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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10‑Q

                      [Mark One]

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 27, 2003

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from           to

Commission File Number
01‑19826

MOHAWK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

              Delaware                                                                                52‑1604305
(State or other jurisdiction of incorporation or organization)                                    (I.R.S. Employer Identification No.)

               P. O. Box 12069, 160 S. Industrial Blvd., Calhoun, Georgia                                   30701
                                   (Address of principal executive offices)                                                                                   (Zip Code)

Registrant's telephone number, including area code:  (706) 629‑7721

      Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ x ] No [   ]

      Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ x ] No [   ]

      The number of shares outstanding of the issuer's classes of capital stock as of October 31, 2003 the latest practicable date, is as follows: 66,484,455 shares of Common Stock, $.01 par value.

MOHAWK INDUSTRIES, INC.

INDEX

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

(In thousands)

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY

(In thousands, except per share data)

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
(Unaudited)

See accompanying notes to condensed consolidated financial statements.
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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(In thousands, except per share amounts)
(Unaudited)

1.   Interim reporting

      The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These statements should be read in conjunction with the financial statements and notes thereto, and the Company's description of critical accounting policies, included in the Company's 2002 Annual Report filed on Form 10-K, as filed with the Securities and Exchange Commission, which includes consolidated financial statements for the year ended December 31, 2002.

      Certain prior period financial statement balances have been reclassified to conform to the current period's presentation.

2.   Acquisitions

      On March 20, 2002, the Company acquired all of the outstanding capital stock of Dal-Tile International Inc. ("Dal-Tile"), a leading manufacturer and distributor of ceramic tile in the United States, for approximately $1,468,325, consisting of approximately 12,900 shares of the Company's common stock, options to purchase 2,100 shares of the Company's common stock and approximately $717,638 in cash, including direct acquisition costs. The acquisition was accounted for by the purchase method and, accordingly, the results of operations of Dal-Tile have been included in the Company's consolidated financial statements from March 20, 2002.

      The following unaudited pro forma financial information presents the combined results of operations of Mohawk and Dal-Tile as if the acquisition had occurred at the beginning of 2002, after giving effect to certain adjustments, including increased interest expense on debt related to the acquisition, the elimination of goodwill amortization and related income tax effects. The pro forma information does not necessarily reflect the results of operations that would have occurred had Mohawk and Dal-Tile constituted a single entity during such period. The following table discloses the results for the nine month period ended:

      On May 5, 2003, the Company acquired certain assets of International Marble and Granite of Colorado, Inc., a distributor of natural stone slabs and tile. The primary reason for the acquisition was to increase the Company's presence in the stone flooring and countertop slab industry. The acquisition was accounted for by the purchase method and, accordingly, the results of operations are included within the Dal-Tile segment from May 5, 2003. The purchase price was not significant.

      On June 30, 2003, the Company acquired certain assets of a manufacturer and distributor of washable bath rugs. The primary reason for the acquisition was to increase sales within the bath mat product line. The acquisition was accounted for by the purchase method and, accordingly, the results of operations are included within the Mohawk segment from June 30, 2003. The purchase price was not significant.

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     MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(In thousands, except per share amounts)
(Unaudited)

 On July 30, 2003, the Company announced that W.L. Ross & Company and Mohawk were successful in their bid for substantially all of the assets of Burlington Industries, Inc. Mohawk's portion of the purchase price for the Lees Carpet division is estimated to be approximately $352,000, subject to certain adjustments. The transaction is expected to close in the fourth quarter of 2003. The acquisition will be financed through the Company's operations and existing credit facilities.

3.   Recent Accounting Pronouncements

      In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." This standard amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133. The standard is effective for contracts entered into or modified after June 30, 2003. The Company has adopted SFAS No. 133 and it did not have a material impact on the Company's consolidated financial statements.

      In May 2003, the FASB issued SFAS No. 150,"Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity, and imposes certain additional disclosure requirements. The provisions of SFAS No. 150 are generally effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company has adopted SFAS No. 150 and it did not have a material impact on the Company's consolidated financial statements.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(In thousands, except per share amounts)
(Unaudited)

7.   Derivative financial instruments

Natural Gas Risk Management

      The Company uses a combination of natural gas futures contracts and long-term supply agreements to manage unanticipated changes in natural gas prices. The contracts are based on forecasted usage of natural gas measured in Million British Thermal Units ("MMBTU").

