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Acquisitions Acquisitions | 6 Months Ended
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Jun. 29, 2013
Business Combinations [Abstract] |
Acquisitions | Acquisitions Marazzi Acquisition On December 20, 2012, the Company entered into a share purchase agreement (the “Share Purchase Agreement”) with LuxELIT S.á r.l., a Luxembourg limited liability company and Finceramica S.p.A., an Italian corporation (collectively, “Sellers”), to acquire the shares of Fintiles S.p.A. ("Marazzi"). On April 3, 2013, pursuant to the terms of the Share Purchase Agreement, the Company completed the acquisition of Marazzi for $1,522,731. The Marazzi business is reflected in the Ceramic segment. The equity value of Marazzi was paid to the Sellers in cash and in the Company's common stock (the “Shares”). The number of Shares transferred as part of the consideration was calculated using the average closing price for the Company's common stock over a 30-day trading period ending March 19, 2013. Pursuant to the Share Purchase Agreement, the Company (i) acquired the entire issued share capital of Marazzi and (ii) assumed $901,773 of indebtedness of Marazzi, in exchange for the following consideration:
• | A cash payment of $307,052; and
• | 2,874 newly issued Shares for a value of $313,906.
The Company funded the cash portion of the Marazzi acquisition through a combination of the 3.85% Senior Notes (as discussed in Note 16), cash on hand and borrowings under the Senior Credit Facility. The Company incurred $13,812 of direct transaction costs, which are recorded in selling, general and administrative expenses for the three and six months ended June 29, 2013. The Marazzi acquisition makes the Company a global leader in ceramic tile. The addition of Marazzi will allow the Company to expand its U.S. distribution, source ceramic tile from a worldwide base, and provide industry leading innovation and design to all of its global ceramic customers. The acquisition will provide opportunities to improve performance by leveraging best practices, operational expertise, product innovation and manufacturing assets across the enterprise. The Company is continuing to obtain information to complete its valuation of intangible assets, as well as to determine the value of the acquired assets and liabilities including tax assets, liabilities and other attributes. The components of the preliminary purchase price allocation for Marazzi are as follows (in thousands):
Enterprise value | $ | 1,522,731 |
Assumed indebtedness | (901,773 | )
Consideration transferred | $ | 620,958 |
Working capital | $ | 384,134 |
Property, plant and equipment, net | 779,148 |
Tradenames | 215,357 |
Customer relationships | 21,792 |
Equity method investments | 1,058 |
Goodwill | 262,613 |
Other long term assets | 16,114 |
Long-term debt, including current portion | (901,773 | )
Other long-term liabilities | (72,143 | )
Deferred tax liability | (79,132 | )
Noncontrolling interest | (6,210 | )
Consideration transferred | $ | 620,958 |
Intangible assets subject to amortization of $21,792 related to customer relationships have an estimated average life of 10 years. In addition to the amortizable intangible assets, there is an additional $215,357 in indefinite-lived trademark intangible assets. The goodwill of $262,613 was allocated to the Ceramic segment. The factors contributing to the recognition of the amount of goodwill are based on several strategic and synergistic benefits that are expected to be realized from the Marazzi acquisition. These benefits include the opportunities to improve the Company's ceramic performance by leveraging best practices, operational expertise, product innovation and manufacturing assets across the segment. The goodwill is not expected to be deductible for tax purposes. Marazzi contributed net sales and a net loss from continuing operations of $309,867 and $6,689, respectively, to the three and six months ended June 29, 2013. The fair value of inventories acquired included a step-up in the value of inventories of approximately $29,781, of which $18,744 was charged to cost of sales in the three months ended June 29, 2013. The remaining $11,037 is expected to be charged to cost of sales during the three months ended September 28, 2013. In connection with the acquisition of Marazzi, the Company is party to an off-balance sheet accounts receivable securitization facility ("Marazzi Securitization Facility") in which it services receivables sold to a third party. As of June 29, 2013, the amount utilized under the Marazzi Securitization Facility was €73,857. The Company is in the process of terminating this facility. The following unaudited pro forma consolidated results of operations have been prepared as if the Marazzi acquisition occurred as of January 1, 2012 (amounts in thousands, except per share data):
