Form 8-K MILLER HERMAN INC For: Jun 24

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June 24, 2015 4:07 PM EDT
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report: June 24, 2015
(Date of earliest event reported)
HERMAN MILLER, INC.
(Exact name of registrant as specified in its charter)

Michigan
(State or Other Jurisdiction of
incorporation)
001-15141
(Commission File No.)
38-0837640 
(IRS Employer
Identification no.)
 
 
 
855 East Main Avenue
Zeeland, Michigan
(Address of Principal Executive Offices)
 
49464
(Zip Code)
 
(616) 654-3000
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(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 communications pursuant to Rule 425 under the 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 (17 CFR 240.14d-2(b))
[__]     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))







Item 2.02     Results of Operations and Financial Condition
On June 24, 2015, Herman Miller, Inc. issued a press release announcing its financial results for the quarter and year ended May 30, 2015. A copy of the press release is attached as Exhibit 99.1. Also, a copy of the supplemental financial data for the quarter ended and year ended May 30, 2015 is attached as Exhibit 99.2.
The information in this Form 8-K and the attached Exhibits shall not be deemed filed for purposes of Section 18 of the Securities 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.

Item 9.01        Financial Statements and Exhibits
Exhibits
99.1        Press release dated June 24, 2015.
99.2        Supplemental financial data for the quarter and year ended May 30, 2015.




SIGNATURE
        Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated:
June 24, 2015
HERMAN MILLER, INC.
 
 
 
 (Registrant)
 
 
 
By:
/s/ Kevin J. Veltman
 Kevin J. Veltman
 
 
 
 
Vice President of Investor Relations & Treasurer (Duly Authorized Signatory for Registrant)




















Herman Miller Reports Fourth Quarter and Fiscal 2015 Results and Announces Dividend Increase
Webcast to be held Thursday, June 25, 2015, at 9:00 AM ET

Release
Immediate
Date
June 24, 2015
Contact
Kevin Veltman (616) 654 3973 or [email protected]
 
Jeff Stutz (616) 654 8538 or [email protected]
 
Media (616) 654-5977 or [email protected]
Address
Herman Miller, Inc., 855 East Main Avenue, PO Box 302, Zeeland, MI 49464-0302
Internet
www.hermanmiller.com

NOTE: A data supplement with additional financial information relating to the periods covered by this press release is available for download from the company’s website at http://www.hermanmiller.com/about-us/investors.html.

Herman Miller, Inc. (NASDAQ: MLHR) today announced results for its fourth quarter and fiscal year ended May 30, 2015. Net sales in the quarter totaled $550.7 million, an increase of 13.0% from the same quarter last fiscal year. New orders in the fourth quarter of $556.9 million were 16.1% above the prior year level.

On an organic basis, which adjusts for acquisitions, divestitures, and foreign currency translation, sales in the fourth quarter increased 3.9% from the same quarter last fiscal year.

Herman Miller reported diluted earnings per share of $0.39 in the fourth quarter. This compares to diluted earnings per share of $0.28 in the same quarter last fiscal year. Excluding the impact of an asset impairment charge and a one-time tax benefit, adjusted diluted earnings per share in the fourth quarter totaled $0.47. The translation impact from year-over-year changes in currency exchange rates had an unfavorable impact on earnings per share of approximately $0.05 in the quarter. In the fourth quarter of last fiscal year, the company reported adjusted diluted earnings per share of $0.50.

For the full fiscal year, net sales were $2,142.2 million, reflecting a year-over-year increase of 13.8% (5.5% organic). Earnings per share for the full year totaled $1.62 compared to a loss of $(0.37) last year. On an adjusted basis, earnings per share totaled $1.82 in fiscal 2015. This represents an increase of 8.3% over adjusted earnings per share of $1.68 in fiscal 2014. The company estimates that foreign currency translation unfavorably impacted its full year earnings per share by approximately $0.12 in fiscal 2015.
The company also announced an increase in its quarterly cash dividend to $0.1475 per share payable in October 2015. This change represents an increase of over 5% from the current dividend payout of $0.14 per share.
Brian Walker, Chief Executive Officer, stated, "Our results for the quarter are encouraging on a number of fronts. We delivered order growth on a constant currency basis and organic sales growth across each of our business segments. We’re making solid progress on the actions we outlined in the third quarter. These actions are aimed to improve the top-line momentum of our North American contract business. While it will take some time to fully realize the benefit of these initiatives, our dealers and sales people have reported renewed confidence in their ability to win. We are pleased and thankful for how our people have responded to these challenges and the pace with which they have driven implementation. We also delivered improved operating results this quarter, posting a 7.6% year-over-year increase in adjusted EBITDA despite ongoing currency pressures. Our EBITDA growth combined with good management of assets resulted in strong cash flow for the quarter and full year. As a result, our Board of Directors decided to increase our dividend for the fourth time in the past three years. This increase reflects the confidence of the Board and our leadership team in the power of our long-term strategy and the future of Herman Miller.


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FINANCIAL HIGHLIGHTS (Dollars in millions, except per share data)
 
 
 
 
 
Three Months Ended
 
Fiscal Year Ended
 
 
 
5/30/2015
5/31/2014
% Chg.
5/30/2015
5/31/2014
% Chg.
 
Net Sales
$
550.7

$
487.5

13.0
 %
$
2,142.2

$
1,882.0

13.8
 %
 
Gross Margin %
38.1
%
36.7
%
N/A

36.9
%
33.5
 %
N/A

 
Operating Expenses
$
161.7

$
131.5

23.0
 %
$
615.3

$
630.2

(2.4
)%
 
Restructuring and Impairment Expenses
$
10.8

$
21.4

(49.5
)%
$
12.7

$
26.5

(52.1
)%
 
Operating Earnings (Loss) %
6.7
%
5.4
%
N/A

7.6
%
(1.4
)%
N/A

 
Adjusted Operating Earnings % *
8.7
%
9.2
%
N/A

8.7
%
8.7
 %
N/A

 
Adjusted EBITDA *
$
59.5

$
55.3

7.6
 %
$
235.2

$
206.3

14.0
 %
 
Adjusted EBITDA %
10.8
%
11.3
%
N/A

11.0
%
11.0
 %
N/A

 
Net Earnings (Loss) Attributable to Herman Miller, Inc.
$
23.4

$
16.6

41.0
 %
$
97.5

$
(22.1
)
(541.2
)%
 
Earnings (Loss) Per Share – Diluted
$
0.39

$
0.28

39.3
 %
$
1.62

$
(0.37
)
(537.8
)%
 
Adj. Earnings Per Share – Diluted *
$
0.47

$
0.50

(6.0
)%
$
1.82

$
1.68

8.3
 %
 
Orders
$
556.9

$
479.5

16.1
 %
$
2,146.5

$
1,917.7

11.9
 %
 
Backlog
$
322.2

$
306.4

5.2
 %
 
 
 
 

*Items indicated represent Non-GAAP measurements; see the reconciliations of non-GAAP financial measures and related explanations in the supplemental data file available for download at http://www.hermanmiller.com/about-us/investors.html. A copy of this supplemental data file has also been included with the earnings press release filed on Form 8-K with the Securities and Exchange Commission.

Fourth Quarter Fiscal 2015 Financial Results

Sales for the quarter within Herman Miller’s North American reportable segment were $309.5 million, an increase of 0.8% from the same quarter last fiscal year. On an organic basis, excluding the impact of dealer divestitures and foreign currency translation, segment sales increased by 2.9% on a year-over-year comparison. New orders in the fourth quarter totaled $321.5 million, representing an increase of 1.5% from last year. On an organic basis, segment orders were up 3.6% from the fourth quarter of last fiscal year. This represents an improvement from the year-over-year decrease of 1% reported for this segment in the third quarter of fiscal 2015.

Net sales within the ELA segment totaled $102.9 million in the fourth quarter of fiscal 2015. This represents a 6.1% decrease from the same quarter last fiscal year. The strength of the U.S. dollar compared to prior year continued to pose a significant headwind to segment growth this quarter. New orders in this segment totaled $93.4 million in the fourth quarter, representing a year-over-year decrease of 1.4%. On an organic basis, excluding the impact of foreign currency translation, segment sales increased 2.8% and orders were 8.3% higher than the fourth quarter of last fiscal year.

Net sales in the fourth quarter within Herman Miller’s Specialty segment totaled $59.4 million. This represents an increase of 11.9% over sales in the same quarter last year. New orders in the fourth quarter of $57.9 million increased 8.2% compared to last year. Sales and order growth were broad-based across the Specialty business.

The Consumer segment reported sales of $78.9 million, which were $61.2 million higher than the prior year period. The majority of this increase related to the acquisition of DWR, which added sales of $60.8 million, net of eliminations. Orders in the quarter of $84.1 million were up by $69.7 million from the prior year.



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Herman Miller's consolidated gross margin in the fourth quarter totaled 38.1%, a 140 basis point improvement over last year's fourth quarter gross margin of 36.7%. This continued trend of year-over-year improvement was fueled by favorable product and channel mix, including the acquisition of DWR, operational improvements, favorable commodities and pricing realization, all of which combined to more than offset the unfavorable currency translation impact from a stronger U.S. dollar.
Jeff Stutz, Chief Financial Officer stated, "We’re pleased to report strong sales and order growth this quarter, coupled with overall earnings performance that exceeded our expectations coming into the quarter. Our operating results were highlighted by continued gross margin expansion and strong operating cash flows, which helped us further reduce the debt we incurred last summer to acquire DWR. These improvements are particularly encouraging as they reflect measured progress in our strategy of expanding in markets with structurally attractive margins and supportive growth prospects."
Herman Miller reported operating expenses in the fourth quarter of $161.7 million compared to $131.5 million in the same quarter a year ago. This represents a year-over-year increase of $30.2 million, which relates primarily to the acquisition of DWR.

During the fourth quarter, the company recognized pretax asset impairment expenses totaling $10.8 million associated with the POSH trade name intangibles. This non-cash charge was determined based upon Herman Miller's impairment review process.

Herman Miller’s effective income tax rate in the fourth quarter was 29.5%. The quarterly income tax rate included a one-time tax benefit of $3.9 million associated with the implementation of a holding company structure for certain non-U.S. subsidiaries. On an adjusted basis, excluding the one-time benefit and asset impairment expenses, the effective rate in the quarter was approximately 35%.

The company ended the fiscal year with total cash and cash equivalents of $63.7 million, an increase of $1.9 million from the balance at the end of the third quarter. Cash flow generated from operations in the fourth quarter and full fiscal year was $57.9 million and $167.7 million, respectively. This compares to $39.7 million and $90.1 million in the respective periods last fiscal year. The full year cash flow from operations in the prior year included a $49 million cash outflow related to the final termination of the company's domestic defined benefit pension plans.

Looking forward, Herman Miller expects net sales in the first quarter of fiscal 2016 to be in the range of $545 million to $565 million. This would represent an increase of between 7% and 11% from the first quarter of fiscal 2015. On an organic basis, adjusted for the DWR acquisition and impact of foreign currency translation, this forecast implies sales growth of approximately 4% at the mid-point of the range. The year-over-year impact of foreign currency translation on net sales is estimated to be approximately $12 million. Diluted earnings per share in the quarter are expected to range between $0.44 and $0.48.

The company will host a live webcast to discuss the results of the fourth quarter of fiscal 2015 on Thursday, June 25, 2015, at 9:00 a.m. ET. To ensure your access to the webcast, you should allow extra time to visit the company’s website at www.hermanmiller.com to download the streaming software necessary to participate. An online archive of the presentation will be available on the website later that day.




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About Herman Miller
Herman Miller’s inspiring designs, inventive technologies and strategic services help people do great things and organizations to perform at their best. The company’s award-winning products and services generated approximately $2.1 billion in revenue in fiscal 2015. A past recipient of the Smithsonian Institution's Cooper-Hewitt National Design Award, Herman Miller designs can be found in the permanent collections of museums worldwide. Innovative business practices and a commitment to social responsibility have also helped establish Herman Miller as a recognized global leader. In 2014, Herman Miller again received the Human Rights Campaign Foundation’s top rating in its annual Corporate Equality Index and was named among the 50 Best U.S. Manufacturers by Industry Week. Herman Miller is included in the Dow Jones Sustainability World Index and trades on the NASDAQ Global Select Market under the symbol MLHR.

This information contains 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, as amended, that are based on management’s beliefs, assumptions, current expectations, estimates, and projections about the office furniture industry, the economy, and the company itself. Words like “anticipates,” “believes,” “confident,” “estimates,” “expects,” “forecasts,” likely,” “plans,” “projects,” and “should,” variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. These risks include, without limitation, the success of our growth strategy, employment and general economic conditions, the pace of economic recovery in the U.S. and in our International markets, the increase in white-collar employment, the willingness of customers to undertake capital expenditures, the types of products purchased by customers, competitive-pricing pressures, the availability and pricing of raw materials, our reliance on a limited number of suppliers, our ability to expand globally given the risks associated with regulatory and legal compliance challenges and accompanying currency fluctuations, the ability to increase prices to absorb the additional costs of raw materials, the financial strength of our dealers and the financial strength of our customers, the mix of our products purchased by customers, our ability to locate new DWR studios, negotiate favorable lease terms for new and existing locations and the implementation of our studio portfolio transformation, our ability to attract and retain key executives and other qualified employees, our ability to continue to make product innovations, the success of newly introduced products, our ability to serve all of our markets, possible acquisitions, divestitures or alliances, the pace and level of government procurement, the outcome of pending litigation or governmental audits or investigations, political risk in the markets we serve, and other risks identified in our filings with the Securities and Exchange Commission. Therefore, actual results and outcomes may materially differ from what we express or forecast. Furthermore, Herman Miller, Inc., undertakes no obligation to update, amend or clarify forward-looking statements.


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Financial highlights for the quarter and fiscal year ended May 30, 2015, follow:

Herman Miller, Inc.
Condensed Consolidated Statements of Operations
(Unaudited) (Dollars in millions, except per share data)

 
Three Months Ended
      
May 30, 2015
May 31, 2014
Net Sales
$
550.7

100.0
%
$
487.5

100.0
%
Cost of Sales
341.1

61.9
%
308.4

63.3
%
Gross Margin
209.6

38.1
%
179.1

36.7
%
Operating Expenses
161.7

29.4
%
131.5

27.0
%
Restructuring and Impairment Expenses
10.8

2.0
%
21.4

4.4
%
Operating Earnings
37.1

6.7
%
26.2

5.4
%
Other Expenses, net
3.4

0.6
%
4.1

0.8
%
Earnings Before Income Taxes and Equity Income
33.7

6.1
%
22.1

4.5
%
Income Tax Expense
9.9

1.8
%
5.7

1.2
%
Equity Income, net of tax
—

—
%
0.2

—
%
Net Earnings
23.8

4.3
%
16.6

3.4
%
Net Earnings Attributable to Noncontrolling Interests
0.4

0.1
%
—

—
%
Net Earnings Attributable to Herman Miller, Inc.
$
23.4

4.2
%
$
16.6

3.4
%
 
 
 
 
 
Amounts per Common Share Attributable to Herman Miller, Inc.
 
 
Earnings Per Share – Basic

$0.39

 

$0.28

 
Weighted Average Basic Common Shares
59,609,462

 
59,156,268

 
Earnings Per Share – Diluted

$0.39

 

$0.28

 
Weighted Average Diluted Common Shares
60,253,733

 
59,852,782

 



-more-



Herman Miller, Inc.
Condensed Consolidated Statements of Operations
(Unaudited) (Dollars in millions, except per share data)

 
Fiscal Year Ended
      
May 30, 2015
May 31, 2014
Net Sales
$
2,142.2

100.0
%
$
1,882.0

100.0
 %
Cost of Sales
1,350.8

63.1
%
1,251.0

66.5
 %
Gross Margin
791.4

36.9
%
631.0

33.5
 %
Operating Expenses
615.3

28.7
%
630.2

33.5
 %
Restructuring and Impairment Expenses
12.7

0.6
%
26.5

1.4
 %
Operating Earnings (Loss)
163.4

7.6
%
(25.7
)
(1.4
)%
Other Expenses, net
18.2

0.8
%
17.7

0.9
 %
Earnings (Loss) Before Income Taxes and Equity Income
145.2

6.8
%
(43.4
)
(2.3
)%
Income Tax Expense (Benefit)
47.2

2.2
%
(21.2
)
(1.1
)%
Equity Income, net of tax
0.1

—
%
0.1

—
 %
Net Earnings (Loss)
98.1

4.6
%
(22.1
)
(1.2
)%
Net Earnings Attributable to Noncontrolling Interests
0.6

—
%
—

—
 %
Net Earnings (Loss) Attributable to Herman Miller, Inc.
$
97.5

4.6
%
$
(22.1
)
(1.2
)%
 
 
 
 
 
Amounts per Common Share Attributable to Herman Miller, Inc.
 
 
Earnings (Loss) Per Share – Basic

$1.64

 

($0.37
)
 
Weighted Average Basic Common Shares
59,475,297

 
58,955,487

 
Earnings (Loss) Per Share – Diluted

$1.62

 

($0.37
)
 
Weighted Average Diluted Common Shares
60,126,101

 
58,955,487

 



-more-



Herman Miller, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited) (Dollars in millions)

 
Fiscal Year Ended
      
May 30, 2015
May 31, 2014
Net Earnings (Loss)
$
98.1

$
(22.1
)
Cash Flows provided by Operating Activities
167.7

90.1

Cash Flows used in Investing Activities
(213.6
)
(48.2
)
Cash Flows provided by (used in) Financing Activities
6.8

(22.4
)
Effect of Exchange Rates
1.3

(0.7
)
Change in Cash
(37.8
)
18.8

Cash, Beginning of Period
101.5

82.7

Cash, End of Period
$
63.7

$
101.5




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Herman Miller, Inc.
Condensed Consolidated Balance Sheets
(Unaudited) (Dollars in millions)
 
May 30, 2015
May 31, 2014
ASSETS
 
 
Current Assets:
 
 
Cash and Cash Equivalents
$
63.7

$
101.5

Marketable Securities
5.7

11.1

Accounts and Notes Receivable, net
189.6

204.3

Inventories, net
129.6

78.4

Prepaid Expenses and Other
74.9

56.5

Total Current Assets
463.5

451.8

Net Property and Equipment
249.5

195.2

Other Assets
475.2

343.9

Total Assets
$
1,188.2

$
990.9

 
 
 
LIABILITIES & STOCKHOLDERS' EQUITY
 
 
Current Liabilities:
 
 
Current Maturities of Long-term Debt
$
—

$
50.0

Accounts Payable
164.7

136.9

Accrued Liabilities
186.2

169.2

Total Current Liabilities
350.9

356.1

Long-term Debt
290.0

200.0

Other Liabilities
88.8

62.7

Total Liabilities
729.7

618.8

Redeemable Noncontrolling Interests
30.4

—

Herman Miller, Inc. Stockholders’ Equity
427.6

372.1

Noncontrolling Interests
0.5

—

Total Stockholders' Equity
428.1

372.1

Total Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity
$
1,188.2

$
990.9




-end-


Herman Miller Inc. Supplemental Financial Data
Three and Twelve Months Ended May 30, 2015
(Unaudited) ($ in millions except per share data and square footage metrics)






Earnings Release Data Supplement
Herman Miller, Inc. (together with its consolidated subsidiaries, the "company", "we", "our" or "us") provides this supplement to assist investors in evaluating the company's financial and operating results and metrics. We suggest that the narratives to each of the tables included in this supplement be read in conjunction with the financial tables. The financial information included in this supplement contains certain non-GAAP financial measures, as explained in more detail in Section II.












Herman Miller Inc. Supplemental Financial Data
Three and Twelve Months Ended May 30, 2015
(Unaudited) ($ in millions except per share data and square footage metrics)

I. Operating Segment Information
The table below summarizes select financial information, for the periods indicated, related to each of the company’s reportable operating segments. The North American Furniture Solutions segment includes the operations associated with the design, manufacture, and sale of furniture products for work-related settings, including office, education, and healthcare environments, throughout the United States and Canada. The business associated with the company's owned contract furniture dealers is also included in the North American Furniture Solutions segment. The ELA Furniture Solutions segment includes EMEA, Latin America, and Asia-Pacific. ELA includes the operations associated with the design, manufacture, and sale of furniture products, primarily for work-related settings, in these aforementioned geographic regions. The Specialty segment includes the operations associated with the design, manufacture, and sale of high-craft furniture products and textiles including Geiger wood products, Maharam textiles and Herman Miller Collection products. The Consumer segment includes operations associated with the sale of modern design furnishings and accessories to third party retail distributors, as well as direct to consumer sales through eCommerce and Design Within Reach retail studios. The Corporate category consists primarily of unallocated corporate expenses including, if applicable to the periods shown, restructuring, impairment, acquisition-related costs, and other unallocated corporate costs.
 
 
Three Months Ended
Twelve Months Ended
Net Sales
 
May 30, 2015
May 31, 2014
May 30, 2015
May 31, 2014
North America
 
$
309.5

$
307.1

$
1,241.9

$
1,216.3

ELA
 
102.9

109.6

409.9

392.2

Specialty
 
59.4

53.1

219.9

205.8

Consumer
 
78.9

17.7

270.5

67.7

Corporate
 
—

—

—

—

Total
 
$
550.7

$
487.5

$
2,142.2

$
1,882.0

 
 
 
 
 
 
% Change in Net Sales
 
 
 
 
 
North America
 
0.8
 %
 
2.1
%
 
ELA
 
(6.1
)%
 
4.5
%
 
Specialty
 
11.9
 %
 
6.9
%
 
Consumer
 
345.8
 %
 
299.6
%
 
Corporate
 
n/a

 
n/a

 
Total
 
13.0
 %
 
13.8
%
 
 
 
 
 
 
 
Operating Earnings (Loss)
 
 
 
 
 
North America
 
$
30.0

$
31.3

$
125.2

$
(27.0
)
ELA
 
6.2

10.2

25.9

23.1

Specialty
 
5.9

2.0

13.5

(5.3
)
Consumer
 
6.3

4.0

14.7

9.9

Corporate
 
(11.3
)
(21.3
)
(15.9
)
(26.4
)
Total
 
$
37.1

$
26.2

$
163.4

$
(25.7
)
 
 
 
 
 
 
Operating Earnings (Loss) % Net Sales
 
 
 
 
 
North America
 
9.7
 %
10.2
%
10.1
%
(2.2
)%
ELA
 
6.0
 %
9.3
%
6.3
%
5.9
 %
Specialty
 
9.9
 %
3.8
%
6.1
%
(2.6
)%
Consumer
 
8.0
 %
22.6
%
5.4
%
14.6
 %
Corporate
 
n/a

n/a

n/a

n/a

Total
 
6.7
 %
5.4
%
7.6
%
(1.4
)%





Herman Miller Inc. Supplemental Financial Data
Three and Twelve Months Ended May 30, 2015
(Unaudited) ($ in millions except per share data and square footage metrics)

II. Non-GAAP Financial Measures
This presentation contains certain non-GAAP financial measures; including Adjusted Earnings per Share, Adjusted Operating Earnings, Adjusted EBITDA, and Organic Growth (Decline). Adjusted Earnings per Share and Adjusted Operating Earnings are calculated by excluding from Earnings per Share and Operating Earnings items that we believe are not indicative of our ongoing operating performance. For the periods covered by this release, such items consist of expenses associated with restructuring actions taken to adjust our cost structure to the current business climate, transition-related expenses, including amortization and settlement expenses relating to defined benefit pension plans that we have terminated, expenses associated with acquisition-related inventory adjustments, transaction expenses associated with our acquisition of DWR, one-time tax impacts and changes in contingent consideration. Adjusted EBITDA is calculated by excluding depreciation, amortization and other net income or expenses from Adjusted Operating Earnings. We present Adjusted Earnings per Share, Adjusted Operating Earnings, and Adjusted EBITDA because we consider them to be important supplemental measures of our performance and believe them to be useful in analyzing ongoing results from operations. Organic Growth (Decline) represents the change in revenue and orders, excluding currency translation effects as well as the impacts of acquisitions and divestitures.

Adjusted Earnings per Share, Adjusted Operating Earnings, Adjusted EBITDA and Organic Growth (Decline) are not measurements of our financial performance under GAAP and should not be considered an alternative to the related GAAP measurement. These non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Our presentation of non-GAAP measures should not be construed as an indication that our future results will be unaffected by unusual or infrequent items. We compensate for these limitations by providing equal prominence of our GAAP results.
A. Reconciliation of Earnings per Share to Adjusted Earnings per Share
 
Three Months Ended
Twelve Months Ended
 
 
May 30, 2015
May 31, 2014
May 30, 2015
May 31, 2014
Earnings (Loss) per Share - Diluted
 
$
0.39

$
0.28

$
1.62

$
(0.37
)
Add: Acquisition-Related Inventory Adjustments
 
—

—

0.08

0.01

Add: Legacy Pension Expenses
 
—

—

—

1.76

Add: Restructuring / Impairment Expenses
 
0.15

0.26

0.17

0.32

Less: POSH Contingent Consideration Reduction
 
—

(0.04
)
—

(0.04
)
Less: One-Time Tax Impact
 
(0.07
)
—

(0.07
)
—

Add: Acquisition Expenses
 
—

—

0.02

—

Adjusted Earnings per Share – Diluted
 
$
0.47

$
0.50

$
1.82

$
1.68

 
 
 
 
 
 
Weighted Average Shares Outstanding used for Calculating Adjusted Earnings per Share – Diluted
 
60,253,733

59,852,782

60,126,101

59,609,363

 
 
 
 
 
 
B. Reconciliation of Operating Earnings to Adjusted Operating Earnings and Adjusted EBITDA
 
Three Months Ended
Twelve Months Ended
 
 
May 30, 2015
May 31, 2014
May 30, 2015
May 31, 2014
Operating Earnings (Loss)
 
$
37.1

$
26.2

$
163.4

$
(25.7
)
Add: Acquisition-Related Inventory Adjustments
 
—

—

7.8

1.4

Add: Legacy Pension Expenses
 
—

—

—

164.4

Add: Restructuring / Impairment Expenses
 
10.8

21.4

12.7

26.5

Less: POSH Contingent Consideration Reduction
 
—

(2.6
)
—

(2.6
)
Add: Acquisition Expenses
 
—

—

2.2

—

Adjusted Operating Earnings
 
$
47.9

$
45.0

$
186.1

$
164.0

 
 
 
 
 
 
Other Income / (Expense), net
 
0.4

0.2

(0.7
)
(0.1
)
Add: Depreciation and Amortization
 
11.2

10.1

49.8

42.4

Adjusted EBITDA
 
$
59.5

$
55.3

$
235.2

$
206.3





Herman Miller Inc. Supplemental Financial Data
Three and Twelve Months Ended May 30, 2015
(Unaudited) ($ in millions except per share data and square footage metrics)
C. Reconciliation of Operating Earnings to Adjusted Operating Earnings and Adjusted EBITDA by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
Three Months Ended
 
May 30, 2015
May 31, 2014
 
North America
ELA
Specialty
Consumer
Corporate
Total
North America
ELA
Specialty
Consumer
Corporate
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Earnings (Loss)
$
30.0

$
6.2

$
5.9

$
6.3

$
(11.3
)
$
37.1

$
31.3

$
10.2

$
2.0

$
4.0

$
(21.3
)
$
26.2

% Net Sales
9.7
%
6.0
%
9.9
%
8.0
%
n/a

6.7
%
10.2
 %
9.3
%
3.8
 %
22.6
%
n/a

5.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Add: Restructuring / Impairment Expenses
—

—

—

—

10.8

10.8

—

—

—

—

21.4

21.4

Add: Acquisition-Related Inventory Adjustments
—

—

—

—

—

—

—

—

—

—

—

—

Add: Legacy Pension Expenses
—

—

—

—

—

—

—

—

—

—

—

—

Add: POSH Cont. Consid. Reduction
—

—

—

—

—

—

—

(2.6
)
—

—

—

(2.6
)
Add: Acquisition Expenses
—

—

—

—

—

—

—

—

—

—

—

—

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Operating Earnings (Loss)
$
30.0

$
6.2

$
5.9

$
6.3

$
(0.5
)
$
47.9

$
31.3

$
7.6

$
2.0

$
4.0

$
0.1

$
45.0

% Net Sales
9.7
%
6.0
%
9.9
%
8.0
%
n/a

8.7
%
10.2
 %
6.9
%
3.8
 %
22.6
%
n/a

9.2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income / (Expense), net
 
 
 
 
0.4

0.4

 
 
 
 
0.2

0.2

Add: Depreciation and Amortization
5.1

1.9

2.0

2.0

0.2

11.2

5.1

2.4

2.2

0.4

—

10.1

Adjusted EBITDA
$
35.1

$
8.1

$
7.9

$
8.3

$
0.1

$
59.5

$
36.4

$
10.0

$
4.2

$
4.4

$
0.3

$
55.3

% Net Sales
11.3
%
7.9
%
13.3
%
10.5
%
n/a

10.8
%
11.9
 %
9.1
%
7.9
 %
24.9
%
n/a

11.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
Twelve Months Ended
 
May 30, 2015
May 31, 2014
 
North America
ELA
Specialty
Consumer
Corporate
Total
North America
ELA
Specialty
Consumer
Corporate
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Earnings (Loss)
$
125.2

$
25.9

$
13.5

$
14.7

$
(15.9
)
$
163.4

$
(27.0
)
$
23.1

$
(5.3
)
$
9.9

$
(26.4
)
$
(25.7
)
% Net Sales
10.1
%
6.3
%
6.1
%
5.4
%
n/a

7.6
%
(2.2
)%
5.9
%
(2.6
)%
14.6
%
n/a

(1.4
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Add: Restructuring / Impairment Expenses
—

—

—

—

12.7

12.7

—

—

—

—

26.5

26.5

Add: Acquisition-Related Inventory Adjustments
—

—

—

7.8

—

7.8

—

—

1.4

—

—

1.4

Add: Legacy Pension Expenses
—

—

—

—

—

—

147.0

—

12.2

5.2

—

164.4

Add: POSH Cont. Consid. Reduction
—

—

—

—

—

—

—

(2.6
)
—

—

—

(2.6
)
Add: Acquisition Expenses
—

—

—

—

2.2

2.2

—

—

—

—

—

—

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Operating Earnings (Loss)
$
125.2

$
25.9

$
13.5

$
22.5

$
(1.0
)
$
186.1

$
120.0

$
20.5

$
8.3

$
15.1

$
0.1

$
164.0

% Net Sales
10.1
%
6.3
%
6.1
%
8.3
%
n/a

8.7
%
9.9
 %
5.2
%
4.0
 %
22.3
%
n/a

8.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income / (Expense), net
 
 
 
 
(0.7
)
(0.7
)
 
 
 
 
(0.1
)
(0.1
)
Add: Depreciation and Amortization
26.5

8.2

7.4

7.3

0.4

49.8

26.8

7.6

6.8

1.2

—

42.4

Adjusted EBITDA
$
151.7

$
34.1

$
20.9

$
29.8

$
(1.3
)
$
235.2

$
146.8

$
28.1

$
15.1

$
16.3

$
—

$
206.3

% Net Sales
12.2
%
8.3
%
9.5
%
11.0
%
n/a

11.0
%
12.1
 %
7.2
%
7.3
 %
24.1
%
n/a

11.0
 %
 




Herman Miller Inc. Supplemental Financial Data
Three and Twelve Months Ended May 30, 2015
(Unaudited) ($ in millions except per share data and square footage metrics)
D. Organic Sales Growth (Decline) by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
Three Months Ended
 
May 30, 2015
May 31, 2014
 
North America
ELA
Specialty
Consumer
Total
North America
ELA
Specialty
Consumer
Total
Net Sales, as reported
$
309.5

$
102.9

$
59.4

$
78.9

$
550.7

$
307.1

$
109.6

$
53.1

$
17.7

$
487.5

% change from PY
0.8
%
(6.1
)%
11.9
%
345.8
%
13.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proforma Adjustments
 
 
 
 
 
 
 
 
 
 
Dealer Divestitures
—

—

—

—

—

(3.6
)
—

—

—

(3.6
)
Currency Translation Effects (1)
2.7

9.8

0.2

0.2

12.9

—

—

—

—

—

Acquisition
—

—

—

(69.1
)
(69.1
)
—

—

—

—

—

Acquisition Intercompany Elimination
—

—

—

8.3

8.3

—

—

—

—

—

Net sales, proforma
$
312.2

$
112.7

$
59.6

$
18.3

$
502.8

$
303.5

$
109.6

$
53.1

$
17.7

$
483.9

% change from PY
2.9
%
2.8
 %
12.2
%
3.4
%
3.9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
Twelve Months Ended
 
May 30, 2015
May 31, 2014
 
North America
ELA
Specialty
Consumer
Total
North America
ELA
Specialty
Consumer
Total
Net Sales, as reported
$
1,241.9

$
409.9

$
219.9

$
270.5

$
2,142.2

$
1,216.3

$
392.2

$
205.8

$
67.7

$
1,882.0

% change from PY
2.1
%
4.5
 %
6.9
%
299.6
%
13.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proforma Adjustments
 
 
 
 
 
 
 
 
 
 
Dealer Divestitures
—

—

—

—

—

(12.1
)
—

—

—

(12.1
)
Currency Translation Effects (1)
7.2

16.8

0.4

0.4

24.8

—

—

—

—

—

Acquisition
—

—

—

(217.0
)
(217.0
)
—

—

—

—

—

Acquisition Intercompany Elimination
—

—

—

22.7

22.7

—

—

—

—

—

Net sales, proforma
$
1,249.1

$
426.7

$
220.3

$
76.6

$
1,972.7

$
1,204.2

$
392.2

$
205.8

$
67.7

$
1,869.9

% change from PY
3.7
%
8.8
 %
7.0
%
13.1
%
5.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period





Herman Miller Inc. Supplemental Financial Data
Three and Twelve Months Ended May 30, 2015
(Unaudited) ($ in millions except per share data and square footage metrics)
E. Organic Order Growth (Decline) by Segment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
Three Months Ended
 
May 30, 2015
May 31, 2014
 
North America
ELA
Specialty
Consumer
Total
North America
ELA
Specialty
Consumer
Total
Orders, as reported
$
321.5

$
93.4

$
57.9

$
84.1

$
556.9

$
316.9

$
94.7

$
53.5

$
14.4

$
479.5

% change from PY
1.5
 %
(1.4
)%
8.2
%
484.0
%
16.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proforma Adjustments
 
 
 
 
 
 
 
 
 
 
Dealer Divestitures
—

—

—

—

 
(3.6
)
—

—

—

 
Currency Translation Effects (1)
3.1

9.2

—

—

 
—

—

—

—

 
Orders, proforma
$
324.6

$
102.6

$
57.9

 
 
$
313.3

$
94.7

$
53.5

 
 
% change from PY
3.6
 %
8.3
 %
8.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
Twelve Months Ended
 
May 30, 2015
May 31, 2014
 
North America
ELA
Specialty
Consumer
Total
North America
ELA
Specialty
Consumer
Total
Orders, as reported
$
1,235.8

$
417.6

$
221.4

$
271.7

$
2,146.5

$
1,241.0

$
399.1

$
208.2

$
69.4

$
1,917.7

% change from PY
(0.4
)%
4.6
 %
6.3
%
291.5
%
291.5
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proforma Adjustments
 
 
 
 
 
 
 
 
 
 
Dealer Divestitures
—

—

—

—

 
(12.1
)
—

—

—

 
Currency Translation Effects (1)
8.3

15.7

—

—

 
—

—

—

—

 
Orders, proforma
$
1,244.1

$
433.3

$
221.4

 
 
$
1,228.9

$
399.1

$
208.2

 
 
% change from PY
1.2
 %
8.6
 %
6.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Currency translation effects represent the estimated net impact of translating current period sales and orders using the average exchange rates applicable to the comparable prior year period






Herman Miller Inc. Supplemental Financial Data
Three and Twelve Months Ended May 30, 2015
(Unaudited) ($ in millions except per share data and square footage metrics)


F. DWR Studio Annualized Net Revenue per Square Foot - Trailing Eight Quarters
 
 
 
 
 
 
 
Q4 Fiscal 2015
Q3 Fiscal 2015
Q2 Fiscal 2015
Q1 Fiscal 2015
 
Average Studio Square Footage
246,519

247,898

248,216

240,350

 
Annualized Net Revenue per Square Foot
$765
$656
$740
$714
 
Studio Count at Quarter End
33

34

37

38

 
 
 
 
 
 
 
 
Q4 Fiscal 2014
Q3 Fiscal 2014
Q2 Fiscal 2014
Q1 Fiscal 2014
 
Average Studio Square Footage
225,518

215,521

215,472

218,372

 
Annualized Net Revenue per Square Foot
$765
$656
$780
$658
 
Studio Count at Quarter End
39

38

41

41

 





Herman Miller Inc. Supplemental Financial Data
Three and Twelve Months Ended May 30, 2015
(Unaudited) ($ in millions except per share data and square footage metrics)

G. Sales and Earnings Guidance - Upcoming Quarter
 
Company Guidance
 
 
Q1 Fiscal 2016
Net Sales
 
$545 million to $565 million
Gross Margin %
 
37.5% to 38.5%
Operating Expenses
 
$163 million to $167 million
Effective Tax Rate
 
32% to 34%
Earnings Per Share, Diluted
 
$0.44 to $0.48





Herman Miller Inc. Supplemental Financial Data
Three and Twelve Months Ended May 30, 2015
($ in millions except per share data)






Forward Looking Statements
This information contains 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, as amended, that are based on management’s beliefs, assumptions, current expectations, estimates, and projections about the office furniture industry, the economy, and the company itself. Words like “anticipates,” “believes,” “confident,” “estimates,” “expects,” “forecasts,” "likely,” “plans,” “projects,” “should,” variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict with regard to timing, extent, likelihood, and degree of occurrence. These risks include, without limitation, the success of our growth strategy, employment and general economic conditions, the pace of economic recovery in the U.S and in our International markets, the increase in white-collar employment, the willingness of customers to undertake capital expenditures, the types of products purchased by customers, competitive pricing pressures, the availability and pricing of raw materials, our reliance on a limited number of suppliers, our ability to expand globally given the risks associated with regulatory and legal compliance challenges and accompanying currency fluctuations, the ability to increase prices to absorb the additional costs of raw materials, the financial strength of our dealers and the financial strength of our customers, the mix of our products purchased by customers, our ability to locate new DWR studios, negotiate favorable lease terms for new and existing locations and the implementation of our studio portfolio transformation, our ability to attract and retain key executives and other qualified employees, our ability to continue to make product innovations, the success of newly introduced products, our ability to serve all of our markets, possible acquisitions, divestitures or alliances, the pace and level of government procurement, the outcome of pending litigation or governmental audits or investigations, political risk in the markets we serve, and other risks identified in our filings with the Securities and Exchange Commission. Therefore, actual results and outcomes may materially differ from what we express or forecast. Furthermore, Herman Miller, Inc., undertakes no obligation to update, amend or clarify forward-looking statements.













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