UNITED STATES
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 September 30, 2006

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 incorporation or organization)                                    (I.R.S. Employer Identification No.)

                             P. O. Box 12069, 160 S. Industrial Blvd., Calhoun, Georgia                                                                   30701
                                           (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 [   ]

      Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act):

Large accelerated filer [ x ] Accelerated filer [   ] Non-accelerated filer [   ]

      Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes [   ] No [ x ]

      The number of shares outstanding of the issuer's classes of capital stock as of October 27, 2006, the latest practicable date, is as follows: 67,723,180 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 as of September 30, 2006 and December 31, 2005	3	
 	 	 	
 	Condensed Consolidated Statements of Earnings for the three months ended	 	
 	September 30, 2006 and October 1, 2005	5	
 	 	 	
 	Condensed Consolidated Statements of Earnings for the nine months ended  	 	
 	September 30, 2006 and October 1, 2005	6	
 	 	 	
 	Condensed Consolidated Statements of Cash Flows for the nine months ended	 	
 	September 30, 2006 and October 1, 2005	7	
 	 	 	
 	Notes to Condensed Consolidated Financial Statements	8	
 	 	 	
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22	
 	 	 	
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27	
 	 	 	
Item 4.	Controls and Procedures	27	
 	 	 	
Part II	Other Information	27	
 	 	 	
Item 1.	Legal Proceedings	27	
 	 	 	
Item 1A.	Risk Factors	28	
 	 	 	
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28	
 	 	 	
Item 3.	Defaults Upon Senior Securities	29	
 	 	 	
Item 4.	Submission of Matters to a Vote of Security Holders	29	
 	 	 	
Item 5.	Other Information	29	
 	 	 	
Item 6.	Exhibits	29	

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS
(In thousands)
(Unaudited)
 	September 30, 2006	 	December 31, 2005	
 	 	 	 	
Current assets:	 	 	 	
 	 	 	 	
    Cash and cash equivalents	 $	69,730 	 	134,585 	
 	 	 	 	
    Receivables	958,416 	 	848,666 	
 	 	 	 	
    Inventories	1,275,435 	 	1,215,427 	
 	 	 	 	
    Prepaid expenses	126,895 	 	140,789 	
 	 	 	 	
    Deferred income taxes	55,128 	 	49,534 	
        Total current assets	2,485,604 	 	2,389,001 	
 	 	 	 	
Property, plant and equipment, at cost	3,005,177 	 	2,824,837 	
Less accumulated depreciation and	 	 	 	
      amortization	1,135,904 	 	1,014,109 	
 	 	 	 	
        Net property, plant and equipment	1,869,273 	 	1,810,728 	
 	 	 	 	
Goodwill	2,685,092 	 	2,621,963 	
 	 	 	 	
Tradenames	646,933 	 	622,094 	
 	 	 	 	
Other intangible assets	521,806 	 	552,003 	
 	 	 	 	
Other assets	25,933 	 	44,248 	
 	 	 	 	
 	 $	8,234,641 	 	8,040,037 	
 	 	 	 	
See accompanying notes to condensed consolidated financial statements.
3	

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY
(In thousands, except per share data)
(Unaudited)
 	September 30, 2006	 	December 31, 2005	
 	 	 	 	
Current liabilities:	 	 	 	
 	 	 	 	
    Current portion of long-term debt	 $	509,151 	 	113,809 	
    Accounts payable and accrued expenses	1,124,974 	 	998,105 	
        Total current liabilities	1,634,125 	 	1,111,914 	
 	 	 	 	
Deferred income taxes	591,273 	 	643,283 	
Long-term debt, less current portion	2,438,732 	 	3,194,561 	
Other long-term liabilities	40,010 	 	32,041 	
        Total liabilities	4,704,140 	 	4,981,799 	

Stockholders' equity:	 	 	 	
    Preferred stock, $.01 par value; 60 shares	 	 	 	
      authorized; no shares issued	- 	 	- 	
    Common stock, $.01 par value; 150,000 shares	 	 	 	
      authorized; 78,748 and 78,478 shares issued	 	 	 	
      in 2006 and 2005, respectively	787 	 	785 	
    Additional paid-in capital	1,145,803 	 	1,123,991 	
    Retained earnings	2,626,039 	 	2,299,696 	
    Accumulated other comprehensive income, net	81,718 	 	(47,433)	
 	3,854,347 	 	3,377,039 	
     Less treasury stock at cost; 11,051 and 10,981	 	 	 	
       shares in 2006 and 2005, respectively	323,846 	 	318,801 	
           Total stockholders' equity	3,530,501 	 	3,058,238 	
 	 	 	 	
 	 $	8,234,641 	 	8,040,037 	
 	 	 	 	
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	
 	September 30, 2006	 	October 1, 2005	
 	 	 	 	
Net sales	 $	2,024,019 	 	1,697,634 	
 	 	 	 	
Cost of sales	1,455,508 	 	1,234,680 	
        Gross profit	568,511 	 	462,954 	
 	 	 	 	
Selling, general and administrative expenses	345,771 	 	274,052 	
        Operating income	222,740 	 	188,902 	
 	 	 	 	
Other expense (income):	 	 	 	
   Interest expense	44,655 	 	10,775 	
   Other expense	2,668 	 	1,970 	
   Other income	(2,613)	 	(2,370)	
   U.S. Customs refund, net	(8,834)	 	- 	
 	35,876 	 	10,375 	
 	 	 	 	
        Earnings before income taxes	186,864 	 	178,527 	
 	 	 	 	
Income taxes	59,156 	 	62,764 	
 	 	 	 	
        Net earnings	 $	127,708 	 	115,763 	

Basic earnings per share	 $	1.89 	 	1.73 	
 	 	 	 	
Weighted-average common shares outstanding	67,704 	 	66,865 	

Diluted earnings per share	 $	1.88 	 	1.71 	
 	 	 	 	
Weighted-average common and dilutive potential	 	 	 	
   common shares outstanding	68,021 	 	67,519 	
 	 	 	 	
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)
 	Nine Months Ended	
 	September 30, 2006	 	October 1, 2005	
 	 	 	 	
Net sales	 $	6,007,248 	 	4,815,548 	
 	 	 	 	
Cost of sales	4,330,015 	 	3,524,060 	
        Gross profit	1,677,233 	 	1,291,488 	
 	 	 	 	
Selling, general and administrative expenses	1,067,547 	 	806,144 	
        Operating income	609,686 	 	485,344 	
 	 	 	 	
Other expense (income):	 	 	 	
   Interest expense	131,113 	 	35,166 	
   Other expense	9,777 	 	6,688 	
   Other income	(3,397)	 	(4,162)	
   U.S. Customs refund, net	(15,066)	 	- 	
 	122,427 	 	37,692 	
 	 	 	 	
        Earnings before income taxes	487,259 	 	447,652 	
 	 	 	 	
Income taxes	160,917 	 	160,147 	
 	 	 	 	
        Net earnings	 $	326,342 	 	287,505 	

Basic earnings per share	 $	4.82 	 	4.30 	
 	 	 	 	
Weighted-average common shares outstanding	67,654 	 	66,827 	

Diluted earnings per share	 $	4.80 	 	4.26 	
 	 	 	 	
Weighted-average common and dilutive potential	 	 	 	
   common shares outstanding	68,056 	 	67,572 	
 	 	 	 	
See accompanying notes to condensed consolidated financial statements
6	

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 	Nine Months Ended	
 	September 30, 2006	 	October 1, 2005	
Cash flows from operating activities:	 	 	 	
 Net earnings	 $	326,342 	 	287,505 	
 Adjustments to reconcile net earnings to net	 	 	 	
     cash provided by operating activities:	 	 	 	
      Depreciation and amortization	202,674 	 	94,900 	
      Deferred income taxes	(64,026)	 	8,387 	
      Loss on disposal of property, plant	 	 	 	
          and equipment	5,895 	 	1,312 	
      Tax benefit on exercise of stock awards	- 	 	4,749 	
      Excess tax benefit from stock-based compensation	(3,022)	 	- 	
      Stock based compensation expense	9,028 	 	- 	
      Changes in operating assets and liabilities,	 	 	 	
       net of effects of acquisition:	 	 	 	
          Receivables	(71,280)	 	(141,544)	
          Inventories	(48,006)	 	(81,498)	
          Accounts payable and accrued expenses	165,244 	 	150,940 	
          Other assets and prepaid expenses	18,642 	 	4,527 	
          Other liabilities	4,750 	 	(1,245)	
             Net cash provided by operating activities	546,241 	 	328,033 	
 	 	 	 	
