851968--3/16/2006--MOHAWK_INDUSTRIES

related topics

{operation, international, foreign}

{cost, regulation, environmental}

{acquisition, growth, future}

{condition, economic, financial}

{loan, real, estate}

{customer, product, revenue}

{product, market, service}

{control, financial, internal}

{property, intellectual, protect}

Certain Factors affecting the Company's Performance The floor covering industry is sensitive to changes in general economic conditions, such as consumer confidence and income, corporate and government spending, interest rate levels and demand for housing. A prolonged decline in spending for replacement floor covering products or new construction activity could have a material adverse effect on the Company's business. The Company may be unable to pass increases in the costs of raw materials and fuel-related costs on to its customers, which could have a material adverse effect on the Company's profitability. The Company faces intense competition in the industry, which could decrease demand for the Company's products or force it to lower prices, which could have a material adverse effect on the Company's profitability. The Company may not be able to successfully integrate Unilin or other acquisitions that the Company may make in the future. The Company has not yet completed the testing of the adequacy of Unilin's internal control over financial reporting, and it is possible that the Company's testing or that of the Company's independent auditors in connection with the audit of the Company's financial results for the year ended December 31, 2006, will reveal material weaknesses in Unilin's internal control over financial reporting. A failure to identify suitable acquisition candidates and to complete acquisitions could have a material adverse effect on the Company's business. The Company may be unable to obtain raw materials on a timely basis, which could have a material adverse effect on the Company's business. The Company has been, and in the future may be, subject to claims and liabilities under environmental, health and safety laws and regulations, which could be significant. Changes in international trade laws and in the business, political and regulatory environment in Mexico and Europe could have a material adverse effect on the Company's business. The Company could face increased competition as a result of the General Agreement on Tariffs and Trade ( GATT ) and the North American Free Trade Agreement ( NAFTA ). Fluctuations in currency exchange rates may impact the Company's financial condition and results of operations and may affect the comparability of results between the Company's financial periods. If the Company is unable to protect the Company's intellectual property rights, particularly with respect to the Company's patented laminate flooring technology and the Company's registered trademarks, the Company's business and prospects could be harmed. Companies may claim that the Company infringed their intellectual property or proprietary rights, which could cause it to incur significant expenses or prevent it from selling the Company's products.

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851968--3/16/2006--MOHAWK_INDUSTRIES_INC