over the last sev- to our distribution. For larger accounts, we assist in eral years. Part of our success has been to focus on developing proprietary marketing systems. We do ev- areas where we had the greatest potential to increase erything possible to support these programs, from market share, such as new home construction and training to advertising to marketing campaigns that ceramic tile. promote our brands. Frank: On the cost side, we always are focusing on Q: process improvements and have had significant suc- How much volatility is there in the flooring market? cess in developing cross-functional teams to look at A: Frank: Not as much as perceived. Our business our business in new ways. Our management team is is actually quite diversified among residential replace- proactive in its approach to streamlining the business ment, new construction and commercial. This helps and leveraging knowledge across all business lines. to smooth the inherent ups and downs in each part of We have used this approach in developing information the market. systems that provide us with real-time visibility into [15]
  • 23. Q: materials. Mohawk is well positioned in this scenario On a similar note, higher interest rates could im- because of our broad range of price points in all major pact new home construction. Wouldn’t that adversely product categories. impact Mohawk? Q: A broadening of product categories has been a major A: Frank: Again, I think the impact is overstated strategic initiative for Mohawk over the past four years. because of our market diversification. If new home Is this likely to continue? sales do slow as a result of increasing interest rates, our residential replacement and commercial business A: Jeff: The past four years have been about transi- segments are likely to see growth because higher inter- tioning Mohawk from a carpet company into a total floor- est rates generally indicate an economy in expansion. ing company. We’ve successfully done so and now have Furthermore, the average square footage per home a presence in every flooring category. Approximately 30 has increased approximately 40 percent since 1973 to percent of our revenues comes from hard surfaces, which approximately 2,330 square feet in 2003. So even if the is the fastest growing part of the flooring market. So I number of new housing starts does decline, there will be think we have made significant progress in the transi- some offset due to the increased size of homes. tion, but we are just beginning to realize the potential in these new areas. Jeff: Another way to look at the interest rate issue is to analyze all the demographic data relative to home- Frank: Scale is a tremendous driver of profitability building. Based on that analysis, many builders believe in our carpet business. Now, we have the opportunity the sector will remain strong through the decade based to build similar scale in the hard surface side. The good on simple supply and demand dynamics. Interest rates news is that we have a head start because of so much tend to affect price points more than anything else, existing infrastructure, such as transportation and with buyers more likely to trade down on price in a ris- distribution centers. ing rate environment. This trend extends to building [16]
  • 24. $2,000 ���� ���� 1,500 ���� ���� An expanding product line combined 1,000 ���� ���� with sound marketing strategies has Gross Profit Dollars ���� led to consistent growth in profitability. 500 ��� ��� ���� 0 � � ���� 03 04 00 01 02 (Amounts in millions $) ���� ��� � Q: Q: Your carpet and tile manufacturing is integrated What type of consumer purchasing similarities are � ���� backward. Do you need to have the same integration in there between soft and hard surfaces? � ���� other categories such as wood, laminate and vinyl? � ���� A: Jeff: One of the reasons retail carpet is a rela- A: Frank: We will probably work toward a model that � ���� tively fragmented industry is because it requires a resembles our tile operations, where we have a balanced very high level of service. Flooring represents a major � ���� strategy between third-party sourcing and internal manu- home improvement expenditure for homeowners and � ���� facturing. This provides us with a great deal of flexibility one not done frequently. As a result, a significant part � � in a variety of areas, ranging from capital expenditures of the sales process involves consumer education. A to product assortment. consumer with greater product knowledge can make more informed choices based on decorating consider- Q: ations, product performance and overall value. This Mohawk’s distribution network is a major strength. requires a well-trained and knowledgeable sales force. Can you leverage this tool and the retailer network it serves There also are installation considerations, which should to grow the hard surface business segment? be coordinated with the purchase. These factors make A: Jeff: Yes. Carpet dealers face the same market flooring somewhat of a complex purchase, whether it’s trends that Mohawk faces, namely the growing popu- broadloom carpet, ceramic tile, vinyl, laminate or larity of hard surfaces. So, like us, they have and will hardwood flooring. In each case, a specialized level of continue to broaden their product assortment. And we service is required and carpet retailers are well-posi- will expand our support of them in this effort just as tioned to provide the resources needed to make this we have supported them in their carpet sales. It’s also level of service happen. important to remember that the consumer purchasing dynamics are similar in both soft and hard surfaces. [17]