Cash flows from investing activities:	 	 	 	
 Additions to property, plant and equipment, net	(124,048)	 	(150,801)	
 Acquisitions	(70,907)	 	(50,606)	
             Net cash used in investing activities	(194,955)	 	(201,407)	
 	 	 	 	
Cash flows from financing activities:	 	 	 	
 Net change in short term credit lines	-   	 	(23,215)	
 Payments on revolving line of credit	(1,290,746)	 	- 	
 Proceeds from revolving line of credit	1,053,298 	 	- 	
 Repayment on bridge loan	(1,400,000)	 	- 	
 Proceeds from issuance of senior notes	1,386,841 	 	- 	
 Net change in asset securitization borrowings	110,000 	 	(90,000)	
 Payments on term loan	(239,220)	 	- 	
 Payments of other debt	(31,904)	 	(9,447)	
 Excess tax benefit from stock-based compensation	3,022 	 	- 	
 Change in outstanding checks in excess of cash	(15,506)	 	2,506 	
 Acquisition of treasury stock	(5,180)	 	(15,448)	
 Proceeds from  stock option exercises	9,505 	 	8,978 	
              Net cash used in financing activities	(419,890)	 	(126,626)	
              Effect of exchange rate changes on	 	 	 	
               cash and cash equivalents	3,749 	 	- 	
              Net change in cash	(64,855)	 	- 	
Cash, beginning of period	134,585 	 	- 	
Cash, end of period	 $	69,730 	 	- 	
 	 	 	 	
See accompanying notes to condensed consolidated financial statements.
7	

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)
(Unaudited)

1.   Interim reporting

      The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the consolidated financial statements and notes thereto, and the Company's description of critical accounting policies, included in the Company's 2005 Annual Report on Form 10-K, as filed with the Securities and Exchange Commission.

2.   Summary of Significant Accounting Policies

      As of April 2, 2006, the Company changed the method of accounting for its inventory from the last-in, first-out ("LIFO") to the first-in, first-out ("FIFO") method for inventories not on FIFO within its Mohawk segment. All prior periods have been revised to reflect this change. See Note 6 for further discussion.

3.   New Pronouncements

      In July 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes-an  Interpretation of FASB Statement No. 109, " which clarifies the accounting for uncertainty in income taxes .  FIN 48 prescribes a recognition threshold and measurement criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.  The provisions of FIN 48 are effective as of the beginning of the Company's 2007 fiscal year, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings.  The Company is currently evaluating the impact of FIN 48 on its consolidated financial statements.

      In September 2006, FASB issued Statement of Financial Accounting Standards No. 157 ("SFAS No. 157"), "Fair Value Measurements." SFAS No. 157 defines fair value, establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. SFAS No. 157 requires companies to disclose the fair value of its financial instruments according to a fair value hierarchy.  Additionally, companies are required to provide certain disclosures regarding instruments within the hierarchy, including a reconciliation of the beginning and ending balances for each major category of assets and liabilities. SFAS 157 is effective for the Company's fiscal year beginning January 1, 2008.  The Company is currently evaluating the impact of SFAS No. 157 on its consolidated financial statements.
8	

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)
(Unaudited)

      In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Post Retirement Plans- an amendment of FASB Statements No. 87, 88, 106 and 132(R)" ("SFAS No. 158"). SFAS No. 158 requires an employer that sponsors one or more single-employer defined benefit plans to recognize the over-funded or under-funded status of a benefit plan in its statement of financial position, recognize as a component of other comprehensive income, net of tax, gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit costs pursuant to SFAS No. 87, "Employers Accounting for Pensions," or SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," measure defined benefit plan assets and obligations as of the date of the employer's fiscal year-end, and disclose in the notes to financial statements additional information about certain effects on net periodic benefit cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition assets or obligations. The recognition and disclosure provisions required by SFAS No. 158 are effective for the Company's fiscal year ending December 31, 2006. The measurement date provisions are effective for fiscal years ending after December 15, 2008. The Company is currently evaluating the impact of SFAS No. 158 on its consolidated financial statements.  

      In September 2006, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements" ("SAB 108"). SAB 108 provides interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement.  The SEC staff believes that registrants should quantify errors using both the balance sheet and income statement approach when quantifying a misstatement. SAB 108 is effective for the Company's fiscal year ending December 31, 2006.  The Company is currently evaluating the impact of SAB 108 on the Company's consolidated financial statements.

4.   Acquisition

      On October 31, 2005, the Company acquired all the outstanding shares of Unilin Holding NV by acquiring Unilin Flooring BVBA, which then purchased Unilin Holding NV. The Company simultaneously acquired all the outstanding shares of Unilin Holding Inc., and its subsidiaries (together with Unilin Flooring BVBA, "Unilin"). Unilin, together with its subsidiaries, is a leading manufacturer, distributor and marketer of laminate flooring in Europe and the United States. The total purchase price of acquiring Unilin, net of cash of $165,709, was Euro 2,105,918, or $2,540,949, based on the prevailing exchange rate at the closing.  The acquisition was accounted for by the purchase method and, accordingly, the results of operations of Unilin have been included in the Company's consolidated financial statements from October 31, 2005.  The purchase price has been allocated to the assets acquired and liabilities assumed based upon the estimated fair values at the date of acquisition. Intangibles and property, plant and equipment values were established with the assistance of an independent third party. The excess of the purchase price over the fair value of the net identifiable assets acquired of approximately $1,247,155 was recorded as goodwill. The primary reason for the acquisition was to expand the Company's presence in the laminate flooring market.

      The Company considered whether identifiable intangible assets existed during the purchase price negotiations and during the subsequent purchase price allocation period. Accordingly, the Company recognized trade names, patents, customer lists, contingent assets and backlogs.

      In accordance with SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142"), goodwill recorded in connection with the Unilin acquisition will not be amortized. Additionally, the Company determined that the trade names intangible assets have indefinite useful lives because they are expected to generate cash flows indefinitely. Goodwill and the trade names intangible assets are subject to annual impairment testing.
9	

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)
(Unaudited)

      The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition, excluding cash of $165,709. During October 2006, the Company finalized the allocation of the purchase price related to the Unilin acquisition.
 	 	 	 	
 	        Current assets	 	 $	389,923 	
 	        Property, plant and equipment	 	752,892 	
 	        Goodwill	 	1,247,155 	
 	        Intangible assets	 	882,886 	
 	        Other assets	 	890 	
 	          Total assets acquired	 	3,273,746 	
 	 	 	 	
 	        Current liabilities	 	277,337 	
 	        Long-term debt	 	32,027 	
 	        Other liabilities	 	423,433 	
 	          Total liabilities assumed	 	732,797 	
 	             Net assets acquired	 	 $	2,540,949 	
      Of the $882,886 of acquired intangibles, $356,521 was assigned to registered trade names that are not subject to amortization.  The remaining acquired intangibles were assigned to customer relationships for $270,709 (7 year weighted average useful life) and patents for $255,656 (12 year weighted average useful life). The $1,247,155 of goodwill is not deductible for tax purposes.

      The following unaudited pro forma financial information presents the combined results of operations of the Company and Unilin as if the acquisition had occurred at the beginning of 2005, after giving effect to certain adjustments, including increased interest expense on debt related to the acquisition, and the amortization of intangible assets. The pro forma information does not necessarily reflect the results of operations that would have occurred had the Company and Unilin constituted a single entity during the period. The following table discloses the pro forma results for the three and nine month periods ended October 1, 2005:
 	 	Three Months Ended	 	Nine Months Ended	
 	 	 	 	 	
        Net sales	 	 $	1,997,690 	 	5,672,680 	
        Net earnings	 	139,651 	 	313,505 	
        Basic earnings per share	 	2.09 	 	4.69 	
        Diluted earnings per share	 	2.07 	 	4.64 	

10	

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)
(Unaudited)
5.   Receivables	 	 	 	
 	 	 	 	
      Receivables are as follows:	 	 	 	
 	September 30, 2006	 	December 31, 2005	
 	 	 	 	
      Customers, trade	 $	1,030,378  	 	925,714  	
      Other	36,695  	 	25,662  	
 	1,067,073  	 	951,376  	
      Less allowance for discounts, returns, claims	 	 	 	
                  and doubtful accounts	108,657  	 	102,710  	
 	 	 	 	