      The Company has designated the natural gas futures contracts as cash flow hedges. Any gain or loss is recognized in cost of sales in the same period or periods during which the hedged transaction affects earnings.  At September 27, 2003, the Company had natural gas contracts outstanding with an aggregate notional amount of approximately 4,550 MMBTU's. The contracts, which mature from October 2003 to December 2004, are marked to market as either an asset or liability with the offset recorded in accumulated other comprehensive income, net of applicable income taxes and any hedge ineffectiveness. At September 27, 2003, the Company had a recorded asset of $1,205.

      The long-term natural gas supply agreements are accounted for under the normal purchases provision within SFAS No. 133 and its amendments. At September 27, 2003, the Company had normal purchase commitments of approximately 4,000 MMBTU's for periods maturing from October 2003 through August 2005. The contracted value of these commitments was approximately $18,286, and the fair value of these commitments was approximately $19,008, at September 27, 2003.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(In thousands, except per share amounts)
(Unaudited)

Foreign Currency Rate Management

      The Company enters into foreign exchange forward contracts to hedge costs associated with its operations in Mexico. The objective of these transactions is to reduce volatility of exchange rates where these operations are located by fixing a portion of their costs in U.S. currency. Gains and losses are recognized in cost of sales in the same period or periods during which the hedged transaction affects earnings. Accordingly, these contracts have been designated as cash flow hedges. At September 27, 2003, the Company had forward contracts maturing from October 2003 through December 2003, to purchase approximately 53,620 Mexican pesos. The aggregate U.S. Dollar value of these contracts at September 27, 2003 was approximately $4,839. The contracts are marked to market in either assets or liabilities with the offset recorded in accumulated other comprehensive income, net of applicable income taxes and any hedge ineffectiveness. Unrealized gains at September 27, 2003 were not material.

Interest Rate Management

      In 2002, the Company determined that its $100,000 interest rate swap was ineffective. Consequently, the $10,700 unrealized loss associated with the swap was recorded as a realized loss in interest expense during the fourth quarter of 2002. The Company continues to carry the liability on its consolidated balance sheet and the interest rate swap is marked to market at the end of each reporting period. The change in fair value for the period ended September 27, 2003 was not material.

8.   Product Warranties

      The Company warrants certain qualitative attributes of its products for up to 20 years. The Company records a provision for estimated warranty and related costs, based on historical experience and periodically adjusts these provisions to reflect actual experience. The warranty provision is as follows:

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(In thousands, except per share amounts)
(Unaudited)

9.  Comprehensive income

      Comprehensive income is as follows:

10.  Stock compensation

      Effective January 1, 2003, the Company adopted the disclosure provisions of SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure." This statement amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based compensation and requires prominent disclosure in both the annual and interim financial statements of the method of accounting used and the financial impact of stock-based compensation. As permitted by SFAS No. 123, the Company accounts for stock options granted as prescribed under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," which recognizes compensation cost based upon the intrinsic value of the award.

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     MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(In thousands, except per share amounts)
(Unaudited)

 If the Company had elected to recognize compensation expense based upon the fair value at the grant dates for awards under these plans, the Company's net earnings per share would have been reduced as follows:

      The following weighted average assumptions were used to determine the fair value using the Black-Scholes option-pricing model for the three and nine month periods ended:

11.  Earnings per share

      The Company applies the provisions of SFAS No. 128, "Earnings per Share," which requires companies to present basic EPS and diluted EPS.  Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period.  Diluted EPS reflects the dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company.

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(In thousands, except per share amounts)
(Unaudited)

      Dilutive common stock options are included in the diluted EPS calculation using the treasury stock method.  Common stock options that were not included in the diluted EPS computation because the options exercise price was greater than the average market price of the common shares (anti-dilutive) for the periods presented are immaterial.

12.  Commitments and contingencies

      The Company is involved in routine 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 to be contemplated to which the Company is a party or to which any of its property is subject.

Environmental Matters

      The Company is subject to various federal, state, local and foreign environmental health and safety laws and regulations, including those governing air emissions, wastewater discharges, the use, storage, treatment and disposal of solid and hazardous materials, and the cleanup of contamination associated therewith. Because of the nature of the Company's business, the Company has incurred, and will continue to incur, costs relating to compliance with such laws and regulations. The Company is involved in various proceedings relating to environmental matters and is currently engaged in environmental investigation, remediation and post-closure care programs at certain sites. The Company has provided reserves for such activities that it has determined to be both probable and reasonably estimable. The Company does not expect that the ultimate liability with respect to such activities will have a material adverse effect on the Company's consolidated financial statements.

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     MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(In thousands, except per share amounts)
(Unaudited)

       Three sites near Mohawk's Dallas facility in its Dal-Tile segment are involved in environmental cleanup projects relating principally to the disposal or alleged disposal by Dal-Tile of waste materials containing lead compounds. Dal-Tile's approved closure plans have been implemented and each site is now undergoing post-closure care.  Dal-Tile has been named as a potentially responsible party under the federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") and similar state statutes for the disposal of certain hazardous substances at various other sites in the United States.  The Company does not believe that any future costs for these sites will have a material adverse effect on the Company's consolidated financial statements.

13.  Supplemental Consolidated Statements of Cash Flows Information

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MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED STATEMENTS
(In thousands, except per share amounts)
(Unaudited)

14.  Segment reporting

      As a result of the Dal-Tile acquisition in 2002, the Company determined that it has two operating segments, the Mohawk segment and the Dal-Tile segment. The Mohawk segment is comprised of all the product lines and operations that were the Company's prior to the Dal-Tile acquisition. The Dal-Tile segment is comprised of the Dal-Tile product lines and operations.

      The accounting policies for each operating segment are consistent with the Company's policies described in the footnotes to the consolidated financial statements included in the Company's Annual Report filed on Form 10-K. Amounts disclosed for each segment are prior to any elimination or consolidation entries. Corporate general and administrative expenses attributable to each segment are estimated and allocated accordingly.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

      On March 20, 2002, the Company acquired all of the outstanding capital stock of Dal-Tile, a leading manufacturer and distributor of ceramic tile in the United States, for approximately $1,469 million, consisting of approximately 12.9 million shares of the Company's common stock, options to purchase approximately 2.1 million shares of the Company's common stock and $718 million in cash. The transaction was accounted for using the purchase method of accounting and, accordingly, the results of operations of Dal-Tile have been included in the Company's consolidated financial statements from March 20, 2002. The purchase price was allocated to the assets acquired and liabilities assumed based upon estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of the net identifiable assets acquired of approximately $1,168.3 million was recorded as goodwill.

      As a result of the Dal-Tile acquisition in 2002, the Company determined that it has two operating segments, the Mohawk segment and the Dal-Tile segment. The Mohawk segment is comprised of all the product lines and operations that were the Company's prior to the Dal-Tile acquisition. The Dal-Tile segment is comprised of the Dal-Tile product lines and operations.

      On May 5, 2003, the Company acquired certain assets of International Marble and Granite of Colorado, Inc., a distributor of natural stone slabs and tile. The primary reason for the acquisition was to increase the Company's presence in the stone flooring and countertop slab industry. The acquisition was accounted for by the purchase method and, accordingly, the results of operations are included within the Dal-Tile segment from May 5, 2003.

      On June 30, 2003, the Company acquired certain assets of a manufacturer and distributor of washable bath rugs. The primary reason for the acquisition was to increase sales within the bath mat product line. The acquisition was accounted for by the purchase method and, accordingly, the results of operations are included within the Mohawk segment from June 30, 2003.

      On July 30, 2003, the Company announced that W.L. Ross & Company and Mohawk were successful in their bid for substantially all of the assets of Burlington Industries, Inc. Mohawk's portion of the purchase price for the Lees Carpet division is estimated to be approximately $352 million, subject to certain adjustments. The transaction is expected to close in the fourth quarter of 2003. The acquisition will be financed through the Company's operations and existing credit facilities.

Results of Operations

Quarter Ended September 27, 2003, as Compared with Quarter Ended September 28, 2002

      Net sales for the quarter ended September 27, 2003 were $1,303.2 million, reflecting an increase of $78.8 million, or approximately 6.4%, from the $1,224.4 million reported in the quarter ended September 28, 2002. The increased net sales are primarily attributable to internal growth of both the Mohawk and Dal-Tile segments. The Mohawk segment recorded net sales of $967.4 million in the current quarter compared to $927.3 million in 2002, representing an increase of $40.1 million, or approximately 4.3%. The increase was primarily due to higher sales in all product categories. The Dal-Tile segment recorded net sales of $335.8 million in the current quarter, reflecting an increase of $38.7 million, or approximately 13.0%, from the $297.1 million reported in the quarter ended September 28, 2002. The increase was primarily attributable to growth within residential products.

      Gross profit for the third quarter of 2003 was $364.9 million (28.0% of net sales) compared to the gross profit of $341.4 million (27.9% of net sales) for the prior year's third quarter.

      Selling, general and administrative expenses for the current quarter were $205.5 million (15.8% of net sales) compared to $197.8 million (16.2% of net sales) for the prior year's third quarter. The percentage reduction was attributable to lower general and administrative and bad debt expense.

      Operating income for the current quarter was $159.4 million (12.2% of net sales) compared to $143.6 million (11.7% of net sales) in the third quarter of 2002. Operating income attributable to the Mohawk segment was

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$108.5 million (11.2% of segment net sales) in the third quarter of 2003 compared to $97.6 million (10.5% of segment net sales) in the third quarter of 2002. Operating income attributable to the Dal-Tile segment was $52.7 million (15.7% of segment net sales) in the third quarter of 2003. Excluding the start up costs for the new Dal-Tile manufacturing facility (approximately $2.5 million), the Dal-Tile segment's operating income for the third quarter of 2003 would have been approximately $55.2 million (16.4% of segment net sales) compared to $47.0 million (15.8% of segment net sales) in the third quarter of 2002. Management believes that presentation of segment operating income excluding startup costs for the new manufacturing facility will be useful to investors because it allows investors to compare the results between the two periods.

      Interest expense for the third quarter of 2003 was $14.2 million compared to $16.4 million in the third quarter of 2002. The decrease in interest expense was attributable to reduced debt levels, offset by an increase in the average borrowing rate due to a change in the mix of fixed rate and variable rate debt, when compared to the third quarter of 2002.

      Income tax expense was $52.5 million, or 36.5% of earnings before income taxes for the third quarter of 2003 compared to $44.0 million, or 35.0% of earnings before income taxes for the prior year's third quarter. The change in tax rate was a result of the utilization of available tax credits in 2003 when compared to 2002.

Nine Months Ended September 27, 2003, as Compared with Nine Months Ended September 28, 2002

      Net sales for the first nine months ended September 27, 2003 were $3,635.1 million, reflecting an increase of $316.2 million, or approximately 9.5%, from the $3,318.9 million reported in the nine months ended September 28, 2002. The increased net sales are attributable to the Dal-Tile segment. The Mohawk segment recorded net sales of $2,702.3 million in the first nine months of 2003 compared to $2,704.2 million in the first nine months of 2002. The decrease was primarily attributable to reduced soft surface sales volume of residential replacement product and Home products in the first half of 2003 compared to the first half of 2002. The Company believes the net sales decline was primarily attributable to lower consumer confidence and uncertainty relating to the U.S. economy. The Dal-Tile segment recorded net sales of $932.8 million in the first nine months of 2003, reflecting an increase of $318.1 million, from the $614.7 million reported in the first nine months of 2002. The Dal-Tile results are not included in the Company's consolidated financial statements prior to the March 20, 2002 acquisition. However, when Dal-Tile net sales for the first nine months of 2003 are compared to Dal-Tile pro forma combined net sales of $850.7 million for the first nine months of 2002 (derived by combining Dal-Tile net sales of $236.0 million prior to the March 20, 2002 acquisition date, after reclassifications to conform to Mohawk's presentation, with reported Dal-Tile net sales of $614.7 million for the first nine months of 2002 following the acquisition date), an increase of $82.1 million or approximately 9.7% for the nine-month period was realized. The increase was primarily attributable to growth within residential products. Management believes that presentation of this pro forma combined net sales information will be useful to investors because it allows investors to compare the results between the two periods.

      Gross profit for the first nine months of 2003 was $979.8 million (27.0% of net sales) compared to the gross profit of $896.7 million (27.0% of net sales) for the prior year's first nine months

      Selling, general and administrative expenses for the first nine months of 2003 were $612.1 million (16.8% of net sales) compared to $538.2 million (16.2% of net sales) for the prior year's first nine months. The increased percentage was attributable to the Dal-Tile segment, which had higher selling and servicing costs.

      Operating income for the first nine months of 2003 was $367.7 million (10.1% of net sales) compared to $358.5 million (10.8% of net sales) in the first nine months of 2002. Operating income attributable to the Mohawk segment was $235.1 million (8.7% of segment net sales) in the first nine months of 2003 compared to $266.7 million (9.9% of segment net sales) in the first nine months of 2002. Operating income attributable to the Dal-Tile segment was $137.7 million (14.8% of segment net sales) in the first nine months of 2003. Excluding the start up costs for the new Dal-Tile manufacturing facility (approximately $4.5 million), the Dal-Tile segment's operating income for the first nine months of 2003 would have been approximately $142.2 million (15.2% of segment net sales) compared to $95.3 million (15.5% of segment net sales) for the first nine months of 2002. Management believes that presentation of segment operating income excluding startup costs for the new manufacturing facility will be useful to investors because it allows investors to compare the results

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between the two periods. On a pro forma combined basis, Dal-Tile operating income was $127.1 million (14.9% of pro forma segment net sales) for the first nine of 2002 (derived by combining Dal-Tile operating income of $31.8 million prior to March 20, 2002, after reclassifications to conform to Mohawk's presentation, with reported Dal-Tile operating income of $95.3 million for the first nine months of 2002 following the acquisition date). Management believes that presentation of this pro forma combined operating income information will be useful to investors because it allows investors to compare the results between the two periods.

      Interest expense for the first nine months of 2003 was $41.3 million compared to $42.4 million in the first nine months of 2002. The decrease in interest expense was attributable to lower average debt levels offset by an increase in the average borrowing rate due to a change in the mix of fixed and variable rate debt in the current nine-month period when compared to the first nine months of 2002.

      Other income for the first nine months of 2003 was $5.5 million compared to $4.0 million in the first nine months of 2002. The change was attributable to exchange rate fluctuations in operations outside the United States. Other expense for the first nine months of 2003 was $4.2 million compared to $6.1 million in the first nine months of 2002. The change was attributable to lower realized exchange losses in the current nine-month period when compared to the first nine months of 2002.

      Income tax expense was $119.6 million, or 36.5% of earnings before income taxes for the first nine months of 2003 compared to $113.7 million, or 36.2% of earnings before income taxes for the prior year's first nine months.

Liquidity and Capital Resources

      The Company's primary capital requirements are for working capital, capital expenditures and acquisitions.  The Company's capital needs are met primarily through a combination of internally generated funds, bank credit lines, term and senior notes, the sale of receivables and credit terms from suppliers.

      The level of accounts receivable increased from $501.1 million at the beginning of 2003 to $602.9 million at September 27, 2003. The $101.8 million increase was primarily attributable to seasonal fluctuation in net sales.  Inventories increased from $678.0 million at the beginning of 2003 to $830.3 million at September 27, 2003, due primarily to building of inventory for hard surface product categories within both the Mohawk and Dal-Tile segments and seasonal increases in business.

      The outstanding checks in excess of cash represent trade payables checks that have not yet cleared the bank. When the checks clear the bank, they are funded by the revolving credit facility. This policy does not impact any liquid assets on the consolidated balance sheet.

      Capital expenditures excluding acquisitions totaled $80.3 million during the first nine months of 2003. Capital expenditures were incurred primarily to modernize, add and expand manufacturing facilities and equipment.  The Company's capital projects are primarily focused on increasing capacity, improving productivity and reducing costs. Capital spending during the remainder of 2003 for both the Mohawk and Dal-Tile segments combined, excluding acquisitions, is expected to range from $29.7 million to $49.7 million, and will be used primarily to purchase equipment and to add manufacturing capacity.

      On September 30, 2003, the Company refinanced its $450 million revolving credit facility with a revolving credit facility of $300 million with interest rates of LIBOR plus 0.4% to 1.5%, depending upon the Company's performance measured against certain financial ratios. The term of the facility is five years for $200 million and 364 days for the remaining $100 million. In addition to this new facility, the Company has secured $50 million in short-term uncommitted lines. All of these credit facilities are unsecured.

      On August 4, 2003, the Company entered into an on-balance sheet trade accounts receivable securitization agreement ("Securitization Facility") with bank agents for asset-backed commercial paper conduits replacing two on-balance sheet trade accounts receivable securitization agreements. The new facility enables the Company to borrow up to $350 million. The Securitization Facility is secured by the trade receivables and is

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subject to annual renewal. At September 27, 2003, the Company had no amounts outstanding under the Securitization Facility.

      The Company believes that the $700 combined total of the revolving credit facility, short-term uncommitted credit lines and the Securitization Facility is adequate to support its capital and working capital requirements. This compares to the $780 million combined total of the revolving credit facility, short-term uncommitted credit lines and the securitization facilities at December 31, 2002.

      The Company's Board of Directors has authorized the repurchase of up to 15 million shares of its outstanding common stock. For the nine-month period ended September 27, 2003, the Company repurchased approximately 593,000 shares at a cost of $27.8 million. Since the inception of the program, a total of approximately 11.0 million shares have been repurchased at an aggregate cost of approximately $293.1 million. All repurchases have been financed through the Company's operations and revolving line of credit.

Recent Accounting Pronouncements

      In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." This standard amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133. The standard is effective for contracts entered into or modified after June 30, 2003. The Company has adopted SFAS No. 149 and it did not have a material impact on the Company's consolidated financial statements.

      In May 2003, the FASB issued SFAS No. 150,"Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity, and imposes certain additional disclosure requirements. The provisions of SFAS No. 150 are generally effective for all financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company has adopted SFAS No. 150 and it did not have a material impact on the Company's consolidated financial statements.

Impact of Inflation

      Inflation affects the Company's manufacturing costs and operating expenses. The carpet and ceramic tile industry has experienced inflation in the prices of raw materials and fuel-related costs. In the past, the Company has generally passed along these price increases to its customers and has been able to enhance productivity to offset increases in costs resulting from inflation in both the United States and Mexico.

Seasonality

      The Company is a calendar year-end company and its results of operations for the first quarter tend to be the weakest.  The second, third and fourth quarters typically produce higher net sales and operating income.  These results are primarily due to consumer residential spending patterns for floorcovering, which historically have decreased during the first two months of each year following the holiday season.

Forward-Looking Information

      Certain of the matters discussed in this Quarterly Report on Form 10-Q, particularly anticipating future financial performance, business prospects, growth and operating strategies, proposed acquisitions, new products and similar matters, and those preceded by, followed by or that otherwise include the words "believes," "expects," "anticipates," "intends," "estimates" or similar expressions constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended.  For those statements, Mohawk claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Those statements are based on many assumptions, including assumptions regarding the Company's ability to maintain its sales growth and gross margins and to control costs. These or other assumptions could prove inaccurate and therefore, there can be no assurance that the "forward-looking statements" will prove to be

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accurate. Forward-looking statements involve a number of risks and uncertainties. The following important factors, in addition to those discussed elsewhere in this document and in Mohawk's Annual Report on Form 10-K for the fiscal year ended December 31, 2002, affect the future results of Mohawk and could cause those results to differ materially from those expressed in the forward-looking statements: materially adverse changes in economic conditions generally in the carpet, rug, ceramic tile and other floorcovering markets served by Mohawk; competition from other carpet, rug, ceramic tile and floorcovering manufacturers; raw material prices; declines in residential or commercial construction activity; timing and level of capital expenditures; the successful integration of acquisitions, including the challenges inherent in diverting Mohawk management's attention and resources from other strategic matters and from operational matters for an extended period of time; the successful introduction of new products; the successful rationalization of existing operations; and other risks identified from time to time in the Company's SEC reports and public announcements. Any forward-looking statements represent Mohawk's estimates only as of the date of this report and should not be relied upon as representing Mohawk's estimates as of any subsequent date. While Mohawk may elect to update forward-looking statements at some point in the future, Mohawk specifically disclaims any obligation to do so, even if Mohawk's estimates change.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

      Financial exposures are managed as an integral part of the Company's risk management program, which seeks to reduce the potentially adverse effect that the volatility of the exchange rate and natural gas markets may have on its operating results. The Company does not regularly engage in speculative transactions, nor does it regularly hold or issue financial instruments for trading purposes.

Natural Gas Risk Management

      The Company uses a combination of natural gas futures contracts and long-term supply agreements to manage unanticipated changes in natural gas prices. The contracts are based on forecasted usage of natural gas measured in Million British Thermal Units ("MMBTU").

      The Company has designated the natural gas futures contracts as cash flow hedges. Any gain or loss is recognized in cost of sales in the same period or periods during which the hedged transaction affects earnings.  At September 27, 2003, the Company had natural gas contracts outstanding with an aggregate notional amount of approximately 4.6 million MMBTU's. The contracts, which mature from October 2003 to December 2004, are marked to market as either an asset or liability with the offset recorded in accumulated other comprehensive income, net of applicable income taxes and any hedge ineffectiveness. At September 27, 2003, the Company had a recorded asset of $1.2 million.

      The long-term natural gas supply agreements are accounted for under the normal purchases provision within SFAS No. 133 and its amendments. At September 27, 2003, the Company had normal purchase commitments of approximately 4.0 million MMBTU's for periods maturing from October 2003 through August 2005. The contracted value of these commitments was approximately $18.3 million and the fair value of these commitments was approximately $19.0 million, at September 27, 2003.

Foreign Currency Rate Management

      The Company enters into foreign exchange forward contracts to hedge costs associated with its operations in Mexico. The objective of these transactions is to reduce volatility of exchange rates where these operations are located by fixing a portion of their costs in U.S. currency. Gains and losses are recognized in cost of sales in the same period or periods during which the hedged transaction affects earnings. Accordingly, these contracts have been designated as cash flow hedges. At September 27, 2003, the Company had forward contracts maturing from October 2003 through December 2003, to purchase approximately 53.6 million Mexican pesos. The aggregate U.S. Dollar value of these contracts at September 27, 2003 was approximately $4.8 million. The contracts are marked to market in either assets or liabilities with the offset recorded in accumulated other comprehensive income, net of applicable income taxes and any hedge ineffectiveness. Unrealized gains at September 27, 2003 were not material.

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Interest Rate Management

      In 2002, the Company determined that its $100 million interest rate swap was ineffective. Consequently, the $10.7 million unrealized loss associated with the swap was recorded as a realized loss in interest expense during the fourth quarter of 2002. The Company continues to carry the liability on its consolidated balance sheet and the interest rate swap is marked to market at the end of each reporting period. The change in fair value for the period ended September 27, 2003 was not material.

Item 4. Controls and Procedures

      Based on an evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report, the Company's Chief Executive Officer and Chief Financial Officer have concluded that such controls and procedures were effective for the period covered by this report. In connection with such evaluation, no change in the Company's internal control over financial reporting occurred during the period covered by this report that materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

      The Company is involved in routine 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 to be contemplated to which the Company is a party or to which any of its property is subject.

Environmental Matters

      The Company is subject to various federal, state, local and foreign environmental health and safety laws and regulations, including those governing air emissions, wastewater discharges, the use, storage, treatment and disposal of solid and hazardous materials, and the cleanup of contamination associated therewith. Because of the nature of the Company's business, the Company has incurred, and will continue to incur, costs relating to compliance with such laws and regulations. The Company is involved in various proceedings relating to environmental matters and is currently engaged in environmental investigation, remediation and post-closure care programs at certain sites. The Company has provided reserves for such activities that it has determined to be both probable and reasonably estimable. The Company does not expect that the ultimate liability with respect to such activities will have a material adverse effect on the Company's consolidated financial statements.

      Three sites near Mohawk's Dallas facility in its Dal-Tile segment are involved in environmental cleanup projects relating principally to the disposal or alleged disposal by Dal-Tile of waste materials containing lead compounds. Dal-Tile's approved closure plans have been implemented and each site is now undergoing post-closure care.  Dal-Tile has been named as a potentially responsible party under the federal Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") and similar state statutes for the disposal of certain hazardous substances at various other sites in the United States.  The Company does not believe that any future costs for these sites will have a material adverse effect on the Company's consolidated financial statements.

Item 2.  Changes in Securities and Use of Proceeds

     None.

Item 3.  Defaults Upon Senior Securities

     None.

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Item 4.  Submission of Matters to a Vote of Security Holders

     None.

Item 5.  Other Information

     None.

Item 6. Exhibits and Reports on Form 8-K

No.      Description

(a)       Exhibits

31.1       Certification Pursuant to Rule 13a-14(a).

31.2       Certification Pursuant to Rule 13a-14(a).

32.1       Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.1       Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)       Reports on Form 8-K

Current Report on Form 8-K: Second quarter earnings press release, dated July 16, 2003.

Current Report on Form 8-K: Press release dated July 21, 2003, announcing Mohawk Industries, Inc. proposal to acquire Lees Carpet.

Current Report on Form 8-K: Press release dated July 30, 2003, announcing Mohawk Industries, Inc. successful bid for Lees Carpet.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

                                                                                                                                                           MOHAWK INDUSTRIES, INC.

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