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

FORM 10-Q
[Mark One]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 1, 2022
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 01-13697
 __________________________________________
MOHAWK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware52-1604305
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
160 S. Industrial Blvd.CalhounGeorgia30701
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (706629-7721
Former name, former address and former fiscal year, if changed since last report:
__________________________________________ 

Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, $.01 par valueMHKNew York Stock Exchange
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 has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerx  Accelerated filer¨
Non-accelerated filer¨  Smaller reporting company¨
Emerging growth company¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  x

The number of shares outstanding of the issuer’s common stock as of October 26, 2022, the latest practicable date, is as follows: 63,534,032 shares of common stock, $.01 par value.


MOHAWK INDUSTRIES, INC.
INDEX
 
  Page No
Part I.
Item 1.
Item 2.
Item 3.
Item 4.
Part II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) 
October 1,
2022
December 31,
2021
(In thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents$326,971 268,895 
Short-term investments110,000 323,000 
Receivables, net2,003,261 1,839,985 
Inventories2,900,116 2,391,672 
Prepaid expenses495,226 394,649 
Other current assets18,755 20,156 
Total current assets5,854,329 5,238,357 
Property, plant and equipment9,342,898 9,250,587 
Less: accumulated depreciation4,818,362 4,613,722 
Property, plant and equipment, net4,524,536 4,636,865 
Right of use operating lease assets400,412 389,967 
Goodwill1,827,968 2,607,909 
Tradenames646,661 694,905 
Other intangible assets subject to amortization, net176,439 205,075 
Deferred income taxes and other non-current assets370,689 451,439 
Total assets$13,801,034 14,224,517 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt and current portion of long-term debt$1,542,139 624,503 
Accounts payable and accrued expenses2,256,097 2,217,418 
Current operating lease liabilities106,511 104,434 
Total current liabilities3,904,747 2,946,355 
Deferred income taxes430,888 495,521 
Long-term debt, less current portion1,019,984 1,700,282 
Non-current operating lease liabilities306,617 297,390 
Other long-term liabilities313,741 356,753 
Total liabilities5,975,977 5,796,301 
Commitments and contingencies (Note 17)
Stockholders’ equity:
Preferred stock, $.01 par value; 60 shares authorized; no shares issued
  
Common stock, $.01 par value; 150,000 shares authorized; 70,875 and 72,952 shares issued and outstanding in 2022 and 2021, respectively
709 729 
Additional paid-in capital1,925,894 1,911,131 
Retained earnings7,376,304 7,692,064 
Accumulated other comprehensive loss(1,268,663)(966,952)
8,034,244 8,636,972 
Less: treasury stock at cost; 7,341 and 7,343 shares in 2022 and 2021, respectively
215,491 215,547 
Total Mohawk Industries, Inc. stockholders’ equity7,818,753 8,421,425 
Nonredeemable noncontrolling interests6,304 6,791 
          Total stockholders’ equity7,825,057 8,428,216 
Total liabilities and stockholders’ equity$13,801,034 14,224,517 
See accompanying notes to condensed consolidated financial statements
3

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 Three Months EndedNine Months Ended
 October 1,
2022
October 2,
2021
October 1,
2022
October 2,
2021
(In thousands, except per share data)
Net sales$2,917,539 2,817,017 9,086,390 8,439,876 
Cost of sales2,203,878 1,979,702 6,697,404 5,908,585 
Gross profit713,661 837,315 2,388,986 2,531,291 
Selling, general and administrative expenses523,479 477,341 1,510,076 1,449,378 
Impairment of goodwill and indefinite-lived intangibles695,771  695,771  
Operating (loss) income (505,589)359,974 183,139 1,081,913 
Interest expense13,797 14,948 37,337 45,083 
Other (income) expense, net(1,242)21 (1,622)(13,374)
(Loss) earnings before income taxes(518,144)345,005 147,424 1,050,204 
Income tax expense15,569 73,821 155,193 205,756 
Net (loss) earnings including noncontrolling interests(533,713)271,184 (7,769)844,448 
Net earnings attributable to noncontrolling interests256 206 440 378 
Net (loss) earnings attributable to Mohawk Industries, Inc.$(533,969)270,978 (8,209)844,070 
Basic (loss) earnings per share attributable to Mohawk Industries, Inc.
Basic (loss) earnings per share attributable to Mohawk Industries, Inc.$(8.40)3.95 (0.13)12.16 
Weighted-average common shares outstanding—basic63,534 68,541 63,923 69,389 
Diluted (loss) earnings per share attributable to Mohawk Industries, Inc.
Diluted (loss) earnings per share attributable to Mohawk Industries, Inc.$(8.40)3.93 (0.13)12.11 
Weighted-average common shares outstanding—diluted63,534 68,864 63,923 69,683 
See accompanying notes to condensed consolidated financial statements.