        Net receivables	 $	958,416  	 	848,666  	

6.   Inventories	 	 	 	
 	 	 	 	
      The components of inventories are as follows:	 	 	 	
 	September 30, 2006	 	December 31, 2005	
 	 	 	 	
        Finished goods	 $	830,732  	 	788,037  	
        Work in process	95,040  	 	93,266  	
        Raw materials	349,663  	 	334,124  	
 	 	 	 	
            Total inventories	 $	1,275,435  	 	1,215,427  	
 	 	 	 	
      Effective April 2, 2006, the Company changed the method of accounting for all inventories not previously accounted for on the first-in, first-out ("FIFO") method from the last-in, first-out ("LIFO") method to the FIFO method. The Company believes the FIFO method of accounting for inventory costs is preferable because it provides a better measure of the current value of its inventory and provides a better matching of manufacturing costs with revenues. The change will also result in the application of a single costing method to all of the Company's inventories. As a result, all inventories are stated at the lower of cost, determined on a FIFO basis, or market. In accordance with SFAS No. 154, "Accounting Changes and Error Corrections," the Company has retrospectively applied this change in method of inventory costing. The impact of the change in method on certain financial statement line items is as follows:
11	

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)
(Unaudited)
 	 	Quarter	 	Nine	 	 	
 	 	Ended	 	Months Ended	 	Year Ended	
 	 	October 1,	 	October 1,	 	December 31,	
 	 	2005	 	2005	 	2005	
Statement of earnings data:	 	 	 	 	 	 	
As originally reported	 	 	 	 	 	 	
Cost of sales	 	 $	1,245,766 	 	3,547,469 	 	4,896,965 	
Operating income	 	177,816 	 	461,935 	 	627,272 	
Income taxes	 	58,789 	 	151,760 	 	198,826 	
Net earnings	 	 $	108,652 	 	272,483 	 	358,195 	
Basic earnings per share	 	1.62 	 	4.07 	 	5.35 	
Diluted earnings per share	 	1.61 	 	4.03 	 	5.30 	
 	 	 	 	 	 	 	
Effect of Change-Increase	 	 	 	 	 	 	
 (decrease)	 	 	 	 	 	 	
Cost of sales	 	 $	(11,086)	 	(23,409)	 	(45,112)	
Operating income	 	11,086 	 	23,409 	 	45,112 	
Income taxes	 	3,975 	 	8,387 	 	16,169 	
Net earnings	 	7,111 	 	15,022 	 	28,943 	
Basic earnings per share	 	0.11 	 	0.23 	 	0.43 	
Diluted earnings per share	0.11 	 	0.23 	 	0.43 	
 	 	 	 	 	 	 	
As revised	 	 	 	 	 	 	
Cost of sales	 	 $	1,234,680 	 	3,524,060 	 	4,851,853 	
Operating income	 	188,902 	 	485,344 	 	672,384 	
Income taxes	 	62,764 	 	160,147 	 	214,995 	
Net earnings	 	 $	115,763 	 	287,505 	 	387,138 	
Basic earnings per share	 	1.73 	 	4.30 	 	5.78 	
Diluted earnings per share	1.71 	 	4.26 	 	5.72 	

12	

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)
(Unaudited)
 	As of 	 	 	Nine Months Ended	
 	December 31, 2005	 	 	October 1, 2005	
Balance sheet:	 	 	Statement of Cash Flows:	 	
As originally reported	 	 	As originally reported	 	
Inventory	 $	1,166,913 	 	Net earnings	 $	272,483 	
   Total Assets	7,991,523 	 	Deferred taxes	- 	
Deferred income taxes	625,887 	 	Change in inventories	(58,089)	
   Total Liabilities	4,964,403 	 	Net cash provided by operating	 	
Retained earnings	2,268,578 	 	 activities	328,033 	
Total liabilities and	 	 	 	 	
 Shareholders' equity	7,991,523 	 	 	 	
 	 	 	 	 	
Effect of Change	 	 	Effect of Change	 	
Inventory	48,514 	 	Net earnings	15,022 	
Deferred income taxes	17,396 	 	Deferred taxes	8,387 	
Retained earnings	31,118 	 	Change in inventories	(23,409)	
 	 	 	Net cash provided by operating	 	
As revised	 	 	 activities	- 	
Inventory	1,215,427 	 	 	 	
   Total Assets	8,040,037 	 	As revised	 	
Deferred income taxes	643,283 	 	Net earnings	287,505 	
   Total Liabilities	4,981,799 	 	Deferred taxes	8,387 	
Retained earnings	2,299,696 	 	Change in inventories	(81,498)	
Total liabilities and	 	 	Net cash provided by operating	 	
 Shareholders' equity	 $	8,040,037 	 	 activities	 $	328,033 	
      The amount of the accounting change prior to 2004 was not significant because FIFO approximated the inventory carrying value. Had the Company continued to apply the LIFO method of accounting, the impact on the statement of earnings would have resulted in an increase to operating income of $2,427 ($1,540, net of tax) and an increase in basic and diluted earnings per share of approximately $0.02 per share for the current quarter and a decrease in operating income of $3,724 ($1,902 net of tax) and a decrease in  basic and diluted earnings per share of approximately $0.03 per share for the nine month period ended September 30, 2006.

7.   Intangible assets and goodwill
Goodwill:	 	 	 	 	 	 	 	
 	Mohawk	 	Dal-Tile	 	Unilin	 	Total	
Balance as of January 1, 2006	 $	198,132 	 	1,191,672 	 	1,232,159 	 	2,621,963 	
Goodwill recognized during the period (1)	1,000 	 	- 	 	(2,565)	 	(1,565)	
Effect of translation during the period	- 	 	- 	 	64,694 	 	64,694 	
Balance as of September 30, 2006	 $	199,132 	 	1,191,672 	 	1,294,288 	 	2,685,092 	

(1) The change in goodwill within the Unilin reporting unit resulted from adjustments to the opening balance sheet related to the Unilin acquisition.   In addition, the Company recognized additional goodwill of $1,000 related to an earn-out agreement entered into in 2003. 
13	

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)
(Unaudited)
Intangible Assets:	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	
Indefinite Life Assets not	 	 	 	 	 	 	 	
 Subject to Amortization:	 	 	 	 	 	 	 	
 	Mohawk	 	Dal-Tile	 	Unilin	 	Total	
Balance as of January 1, 2006, net	 $	125,580 	 	146,700 	 	349,814 	 	622,094 	
Effect of translation during the period	- 	 	- 	 	24,839 	 	24,839 	
Balance as of September 30, 2006	 $	125,580 	 	146,700 	 	374,653 	 	646,933 	
 	 	 	 	 	 	 	 	
Intangible Assets Subject	 	 	 	 	 	 	 	
 to Amortization:	 	 	 	 	 	 	 	
Balance as of January 1, 2006, gross	 $	53,360 	 	2,570 	 	519,119 	 	575,049 	
Less: Accumulated Amortization	(7,710)	 	(751)	 	(14,585)	 	(23,046)	
Balance as of January 1, 2006, net	45,650 	 	1,819 	 	504,534 	 	552,003 	
Amortization during the period	(2,651)	 	(644)	 	(56,990)	 	(60,285)	
Effect of translation during the period	- 	 	- 	 	30,088 	 	30,088 	
Balance as of September 30, 2006	 $	42,999 	 	1,175 	 	477,632 	 	521,806 	
 	 	 	 	 	 	 	 	
      Amortization expense for the three and nine month periods ended September 30, 2006 and October 1, 2005, respectively, is as follows:
 Amortization expense:	Three Months Ended	 	Nine Months Ended	
 	2006	 	2005	 	2006	 	2005	
 	 	 	 	 	 	 	 	
Aggregate Amortization Expense	 $	20,472 	 	1,000 	 	60,285 	 	3,002 	

8.     Accounts payable and accrued expenses	 	 	 	
 	 	 	 	
        Accounts payable and accrued expenses are as	 	 	 	
          follows:	 	 	 	
 	September 30, 2006	 	December 31, 2005	
 	 	 	 	
        Outstanding checks in excess of cash	 $	81,883 	 	97,389 	
        Accounts payable, trade	411,728 	 	401,543 	
        Accrued expenses	298,580 	 	240,827 	
        Income taxes payable	165,435 	 	121,533 	
        Accrued compensation	167,348 	 	136,813 	
 	 	 	 	
           Total accounts payable and accrued expenses	 $	1,124,974 	 	998,105 	

14	

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)
(Unaudited)

