T
hroughout its history, Mohawk has routinely reinvented itself to adapt to changing
business conditions and challenges. In the 1970s and ’80s, carpet was the floor covering of choice
for style and luxury. In the ’90s, this began changing, with hard-surface products like tile,
hardwood and, later, laminate gaining more and more market share. Because of changing consumer
tastes, Mohawk made the decision to become more than just a carpet resource and began actively
developing other product lines. These included two major acquisitions: Dal-Tile for ceramic and
Unilin for laminate. In addition, Mohawk developed partnerships with a number of hardwood suppliers
to expand its wood line, and became a national distributor for Congoleum® resilient. As a result,
Mohawk’s overall product mix changed dramatically. In 2001, 5 percent of company sales were
hard-surface products; in 2005, 35 percent of sales were hard surface.

Mohawk has established strong partnerships with other suppliers including St. Paul,
Minn.-based 3M, which provides Scotchgard™ finishes for Mohawk hardwood flooring products.

Mohawk Carpet: Commercial And Home

Carpet is still the core of Mohawk’s business, and the company has a strong presence in
residential carpet, commercial carpet, and rugs and accessories. Mohawk’s residential brands
include Aladdin®, Horizon®, Wunda Weve®, Custom Weave® and Karastan®, which provide consumers with
a vast selection of products at virtually any price and quality level. Mohawk has created three
aligned dealer networks —Mohawk Floorscapes®, Mohawk ColorCenter® and Mohawk Floorz® — that provide
cobranding opportunities between Mohawk and key independent retailers nationwide. This has not only
strengthened Mohawk’s relationships with many of the nation’s best flooring dealers, but also has
produced better retail selling systems that have improved store profitability and the consumer
buying experience
(See “A Step Forward For Retailing,”

www.TextileWorld.com
, July/August 2006).

On the commercial side of the business, Mohawk’s brands include Bigelow Commercial®, Durkan
Commercial®, Karastan Contract®, Mohawk Commercial® and Lees®. These businesses provide Mohawk with
the capability to service the overall commercial market and also allow the company to target brands
to specific industry subsets, such as hospitality, medical and modular flooring.

Mohawk Home, the company’s multifaceted rug and textile business based in Sugar Valley, Ga.,
provides rugs, throws and other home décor merchandise including bath rugs, matelassé bedspreads
and throw pillows to mass merchants and specialty retailers across the nation. Mohawk products are
marketed under Mohawk Home®, Mohawk Select®, Goodwin Weavers®, Karastan and numerous private
brands. Designers and artists who have contributed to Mohawk’s line include Raymond Waites, Thomas
Kinkade and Susan Sargent.

For a number of years, Mohawk has been producing its own carpet fiber — establishing
facilities and brands for nylon, polyester and olefin products; and currently supplying a
significant percentage of its fiber needs internally. In addition, Mohawk has maintained strong
partnerships with other fiber and fiber treatment suppliers such as Invista (Stainmaster®), Solutia
(Wear-Dated®) and 3M (Scotchgard™). In 2005, Mohawk announced it had teamed with DuPont to become
the exclusive supplier to the carpet industry of SmartStrand™ fiber made with DuPont™ Sorona®
polymer. Considered according to industry consensus to be the biggest innovation in fiber in 20
years, as reported by industry publications, SmartStrand fiber offers exceptional stain resistance
and cleanability, durability, and styling options. Mohawk reports the SmartStrand launch has been
the biggest new product introduction in its history.

“The SmartStrand launch was significant in that it was the first really new fiber for carpet
in more than two decades,” said Ed Williams, senior vice president of marketing. “It has the
resilience of nylon coupled with remarkable stain resistance and a very soft hand. Stain resistance
is engineered into the fiber, so it will never wear off. It has Mohawk’s first-ever Limited
Lifetime Warranty for stain resistance. It also allowed Mohawk to partner with DuPont for the power
of two key brands that consumers strongly associate with floor covering innovation.”

Williams noted the SmartStrand launch to customers across North America included
demonstration kits, displays and video presentations that could be incorporated into store
displays. Some retailers were so enthusiastic about the product that they went so far as to remodel
their stores so the SmartStrand display was the first thing consumers saw as they entered the
store.

Beginning in 2007, SmartStrand will have a unique sustainability story, as DuPont begins
making Sorona polymer, in part, from sugar-based crops such as corn
(See “Sustainability Yields Quality,”
www.TextileWorld.com, July/August 2006).