4


MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 
 Three Months EndedNine Months Ended
 October 1,
2022
October 2,
2021
October 1,
2022
October 2,
2021
(In thousands)
Net (loss) earnings including noncontrolling interests$(533,713)271,184 (7,769)844,448 
Other comprehensive (loss) income:
Foreign currency translation adjustments(254,002)(91,318)(302,384)(178,077)
Prior pension and post-retirement benefit service cost and actuarial gain, net of tax65 108 672 316 
Other comprehensive (loss) income(253,937)(91,210)(301,712)(177,761)
Comprehensive (loss) income(787,650)179,974 (309,481)666,687 
Comprehensive (loss) income attributable to noncontrolling interests(16)107 439 88 
Comprehensive (loss) income attributable to Mohawk Industries, Inc.$(787,634)179,867 (309,920)666,599 
See accompanying notes to condensed consolidated financial statements.
5

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) 
 Nine Months Ended
 October 1,
2022
October 2,
2021
(In thousands)
Cash flows from operating activities:
Net (loss) earnings including noncontrolling interests$(7,769)844,448 
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:
Restructuring21,673 7,410 
Impairment of goodwill and indefinite-lived intangibles695,771  
Depreciation and amortization436,449 448,299 
Deferred income taxes(47,846)(52,304)
Loss on disposal of property, plant and equipment591 1,161 
Stock-based compensation expense17,488 19,411 
Changes in operating assets and liabilities, net of effects of acquisitions:
Receivables, net(267,546)(275,952)
Inventories(548,711)(330,745)
Accounts payable and accrued expenses162,841 381,634 
Other assets and prepaid expenses(41,678)(23,860)
Other liabilities6,172 77,233 
Net cash provided by operating activities427,435 1,096,735 
Cash flows from investing activities:
Additions to property, plant and equipment(430,084)(375,179)
Acquisitions, net of cash acquired(157,274)(77,187)
Purchases of short-term investments(2,233,000)(778,239)
Redemption of short-term investments2,446,000 1,344,574 
Net cash (used in) provided by investing activities(374,358)113,969 
Cash flows from financing activities:
Payments on Senior Credit Facilities(5,000) 
Proceeds from Senior Credit Facilities5,000  
Payments on commercial paper(12,542,311)(94,820)
Proceeds from commercial paper12,866,175 94,605 
Repayments on Senior Notes (352,609)
Net payments of other financing activities(16,061)(7,874)
Debt issuance costs(1,621) 
Purchase of Mohawk common stock(307,572)(473,334)
Change in outstanding checks in excess of cash(1,588)(921)
Net cash used in financing activities(2,978)(834,953)
Effect of exchange rate changes on cash and cash equivalents7,977 (16,349)
Net change in cash and cash equivalents58,076 359,402 
Cash and cash equivalents, beginning of period268,895 768,625 
Cash and cash equivalents, end of period$326,971 1,128,027 


See accompanying notes to condensed consolidated financial statements.

6

MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)

1. General

Unless this Form 10-Q indicates otherwise or the context otherwise requires, the terms “we,” “our,” “us,” “Mohawk,” or “the Company” as used in this Form 10-Q refer to Mohawk Industries, Inc.

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 U.S. generally accepted accounting principles (“U.S. GAAP”) 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 consolidated financial statements and notes thereto, and the Company’s description of critical accounting policies, included in the Company’s 2021 Annual Report on Form 10-K, as filed with the Securities and Exchange Commission. Results for interim periods are not necessarily indicative of the results for the year.

Hedges of Net Investments in Non-U.S. Operations

The Company has numerous investments outside the United States. The net assets of these subsidiaries are exposed to changes and volatility in currency exchange rates. The Company has in the past and might in the future use foreign currency denominated debt to hedge its non-U.S. net investments against adverse movements in exchange rates. In periods when the Company uses foreign currency denominated debt to hedge its non-U.S. net investments, the gains and losses on the Company’s net investments in its non-U.S. operations are economically offset by losses and gains on its foreign currency borrowings. Changes in the U.S. dollar value of the Company’s euro denominated debt are recorded in the foreign currency translation adjustment component of accumulated other comprehensive income or (loss). In June 2015, the Company designated its €500,000 2.00% Senior Notes borrowing as a net investment hedge of a portion of its European operations. On October 19, 2021, the Company redeemed at par the 2.00% Senior Notes, originally due on January 14, 2022, and paid the remaining €500,000 outstanding principal of the 2.00% Senior Notes, plus any unpaid interest, utilizing cash on hand. In connection with this repayment, the Company dedesignated its €500,000 2.00% Senior Notes borrowing as a net investment hedge of a portion of its European operations. For the nine months ended October 2, 2021, the change in the U.S. dollar value of the Company’s euro denominated debt was a decrease of $35,363 ($27,056 net of taxes).