9.   Product Warranties

      The Company warrants certain qualitative attributes of its products for up to 20 years. The Company records a liability for estimated warranty and related costs, based on historical experience and periodically adjusts these liabilities to reflect actual experience. The warranty obligation is as follows:
 	Three Months Ended	 	Nine Months Ended	
 	September 30,	 	October 1,	 	September 30,	 	October 1,	
 	2006	 	2005	 	2006	 	2005	
 	 	 	 	 	 	 	 	
      Balance at beginning of period	 $	24,824 	 	24,054 	 	25,988 	 	23,473 	
      Warranty claims paid	(11,676)	 	(10,815)	 	(36,481)	 	(35,058)	
      Warranty expense	12,418 	 	10,996 	 	36,059 	 	35,820 	
      Balance at end of period	 $	25,566 	 	24,235 	 	25,566 	 	24,235 	
 	 	 	 	 	 	 	 	
10.  Comprehensive income

      Comprehensive income is as follows:
 	Three Months Ended	 	Nine Months Ended	
 	September 30,	 	October 1,	 	September 30,	 	October 1,	
 	2006	 	2005	 	2006	 	2005	
 	 	 	 	 	 	 	 	
Net earnings	 $	127,708 	 	115,763 	 	326,342 	 	287,505 	
 Other comprehensive income:	 	 	 	 	 	 	 	
    Foreign currency translation	(16,619)	 	56  	 	132,044  	 	(517)	
    Unrealized (loss) gain on derivative	 	 	 	 	 	 	 	
      instruments, net of income taxes	(388)	 	3,206 	 	(2,893)	 	4,898 	
          Comprehensive income	 $	110,701 	 	119,025 	 	455,493 	 	291,886 	
 	 	 	 	 	 	 	 	
11.  Stock compensation

      Prior to January 1, 2006, the Company accounted for its stock compensation plans under the recognition and measurement provisions of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related Interpretations, as permitted by FASB No. 123, "Accounting for Stock-Based Compensation." Accordingly, no stock-based employee compensation cost related to stock options was recognized in the Consolidated Statement of Earnings as all options granted under the plans had an exercise price equal to the market value of the underlying common stock on the date of grant. Effective January 1, 2006, the Company adopted the fair value recognition provisions of FASB No. 123(R), "Share-Based Payment," using the modified-prospective-transition method. Under that transition method, compensation cost includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of, January 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of FASB No. 123, and (b) compensation cost for all share-based payments granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of FASB No. 123(R). Results for prior periods have not been restated.
15	

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)
(Unaudited)

      Prior to the adoption of FASB No. 123(R), the Company presented all tax benefits of deductions resulting from the exercise of stock options as operating cash flows in the Consolidated Statement of Cash Flows. FASB No. 123(R) requires the cash flows resulting from the tax benefits resulting from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) to be classified as financing cash flows. Accordingly, the Company has classified the excess tax benefit as a financing cash inflow.

      Under the Company's 2002 Long-Term Incentive Plan ("Plan"), the Company's principal stock compensation plan, stock options may be granted to directors and key employees through 2012 to purchase a maximum of 3,200 shares of common stock. Option awards are generally granted with an exercise price equal to the market price of the Company's common stock on the date of the grant. Those option awards generally vest between three and five years and have a 10-year contractual term. In addition, the Company maintains an employee incentive program that awards restricted stock on the attainment of certain service criteria. The outstanding awards related to these restricted stock programs and related compensation expenses were not significant for the quarters ended September 30, 2006 and October 1, 2005.

      On October 31, 2005, the Company entered into a Discounted Stock Purchase Agreement (the "DSPA") with certain members of the Unilin management team (the "Unilin Management"). Under the terms of the DSPA, the Company will be obligated to make cash payments to the Unilin Management in the event that certain performance goals are satisfied. In each of the years in the five-year period ended December 31, 2010, the Unilin Management can earn amounts, in the aggregate, equal to the average value of 30,671 shares of the Company's common stock over the 20 trading day period ending on December 31 of the prior year.  Any failure in a given year to reach the performance goals may be rectified, and consequently the amounts payable with respect to achieving such criteria may be made, in any of the other years. The amount of the liability is measured each period and recognized as compensation expense in the statement of operations.

      The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FASB No. 123(R) to options granted under the Plan in the period presented. For purposes of this pro forma disclosure, the value of the options is estimated using a Black-Scholes-Merton option-pricing formula and amortized to expense over the options' vesting periods.
 	Three Months	 	Nine Months	
 	Ended October 1,	 	Ended October 1,	
 	2005	 	2005	
 	 	 	 	
    Net earnings as reported	 $	115,763 	 	287,505 	
    Add: Stock-based employee compensation	 	 	 	
     included in reported net earnings, net of	 	 	 	
     related tax effects	- 	 	- 	
    Deduct: Stock-based employee compensation	 	 	 	
     expense determined under fair value based	 	 	 	
     method for all awards, net of related tax effects	(2,188)	 	(6,366)	
    Pro forma net earnings	 $	113,575 	 	281,139 	
 	 	 	 	
      Net earnings per common share (basic):	 	 	 	
       As reported	 $	1.73 	 	4.30 	
       Pro forma	 $	1.70 	 	4.21 	
      Net earnings per common share (diluted):	 	 	 	
       As reported	 $	1.71 	 	4.26 	
       Pro forma	 $	1.69 	 	4.17 	

16	

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)
(Unaudited)

      The fair value of the option award is estimated on the date of grant using the Black-Scholes-Merton valuation model that uses the assumptions noted in the following table. Expected volatility is based on the historical volatility of the Company's common stock and other factors. The Company uses historical data to estimate option exercise and forfeiture rates within the valuation model. Optionees that exhibit similar option exercise behavior are segregated into separate groups within the valuation model. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate is based on U.S. Treasury yields in effect at the time of the grant for the expected term of the award. There were no options granted during the third quarter of 2006.
 	 	 	Three Months Ended	 	Nine Months Ended	
 	 	 	October 1,	 	September 30,	 	October 1,	
 	 	 	2005	 	2006	 	2005	
 	 	 	 	 	 	 	 	
       Dividend yield	 	 	-             	 	- 	 	- 	
       Risk-free interest rate	 	4.3 %       	 	4.6 %	 	3.9 %	
       Expected volatility	 	 	37.9 %      	 	35.3 %	 	38.0 %	
       Expected term (years)	 	6.0         	 	5.6 	 	6.0 	
 	 	 	 	 	 	 	 	
       The summary of the Company's Plan as of September 30, 2006, and changes during the nine month period then ended is presented as follows:
 	Shares	 	Weighted Average Exercise Price	 	Weighted Average Remaining Contractual Term (years)	 	Average Intrinsic Value	
 	 	 	 	 	 	 	 	
        Options outstanding, beginning	2,276 	 	 $	59.60 	 	 	 	 	
         of year	 	 	 	 	 	 	 	
        Granted	144 	 	83.74 	 	 	 	 	
        Exercised	(263)	 	36.92 	 	 	 	 	
        Forfeited and expired	(31)	 	75.00 	 	 	 	 	
        Options outstanding, end of period	2,126 	 	63.83 	 	6.6 	 	 $	30,062 	
 	 	 	 	 	 	 	 	
        Vested and expected to	 	 	 	 	 	 	 	
         vest at September 30, 2006	2,046 	 	 $	63.20 	 	6.6 	 	 $	29,869 	
 	 	 	 	 	 	 	 	
        Exercisable at September 30, 2006 	1,073 	 	 $	51.53 	 	5.5 	 	 $	25,438 	

17	

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)
(Unaudited)

      The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2006 and October 1, 2005, was $33.89 and $38.28, respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2006, was $11,861. Total compensation expense recognized for the nine months ended September 30, 2006, was $9,028 or $5,701 net of tax, which was allocated to selling, general and administrative expenses. The remaining unamortized expense for non-vested compensation expense at September 30, 2006, was $21,424 with a weighted average remaining life of 2.4 years. If the Company had continued to account for share-based compensation under APB Opinion No. 25, basic and diluted net earnings per share for the three and nine months ended September 30, 2006 would have been $1.91 and $1.90 and $4.91 and $4.88, respectively.