  • 25. Q: Q: How are the marketing dynamics different for Acquisitions have been a major part of your growth Dal-Tile, where distribution is weighted more toward strategy for over a decade. Are there still attractive acqui- contractors rather than retailers? sition candidates and what are your acquisition criteria? A: A: Jeff: Absolutely – there are still attractive candi- Jeff: Ceramic and stone are interesting because they extend beyond flooring to other surfaces, such dates. We make acquisitions for three primary reasons. as countertops and walls. Ceramics, in particular, can First, we acquire to gain market share. Last year’s acqui- involve extremely intricate design. The key is getting sition of Lees Carpet is the perfect example. It gave us the customer – whether it’s a designer, contractor or immediate leadership in commercial carpet and a strong end-user – into a sales environment that is conducive to position in modular carpet tile. Second, we acquire to viewing the full range of possibilities. That’s why we have improve backward integration in manufacturing as been investing heavily in remodeling Dal-Tile’s service we did recently in our Wayn-Tex acquisition. This center showrooms. We’re also introducing Dal-Tile Design gives us yet another point of control in the supply chain. Centers in major markets. These centers can display the And third, we acquire to broaden our product offering. entire product line, as well as accommodate “idea” A current example would be stone surfaces, which is a displays that showcase installed designs. A homeowner, highly fragmented market. We’ve bought two stone for instance, can visit a Design Center, receive assistance slab distributors since 2002. from Dal-Tile design experts and then order through Frank: It’s important to remember that acquisitions their installation contractor or flooring dealer. are a means to realize a goal. Our goals are earnings Frank: Historically, Dal-Tile has been stronger in the growth and return on invested capital. Acquisitions are commercial rather than the residential market. The one way to achieve our goals, but we also are very open initiatives that Jeff has described, along with adding to joint ventures or building a “green field” operation more high-end porcelain to their product line, will be from the ground up. We will pursue the best path based particularly helpful as we pursue more upside in the on our strategic needs and the financial equation. residential market. [18]
  • 26. ���� ���� ���� ���� ���� ���� $3,000 ���� ��� ��� 2,400 ���� The strength of our balance sheet � � 1,800 ���� is evidenced by a four-fold increase Stockholders’ Equity 1,200 ���� in stockholders’ equity over the past five years. 600 ��� 0 � 03 04 00 01 02 (Amounts in millions $) � ���� � ���� � ���� � ���� � ���� Q: proposition that involves weighing the benefits of new Over the past decade, Mohawk has spent cash of � ���� markets versus the loss of certain operational leverage approximately $1.4 billion on acquisitions. In the event � � in North America. It is, however, a route we may explore acquisition activity does slow, then where will you direct in the future. your cash? Q: A: Frank: We have a structured approach to our use of In closing, what makes you most optimistic about Mohawk’s future? capital. Our first priority is internal capital expenditures which have the lowest risk but still provide high returns A: Jeff: As we’ve explained in this report, the for us. Next would be acquisitions that add revenue Company’s market position is really hard to beat. We growth and expand our product lines quicker than we benefit from a strong management team that promotes could develop those lines internally. These investments innovation and efficiency. We have a tremendous group often provide stronger returns. Finally, we would em- of employees who take great pride in their work. We’re ploy stock repurchases as an alternative if the first two also excited about the environment in which we do options are not available. We have a repurchase program business. We are seeing a rebound in the commercial in place that allows for an additional four million shares business, which will be a great chance to maximize the to be repurchased. potential of Lees. On our residential side, there are favorable trends. More people own homes; the aver- Jeff: The next level for cash investment would be to age home is larger; interest in home décor is higher look beyond the current parameters of our business, than ever before. We feel fortunate to provide products such as possible expansion into new product categories that are an integral part of building, maintaining and, that complement our flooring business. Another long- frankly, enjoying a home. Our business is a good place term possibility is to look at opportunities outside North to be and is going to remain so for a long time. America. International expansion is a more complex [19]
  • 27. BOARD OF DIRECTORS AND OFFICERS Mohawk Industries, Inc. and Subsidiaries DIRECTORS Jeffrey S. Lorberbaum John F. Fiedler † // Robert N. Pokelwaldt * † Chairman of the Board, President Former Chairman and Former Chairman and Chief Executive and Chief Executive Officer Chief Executive Officer Officer of York International Corporation Borg-Warner Automotive Inc. (a manufacturer of air conditioning and (a manufacturer of automotive parts) cooling systems) Leo Benatar † // Principal of Benatar and Associates and David L. Kolb S.H. “Jack” Sharpe Former Chairman of Engraph, Inc., a sub- sidiary of Sonoco Products Company (an Former Chairman and Executive Vice President international manufacturer of industrial Chief Executive Officer Mohawk Residential Business and consumer packaging products) Mohawk Industries W. Christopher Wellborn Phyllis O. Bonanno * Larry W. McCurdy * † President President and Former Chairman, Dal-Tile Chief Executive Officer of President and Chief Executive International Trade Solutions, Inc. Officer of Echlin, Inc. (a worldwide manufacturer of motor vehicle parts) Bruce C. Bruckmann * // * Audit Committee Managing Director † Compensation Committee Bruckmann, Rosser, Sherrill & Co., Inc. // Nominating and Corporate (a venture capital firm) Governance Committee OFFICERS Jeffrey S. Lorberbaum Jerry L. Melton W. Christopher Wellborn Chairman, President and Vice President President Chief Executive Officer Human Resources Dal-Tile Frank H. Boykin Donald R. Riley Joe W. Yarbrough, Jr. Vice President Finance and Chief Information Officer Vice President Chief Financial Officer Operations H. Monte Thornton William B. Killbride President President Mohawk Flooring Mohawk Home Officers (shown below from left to right): H. Monte Thornton, Donald R. Board of Directors (shown below from left to right): Bruce C. Bruckmann, W. Christopher Riley, Joe W. Yarbrough, Jr., Jeffrey S. Lorberbaum, William B. Killbride, Wellborn, David L. Kolb, S.H. “Jack” Sharpe, Robert N. Pokelwaldt, Phyllis O. Bonanno, Frank H. Boykin, Jerry L. Melton and W. Christopher Wellborn. Jeffrey S. Lorberbaum, Leo Benatar, John F. Fiedler and Larry W. McCurdy. [20]