Dal-Tile: Ceramic & Stone

In 2002, Mohawk became the leading provider of ceramic tile in the United States with its
acquisition of Dallas-based Dal-Tile Corp. Dal-Tile has annual sales of $1.7 billion and is the
largest resource in the United States by a significant margin for ceramic tile. The Daltile® and
American Olean™ brands are well-recognized among dealers, builders and consumers; and Dal-Tile
offers the most comprehensive product line in the industry.

Dal-Tile added to the largest ceramic tile production capacity in North America recently
with the opening of new facilities in Oklahoma and Mexico, increasing its production volume by 14
percent. Market share is increasing in the residential market, and profitability is benefiting from
an emphasis on higher-margin products.

More than half of Dal-Tile’s sales service centers have been remodeled, and the number of
sales personnel has been increased. In six major US markets, Dal-Tile has established gallery
selection centers that showcase its entire product portfolio. This gives the division the
opportunity to show just how many design options are available with its product line. And like
Mohawk, Dal-Tile has grown through carefully planned acquisitions that increased its presence in
stone surfaces.

Mohawk also markets a separate line of ceramic products under its Mohawk Ceramic brand,
which has allowed more penetration into floor covering retail markets.

Mohawk’s acquisition of Dal-Tile Corp. in 2002 added ceramic tile to its portfolio of
products.

Unilin: Laminate Flooring

In 2005, Mohawk completed an acquisition that gave it a major presence in the fast-growing
laminate market. Patterned after the Dal-Tile acquisition, the purchase of Unilin NV, a
Belgium-based company, was designed to fast-forward Mohawk’s development of a key product category.

“As we did through the acquisition of Dal-Tile in early 2002, we have further diversified
our product base, distribution strategy and geographical footprint through the acquisition of
Unilin,” said Jeff Lorberbaum, chairman and CEO, Mohawk. “We were impressed by Unilin’s operating
team and the strength of the Quick-Step® brand strategy, as well as the company’s attractive growth
prospects going forward.”

Unilin is the only vertically integrated laminate manufacturer in North America, and has
just opened a new plant in Thomasville, N.C., with the capacity to produce 100 million square feet
per year. In addition, Unilin and its brand, Quick-Step, are recognized as major innovators in the
laminate market, creating dramatic new flooring styles that mimic natural stone and wood, complete
with texture, grain, beveled edges, random patterns and even hand-scraped looks. Unilin’s glueless
plank locking system, Uniclic®, allows easy angled assembly of the floor or — in tight spaces such
as under counters — a sliding method of securely bonding the boards by tapping them together with a
mallet.

The US market for laminate flooring is expected to grow at 15 percent annually, and
Unilin/Quick-Step is positioned to take a significant part of that share. In addition, Mohawk
markets a separate line of laminate products under its Mohawk Laminate brand, providing the
opportunity for even more market penetration.

Creating The

Optimum Distribution Resource
 

As North America’s largest flooring company, Mohawk requires an efficient and comprehensive
distribution infrastructure.

Mohawk’s national distribution network is comparable to a small national freight company.
Mohawk operates 21 factory warehouses, 19 regional warehouses and 43 satellite warehouses across
the nation. A fleet of 1,000 trucks and 2,000 trailers services more than 30,000 customers across
the continent.

More Than Half Next Day

Mohawk’s inventory is tracked at every step of production and delivery using the company’s
exclusive Real Time Visibility software.

With Real Time Visibility, dealers can get up-to-the-moment reports on orders throughout the
system, which uses satellite signals, transmission towers and wireless mobile computers to
continuously monitor deliveries from Mohawk. The system lets Mohawk and its customers know when
orders load onto the truck, where the truck is located, when each order delivers, what was
delivered and who signed for it. Dealers can pinpoint within a matter of minutes when their orders
will be arriving at the loading dock.

Mohawk also is a strong believer in backwards integration and has executed a number of
acquisitions to help manage manufacturing for carpet, ceramic tile, laminate and other products.
This helps improve efficiency even further and manage costs.

Mohawk also distributes a full range of hardwood flooring products in a wide variety of
specifications and finishes. Mohawk’s hardwood flooring line has been singled out by key industry
publications for its quality, styling and value. Dealers themselves have voted Mohawk hardwood
products as being their choice of all new offerings for the year.

Mohawk also is a distributor of Congoleum vinyl products, which offer versatility,
durability, and an exceptionally wide selection of colors and styles.

Other Mohawk product lines, like Mohawk Home rugs and throws, are marketed through mass
merchants, discounters and department stores, adding an entirely new level of distribution
activity. Because of the size of these customers, Mohawk distribution also utilizes new
technologies such as radio frequency identification to manage inventory and shipments.

July/August 2006

I
n Mohawk Industries’ corporate environmental policy statement, CEO Jeff Lorberbaum states
that sustainability is an essential business practice in today’s global economy. The policy
outlines the company’s commitment to support and comply with programs that foster environmental
stewardship and safety in line with its common goals.