      The following table summarizes information about the Company's stock options outstanding at September 30, 2006:
 	 	Outstanding	 	Exercisable	
Exercise price range	 	Number of Shares	 	Average Life	 	Average Price	 	Number of Shares	 	Average Price	
Under $42.86	 	359 	 	3.73 	 	 $	28.99 	 	356 	 	 $	28.88 	
$48.50-58.00	 	365 	 	6.29 	 	50.39 	 	243 	 	50.24 	
$61.33-63.90	 	370 	 	5.49 	 	63.33 	 	273 	 	63.37 	
$65.02-73.45	 	381 	 	7.28 	 	72.31 	 	133 	 	72.03 	
$73.54-88.33	 	641 	 	8.66 	 	85.88 	 	67 	 	86.66 	
$89.46-90.97	 	10 	 	8.40 	 	90.47 	 	1 	 	90.54 	
   Total	 	2,126 	 	6.62 	 	 $	63.83 	 	1,073 	 	 $	51.53 	
 	 	 	 	 	 	 	 	 	 	 	
12.  Earnings per share

      The Company applies the provisions of SFAS No. 128, "Earnings per Share," which requires companies to present basic EPS and diluted EPS.  Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period.  Diluted EPS reflects the dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.

      Dilutive common stock options are included in the diluted EPS calculation using the treasury stock method.  Options to purchase common stock excluded from the computation of diluted earnings per share because their effect would have been anti-dilutive were 1,547 shares and 981 shares for the third quarter of 2006 and 2005, respectively, and 1,316 shares and 909 shares for the nine month periods ended September 30, 2006 and October 1, 2005, respectively.
18	

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)
(Unaudited)
 	Three Months Ended	 	Nine Months Ended	
 	September 30,	 	October 1,	 	September 30,	 	October 1,	
 	2006	 	2005	 	2006	 	2005	
 	 	 	 	 	 	 	 	
Net earnings	 $	127,708  	 	115,763  	 	326,342  	 	287,505  	
 	 	 	 	 	 	 	 	
Weighted-average common and dilutive	 	 	 	 	 	 	 	
    potential common shares outstanding:	 	 	 	 	 	 	 	
      Weighted-average common shares	 	 	 	 	 	 	 	
      outstanding	67,704  	 	66,865  	 	67,654  	 	66,827  	
      Add weighted-average dilutive	 	 	 	 	 	 	 	
      potential common shares - options to	 	 	 	 	 	 	 	
        purchase common shares, net	317  	 	654  	 	402  	 	745  	
Weighted-average common and dilutive	 	 	 	 	 	 	 	
 potential common shares outstanding	68,021  	 	67,519  	 	68,056  	 	67,572  	
 	 	 	 	 	 	 	 	
Basic earnings per share	 $	1.89  	 	1.73  	 	4.82  	 	4.30  	
 	 	 	 	 	 	 	 	
Diluted earnings per share	 $	1.88  	 	1.71  	 	4.80  	 	4.26  	
 	 	 	 	 	 	 	 	
13.  Supplemental Condensed Consolidated Statements of Cash Flows Information
 	Nine Months Ended	
 	September 30, 2006	 	October 1, 2005	
        Net cash paid during the period for:	 	 	 	
                Interest	 $	79,626 	 	31,806 	
                Income taxes	 $	166,108 	 	148,691 	
 	 	 	 	
14.  Segment reporting

      The Company has three reporting segments, the Mohawk segment, the Dal-Tile segment and the Unilin segment.  The Mohawk segment (an aggregation of the Mohawk Flooring reporting unit and the Mohawk Home reporting unit) designs, manufactures, sources, markets and distributes its product lines, which include carpet, rugs, pad, ceramic tile, hardwood, resilient and laminate through independent floor covering retailers, home centers, mass merchandisers, department stores, commercial dealers and commercial end users. The Dal-Tile segment designs, manufactures, sources, markets and distributes its product lines which include ceramic tile, porcelain tile and stone products sold through tile and flooring retailers, contractors, independent distributors and home centers.  The Unilin segment which is headquartered in Belgium, designs, manufactures and markets laminate flooring products, which are distributed through separate distribution channels consisting of independent distributors (who sell through retailers) and home centers.  The business is organized to address the specific customer needs of each distribution channel.
19	

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)
(Unaudited)

      Except as described in Notes 2 and 6 above, the accounting policies for each operating segment are consistent with the Company's policies described in the footnotes to the consolidated financial statements included in the Company's Annual Report filed on Form 10-K. Amounts disclosed for each segment are prior to any elimination or consolidation entries. Corporate general and administrative expenses attributable to each segment are estimated and allocated accordingly. Segment performance is evaluated based on operating income.
    Segment information is as follows:	Three Months Ended	 	Nine Months Ended	
 	September 30,	 	October 1,	 	September 30,	 	October 1,	
 	2006	 	2005	 	2006	 	2005	
     Net sales:	 	 	 	 	 	 	 	
        Mohawk	 $	1,233,833 	 	1,248,216 	 	3,626,371 	 	3,524,477 	
        Dal-Tile	501,241 	 	449,418 	 	1,482,065 	 	1,291,071 	
        Unilin	292,924 	 	- 	 	909,319 	 	- 	
        Corporate, Eliminations and	 	 	 	 	 	 	 	
          Intersegment Sales	(3,979)	 	- 	 	(10,507)	 	- 	
 	 $	2,024,019 	 	1,697,634 	 	6,007,248 	 	4,815,548 	
 	 	 	 	 	 	 	 	
     Operating income:	 	 	 	 	 	 	 	
        Mohawk	 $	110,505 	 	121,940 	 	275,111 	 	295,631 	
        Dal-Tile	69,642 	 	69,137 	 	213,286 	 	196,898 	
        Unilin	49,748 	 	- 	 	149,424 	 	- 	
        Corporate and Eliminations	(7,155)	 	(2,175)	 	(28,135)	 	(7,185)	
 	 $	222,740 	 	188,902 	 	609,686 	 	485,344 	
 	 	 	 	 	 	 	 	
 	 	 	 	 	As of	
 	 	 	 	 	September 30,	 	December 31,	
 	 	 	 	 	2006	 	2005	
       Assets:	 	 	 	 	 	 	 	
          Mohawk	 	 	 	 	 $	2,597,805 	 	2,473,497 	
          Dal-Tile	 	 	 	 	2,294,118  	 	2,207,514  	
          Unilin	 	 	 	 	3,239,804 	 	3,263,248 	
          Corporate and Eliminations	 	 	 	 	102,914 	 	95,778 	
 	 	 	 	 	 $	8,234,641 	 	8,040,037 	
 	 	 	 	 	 	 	 	
15.  Commitments, Contingencies and Other

      The Company is involved in 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.
20	

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)
(Unaudited)

      In Shirley Williams, et al vs. Mohawk Industries, Inc., four plaintiffs filed a purported class action lawsuit in January 2004, in the United States District Court for the Northern District of Georgia, alleging that they are former and current employees of the Company and that the actions and conduct of the Company, including the employment of persons who are not permitted to work in this country, have damaged them and the other members of the purported class by suppressing the wages of the Company's hourly employees in Georgia. The plaintiffs seek a variety of relief, including (a) treble damages; (b) return of any allegedly unlawful profits; and (c) attorney's fees and costs of litigation. In February 2004, the Company filed a Motion to Dismiss the Complaint, which was denied by the Northern District in April 2004. The Company then sought and obtained permission to file an immediate appeal of the Northern District's decision to the United States Court of Appeals for the 11th Circuit. In June 2005, the 11th Circuit reversed in part and affirmed in part the lower court's decision (Williams v. Mohawk Industries, Inc., 411 F.3d 1252 (11th Cir. 2005)). In June 2005, the Company filed a motion requesting review by the full 11th Circuit, which was denied in August 2005. In October 2005, the Company filed a petition for certiorari with the United States Supreme Court, which petition was granted in December of 2005. The case was argued before the Supreme Court on April 26, 2006. On June 5, 2006, the Supreme Court vacated the 11th Circuit ruling and ordered the 11th Circuit to reconsider its vacated ruling. On September 27, 2006, the 11th Circuit issued a second decision reversing in part and affirming in part the lower court's decision.  On October 18, 2006, the Company filed a motion requesting review of this decision by the full 11th Circuit.  The Company will continue to vigorously defend itself against this action.

     The Company believes that adequate provisions for resolution of all claims and pending litigation have been made for probable losses and that the ultimate outcome of these actions will not have a material adverse effect on its financial condition but could have a material effect on its results of operations in a given quarter or annual period.

