UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
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[Mark One] |
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[X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE |
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For the fiscal year ended December 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from____to_____
Commission File Number 01-19826
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS
PLAN II
(Full title of the Plan)
MOHAWK INDUSTRIES, INC.
(Name of the issuer of the securities held pursuant to the
Plan)
P. O. Box 12069, 160 S. Industrial Blvd.
Calhoun, Georgia 30701
(Address of principal executive offices)
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS
PLAN II
Index to Financial Statements, Supplemental Schedule and Exhibits
Item
Report of Independent Registered Public Accounting Firm
Statements of Net Assets Available for Plan Benefits as of December 31, 2004 and 2003
Statements of Changes in Net Assets Available for Plan Benefits for the Years ended December 31, 2004 and 2003
Notes to the Financial Statements
Schedule H, Line 4i-Schedule of Assets (Held at Year End)-December 31, 2004
Signature
Exhibit 23 - Consent of Independent Registered Public Accounting Firm
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN II
Financial Statements and Supplemental Schedule
December 31, 2004 and 2003
(With Report of Independent Registered Public Accounting Firm)
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN II
Table of Contents
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Page |
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Report of Independent Registered Public Accounting Firm |
1 |
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Statements of Net Assets Available for Plan Benefits as of December 31, 2004 and 2003 |
2 |
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Statements of Changes in Net Assets Available for Plan Benefits for the Years ended December 31, 2004 and 2003 |
3 |
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Notes to Financial Statements |
4 |
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Schedule |
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Schedule H, Line 4i - Schedule of Assets (Held at End of Year) - December 31, 2004 |
10 |
Report of Independent Registered Public Accounting Firm
Plan Administrator
Mohawk Carpet Corporation
Retirement Savings Plan II:
We have audited the accompanying statements of net assets available for plan benefits of the Mohawk Carpet Corporation Retirement Savings Plan II (the Plan) as of December 31, 2004 and 2003, and the related statements of changes in net assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 2004 and 2003, and the changes in net assets available for plan benefits for the years then ended in conformity with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets (held at end of year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN II
Statements of Changes in Net Assets Available for Plan Benefits
December 31, 2004 and 2003
|
2004 |
2003 |
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Assets: |
||||||||||
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Cash |
$ |
546,012 |
14,243 |
|||||||
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Investments (notes 3 and 4) |
303,774,655 |
249,180,702 |
||||||||
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Contributions receivable from employer |
576,105 |
- |
||||||||
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Contributions receivable from participants |
1,570,887 |
- |
||||||||
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Net assets available for plan benefits |
$ |
306,467,659 |
249,194,945 |
|||||||
See accompanying notes to the financial statements.
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN II
Statements of Changes in Net Assets Available for Plan Benefits
December 31, 2004 and 2003
|
2004 |
2003 |
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Additions: |
||||||||||
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Investment income: |
||||||||||
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Interest and dividends |
$ |
5,641,687 |
4,980,729 |
|||||||
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Net appreciation in fair value of investments: |
||||||||||
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Mutual funds |
13,637,763 |
21,646,106 |
||||||||
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Common collective funds |
3,208,363 |
3,547,103 |
||||||||
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Mohawk Industries, Inc. common stock |
9,451,920 |
6,191,069 |
||||||||
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Net investment income |
31,939,733 |
36,365,007 |
||||||||
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Contributions from employer |
11,396,245 |
9,236,808 |
||||||||
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Contributions from participants |
27,531,031 |
21,632,462 |
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Transfers from other plans (note 7) |
2,891,213 |
45,483,873 |
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Total additions |
73,758,222 |
112,718,150 |
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Deductions: |
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Participants' benefits |
15,165,087 |
9,577,096 |
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Administrative expenses |
64,333 |
31,500 |
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Transfers to other plan (note 7) |
1,256,088 |
591,007 |
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Total deductions |
16,485,508 |
10,199,603 |
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Increase in net assets available for plan benefits |
57,272,714 |
102,518,547 |
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Net assets available for plan benefits at beginning of year |
249,194,945 |
146,676,398 |
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Net assets available for plan benefits at end of year |
$ |
306,467,659 |
249,194,945 |
|||||||
See accompanying notes to the financial statements.
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN II
Notes to Financial Statements
December 31, 2004 and 2003
(1) Summary of Significant Accounting Policies
The following is a summary of significant accounting policies followed by the Mohawk Carpet Corporation Retirement Savings Plan II (the Plan) in preparing its financial statements.
(a) Basis of Presentation
The accompanying financial statements of the Plan have been prepared on the accrual basis of accounting and present the net assets available for plan benefits and changes in those net assets.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
(b) Investments
Investments in mutual funds, common stock, and common collective funds are stated at fair value based on quoted market prices or as determined by Scudder Investments (Trustee). Investments in money market funds and loans to participants are stated at cost which approximates fair value. Common collective funds contain investments in guaranteed investment contracts, which are stated at contract value which approximate fair value. Securities transactions are accounted for on a trade date basis.
Realized and unrealized investment gains and losses are included in net appreciation in fair value of investments in the accompanying statements of changes in net assets available for plan benefits.
The Plan provides for investing in numerous funds, which invest in various types of investment securities and in various companies in various markets. Investment securities, generally, are exposed to several risks, such as interest rate, market, and credit risks. Due to the level of risk associated with the funds, it is reasonably possible that changes in the values of the funds will occur in the near term and such changes could materially affect the amounts reported in the financial statements and supplemental schedule.
(c) Fair Value of Financial Instruments
Investments in securities are stated at fair value. In addition, management of the Plan believes that the carrying amount of receivables is a reasonable approximation of the fair value due to the short‑term nature of these instruments.
(2) Description of the Plan
The following description of the Plan provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions.
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN II
Notes to Financial Statements
December 31, 2004 and 2003
(a) General
The Plan is a defined contribution plan and covers substantially all salaried, sales, and nonexempt employees, of Mohawk Carpet Corporation (the Company), a wholly owned subsidiary of Mohawk Industries, Inc. and all employees; including hourly, nonexempt and salaried, of the Karastan Bigelow Group and the Lauren Park Mill Group, are included in The Plan . Effective January 1, 2003, certain employees of Dal-Tile International, Inc., a wholly owned subsidiary of Mohawk Industries, Inc., were covered by the Plan (see note 7). Effective November 10, 2003, certain employees of Lees Carpet Division, a division of Mohawk Industries, Inc., were covered by the Plan. The Plan provides for retirement savings to qualified active participants through both participant and employer contributions and is subject to certain provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Employees are eligible to participate in the Plan at the beginning of a calendar month after the completion of 90 days of service.
The Plan is administered by an Administrative Committee appointed by the Company. The Administrative Committee is responsible for the control, management, and administration of the Plan and the assets held in trust at Scudder Investments as of December 31, 2004 and 2003 and for the years then ended.
(b) Contributions
Contributions to the Plan are made by both participants and the Company. Participants may contribute a maximum of 25% of their gross compensation, subject to certain limitations. Participants may allocate their contributions in multiples of 1% to various investment funds of the Plan. For all participants other than employees of Dal-Tile International, Inc. and Lees Carpet Division, the Company provides 50% matching contributions up to the first 4% of each participant's gross compensation contributed to the Plan. The Company also provides an additional match of $0.25 for every $1.00 of participant contributions in excess of 4% up to a maximum of 6%. The employer match for participants employed by Dal-Tile International, Inc. is 50% up to the first 6% of each participant's gross compensation contributed to the Plan. The employer match for participants employed by Lees Carpet Division is 100% up to the first 3% of each participant's gross compensation contributed to the Plan plus 50% of participant contributions in excess of 3% up to a maximum of 5%.
