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Form 8-K MOHAWK INDUSTRIES INC For: May 07

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May 7, 2015 4:42 PM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 7, 2015
MOHAWK INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
 

 
 
 
 
 
Delaware
 
01-13697
 
52-1604305
(State or Other
Jurisdiction of
Incorporation)
 
(Commission File
Number)
 
(IRS Employer
Identification No.)

 
 
 
 
 
 
 
160 South Industrial Blvd., Calhoun, Georgia
 
30701
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s telephone number, including area code (706) 629-7721
 
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨   Written communication pursuant to Rule 425 under Securities Act (17 CFR 230.425)
¨   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act CFR 240.14d-2(b))
¨   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act CFR 240.17R 240.13e-4(c))




Item 2.02 Results of Operations and Financial Condition.
The following information, including the Exhibit attached hereto, is being furnished pursuant to this Item 2.02 and shall not be deemed “filed” for purpose of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
On May 7, 2015, Mohawk Industries, Inc., issued a press release announcing its first quarter financial results. A copy of the press release is attached hereto and hereby incorporated by reference as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
99.1 Press release dated May 7, 2015.







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 hereunto duly authorized.
 

 
 
 
 
 
 
 
 
 
 
 
 
 
Mohawk Industries, Inc.
Date:
 
May 7, 2015
 
By:
 
/s/ James F. Brunk
 
 
 
 
 
 
James F. Brunk
 
 
 
 
 
 
V.P. & Corporate Controller








INDEX TO EXHIBITS
 

 
 
 
 
Exhibit
 
 
 
 
 
 
99.1
 
Press release dated
May 7, 2015






Exhibit 99.1
NEWS RELEASE          ______________________________________________________________________________________________________                            
For Release:        Immediately
            
Contact:         Frank H. Boykin, Chief Financial Officer (706) 624-2695

    

MOHAWK INDUSTRIES, INC. ANNOUNCES FIRST QUARTER EARNINGS

Record Q1 Adjusted EPS; 38% Increase Over PY
Adjusted Operating Income Up 170 bps

Calhoun, Georgia, May 7, 2015 - Mohawk Industries, Inc. (NYSE: MHK) today announced 2015 first quarter net earnings of $22 million and diluted earnings per share (EPS) of $.30. Excluding unusual charges, net earnings were $125 million and EPS was $1.70, a 38% increase over last year’s first quarter adjusted EPS and the highest Q1 adjusted EPS in the company’s history. Net sales for the first quarter of 2015 were $1.9 billion, an increase of approximately 4% versus the prior year’s first quarter or 6% on a constant days and currency exchange rate basis excluding a 2014 disposition of a ceramic plant. For the first quarter of 2014, net sales were $1.8 billion, net earnings were $81 million and EPS was $1.11; excluding unusual charges, net earnings were $90 million and EPS was $1.23.

Commenting on Mohawk Industries’ first quarter performance, Jeffrey S. Lorberbaum, Chairman and CEO, stated, “For the period, our adjusted operating margin was approximately 10%, an increase of 170 basis points compared to the prior year, as a result of new products, higher volume, and numerous productivity initiatives. We improved SG&A as a percent of sales by 90 basis points across the business, even as we expanded our sales organization, introduced leading product innovation and implemented merchandising systems that showcase our product value. Throughout the business, we are introducing new products across all categories that are being well received in their markets, generating sales growth and increasing margins.”

Carpet Segment net sales for the quarter were $739 million, up approximately 10% over last year as reported or 4% on a constant days basis. Our adjusted operating income increased about 20% over the prior year with a margin of 5.5% as we reduced our SG&A as a percent of sales. SmartStrand® Forever Clean™, the next generation of our exclusive SmartStrand franchise, was launched in the first quarter, and continues to gain momentum in the market. We are expanding the sales of our premium Karastan carpet brand and increasing our participation in the builder and multifamily channels. In commercial carpet, we continue to




improve sales and operating margin through innovative designs, process simplification and material optimization. We have completed our Continuum™ manufacturing expansion and are increasing sales in this faster growing polyester category.