      On January 17, 2006, the Company issued $500,000 aggregate principal amount of 5.750% notes due 2011 and $900,000 aggregate principal amount of 6.125% notes due 2016. The net proceeds from the issuance of these notes were used to pay off a $1,400,000 bridge credit facility entered into in connection with the Unilin acquisition. Interest payable on each series of the notes is subject to adjustment if either Moody's Investor Service, Inc. or Standard & Poor's Ratings Services, or both, downgrades the Company's debt rating.  Each rating agency downgrade results in a 0.25% increase in the interest rate, subject to a maximum increase of 1% per rating agency. If later the Company's debt rating improves, then the interest rates would be reduced accordingly. The provision for increasing the interest rate will no longer apply if the Company's debt rating from both rating agencies improves above the debt rating in effect at the time of the issuance of the notes.

      The Company has received partial refunds from the United States government in reference to settling customs disputes dating back to 1982. Accordingly, the Company recorded a net gain of $8,834 ($5,615, net of taxes) in other income (expense) for the three months ended September 30, 2006 and $15,066 ($9,518 net of taxes) in other income (expense) for the nine months ended September 30, 2006.  Additional future recoveries will be recorded as realized.

16.  Subsequent Event

    On October 16, 2006, the Company made the decision to permanently close its Jackson, Tennessee mosaic tile plant due to demand and production realignment. The Company will incur approximately $4,000 in costs associated with this restructuring.  Of this amount, approximately $2,700 is a non-cash asset impairment charge and the remaining $1,300 will be costs incurred for severance and other closure activities. In addition, the Company anticipates approximately $2,000 in other costs related to other restructurings within the Dal-Tile segment.
   21	

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Overview

      The Company is a leading producer of floor covering products for residential and commercial applications in the United States and Europe with net sales in 2005 in excess of $6.6 billion. The Company is the second largest carpet and rug manufacturer, and a leading manufacturer, marketer and distributor of ceramic tile and natural stone, in the United States and a leading producer of laminate flooring in the United States and Europe.

      The Company has three reporting segments, the Mohawk segment, the Dal-Tile segment and the Unilin segment. The Mohawk segment distributes its product lines, which include carpet, rugs, pad, ceramic tile, hardwood, resilient and laminate, through its network of approximately 50 regional distribution centers and satellite warehouses using its fleet of company-operated trucks, common carriers or rail transportation. The Mohawk segment product lines are purchased by independent floor covering retailers, home centers, mass merchandisers, department stores, independent distributors, commercial dealers and commercial end users. The Dal-Tile segment product lines include ceramic tile, porcelain tile and stone products distributed through approximately 274 company-operated sales service centers and regional distribution centers using primarily common carriers and rail transportation. The Dal-Tile segment product lines are purchased by tile specialty dealers, tile contractors, floor covering retailers, commercial end users, independent distributors and home centers. The Unilin segment manufactures and markets laminate flooring products, which are distributed through separate distribution channels consisting of independent distributors (who sell through retailers) and home centers. The business is organized to address the specific customer needs of each distribution channel.

      The Company reported net earnings of $127.7 million or diluted earnings per share ("EPS") of $1.88, up 10.3% for the third quarter of 2006 compared to net earnings of $115.8 million or $1.71 EPS for the third quarter of 2005. The increase in EPS resulted from the Unilin acquisition, hard surface sales growth, price increases and U.S. customs refunds. The increase was offset by increased raw material costs, increased distribution, energy costs and the expensing of stock options.

   The Company reported net earnings of $326.3 million or EPS of $4.80, up 13.5% for the first nine months of 2006 compared to net earnings of $287.5 million or $4.26 EPS for the first nine months of 2005. The increase in EPS resulted primarily from the Unilin acquisition, hard surface sales growth, price increases and U.S. customs refunds. The increase was offset by increased raw material costs, higher energy costs, increased distribution costs and the expensing of stock options.

     During the third quarter of 2006, the Company's results were impacted by a slowing U.S. economy which impacted demand within certain categories within its segments. The Company anticipates continued slow sales in the fourth quarter that will result in unfavorable manufacturing overhead costs impacting margins, especially within its Mohawk and Dal-Tile segments.

Results of Operations

Quarter Ended September 30, 2006, as Compared with Quarter Ended October 1, 2005

      Net sales for the quarter ended September 30, 2006 were $2,024.0 million, reflecting an increase of $326.4 million, or approximately 19.2%, from the $1,697.6 million reported in the quarter ended October 1, 2005. The increased net sales are primarily attributable to the Unilin acquisition, hard surface sales growth and selling price increases. The Mohawk segment recorded net sales of $1,233.8 million in the current quarter compared to $1,248.2 million in the third quarter of 2005, representing a decrease of $14.4 million or approximately 1.2%. The decrease was primarily attributable to both new and residential replacement demand slowing within its soft surface product categories offset by growth within commercial soft surface product categories. The Dal-Tile segment recorded net sales of $501.2 million in the current quarter, reflecting an increase of $51.8 million or approximately 11.5%, from the $449.4 million reported in the third quarter of 2005. The increase was primarily attributable to internal growth, acquisitions and selling price increases. The Unilin segment recorded net sales of $292.9 million in the current quarter.
22	

      Gross profit for the third quarter of 2006 was $568.5 million (28.1% of net sales) and represented an increase of $105.5 million from gross profit of $463.0 million (27.3% of net sales) for the prior year's third quarter. Gross profit as a percentage of net sales in the current period was favorably impacted by the Unilin acquisition, internal growth and acquisitions in the Dal-Tile segment. The increase was offset by increased raw material, distribution and start up costs when compared to the third quarter of 2005.

      Selling, general and administrative expenses for the third quarter of 2006 were $345.8 million (17.1% of net sales) compared to $274.1 million (16.1% of net sales) for the prior year's third quarter. The increase in selling, general and administrative expenses as a percentage of net sales was attributable to the Unilin acquisition, higher selling expense within the Mohawk segment and the expensing of stock options during the current quarter.

      Operating income for the third quarter of 2006 was $222.7 million (11.0% of net sales) compared to $188.9 million (11.1% of net sales) in the third quarter of 2005. Operating income as a percentage of net sales in the current quarter was unfavorably impacted by slower new and residential replacement demand, an increase in raw material costs, the expensing of stock options, offset by selling price increases and internal growth within the hard surface product categories. Operating income attributable to the Mohawk segment was $110.5 million (9.0% of segment net sales) in the third quarter of 2006 compared to $121.9 million (9.8% of segment net sales) in the third quarter of 2005. Operating income as a percentage of net sales in the current quarter was unfavorably impacted by slower new and replacement residential demand, an increase in raw material costs and distribution costs resulting from increases in energy costs. Operating income attributable to the Dal-Tile segment was $69.6 million (13.9% of segment net sales) in the third quarter of 2006 compared to $69.1 million (15.4% of segment net sales) for the third quarter of 2005. Operating income as a percentage of net sales was unfavorably impacted by higher distribution costs and start up costs at its Muskogee location. Operating income attributable to the Unilin segment was $49.7 million (17.0% of segment net sales) in the third quarter of 2006.

      Interest expense for the third quarter of 2006 was $44.7 million compared to $10.8 million in the third quarter of 2005. The increase in interest expense was attributable to higher average debt levels as a result of the Unilin acquisition in the current quarter when compared to the third quarter of 2005. In addition, interest rates in the third quarter of 2006 were higher when compared to the third quarter of 2005.

      Income tax expense was $59.2 million, or 31.7% of earnings before income taxes for the third quarter of 2006 compared to $62.8 million or 35.2% of earnings before income taxes for the prior year's third quarter. The decrease in the tax rate is due to the combination of domestic and international tax rates resulting from the Unilin acquisition in the current quarter when compared to the quarter ended October 1, 2005.

Nine Months Ended September 30, 2006, as Compared with Nine Months Ended October 1, 2005

      Net sales for the nine months ended September 30, 2006 were $6,007.2 million, reflecting an increase of $1,191.7 million, or approximately 24.7%, from the $4,815.5 million reported in the nine months ended October 1, 2005. The increased net sales are primarily attributable to the Unilin acquisition, internal growth and selling price increases. The Mohawk segment recorded net sales of $3,626.4 million in the current nine months compared to $3,524.5 million in the nine months of 2005, representing an increase of $101.9 million or approximately 2.9%. The increase was primarily attributable to price increases and growth of its hard surface product categories partially offset by slower new and residential replacement demand within its soft surface product categories. The Dal-Tile segment recorded net sales of $1,482.1 million in the current nine months ended September 30, 2006, reflecting an increase of $191.0 million or approximately 14.8%, from the $1,291.1 million reported in the nine months of 2005. The increase was primarily attributable to internal growth, acquisitions and selling price increases. The Unilin segment recorded net sales of $909.3 million for the nine months ended September 30, 2006.
23	

      Gross profit for the nine months ended September 30, 2006 was $1,677.2 million (27.9% of net sales) and represented an increase of $385.7 million from gross profit of $1,291.5 million (26.8% of net sales) for the nine months ended October 1, 2005. Gross profit as a percentage of net sales in the current period was favorably impacted by the Unilin acquisition and increased selling prices. The increase was offset by an increase in raw material, energy, distribution, and start up costs when compared to the first nine months of 2005.

