Mohawk 4Q Net Earnings Up 30%

Calhoun, GA, February 15, 2007--Mohawk Industries in the fourth quarter posted net earnings that were up 30% to $129.5 million and diluted earnings per share that were up 29% to $1.90.

Net sales for the quarter were $1.9 billion, an increase of 5% from 2005. The sales growth resulted from the Unilin acquisition (completed October 31, 2005), hard surfaces sales growth and price increases.

The company beat analyst’s EPS estimates of $1.52 per share. Analysts were looking for revenue in the quarter of $1.92B.

Cash flow from operations and EBITDA during the quarter remained strong at $235.8 million and $303.9 million, respectively. After paying down debt of $602.7 million during the year and $190.9 million during the fourth quarter, debt to EBITDA ratio improved to 2.5 and our debt to capitalization ratio improved to 43%. Working capital also showed improvement over last year.

For the year 2006, net earnings were up 18% to $455.8 million and EPS were were up 17% to $6.70. Net sales for the year were $7.9 billion, an increase of 19% from 2005. This increase is attributable to the Unilin acquisition, hard surface sales growth, and price increases.

For the year analysts has forecast EPS of $6.17, on revenue of $7.95B.

In commenting on the fourth quarter results, Jeffrey S. Lorberbaum, chairman and CEO, stated: "Even though the industry remains soft, our business results were good for the quarter. We benefited from strong growth in the Unilin business and business initiatives to reduce costs. Our overall strategy of offering a total flooring solution combined with an expanded geographical presence has positively influenced results. The U.S. flooring industry continued slowing. The residential new construction market and the retail remodeling channel have continued their decline. The commercial channel continues to out perform the residential channel.

The Mohawk segment sales were down 6% as industry sales continued to contract. The cost reduction programs put in place last quarter partially offset lower margins which were impacted by higher costs and reduced volume. There continues to be an increased level of promotional activity to stimulate customer activity. Our new and replacement residential carpet sales continued to fall. The commercial channel continued to grow during the quarter with some softening in the high end category as customers have traded down. Our material costs have remained high but could improve if commodity prices soften. There are many initiatives on cost reduction, efficiency and sales growth in process. We continue to review the industry and adjust to the changing environment.

Our Dal-Tile segment sales grew 4% during the quarter despite a deteriorating residential market. Dal-Tile is following industry trends with residential sales slowing and commercial sales growing. We are reducing expenses, increasing productivity, and focusing on the commercial and redecorating channels. Our plant expansions were completed and will enhance our position. Margins were impacted by the closing of a high cost ceramic facility and higher transportation costs. Our ceramic business is well positioned for the long-term.

The Unilin segment performed above our expectations. Both the European and U.S. markets were strong with a proforma sales increase of 24% using a constant exchange rate. The Mohawk brand laminate continues to increase sales of Unilin products. Operating margins at 20% were higher than anticipated due to volume increases, improved product mix, and later raw material cost increases than anticipated. The Unilin management team continues to produce strong results and has proven to be a positive addition to our business. We received a favorable international trade commission ruling which precluded many importers from bringing laminate products into the U.S. that infringe on patents."

The Company is anticipating continued slow U.S. industry sales in the first quarter of 2007 that will impact margins and earnings. It has reduced manufacturing, administration, and marketing expenses based on current industry conditions and will continue to adjust as required. Based on these factors, earnings guidance for the first quarter of 2007 is from $1.01 to $1.10 EPS. This guidance includes refunds of approximately $5 million received from U.S. customs in January 2007.