Ceramic Segment net sales for the quarter were $720 million, up approximately 4% over last year as reported or an increase of approximately 9% on a constant days and currency exchange rate basis excluding a 2014 disposition of a ceramic plant. Even with the impact of the weaker euro and ruble, the segment’s adjusted operating income grew 37% over the prior year to a margin of approximately 12%, an increase of 290 basis points. Our regional ceramic organizations are outperforming our competitors on a local basis as we leverage our product innovation, manufacturing expertise and distribution advantages. Our U.S. ceramic business continues to strengthen as we introduce unique products in all of our channels. For the eleventh consecutive year, retailers voted one of our ceramic collections as the best in the industry, underscoring our leadership in design and technical innovation. In Mexico, we are gaining significant share as a result of our leading styling and expanded distribution; and our margins are improving as we enhance our product mix and lower our costs. In Europe, our focus on bringing differentiated products to market has expanded our distribution and improved our average selling price. In Russia, the strong performance of our porcelain collections improved our mix and volume, yielding a higher operating profit in local currency than last year in a difficult environment.

Laminate and Wood Segment net sales for the quarter were $448 million, decreasing approximately 4% over last year as reported and increasing approximately 5% at a constant days and currency exchange rate basis. Adjusted operating margin for the segment was 14%, growing 280 basis points over the prior year. The segment’s improved results were driven by positive volume, productivity improvements and successful product introductions, partially offset by the stronger dollar. On a local currency basis, our European laminate business showed improvement, with strong growth in the U.K., Australia and Russia, partially offset by lower sales in France. Sales of our new Impressive™ laminate collection have grown rapidly due to the product’s richly detailed surface and exclusive water resistant technology. We are aggressively marketing new LVT collections produced at our facility in Belgium to generate sales volume and achieve our product expansion goals. In the U.S., new laminate product launches featuring our most realistic visuals and textures drove sales across all channels, with retailers selecting one of our collections as the best new laminate product, the fifth consecutive year we’ve received this honor. Sales of our engineered wood collections increased, in both our retail and new construction channels; and we announced a price increase for the category during the period.





We were pleased with our progress during the first quarter and anticipate the improving U.S. economy and a stronger flooring market will benefit our business for the remainder of the year. In the U.S., continued economic and income growth, low gasoline prices and interest rates and increased home values should drive our business throughout 2015. We expect our European sales in local currency to improve slightly, with new product innovations enhancing our mix along with manufacturing and productivity initiatives improving margins. In Russia, our leading brand and product positions combined with our efficient manufacturing will improve our market share in a challenging economy, while increased inflation and competition will impact our margins. Foreign currency will continue to negatively impact our results during the second quarter, with the current euro approximately 20% weaker and ruble approximately 30% lower than last year. This will be partially mitigated by our sales and productivity initiatives, SG&A reductions and cost improvement projects. Taking all of these factors into account, our guidance for second quarter earnings is $2.51 to $2.60 per share, excluding any earnings from new acquisitions or any restructuring charges. Our second quarter earnings guidance would have been approximately $0.25 per share higher on a constant exchange rate relative to last year. Assuming the transactions close in the second quarter, we estimate the IVC and Kai acquisitions will add $0.06 to $0.08 per share to earnings in the period.

We anticipate significant opportunities with our IVC acquisition, which will expand our participation in the LVT and fiberglass sheet vinyl categories in the U.S. and Europe, and our Kai acquisition, which will increase our ceramic participation in Eastern Europe. These acquisitions will improve our future growth, broaden our geographic coverage and solidify our position as the world’s largest flooring manufacturer.


ABOUT MOHAWK INDUSTRIES
Mohawk Industries is the leading global flooring manufacturer that creates products to enhance residential and commercial spaces around the world. Mohawk’s vertically integrated manufacturing and distribution processes provide competitive advantages in the production of carpet, rugs, ceramic tile, laminate, wood, stone and vinyl flooring. Our industry-leading innovation has yielded products and technologies that differentiate our brands in the marketplace and satisfy all remodeling and new construction requirements. Our brands are among the most recognized in the industry and include American Olean, Bigelow, Daltile, Durkan, Karastan, Lees, Marazzi, Mohawk, Pergo, Unilin and Quick-Step. During the past decade, Mohawk has transformed its business from an American carpet manufacturer into the world’s largest flooring company with operations in Australia, Brazil, Canada, China, Europe, India, Malaysia, Mexico, New Zealand, Russia and the United States.




Certain of the statements in the immediately preceding paragraphs, particularly anticipating future performance, business prospects, growth and operating strategies and similar matters and those that include the words “could,” “should,” “believes,” “anticipates,” “expects,” and “estimates,” or similar expressions constitute “forward-looking statements.” 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. There can be no assurance that the forward-looking statements will be accurate because they are based on many assumptions, which involve risks and uncertainties. The following important factors could cause future results to differ: changes in economic or industry conditions; competition; inflation and deflation in raw material prices and other input costs; inflation and deflation in consumer markets; energy costs and supply; timing and level of capital expenditures; timing and implementation of price increases for the Company’s products; impairment charges; integration of acquisitions; international operations; introduction of new products; rationalization of operations; tax, product and other claims; litigation; and other risks identified in Mohawk’s SEC reports and public announcements.



Conference call Friday, May 8, 2015 at 11:00 AM Eastern Time
The telephone number is 1-800-603-9255 for US/Canada and 1-706-634-2294 for International/Local. Conference ID # 21829028. A replay will be available until Friday May 22, 2015 by dialing 855-859-2056 for US/local calls and 404-537-3406 for International/Local calls and entering Conference ID # 21829028.







MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
 
 
 
 
 
 
 
 
 
Consolidated Statement of Operations
 
Three Months Ended
(Amounts in thousands, except per share data)
 
April 4, 2015
 
March 29, 2014
 
 
 
 
 
Net sales
 
$
1,881,177

 
1,813,095

Cost of sales
 
1,369,234

 
1,331,740

    Gross profit
 
511,943

 
481,355

Selling, general and administrative expenses
 
468,169

 
350,620

Operating income
 
43,774

 
130,735

Interest expense
 
16,449

 
22,096

Other expense (income), net
 
(1,083
)
 
4,890

    Earnings from continuing operations before income taxes
 
28,408

 
103,749

Income tax expense
 
5,904

 
22,696

        Net earnings including noncontrolling interest
 
22,504

 
81,053

Net earnings (loss) attributable to noncontrolling interest
 
158

 
(28
)
Net earnings attributable to Mohawk Industries, Inc.
 
$
22,346

 
81,081

 
 
 
 
 
Basic earnings per share attributable to Mohawk Industries, Inc.
 
 
Basic earnings per share attributable to Mohawk Industries, Inc.
 
$
0.31

 
1.11

Weighted-average common shares outstanding - basic
 
72,988

 
72,742

 
 
 
 
 
Diluted earnings per share attributable to Mohawk Industries, Inc.
 
 
Diluted earnings per share attributable to Mohawk Industries, Inc.
 
$
0.30

 
1.11

Weighted-average common shares outstanding - diluted
 
73,530

 
73,282


Other Financial Information
 
 
 
 
(Amounts in thousands)
 
 
 
 
Depreciation and amortization
 
$
85,656

 
80,984

Capital expenditures
 
$
105,794

 
122,081






Consolidated Balance Sheet Data
 
 
 
 
(Amounts in thousands)
 
 
 
 
 
 
April 4, 2015
 
March 29, 2014
ASSETS
 
 
 
 
Current assets:
 
 
 
 
    Cash and cash equivalents
 
$
107,041

 
72,645

    Receivables, net
 
1,158,858

 
1,174,895

    Inventories
 
1,505,632

 
1,632,236

    Prepaid expenses and other current assets
 
285,261

 
249,690

    Deferred income taxes
 
147,027

 
133,808

        Total current assets
 
3,203,819

 
3,263,274

Property, plant and equipment, net
 
2,618,633

 
2,745,057

Goodwill
 
1,553,155

 
1,721,792

Intangible assets, net
 
661,846

 
796,896

Deferred income taxes and other non-current assets
 
247,169

 
154,469

    Total assets
 
$
8,284,622

 
8,681,488

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Current portion of long-term debt and commercial paper
 
$
1,806,175

 
654,871

Accounts payable and accrued expenses
 
1,085,805

 
1,188,644

        Total current liabilities
 
2,891,980

 
1,843,515

Long-term debt, less current portion
 
606,080

 
1,811,789

Deferred income taxes and other long-term liabilities
 
562,767

 
532,740

        Total liabilities
 
4,060,827

 
4,188,044

Total stockholders' equity
 
4,223,795

 
4,493,444

    Total liabilities and stockholders' equity
 
$
8,284,622

 
8,681,488


Segment Information
 
As of and for the Three Months Ended
(Amounts in thousands)
 
April 4, 2015
 
March 29, 2014
 
 
 
 
 
Net sales:
 
 
 
 
    Carpet
 
$
739,264

 
674,926

    Ceramic
 
719,828

 
695,094

    Laminate and Wood
 
448,398

 
468,008

    Intersegment sales
 
(26,313
)
 
(24,933
)
        Consolidated net sales
 
$
1,881,177

 
1,813,095

 
 
 
 
 
Operating income (loss):
 
 
 
 
    Carpet
 
$
(89,994
)
 
34,271

    Ceramic
 
85,327

 
60,659

    Laminate and Wood
 
58,901

 
44,119

    Corporate and eliminations
 
(10,460
)
 
(8,314
)
        Consolidated operating income
 
$
43,774

 
130,735

 
 
 
 
 
Assets:
 
 
 
 
    Carpet
 
$
2,015,550

 
1,920,937

    Ceramic
 
3,584,471

 
3,782,006

    Laminate and Wood
 
2,406,286

 
2,788,839

    Corporate and eliminations
 
278,315

 
189,706

        Consolidated assets
 
$
8,284,622

 
8,681,488






Reconciliation of Net Earnings Attributable to Mohawk Industries, Inc. to Adjusted Net Earnings Attributable to Mohawk Industries, Inc. and Adjusted Diluted Earnings Per Share Attributable to Mohawk Industries, Inc.
(Amounts in thousands, except per share data)
 
 
 
 
Three Months Ended
 
April 4, 2015
 
March 29, 2014
Net earnings attributable to Mohawk Industries, Inc.
$
22,346

 
81,081

Adjusting items:
 
 
 
Restructuring, acquisition and integration-related costs
12,529

 
11,725

Legal settlement and reserve
125,000

 
—

Deferred loan costs
651

 
—

Income taxes
(35,554
)
 
(2,391
)
 Adjusted net earnings attributable to Mohawk Industries, Inc.
$
124,972

 
90,415

 
 
 
 
Adjusted diluted earnings per share attributable to Mohawk Industries, Inc.
$
1.70

 
1.23

Weighted-average common shares outstanding - diluted
73,530

 
73,282


Reconciliation of Adjusted Diluted Earnings Per Share on a Constant Exchange Rate
 
 
 
 
 
 
 
Three Months Ended
 
 
April 4, 2015
Adjusted diluted earnings per share attributable to Mohawk Industries, Inc.
 
$
1.70

Adjustment to constant exchange rate
 
0.20

Adjusted diluted earnings per share attributable to Mohawk Industries, Inc. on a constant exchange rate
 
$
1.90


Reconciliation of Total Debt to Net Debt
 
(Amounts in thousands)
 
 
April 4, 2015
Current portion of long-term debt and commercial paper
$
1,806,175

Long-term debt, less current portion
606,080

Less: Cash and cash equivalents
107,041

  Net Debt
$
2,305,214




Reconciliation of Operating Income to Adjusted EBITDA
 
 
 
 
 
 
(Amounts in thousands)
 
 
 
 
 
 
 
 
Trailing Twelve
 
 
Three Months Ended
 
Months Ended
 
 
June 28, 2014
 
September 27, 2014
 
December 31, 2014
 
April 4, 2015
 
April 4, 2015
Operating income
$
222,248

 
213,693

 
206,120

 
43,774

 
685,835

Other (expense) income
1,555

 
2,374

 
(9,737
)
 
1,083

 
(4,725
)
Net (earnings) loss attributable to non-controlling interest
(111
)
 
6

 
(212
)
 
(158
)
 
(475
)
Depreciation and amortization
83,754

 
85,167

 
95,665

 
85,656

 
350,242

  EBITDA
307,446

 
301,240

 
291,836

 
130,355

 
1,030,877

Restructuring, acquisition and integration-related costs
10,224

 
11,311

 
21,859

 
8,169

 
51,563

Legal settlement and reserve
—

 
10,000

 
—

 
125,000

 
135,000

   Adjusted EBITDA
$
317,670


322,551

 
313,695

 
263,524

 
1,217,440

 
 