|  | Three Months Ended |  | Six Months Ended
|  | June 29, 2013 |  | June 30, 2012 |  | June 29, 2013 |  | June 30, 2012
Net Sales: |  |  |  |  |  |  |  |
As reported |  | $ | 1,976,299 |  |  | 1,469,793 |  |  | 3,463,114 |  |  | 2,878,828 |
Pro forma |  | $ | 1,976,299 |  |  | 1,760,068 |  |  | 3,725,595 |  |  | 3,422,020 |
Net earnings from continuing operations attributable to Mohawk Industries, Inc.: |  |  |  |  |  |  |  |
As reported |  | $ | 85,933 |  |  | 73,188 |  |  | 136,428 |  |  | 113,565 |
Pro forma |  | $ | 100,741 |  |  | 84,956 |  |  | 159,150 |  |  | 113,755 |
Basic earnings per share from continuing operations attributable to Mohawk Industries, Inc.: |  |  |  |  |  |  |  |
As reported |  | $ | 1.19 |  |  | 1.06 |  |  | 1.92 |  |  | 1.65 |
Pro forma |  | $ | 1.39 |  |  | 1.18 |  |  | 2.20 |  |  | 1.58 |
Diluted earnings per share from continuing operations attributable to Mohawk Industries, Inc.: |  |  |  |  |  |  |  |
As reported |  | $ | 1.18 |  |  | 1.06 |  |  | 1.91 |  |  | 1.64 |
Pro forma |  | $ | 1.38 |  |  | 1.18 |  |  | 2.18 |  |  | 1.58 |
The pro forma earnings and per share results for the three and six months ended June 30, 2012 included amounts charged to cost of sales for the step-up to fair value in inventories of approximately $8,243 and $22,242, respectively, net of tax. The pro forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that actually would have resulted had the acquisition occurred on the date indicated or that may result in the future. Other Acquisitions On January 10, 2013, the Company completed its purchase of Pergo, a leading manufacturer of laminate flooring in the U.S. and the Nordic countries. The total value of the acquisition was approximately $150 million. Pergo complements the Company's specialty distribution network in the U.S., leverages its geographic position in Europe, expands its geographic reach to the Nordic countries and India and enhances its patent portfolio. The acquisition's results and a preliminary purchase price allocation are included in the condensed consolidated financial statements as of March 30, 2013. The Company's acquisition of Pergo resulted in a preliminary goodwill allocation of $24,501, indefinite-lived trademark intangible assets of $16,834 and intangible assets subject to amortization of $15,188. The factors contributing to the recognition of the amount of goodwill include the opportunity to optimize the assets of Pergo with the Company's existing Laminate and Wood assets while strengthening the design and product performance of the Pergo and Unilin brands. The Pergo results are reflected in the Laminate and Wood segment. On May 3, 2013, the Company completed the acquisition of Spano, a Belgian panel board manufacturer. The total value of the acquisition was approximately $160 million. Spano extends the Laminate and Wood segment's customer base into new channels of distribution and adds technical expertise and product knowledge which we can leverage. The acquisition's results and a preliminary purchase price allocation are included in the condensed consolidated financial statements as of June 29, 2013. The Company's acquisition of Spano resulted in a preliminary goodwill allocation of $35,857. The factors contributing to the recognition of the amount of goodwill include the extension of the Company's customer base into new channels of distribution and the opportunity for synergies in manufacturing assets and processes, raw materials and operational efficiencies. The Spano results are reflected in the Laminate and Wood segment.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e6996-128479 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1524-128463 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=7659399&loc=d3e1383-128463 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=7488404&loc=d3e7000-128479 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Paragraph F4 -Subparagraph e -Appendix F Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4934-128472 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141 -Paragraph 51, 52 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. 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This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 88-16 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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