      Selling, general and administrative expenses for the first nine months of 2006 were $1,067.5 million (17.8% of net sales) compared to $806.1 million (16.7% of net sales) for the prior year's nine months. The percentage increase was attributable to the Unilin segment, increased selling and distribution costs, and the expensing of stock options during the first nine months of 2006.

      Operating income for the first nine months of 2006 was $609.7 million (10.1% of net sales) compared to $485.3 million (10.1% of net sales) in the first nine months of 2005. Operating income as a percentage of net sales in the first nine months of 2006 was favorably impacted by the Unilin acquisition, selling price increases and internal growth within the hard surface product categories, offset by the expensing of stock options, an increase in raw material costs and higher energy costs. Operating income attributable to the Mohawk segment was $275.1 million (7.6% of segment net sales) in the first nine months of 2006 compared to $295.6 million (8.4% of segment net sales) in the first nine months of 2005. Operating income as a percentage of net sales in the first nine months of 2006 was unfavorably impacted by slower new and residential replacement demand within soft surface product categories, an increase in raw material and energy costs, and increased selling and distribution costs, offset by selling price increases and internal growth within its hard surface product categories. Operating income attributable to the Dal-Tile segment was $213.3 million (14.4% of segment net sales) in the first nine months of 2006 compared to $196.9 million (15.3% of segment net sales) for the first nine months of 2005. Operating income as a percentage of net sales was unfavorably impacted by higher distribution costs and start up costs at its Muskogee location. Operating income attributable to the Unilin segment was $149.4 million (16.4% of segment net sales) in the first nine months of 2006.

      Interest expense for the first nine months of 2006 was $131.1 million compared to $35.2 million in the first nine months of 2005. The increase in interest expense was attributable to higher average debt levels as a result of the Unilin acquisition in the first nine months of 2006 when compared to the first nine months of 2005. In addition, interest rates in the first nine months of 2006 were higher when compared to the first nine months of 2005.

      Income tax expense was $160.9 million, or 33.0% of earnings before income taxes for the first nine months of 2006 compared to $160.1 million, or 35.8% of earnings before income taxes for the nine months ended October 1, 2005. The decrease in the tax rate is due to the combination of domestic and international tax rates resulting from the Unilin acquisition in the first nine months of 2006 when compared to the nine months ended October 1, 2005.

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 primarily through a combination of internally generated funds, bank credit lines, term and senior notes, the sale of trade receivables and credit terms from suppliers.

      Cash flows generated by operations for the first nine months of 2006 were $546.2 million compared to $328.0 million for the first nine months of 2005. Contributing to the improved cash flow was higher net earnings after adjusting for the incremental depreciation and amortization expense resulting from the Unilin acquisition and improved inventory turns when compared to the prior year's first nine months.

      Net cash used in investing activities, acquisitions and capital expenditures for the first nine months of 2006 was $195.0 million compared to $201.4 million for the first nine months of 2005. The decrease is due to lower capital spending partially offset by higher acquisition investments within the Mohawk segment. Capital spending during the remainder of 2006 for the Mohawk, Dal-Tile and Unilin segments combined, excluding acquisitions, is expected to range from $95 million to $109 million, and will be used primarily to purchase equipment and to add manufacturing capacity.
24	

      Net cash used in financing activities for the first nine months of 2006 was $419.9 million compared to $126.6 million for the same period in 2005. The primary reason for the change was an increase in debt payments during the first nine months of 2006 compared to the same period in 2005.

      At September 30, 2006, the Company had a total commitment of approximately $1.4 billion under its senior unsecured credit facilities and a Euro revolving credit facility. A total of approximately $742.4 million was available under these facilities at September 30, 2006. The amount used under the senior unsecured credit facilities at September 30, 2006 was $702.8 million. The amount used under these facilities is composed of $620.5 million in borrowings, $55.6 million in letters of credit guaranteeing the Company's industrial revenue bonds and $26.7 million in standby letters of credit related to various insurance contracts and foreign vendor commitments.

      On January 17, 2006, the Company issued $500 million aggregate principal amount of 5.750% notes due 2011 and $900 million aggregate principal amount of 6.125% notes due 2016. The net proceeds from the issuance of these notes were used to pay off a $1.4 billion bridge credit facility entered into in connection with the Unilin acquisition. Interest payable on each series of the notes is subject to adjustment if either Moody's Investor Service, Inc. or Standard & Poor's Ratings Services, or both, downgrades the Company's debt rating.  Each rating agency downgrade results in a 0.25% increase in the interest rate, subject to a maximum increase of 1% per rating agency. If later the Company's debt rating improves, then the interest rates would be reduced accordingly. The provision for increasing the interest rate will no longer apply if the Company's debt rating from both rating agencies improves above the debt rating in effect at the time of the issuance of the notes.

      The Company has an on-balance sheet trade accounts receivable securitization agreement ("Securitization Facility"). The Securitization Facility allows the Company to borrow up to $350 million based on available accounts receivable. At September 30, 2006, the Company had approximately $150.0 million outstanding secured by trade receivables.

Contractual Obligations

      There have been no significant changes to the Company's contractual obligations as disclosed in the Company's 2005 Annual Report filed on Form 10-K.

Critical Accounting Policies and Estimates

      The Company's critical accounting policies and estimates are described in the Company's 2005 Annual Report filed on Form 10-K, except that as of April 2, 2006, the Company changed the method of accounting for its inventory from the last-in, first-out ("LIFO") to the first-in, first-out ("FIFO") method for inventories not on FIFO within its Mohawk segment. 

New Pronouncements

      In July 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48 ("FIN 48"), "Accounting for Uncertainty in Income Taxes-an  Interpretation of FASB Statement No. 109, " which clarifies the accounting for uncertainty in income taxes .  FIN 48 prescribes a recognition threshold and measurement criteria for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.  The provisions of FIN 48 are effective as of the beginning of the Company's 2007 fiscal year, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings.  The Company is currently evaluating the impact of FIN 48 on its consolidated financial statements.
25	

      In September 2006, FASB issued Statement of Financial Accounting Standards No. 157 ("SFAS No. 157"), "Fair Value Measurements." SFAS No. 157 defines fair value, establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. SFAS No. 157 requires companies to disclose the fair value of its financial instruments according to a fair value hierarchy.  Additionally, companies are required to provide certain disclosures regarding instruments within the hierarchy, including a reconciliation of the beginning and ending balances for each major category of assets and liabilities. SFAS 157 is effective for the Company's fiscal year beginning January 1, 2008.  The Company is currently evaluating the impact of SFAS No. 157 on its consolidated financial statements.

      In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Post Retirement Plans- an amendment of FASB Statements No. 87, 88, 106 and 132(R)" ("SFAS No. 158"). SFAS No. 158 requires an employer that sponsors one or more single-employer defined benefit plans to recognize the over-funded or under-funded status of a benefit plan in its statement of financial position, recognize as a component of other comprehensive income, net of tax, gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit costs pursuant to SFAS No. 87, "Employers Accounting for Pensions," or SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," measure defined benefit plan assets and obligations as of the date of the employer's fiscal year-end, and disclose in the notes to financial statements additional information about certain effects on net periodic benefit cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition assets or obligations. The recognition and disclosure provisions required by SFAS No. 158 are effective for the Company's fiscal year ending December 31, 2006.  The measurement date provisions are effective for fiscal years ending after December 15, 2008.  The Company is currently evaluating the impact of SFAS No. 158 on its consolidated financial statements.  

      In September 2006, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements" ("SAB 108"). SAB 108 provides interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement.  The SEC staff believes that registrants should quantify errors using both the balance sheet and income statement approach when quantifying a misstatement. SAB 108 is effective for the Company's fiscal year ending December 31, 2006.  The Company is currently evaluating the impact of SAB 108 on the Company's consolidated financial statements.

