Commitments, Contingencies And Other

9 Months Ended

Oct. 01, 2011

Commitments, Contingencies And Other [Abstract]

Commitments, Contingencies And Other

12. 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 by the Company to be contemplated to which the Company is a party or to which any of its property is subject.

Beginning in August 2010, a series of civil lawsuits was initiated in several U.S. federal courts alleging that certain manufacturers of polyurethane foam products and competitors of the Company's carpet underlay division had engaged in price fixing in violation of U.S. antitrust laws. Mohawk has been named as a defendant in seven of the 43 cases filed (the first on August 26, 2010), as well as in two consolidated amended class action complaints, the first filed on February 28, 2011, on behalf of a class of all direct purchasers of polyurethane foam products, and the second filed on March 21, 2011, on behalf of a class of indirect purchasers. All pending cases in which the Company has been named as a defendant have been filed in or transferred to the U.S. District Court for the Northern District of Ohio for consolidated pre-trial proceedings under the name In re: Polyurethane Foam Antitrust Litigation, Case No. 1:10-MDL-02196.

In these actions, the plaintiffs, on behalf of themselves and/or a class of purchasers, seek three times the amount of unspecified damages allegedly suffered as a result of alleged overcharges in the price of polyurethane foam products from at least 1999 to the present. Each plaintiff also seeks attorney fees, pre-judgment and post-judgment interest, court costs, and injunctive relief against future violations. In April 2011, the Company filed a motion to dismiss the class action claims brought by the direct purchasers, and in May 2011, the Company moved to dismiss the claims brought by the indirect purchasers. On July 19, 2011, the Court issued a written opinion denying all defendants' motions to dismiss. The Company denies all of the allegations in these actions and will vigorously defend itself.

The Company believes that adequate provisions for resolution of all contingencies, 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 adverse effect on its results of operations in a given quarter or year.

Subsequent to the quarter ended October 1, 2011, the Company received notification from the Belgian taxing authority of its intent to increase the Company's tax base in connection with its 2008 and 2009 tax years. The adjustments proposed relate to certain income items. The Company disagrees with the view of the Belgian taxing authority, is reviewing the notification and intends to vigorously contest the proposed changes. The Company believes the ultimate outcome of these actions will not have a material adverse effect on its financial condition but could have a material adverse effect on its results of operations in a given quarter or year.

The Company recorded pre-tax business restructuring charges of $2,186 and $15,513 for the three and nine months ended October 1, 2011, respectively, of which $1,185 and $13,064 was recorded as cost of sales and $1,001 and $2,449 was recorded as selling, general and administrative expenses for the same periods, respectively. For the three and nine months ended October 2, 2010, the Company recorded pre-tax business restructuring charges of $3,330 and $12,263, respectively, of which $2,309 and $11,095 was recorded as cost of sales and $1,021 and $1,168 was recorded as selling, general and administrative expenses for the same periods, respectively. The charges in 2011 and 2010 primarily relate to the Company's actions taken to lower its cost structure and improve the efficiency of its manufacturing and distribution operations as the Company adjusts to current economic conditions.

The restructuring activity for the first nine months of 2011 is as follows:

	Asset write- downs			Lease impairments			Severance			Other restructuring costs			Total
Balance as of December 31, 2010	$	—			10,983			2,108			420			13,511
Provisions:
Mohawk segment		7,426			466			4,508			3,113			15,513
Cash payments		—			(3,048	)		(1,198	)		(2,267	)		(6,513	)
Noncash items		(7,426	)		—			—			(218	)		(7,644	)
Balance as of October 1, 2011	$	—			8,401			5,418			1,048			14,867

The Company expects the remaining severance costs, lease impairments and other restructuring costs to be paid over the next five years.

On October 28, 2011, subsequent to the balance sheet date, the Company announced a plan to exit a manufacturing facility in the Mohawk segment. The Company is finalizing its estimates and expects to record a restructuring charge in the fourth quarter of 2011.