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes which simplified the accounting for income taxes in several areas by removing certain exceptions and by clarifying and amending existing guidance applicable to accounting for income taxes. The Company adopted the new standard on January 1, 2021. The effect of adopting the new standard was not material.



7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
2. Acquisitions

2022 Acquisitions

On July 6, 2022, the Company completed its purchase of a Georgia-based manufacturer specializing in non-woven, needle-punch technology in the Flooring North America (“Flooring NA”) Segment for $146,409. The Company’s acquisition resulted in a preliminary goodwill allocation of $56,172, pending working capital adjustments, and intangible assets subject to amortization of $15,000. Approximately half of the goodwill is expected to be deductible for tax purposes. During the third quarter, the Company also completed an acquisition of a wood veneer plant in the Flooring Rest of the World (“Flooring ROW”) Segment for $13,806.

2021 Acquisitions

During the nine months ended October 2, 2021, the Company made acquisitions in the Flooring ROW Segment totaling $77,187, including the acquisition of an insulation manufacturer, on September 7, 2021 for $67,285. The Company’s acquisition resulted in a goodwill allocation of $31,319 and an intangible asset subject to amortization of $10,601. The goodwill is not expected to be deductible for tax purposes. The remaining acquisitions resulted in goodwill of $1,273 and intangible assets subject to amortization of $5,596.

3. Revenue from Contracts with Customers

Contract Liabilities

The Company records contract liabilities when it receives payment prior to fulfilling a performance obligation. Contract liabilities related to revenues are recorded in accounts payable and accrued expenses on the accompanying condensed consolidated balance sheets. The Company had contract liabilities of $72,860 and $65,744 as of October 1, 2022 and December 31, 2021, respectively.

Performance Obligations

Substantially all of the Company’s revenue is recognized at a point in time when the product is either shipped or received from the Company’s facilities and control of the product is transferred to the customer. Accordingly, in any period, the Company does not recognize a significant amount of revenue from performance obligations satisfied or partially satisfied in prior periods and the amount of such revenue recognized during the three and nine months ended October 1, 2022 and October 2, 2021 was immaterial.

Costs to Obtain a Contract

The Company incurs certain incremental costs to obtain revenue contracts. These costs relate to marketing display structures and are capitalized when the amortization period is greater than one year, with the amount recorded in other assets on the accompanying condensed consolidated balance sheets. Capitalized costs to obtain contracts were $60,457 and $49,644 as of October 1, 2022 and December 31, 2021, respectively. Straight-line amortization expense recognized during the nine months ended October 1, 2022 and October 2, 2021 related to these capitalized costs were $38,394 and $44,042, respectively.



8

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
Revenue Disaggregation

The following table presents the Company’s segment revenues disaggregated by the geographical market location of customer sales and product categories for the three months ended October 1, 2022 and October 2, 2021:
October 1, 2022Global Ceramic SegmentFlooring NA SegmentFlooring ROW SegmentTotal
Geographical Markets
United States$614,460 1,056,596 3,784 1,674,840 
Europe201,217 2,079 495,291 698,587 
Russia113,195  49,001 162,196 
Other167,784 30,959 183,173 381,916 
$1,096,656 1,089,634 731,249 2,917,539 
Product Categories
Ceramic & Stone$1,089,593 9,642  1,099,235 
Carpet & Resilient7,063 842,069 220,320 1,069,452 
Laminate & Wood 237,923 235,461 473,384 
Other(1)
  275,468 275,468 
$1,096,656 1,089,634 731,249 2,917,539 

October 2, 2021Global Ceramic SegmentFlooring NA SegmentFlooring ROW SegmentTotal
Geographical Markets
United States$556,496 1,016,015 3,851 1,576,362 
Europe205,263 1,398 545,538 752,199 
Russia81,246 25 40,275 121,546 
Other155,439 33,015 178,456 366,910 
$998,444 1,050,453 768,120 2,817,017 
Product Categories
Ceramic & Stone$993,864 9,079  1,002,943 
Carpet & Resilient4,580 834,581 231,825 1,070,986 
Laminate & Wood 206,793 250,307 457,100 
Other(1)
  285,988 285,988 
$998,444 1,050,453 768,120 2,817,017 

(1) Other includes roofing elements, insulation boards, chipboards and IP contracts.