Affirming the environmental movement’s mantra, reduce, reuse and recycle, Mohawk has developed
numerous programs to reduce waste and consumption, and to recycle used products into new carpet and
other floor covering products. Its recycling efforts began in the 1990s as technologies became
available to convert used materials into new products. They are consistent with overall US carpet
industry initiatives through the Carpet America Recovery Effort, of which it is a corporate
sponsor, to divert 40 percent of used carpet from landfills by 2012, and eventually to recover all
carpet for recycling or reuse. The company continually reevaluates its operations, design processes
and the raw materials used in its products looking for alternatives to current practices, materials
and natural resource use that will help it reduce its environmental footprint. Last year, its Lees
Carpets plant in Glasgow, Va., received ISO 14001 certification for its environmental management
system and became one of only a handful of carpet manufacturers to have earned both ISO 14001 and
ISO 9001:2000 certification related to product quality
(See ”
Floor
Covering News,”
TW, May 2005). Mohawk’s Landrum, S.C., woven carpet plant, which has had ISO
9001 certification for more than 10 years, is currently working toward ISO 14001 certification; and
several other carpet-manufacturing plants are working toward earning both ISO 9001 and ISO 14001
certification within the next 24 to 36 months.

Recycling Program

Reductions

In terms of reductions, Mohawk cut its water usage in half from 1995 to 2003 through
conservation initiatives and development of new processes. Its Dublin and Sugar Valley, Ga.,
facilities include water treatment plants that restore the effluent to a quality much higher than
is required by the Environmental Protection Agency, the company reports.

Mohawk has reduced the phosphorus content in its wastewater by 70 percent as a result of a
processing change. Today, hazardous waste streams from most company facilities fall below base
levels that require reporting under federal regulations. Over the last decade, Mohawk also has made
substantial reductions in energy consumption through the implementation of energy conservation
programs and manufacturing equipment upgrades. Although no renewable energy is available locally,
the company has committed to purchase renewable energy tags from totally renewable energy sources
as offsets. It also has initiated proprietary research into developing renewable energy for one of
its major manufacturing plants.

Beyond reductions in water, energy and chemical waste streams, Mohawk has reduced the amount of
fiber needed to manufacture some carpet and rug products through production of woven carpet which
uses 30-percent less fiber and lasts more than twice as long as tufted carpet.

Carpet From Corn

Within another year, Mohawk expects to be making carpet from bio-based man-made
fibers. The company has partnered with Wilmington, Del.-based DuPont to bring to market a new line
of residential carpet offered under the SmartStrand with DuPont Sorona® polymer brand. Sorona, a
family of polymers made from 1,3-propanediol, originally was developed as a petroleum-based
polymer, but DuPont has developed a bio-based variety made partly from corn sugar. The bio-based
polymer will be in commercial production later this year, and Mohawk will begin producing the new
tufted residential carpet line in 2007.

The Right Thing To Do

Commenting on Mohawk’s commitment to environmental stewardship, Monte Thornton, president,
Mohawk Flooring, stated: First and foremost, it is the right thing to do. Next, there is a
financial reward associated with good environmental stewardship. It costs more on the front end to
implement these programs, but these commitments yield great returns, from reduced depletion of
natural resources, and reduced water and energy usage, to improved employee morale and being good
corporate and community citizens. The informed consumer now expects to purchase products from
environmentally responsible companies.

A
t nearly 130 years old, the Mohawk brand is older than household names such as Hershey,
Coca-Cola or Disney. For the last decade, branding has been a major area of investment for Mohawk
Industries. After its major acquisitions in the early 1990s, Mohawk set about consolidating many of
the floor covering brands it had purchased and bringing them under the Mohawk flagship. While many
of these brands still have some presence among dealers, the emphasis with consumers has been to
take advantage of the power of the Mohawk name.

Mohawk’s 2006 consumer advertising campaign, named “What If?,” features fairy-tale
characters.

Consumer Advertising

For the last several years, Mohawk has conducted strong consumer advertising programs, using key
consumer shelter publications and national television. In the last four years, the consumer ad
campaign has also been tied to national sales events to give Mohawk’s aligned dealers — Mohawk
Floorscapes, Mohawk ColorCenter, Mohawk Floorz — extra selling opportunities. Studies show that
Mohawk is one of the most-recognized brands in the floor covering business, and the company
continues to reinforce this through a very active consumer advertising and public relations
program.

Mohawk’s 2006 consumer advertising campaign is using print and television to make more than
1.2 billion impressions targeted to floor covering shoppers across the nation. The campaign
includes ads in more than 30 magazines and on 11 national television channels. 

The television campaign continues the use of Mohawk’s “Shall We Dance?” commercial, which
features a dancing vacuum cleaner, while the print campaign entitled “What If?” features all-new
creative based on classic fairy-tale characters, including Cinderella, Goldilocks and the Evil
Queen. Ads feature different types of floor covering — carpet, hardwood and ceramic — and ask: What
if the ending of a classic fairy tale or fable is changed by the beauty of a Mohawk floor?

The “Cinderella” ad features the would-be princess in her kitchen, while her pumpkin carriage
awaits, visible in the background. But she’s not in a hurry to get to the ball — the copy explains,
as she gazes at the floor, Mohawk Ceramic’s new Sardara. She’s already found her “true love.”

A second ad, “Goldilocks,” showcases the beauty and comfort of Mohawk Carpet. Cottage
Hideway, featuring Wear-Dated® fiber and Scotchgard™ Protector Advanced Repel Technology, is the
product highlighted in the ad. It shows Goldilocks asleep in the three bears’ bedroom, but not on
any of the beds. She’s dozing on the floor, which is the place that’s really “just right.”&
#160;

A third ad takes a slightly different approach for Mohawk Hardwood. The Evil Queen of
fairy-tale fame is looking in a mirror at Mohawk Hardwood’s Santa Barbara Plank. Her countenance is
more grim than usual as she realizes she has unbeatable competition for the “fairest of all.”

“The humorous approach we’ve used in previous campaigns is still a strong way to build
recognition of the Mohawk brand and our products,” said Ed Williams, senior vice president of
marketing for Mohawk. “This year’s campaign uses the humor of universally known stories to call
attention to the beauty and comfort of Mohawk floors. We were particularly pleased with how
strongly this campaign scored in consumer testing, especially with women. It really strikes a chord
with the people who are most likely to be floor covering shoppers.”

The print campaign started in April and will continue through November in magazines including
Better Homes and Gardens; Good Housekeeping; Architectural Digest; House & Garden; House
Beautiful; Country Living; O, The Oprah Magazine; Martha Stewart Living; Real Simple; Food and
Wine; Parents; Sunset; and Southern Living. Among the channels included in the television campaign
are HGTV; DIY Network; Discovery Home; The Learning Channel; We, Women’s Entertainment; and the
Travel Channel.

The fairy-tale graphics are an integral part of the Mohawk consumer website,
www.mohawk-flooring.com, which was updated recently to
make it easier for consumers to get information and find local dealers. Information is now
categorized into three stages: “Decorating and Planning”; “Shopping and Buying”; and “Caring and
Maintaining.”

“By organizing information in this manner, consumers can have easy access to the details they
need at every step of floor covering selection and ownership,” Williams said. “This means they come
into dealerships better informed and better prepared to buy.”

An easy-to-use and informative website is critical as shoppers do more research online before
going out to visit actual stores.

July/August 2006

Bernard S. Grosclose Jr., chairman of the American Association of Port Authorities, and
president and CEO of the South Carolina State Ports Authority, presented the keynote speech.
Grosclose spoke of the challenges encountered as well as the successes achieved by the South
Carolina ports. He spoke of the cooperation necessary between the community and the port, the
growth and success achieved through an active and responsive diologue, and the resulting measurable
performance gains in movement of cargo through the port.

Bernard S. Grosclose Jr., chairman of the American Association of Port Authorities, and
president and CEO of the South Carolina State Ports Authority

Education took the form of panel
discussions focused on bringing together the many aspects of shipping and logistics. Subjects
ranged from “International Logistics From the Shippers Perspective” — which paired two retailers, a
domestic manufacturer and a cotton logistics manager — to “India — Trading Partner, Employer, New
World Power” — in which professionals experienced in trade with India spoke of the opportunities in
developing improved trade flows.

Textile World
moderated the panel titled “Transportation Challenges in the Decade Ahead,” which paired
Robin Lanier, executive director of the Waterfront Coalition, with Kenny Riley, president of the
International Longshoremen’s Association Local 1422. It was apparent that with logistics
complexity, volume and security demands increasing in the face of challenges such as shortages in
trucking and fuel price increases, moving product in and out of the port will need increased
cooperation and collaboration among the port, security, shippers, truckers, labor and the
community. Such activity demands investment and cooperation to maximize the performance and
productivity of the port while meeting the growing demands of all links in the supply chain.

SCITC General Chairman Elizabeth Colbert-Busch, director of sales and marketing, South
Atlantic region, OOCL (USA) Inc.

In addition, as part of its educational outreach, the board presented eight scholarships to
an impressive group of college students.

July/August 2006