Subsequent Event

      On October 16, 2006, the Company made the decision to permanently close its Jackson, Tennessee mosaic tile plant due to demand and production realignment. The Company will incur approximately $4.0 million in costs associated with this restructuring.  Of this amount, approximately $2.7 million is a non-cash asset impairment charge and the remaining $1.3 million will be costs incurred for severance and other closure activities. In addition, the Company anticipates approximately $2.0 million in other costs related to other restructurings within the Dal-Tile segment.
26	

Impact of Inflation

     Inflation affects the Company's manufacturing costs, distribution costs and operating expenses. The carpet, tile and laminate industry have experienced significant inflation in the prices of raw materials and fuel-related costs beginning in the first quarter of 2005. For the period from 1999 through 2004 the carpet and tile industry experienced moderate inflation in the prices of raw materials and fuel-related costs. In the past, the Company has generally been able to pass along these price increases to its customers and has been able to enhance productivity to help offset increases in costs resulting from inflation in its operations.

Seasonality

     The Company is a calendar year-end company. With respect to its Mohawk and Dal-Tile segments, its results of operations for the first quarter tend to be the weakest.  The second, third and fourth quarters typically produce higher net sales and operating income in these segments.  These results are primarily due to consumer residential spending patterns for floor covering, which historically have decreased during the first two months of each year following the holiday season. The Unilin segment's second and fourth quarters typically produce higher net sales and earnings followed by a moderate first quarter and a weaker third quarter. The third quarter is traditionally the weakest due to the European holiday in late summer.

Forward-Looking Information

      Certain of the statements in this Form 10-Q, particularly those anticipating future performance, business prospects, growth and operating strategies, proposed acquisitions, and similar matters, and those that include the words "believes," "anticipates," "forecast," "estimates" or similar expressions constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, 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. There can be no assurance that the forward-looking statements will be accurate because they are based on many assumptions, which involve risks and uncertainties. The following important factors could cause future results to differ: changes in industry conditions; competition; raw material prices; energy costs; timing and level of capital expenditures; integration of acquisitions; introduction of new products; rationalization of operations; litigation; and other risks identified in Mohawk's SEC reports and public announcements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

      The Company's exposures to market risk have not changed significantly since December 31, 2005.

Item 4. Controls and Procedures

      Based on an evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report, the Company's Chief Executive Officer and Chief Financial Officer have concluded that such controls and procedures were effective for the period covered by this report. No change in the Company's internal control over financial reporting occurred during the period covered by this report that materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

      The Company is involved in 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.
27	

      In Shirley Williams, et al vs. Mohawk Industries, Inc., four plaintiffs filed a purported class action lawsuit in January 2004, in the United States District Court for the Northern District of Georgia, alleging that they are former and current employees of the Company and that the actions and conduct of the Company, including the employment of persons who are not permitted to work in this country, have damaged them and the other members of the purported class by suppressing the wages of the Company's hourly employees in Georgia. The plaintiffs seek a variety of relief, including (a) treble damages; (b) return of any allegedly unlawful profits; and (c) attorney's fees and costs of litigation. In February 2004, the Company filed a Motion to Dismiss the Complaint, which was denied by the Northern District in April 2004. The Company then sought and obtained permission to file an immediate appeal of the Northern District's decision to the United States Court of Appeals for the 11th Circuit. In June 2005, the 11th Circuit reversed in part and affirmed in part the lower court's decision (Williams v. Mohawk Industries, Inc., 411 F.3d 1252 (11th Cir. 2005)). In June 2005, the Company filed a motion requesting review by the full 11th Circuit, which was denied in August 2005. In October 2005, the Company filed a petition for certiorari with the United States Supreme Court, which petition was granted in December of 2005. The case was argued before the Supreme Court on April 26, 2006. On June 5, 2006, the Supreme Court vacated the 11th Circuit ruling and ordered the 11th Circuit to reconsider its vacated ruling. On September 27, 2006, the 11th Circuit issued a second decision reversing in part and affirming in part the lower court's decision.  On October 18, 2006, the Company filed a motion requesting review of this decision by the full 11th Circuit.  The Company will continue to vigorously defend itself against this action.

     The Company believes that adequate provisions for resolution of all claims and pending litigation have been made for probable losses and that the ultimate outcome of these actions will not have a material adverse effect on its financial condition but could have a material effect on its results of operations in a given quarter or annual period.

Item 1A.  Risk Factors

      There have been no significant changes to the Company's risk factors as disclosed in the Company's 2005 Annual Report filed on Form 10-K.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.
Mohawk Industries, Inc.  Purchases of Equity Securities	
 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	Maximum	
 	 	 	 	 	 	 	Number	
 	 	 	 	 	 	 	of	
 	 	 	 	 	Total	 	Shares that	
 	 	 	 	 	Number of Shares	 	May Yet Be	
 	 	 	Average	 	Purchased as Part	 	Purchased	
 	Total Number	 	Price	 	of Publicly	 	Under the	
 	of Shares	 	Paid per	 	Announced Plans	 	Plans or	
Period	Purchased (1)	 	Share	 	or Programs	 	Programs	
Opening balance	11,437,564 	 	 $	28.81 	 	11,437,564 	 	3,562,436 	
Month #1 (July 2, 2006-	 	 	 	 	 	 	 	
   August 5, 2006)	- 	 	- 	 	- 	 	- 	
Month #2 (August 6, 2006-	 	 	 	 	 	 	 	
   September 2, 2006)	74,365 	 	69.66 	 	74,365 	 	(74,365)	
Month #3 (September 3, 2006-	 	 	 	 	 	 	 	
   September 30, 2006)	- 	 	- 	 	- 	 	- 	
              Total	11,511,929 	 	 $	29.08 	 	11,511,929 	 	3,488,071 	
 	 	 	 	 	 	 	 	
      ___
(1)     The total number of shares repurchased includes an aggregate of 44,874 shares surrendered to the Company to satisfy the exercise price
and tax withholding obligations in connection with the exercise of stock options.
28	

     On September 29, 1999, the Company announced that its Board of Directors authorized the repurchase of up to 5 million shares of the Company's common stock. On December 16, 1999, the Company announced that the Company's Board of Directors authorized the repurchase of an additional 5 million shares of its common stock under the existing repurchase plan. On May 18, 2000, the Company announced that the Company's Board of Directors authorized the repurchase of an additional 5 million shares of its common stock under the existing repurchase plan. The Company purchased 74,365 shares of its common stock during the third quarter of 2006.

Item 3.  Defaults Upon Senior Securities

     None.

Item 4.  Submission of Matters to a Vote of Security Holders

     None.

Item 5.  Other Information

      None.

Item 6. Exhibits
No.     Description
31.1    Certification Pursuant to Rule 13a-14(a).
31.2    Certification Pursuant to Rule 13a-14(a).
32.1    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
29	

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: November 3, 2006                                                    By: /s/ Jeffrey S. Lorberbaum
                                                                                           JEFFREY S. LORBERBAUM, Chairman, President and
                                                                                           Chief Executive Officer (principal executive officer)
 
Dated: November 3, 2006                                                     By: /s/ Frank H. Boykin
                                                                                             FRANK H. BOYKIN, Chief Financial Officer,
                                                                                            (principal financial officer)
 
 30	

EXHIBIT 31.1

CERTIFICATIONS

I, Jeffrey S. Lorberbaum, certify that:

1.             I have reviewed this quarterly report on Form 10-Q of Mohawk Industries, Inc.;

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.             The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.             The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 3, 2006
/s/: Jeffrey S. Lorberbaum
Jeffrey S. Lorberbaum
Chairman, President and Chief Executive Officer

                                                                                                                                                                                                                                                        EXHIBIT 31.2

CERTIFICATIONS

I, Frank H. Boykin, certify that:

1.             I have reviewed this quarterly report on Form 10-Q of Mohawk Industries, Inc.;

2.             Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.             Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.             The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.             The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 3, 2006

/s/: Frank H. Boykin
Frank H. Boykin
Chief Financial Officer

Exhibit 32.1

Statement of Chief Executive Officer of
MOHAWK INDUSTRIES, INC.
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
§ 906 of the Sarbanes-Oxley Act of 2002

       In connection with the quarterly report of Mohawk Industries, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jeffrey S. Lorberbaum, Chairman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

  /s/:Jeffrey S. Lorberbaum
Jeffrey S. Lorberbaum
Chairman, President and Chief Executive Officer
November 3, 2006

Exhibit 32.2

Statement of Chief Financial Officer of
MOHAWK INDUSTRIES, INC.
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
§ 906 of the Sarbanes-Oxley Act of 2002

       In connection with the quarterly report of Mohawk Industries, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Frank H. Boykin, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/: Frank H. Boykin
Frank H. Boykin
Chief Financial Officer
November 3, 2006