9

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
The following table presents the Company’s segment revenues disaggregated by the geographical market location of customer sales and product categories for the nine months ended October 1, 2022 and October 2, 2021:
October 1, 2022Global Ceramic SegmentFlooring NA SegmentFlooring ROW SegmentTotal
Geographical Markets
United States$1,825,304 3,153,752 10,802 4,989,858 
Europe702,308 5,932 1,776,686 2,484,926 
Russia283,702 23 127,507 411,232 
Other508,668 101,375 590,331 1,200,374 
$3,319,982 3,261,082 2,505,326 9,086,390 
Product Categories
Ceramic & Stone$3,302,446 28,685  3,331,131 
Carpet & Resilient17,536 2,547,184 709,148 3,273,868 
Laminate & Wood 685,213 836,756 1,521,969 
Other (1)
  959,422 959,422 
$3,319,982 3,261,082 2,505,326 9,086,390 
October 2, 2021Global Ceramic SegmentFlooring NA SegmentFlooring ROW SegmentTotal
Geographical Markets
United States$1,659,106 3,000,077 8,191 4,667,374 
Europe658,829 1,977 1,702,522 2,363,328 
Russia222,226 75 105,395 327,696 
Other427,657 98,763 555,058 1,081,478 
$2,967,818 3,100,892 2,371,166 8,439,876 
Product Categories
Ceramic & Stone$2,958,056 26,062  2,984,118 
Carpet & Resilient9,762 2,470,079 745,774 3,225,615 
Laminate & Wood 604,751 776,690 1,381,441 
Other (1)
  848,702 848,702 
$2,967,818 3,100,892 2,371,166 8,439,876 

(1) Other includes roofing elements, insulation boards, chipboards and IP contracts.

10

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
4. Restructuring, Acquisition and Integration-Related Costs

The Company incurs costs in connection with acquiring, integrating and restructuring acquisitions and in connection with its global cost-reduction/productivity initiatives. For example:

In connection with acquisition activity, the Company typically incurs costs associated with executing the transactions, integrating the acquired operations (which may include expenditures for consulting and the integration of systems and processes), and restructuring the combined company (which may include charges related to employees, assets and activities that will not continue in the combined company); and

In connection with the Company’s cost-reduction/productivity initiatives, it typically incurs costs and charges associated with site closings and other facility rationalization actions including accelerated depreciation (“Asset write-downs”) and workforce reductions.

Restructuring, acquisition transaction and integration-related costs consisted of the following during the three and nine months ended October 1, 2022 and October 2, 2021:
Three Months EndedNine Months Ended
October 1
2022
October 2
2021
October 1
2022
October 2
2021
Cost of sales
Restructuring costs$30,421 246 31,722 15,685 
Acquisition integration-related costs 306 349 349 
  Restructuring and acquisition integration-related costs$30,421 552 32,071 16,034 
Selling, general and administrative expenses
Restructuring costs$2,949 (89)3,035 226 
Acquisition transaction-related costs481 184 1,508 1,928 
Acquisition integration-related costs687 426 1,741 849 
  Restructuring, acquisition transaction and integration-related costs$4,117 521 6,284 3,003 



11

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
The restructuring activity for the three months ended October 1, 2022 is as follows:
Asset write-downs (gains on disposals)SeveranceOther
restructuring
costs
Total
Balances as of July 2, 2022$ 430  430 
Restructuring costs
Global Ceramic Segment 3,366  3,366 
Flooring NA Segment15,193 870 3,726 19,789 
Flooring ROW Segment5,805 2,611 1,799 10,215 
Total restructuring costs20,998 6,847 5,525 33,370 
Cash payments (1,739)(5,401)(7,140)
Non-cash items(20,998)(34)(124)(21,156)
Balances as of October 1, 2022$ 5,504  5,504 
Restructuring costs recorded in:
Cost of sales$20,998 3,924 5,499 30,421 
Selling, general and administrative expenses 2,923 26 2,949 
Total restructuring costs$20,998 6,847 5,525 33,370 
    