 
 
 
 
 
 
 
 
 
Net Debt to Adjusted EBITDA
 
 
 
 
 
 
 
 
1.9







Reconciliation of Net Sales to Net Sales on a Constant Exchange Rate and Shipping Days
 
 
 
 
(Amounts in thousands)
 
 
 
 
 
 
Three Months Ended
 
 
April 4, 2015
 
March 29, 2014
Net sales
 
$
1,881,177

 
1,813,095

Adjustment to net sales on constant shipping days
 
(105,125
)
 
—

Adjustment to net sales on a constant exchange rate
 
136,782

 
—

  Net sales on a constant exchange rate and shipping days
 
$
1,912,834

 
1,813,095





Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate and Shipping Days
 
 
(Amounts in thousands)
 
 
 
 
 
 
Three Months Ended
Carpet
 
April 4, 2015
 
March 29, 2014
Net sales
 
$
739,264

 
674,926

Adjustment to net sales on constant shipping days
 
(40,500
)
 
—

Adjustment to segment net sales on a constant exchange rate
 
—

 
—

  Segment net sales on a constant exchange rate and shipping days
 
$
698,764

 
674,926





Reconciliation of Segment Net Sales to Proforma Segment Net Sales on a Constant Exchange Rate and Shipping Days
 
 
(Amounts in thousands)
 
 
 
 
 
 
Three Months Ended
Ceramic
 
April 4, 2015
 
March 29, 2014
Net sales
 
$
719,828

 
695,094

Adjustment to net sales on constant shipping days
 
(37,449
)
 
—

Adjustment to segment net sales on a constant exchange rate
 
66,882

 
—

Exclusion of sales from 2014 disposal of French Ceramic Subsidiary
 
—

 
(8,700
)
Segment proforma net sales on a constant exchange rate and shipping days
 
$
749,261

 
686,394





Reconciliation of Segment Net Sales to Segment Net Sales on a Constant Exchange Rate and Shipping Days
 
 
(Amounts in thousands)
 
 
 
 
 
 
Three Months Ended
Laminate and Wood
 
April 4, 2015
 
March 29, 2014
Net sales
 
$
448,398

 
468,008

Adjustment to net sales on constant shipping days
 
(27,176
)
 
—

Adjustment to segment net sales on a constant exchange rate
 
69,900

 
—

  Segment net sales on a constant exchange rate and shipping days
 
$
491,122

 
468,008














Reconciliation of Gross Profit to Adjusted Gross Profit
 
 
 
(Amounts in thousands)
 
 
 
 
Three Months Ended
 
April 4, 2015
 
March 29, 2014
Gross Profit
$
511,943

 
481,355

Adjustments to gross profit:
 
 
 
Restructuring and integration-related costs
9,976

 
5,637

  Adjusted gross profit
$
521,919

 
486,992

Adjusted gross profit as a percent of net sales
27.7
%
 
26.9
%



Reconciliation of Selling, General and Administrative Expenses to Adjusted Selling, General and Administrative Expenses
(Amounts in thousands)
 
 
 
 
Three Months Ended
 
April 4, 2015
 
March 29, 2014
Selling, general and administrative expenses
$
468,169

 
350,620

Adjustments to selling, general and administrative expenses:
 
 
 
Restructuring, acquisition and integration-related costs
(2,553
)
 
(6,088
)
Legal settlement and reserve
(125,000
)
 
—

  Adjusted selling, general and administrative expenses
$
340,616

 
344,532

Adjusted selling, general and administrative expenses as a percent of net sales
18.1
%
 
19.0
%



Reconciliation of Operating Income to Adjusted Operating Income
(Amounts in thousands)
 
 
 
 
Three Months Ended
 
April 4, 2015
 
March 29, 2014
Operating income
$
43,774

 
130,735

Adjustments to operating income:
 
 
 
Restructuring, acquisition and integration-related costs
12,529

 
11,725

Legal settlement and reserve
125,000

 
—

  Adjusted operating income
$
181,303

 
142,460

Adjusted operating income as a percent of net sales
9.6
%
 
7.9
%



Reconciliation of Adjusted Operating Income on a Constant Exchange Rate
(Amounts in thousands)
 
 
 
 
Three Months Ended
 
April 4, 2015
 
March 29, 2014
Operating income
$
43,774

 
130,735

Adjustments to operating income:
 
 
 
Restructuring, acquisition and integration-related costs
12,529

 
11,725

Legal settlement and reserve
125,000

 
—

Adjustment to operating income on constant exchange rates of Euro/USD: 1.12 vs 1.37 and Ruble/USD: 61.87 vs 35.01
21,000

 
—

   Adjusted operating income on a constant exchange rate
$
202,303

 
142,460







Reconciliation of Segment Operating Income to Adjusted Segment Operating Income
(Amounts in thousands)
 
 
 
 
Three Months Ended
Carpet
April 4, 2015
 
March 29, 2014
Operating income
$
(89,994
)
 
34,271

Adjustment to segment operating income:
 
 
 
Restructuring, acquisition and integration-related costs
5,945

 
—

Legal settlement and reserve
125,000

 
—

  Adjusted segment operating income
$
40,951

 
34,271

Adjusted operating income as a percent of net sales
5.5
%
 
5.1
%



Reconciliation of Segment Operating Income to Adjusted Segment Operating Income
(Amounts in thousands)
 
 
 
 
Three Months Ended
Ceramic
April 4, 2015
 
March 29, 2014
Operating income
$
85,327

 
60,659

Adjustments to segment operating income:
 
 
 
Restructuring, acquisition and integration-related costs
362

 
1,981

  Adjusted segment operating income
$
85,689

 
62,640

Adjusted operating income as a percent of net sales
11.9
%
 
9.0
%




Reconciliation of Segment Operating Income to Adjusted Segment Operating Income on a Constant Exchange Rate
(Amounts in thousands)
 
 
 
 
Three Months Ended
Ceramic
April 4, 2015
 
March 29, 2014
Operating income
$
85,327

 
60,659

Adjustments to segment operating income:
 
 
 
Restructuring, acquisition and integration-related costs
362

 
1,981

Adjustment to operating income on constant exchange rates of Euro/USD: 1.12 vs 1.37 and Ruble/USD: 61.87 vs 35.01
10,000

 
—

Adjusted segment operating income on a constant exchange rate
$
95,689

 
62,640




Reconciliation of Segment Operating Income to Adjusted Segment Operating Income
(Amounts in thousands)
 
 
 
 
Three Months Ended
Laminate and Wood
April 4, 2015
 
March 29, 2014
Operating income
$
58,901

 
44,119

Adjustment to segment operating income:
 
 
 
Restructuring, acquisition and integration-related costs
5,035

 
9,576

  Adjusted segment operating income
$
63,936

 
53,695

Adjusted operating income as a percent of net sales
14.3
%
 
11.5
%






Reconciliation of Segment Operating Income to Adjusted Segment Operating Income on a Constant Exchange Rate
(Amounts in thousands)
 
 
 
 
Three Months Ended
Laminate and Wood
April 4, 2015
 
March 29, 2014
Operating income
$
58,901

 
44,119

Adjustments to segment operating income:
 
 
 
Restructuring, acquisition and integration-related costs
5,035

 
9,576

Adjustment to operating income on a constant exchange rate of Euro/USD: 1.12 vs 1.37
11,000

 
—

 Adjusted segment operating income on a constant exchange rate
$
74,936

 
53,695




Reconciliation of Income Tax Expense to Adjusted Income Tax Expense
 
 
 
(Amounts in thousands)
 
 
 
 
Three Months Ended
 
April 4, 2015
 
March 29, 2014
Income tax expense
$
5,904

 
22,696

Income tax effect of adjusting items
35,554

 
2,391

  Adjusted income tax expense
$
41,458

 
25,087

 
 
 
 
Adjusted income tax rate
25
%
 
22
%



The Company believes it is useful for itself and investors to review, as applicable, both GAAP and the above non-GAAP measures in order to assess the performance of the Company's business for planning and forecasting in subsequent periods. In particular, the Company believes excluding the impact of restructuring, acquisition and integration-related costs is useful because it allows investors to evaluate our performance for different periods on a more comparable basis.



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