The terms of the Plan also provide for discretionary employer profit sharing contributions to the Mohawk Stock Fund for plan participants employed on the last day of the plan year or terminated during the plan year on account of death, disability, or retirement. Discretionary employer profit sharing contributions of $2,516,561 and $1,936,982, respectively, were made to the Plan during the years ended December 31, 2004 and 2003. Subsequent to December 31, 2004, the Company approved and contributed $2,944,231 as a discretionary contribution to the Plan.
(c) Participant Accounts
Each participant's account is credited with their contribution for the period as well as the employer's matching contribution and an allocation of any employer profit sharing contribution. Investment income, realized gains/losses, and the change in unrealized appreciation or depreciation on plan investments are credited to participants' accounts monthly based on the proportion of each participant's account balance to the total account balance within each investment fund at the beginning of the month.
Participant accounts may be invested in one or more of the investment funds available under the Plan at the direction of the participant. The Plan provides for monthly valuation of accounts. Current investment funds available within the Plan include the following:
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN II
Notes to Financial Statements
December 31, 2004 and 2003
|
Investment fund |
Fund objective |
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Scudder Stable Value |
To provide fixed rate of return for a fixed period of time. Money in |
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Fund: |
this fund is invested in investment contracts, money market |
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securities, and managed bond portfolios. |
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PIMCO Total Return |
To provide the opportunity for higher earnings than the stable value |
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Fund: |
fund. Money in this fund is invested primarily in intermediate |
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term, high-quality, fixed income securities. |
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Artisan Mid Cap |
To provide long-term growth of capital by investing in common |
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Fund: |
stocks of mid-size companies. |
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Baron Growth Fund: |
To provide capital appreciation by investing primarily in common |
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stocks of smaller growth companies with market values under |
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$2.5 billion. |
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Fidelity Dividend |
To provide capital appreciation. Money in this fund is invested in |
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Growth Fund: |
assets in common stock of firms that are believed to have the |
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potential for dividend growth. |
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Fidelity Low-Priced |
To provide capital appreciation. Money in this fund is invested in |
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Stock Fund: |
stocks with prices less than $35.00 per share at the time of the |
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Fund's investment. |
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Fidelity Mid-Cap |
To provide long-term growth of capital by investing in common |
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Stock Fund: |
stocks of companies with medium market capitalization. |
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Lord Abbett Small Cap |
To provide long-term capital appreciation by investing at least 80% |
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Value Fund: |
of assets in equity securities of companies with market |
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capitalizations of less than $2 billion at the time of purchase. |
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PIMCO PEA |
To provide long-term growth of capital and current income by |
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Renaissance Fund: |
investing primarily in a variety of income-producing |
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equity securities. |
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Scudder Dreman High- |
To provide long-term capital growth through investing in large |
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Return Equity Fund: |
capitalization stocks in undervalued sectors of the stock market. |
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MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN II
Notes to Financial Statements
December 31, 2004 and 2003
|
Investment fund |
Fund objective |
||||||||
|
Scudder Equity 500 |
To track the performance of the Standard & Poor's 500 Composite |
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Index Fund: |
Stock Price Index which emphasizes stocks of large |
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U.S. companies. |
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Scudder International |
To maximize capital appreciation by investing in a variety of |
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Select Equity Fund: |
countries and economic sectors. |
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Transamerica Premier |
To provide long-term growth through investing in a diversified |
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Equity Fund: |
portfolio of equity securities of domestic growth companies |
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of any size. |
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|
Mohawk Aggressive |
To provide capital appreciation. Money in this fund is invested in a |
||||||||
|
Portfolio Fund: |
mix current investment funds, excluding company stock (the Plan's |
||||||||
| Core Funds). | |||||||||
|
Mohawk Conservative |
To provide a stable return on investment. Money in this fund is |
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|
Portfolio Fund: |
invested in a mix of the Plan's Core Funds. |
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|
Mohawk Moderate |
To provide investment diversification by investing in both growth |
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|
Portfolio Fund: |
and income investments. Money in this fund is invested in a |
||||||||
|
mix of the Plan's Core Funds. |
|||||||||
|
Mohawk Stock Fund: |
To provide capital appreciation through the ownership of Mohawk |
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|
Industries, Inc. common stock. |
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(d) Distributions to Participants
Upon termination of employment, the participant's account shall be distributed in a lump-sum cash payment as soon as administratively practicable.
Under the terms of the Plan, participants may make hardship withdrawals from their accounts upon furnishing proof of hardship as specified in the Plan agreement. Participants may also borrow the lesser of $50,000 or 50% of the value of their accounts subject to limitations provided by the Plan. Loans must be paid back to the Plan generally within four years of the loan date, with the exception of homestead loans.
(e) Vesting
Participants are immediately vested in their contributions and any income earned on such contributions. Participants whose entry date under the Prior Plan or this Plan is on or after January 1, 2001 are vested in the Company's matching and discretionary contributions after one year of service.
Amounts forfeited by participants who terminate from the Plan prior to being 100% vested are applied to reduce subsequent Company contributions to the Plan. In 2004 and 2003, employer contributions were reduced by forfeitures of $- and $103,312, respectively.
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN II
Notes to Financial Statements
December 31, 2004 and 2003
(f) Administrative Expenses
Certain administrative expenses of the Plan are paid by the Company. These costs include legal, accounting, and certain administrative fees.
(3) Transactions with Parties-in-Interest
At December 31, 2004 and 2003, the Plan held investments sponsored by the trustee with current values of $184,192,165 and $160,023,498, respectively. The Plan also held investments in 447,738 and 441,299 shares of Mohawk Industries, Inc. common stock with current values of $40,856,091 and $31,129,083 at December 31, 2004 and 2003, respectively.
(4) Investments
The following investments represent 5% or more of the Plan assets at December 31, 2004 and 2003:
|
2004 |
2003 |
|||||||||
|
Mutual funds: |
||||||||||
|
Scudder Dreman High Return Equity Fund |
$ |
52,396,520 |
46,351,171 |
|||||||
|
Scudder Equity 500 Index Fund |
15,090,883 |
12,530,438 |
||||||||
|
Transamerica Premier Equity Fund |
16,511,982 |
13,122,737 |
||||||||
|
Mohawk Industries, Inc. common stock |
40,856,091 |
31,129,083 |
||||||||
|
Common collective funds: |
||||||||||
|
Scudder Stable Value Fund |
76,753,133 |
68,983,920 |
||||||||
|
Mohawk Moderate Portfolio Fund |
22,081,457 |
17,759,695 |
||||||||
All of the Plan's investments are held by a party-in-interest to the Plan.
(5) Income Tax Status
The Plan obtained a favorable determination letter dated April 22, 2005, in which the Internal Revenue Service stated that the Plan was in compliance with the applicable requirements of the Internal Revenue Code.
(6) Plan Termination
While it is the Company's intention to continue the Plan indefinitely, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA and the Plan agreement. In the event of Plan termination, participants will become 100% vested in their accounts.
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN II
Notes to Financial Statements
December 31, 2004 and 2003
(7) Transfers from/to Other Plans
During 2004 and 2003, due to changes in employment status, $2,891,213 and $1,483,281, respectively, were attributable to account balances of certain participants that were transferred from the Mohawk Carpet Corporation Retirement Savings Plan to the Plan.
During 2004 and 2003, due to changes in employment status, $1,256,088 and $591,007, respectively, were attributable to account balances of certain participants that were transferred to the Mohawk Carpet Corporation Retirement Savings Plan from the Plan.
In January 2003, the assets of Dal-Tile International, Inc. Employees' Retirement Savings Plan for Salaried and Nonmanufacturing Hourly Employees (the Dal-Tile Plan) were merged with the Plan. During the year ended December 31, 2003, assets of $44,000,592 were transferred to the Plan from the Dal-Tile Plan. In June 2005, assets of the Wayn-Tex, Inc. Employees Save Plus Plan of $2,844,014 were merged with the Plan.
Schedule
MOHAWK CARPET CORPORATION RETIREMENT SAVINGS PLAN II
Schedule H, Line 4i-Schedule of Assets (Held at End of Year)
December 31, 2004
|
Current |
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|
Identity of issue |
Description of investment |
value |
||||||||||
|
Mutual funds: |
||||||||||||
|
PIMCO Total Return Fund |
978,808 |
Mutual fund units |
$ |
10,443,878 |
||||||||
|
Artisan Mid Cap Fund |
16,764 |
Mutual fund units |
495,540 |
|||||||||
|
Baron Growth Fund |
170,855 |
Mutual fund units |
7,666,253 |
|||||||||
|
Fidelity Dividend Growth Fund |
458,681 |
Mutual fund units |
13,067,824 |
|||||||||
|
Fidelity Low-Priced Stock Fund |
181,574 |
Mutual fund units |
7,308,364 |
|||||||||
|
Fidelity Mid-Cap Stock Fund |
316,495 |
Mutual fund units |
7,421,797 |
|||||||||
|
Lord Abbett Small Cap Value Fund |
15,355 |
Mutual fund units |
422,877 |
|||||||||
|
PIMCO PEA Renaissance Fund |
139,722 |
Mutual fund units |
3,751,541 |
|||||||||
|
* |
Scudder Dreman High-Return Equity Fund |
1,227,948 |
Mutual fund units |
52,396,520 |
||||||||
|
* |
Scudder Equity 500 Index Fund |
111,208 |
Mutual fund units |
15,090,883 |
||||||||
|
* |
Scudder International Select Equity Fund |
521,698 |
Mutual fund units |
10,340,060 |
||||||||
|
Transamerica Premier Equity Fund |
848,509 |
Mutual fund units |
16,511,982 |
|||||||||
|
* |
Mohawk Industries, Inc. - common stock |
447,738 |
Shares of common stock |
40,856,091 |
||||||||
|
Common collective funds: |
||||||||||||
|
* |
Scudder Stable Value Fund |
76,753,134 |
Collective fund units |
76,753,133 |
||||||||
|
* |
Mohawk Aggressive Portfolio Fund |
410,694 |
Collective fund units |
5,987,926 |
||||||||
|
* |
Mohawk Conservative Portfolio Fund |
127,348 |
Collective fund units |
1,542,186 |
||||||||
|
* |
Mohawk Moderate Portfolio Fund |
1,670,307 |
Collective fund units |
22,081,457 |
||||||||
|
Loans to participants |
(1) |
11,636,343 |
||||||||||
|
Total |
$ |
303,774,655 |
||||||||||
|
* |
Scudder Investments, Trustee and Mohawk Industries, Inc. are parties-in-interest to the Plan. |
|||||||||||
|
(1) |
Loans are consummated at a fixed rate (then current prime rate plus 1%) with maturity dates through |
|||||||||||
|
October 4, 2017. Interest rates range from 5.0% to 12.33% on loans outstanding. |
||||||||||||
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.
Mohawk Carpet Corporation Retirement Savings Plan
II
(Full Title of
the Plan)
|
Dated: June 28, 2005 |
By:/s/ Jerry L. Melton |
|
&n bsp; |
Jerry L. Melton, |
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
The Board of Directors
Mohawk Industries, Inc.:
We consent to the incorporation by reference in the registration statement (No. 33-87998) on Form S‑8 for the Mohawk Carpet Corporation Retirement Savings Plan II of our report dated June 28, 2005, with respect to the statements of net assets available for plan benefits of the Mohawk Carpet Corporation Retirement Savings Plan II as of December 31, 2004 and 2003, and the related statements of changes in net assets available for plan benefits for the years then ended and related supplemental schedule, which report appears in the December 31, 2004 Annual Report on Form 11‑K of the Mohawk Carpet Corporation Retirement Savings Plan II.