The restructuring activity for the nine months ended October 1, 2022 is as follows:
Asset write-downs (gains on disposals)SeveranceOther
restructuring
costs
Total
Balances as of December 31, 2021$ 1,634 995 2,629 
Restructuring costs
Global Ceramic Segment 3,366  3,366 
Flooring NA Segment15,107 870 3,677 19,654 
Flooring ROW Segment5,805 2,611 3,321 11,737 
Total restructuring costs20,912 6,847 6,998 34,757 
Cash payments (2,918)(7,119)(10,037)
Non-cash items(20,912)(59)(874)(21,845)
Balances as of October 1, 2022$ 5,504  5,504 
Restructuring costs recorded in:
Cost of sales$20,912 3,924 6,886 31,722 
Selling, general and administrative expenses 2,923 112 3,035 
Total restructuring costs$20,912 6,847 6,998 34,757 

The Company expects the remaining severance and other restructuring costs to be paid over the next 12 months.
12

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
5. Fair Value

The Company’s wholly-owned captive insurance company may invest in the Company’s commercial paper. These short-term commercial paper investments are classified as trading securities and carried at fair value based upon the Level 2 fair value hierarchy.

Items Measured at Fair Value
The following table presents the items measured at fair value:

At October 1, 2022At December 31, 2021
Short-term investments:
Commercial paper (Level 2)$110,000 323,000 

The fair values and carrying values of the Company’s debt are disclosed in Note 18 - Debt.

6. Receivables, net

Receivables, net are as follows:
At October 1, 2022At December 31, 2021
Customers, trade$1,899,479 1,721,584 
Income tax receivable27,241 73,727 
Other148,283 117,823 
2,075,003 1,913,134 
Less: allowance for discounts, claims and doubtful accounts71,742 73,149 
Receivables, net$2,003,261 1,839,985 


7. Inventories

The components of inventories are as follows:
At October 1, 2022At December 31, 2021
Finished goods$2,025,754 1,677,707 
Work in process176,033 144,004 
Raw materials698,329 569,961 
Total inventories$2,900,116 2,391,672 

13

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
8. Goodwill and Intangible Assets

The Company performs its annual testing of goodwill and indefinite-lived intangibles in the fourth quarter of each year. Between annual testing dates, the Company monitors factors such as its market capitalization, comparable company market multiples and macroeconomic conditions to identify conditions that could impact the Company’s assumptions utilized in the determination of the estimated fair values of the Company’s reporting units and indefinite-lived intangible assets significantly enough to trigger an impairment.

The goodwill impairment tests are based on determining the fair value of the specified reporting units based on management judgements and assumptions using the discounted cash flows under the income approach classified in Level 3 of the fair value hierarchy and comparable company market valuation classified in Level 2 of the fair value hierarchy approaches. The Company has identified Global Ceramic, Flooring NA and Flooring ROW as its reporting units for the purposes of allocating goodwill and intangibles as well as assessing impairments. The valuation approaches are subject to key judgments and assumptions that are sensitive to change such as judgements and assumptions about appropriate sales growth rates, operating margins, weighted average cost of capital ("WACC") and comparable company market multiples.

As a result of a decrease in the Company’s market capitalization, comparable company market multiples, projected future cash flows and an increase in the WACC due to increases in the risk free rate and applicable risk premiums, the Company determined that a triggering event occurred requiring goodwill impairment testing for each of its reporting units as of October 1, 2022. The impairment test indicated a pre-tax, non-cash goodwill impairment charge related to the Global Ceramic reporting unit of $688,514 ($679,664 net of tax) which the Company recorded during the three months ended October 1, 2022. The Company concluded goodwill of its other reporting units was not impaired at October 1, 2022.

The Company compared the estimated fair values of its indefinite-lived intangibles to their carrying values and determined that there were impairments of $7,257 ($5,939 net of tax) in the Flooring ROW and Flooring NA reporting units during the three months ended October 1, 2022.

A significant or prolonged deterioration in economic conditions, continued increases in the costs of raw materials and energy combined with an inability to pass these costs on to customers, a further decline in the Company’s market capitalization or comparable company market multiples, projected future cash flows, or increases in the WACC, could impact the Company’s assumptions and require a reassessment of goodwill or indefinite-lived intangible assets for impairment in future periods. The excess of fair value over carrying value for the Flooring ROW reporting unit was approximately 20% and the excess of fair value over carrying value for the Flooring NA reporting unit was less than 5% as of October 1, 2022. Future declines in estimated after tax cash flows, increases in the WACC or a decline in market capitalization could result in an additional indication of impairment in one or more of the Company’s reporting units.

The components of goodwill and other intangible assets are as follows:
14

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

Goodwill: