Good morning, everyone, and welcome to the Herman Miller Inc. Fourth Quarter and Fiscal Year End 2012 Earnings Results Conference Call. This call is being recorded. This presentation will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include those risk factors discussed in the company's reports on Form 10-K and 10-Q and other reports filed with the Securities and Exchange Commission. Today's presentation will be hosted by Mr. Brian Walker, President and Chief Executive Officer; Mr. Greg Bylsma, Executive Vice President and Chief Financial Officer. Mr. Walker and Mr. Bylsma are joined by Mr. Jeff Stutz, Treasurer and Vice President, Investor Relations. Mr. Walker and Mr. Bylsma will open the call with a brief presentation, which will be followed by your questions. [Operator Instructions] At this time, I would like to begin the presentation by turning the call over to Mr. Walker. Please go ahead.

Good morning and welcome. Last quarter, we described the demand pattern for our business as mixed, with relative softness in the federal government and healthcare sectors, largely offset by continued growth in emerging market economies and solid demand from our core North American contract customers. Our fourth quarter financial results reflect a very similar story. Consolidated net sales in the period adjusted for the impact of dealer de-consolidations decreased 1% from the same quarter last year. On the same basis, new orders in the fourth quarter were up 2.5% from last year. Sequentially, orders in Q4 reflected a healthy seasonal increase of 23% from the third quarter level. Throughout the quarter, our North American business segment continued to face the headwinds of sluggish demand from U.S. federal government and healthcare buyers. This was, however, offset by robust demand in our core non-government office furniture business, which adjusted for the sale of own dealers posted a 15% increase in orders over the prior year. Our International business segment also experienced mixed demand this quarter. Order activity across continental Europe was down year-on-year, reflecting the current recessionary backdrop in the region. By contrast, our business in South America and the Asia Pacific region posted another quarter of double-digit sales and order increases relative to last year. These varying demand patterns were not surprising given the mixed macroeconomic environment we're facing. On one hand, service sector employment levels have continued to improve, albeit at a slow rate. Businesses continue to report strong profits and healthy cash positions. Net U.S. office-based absorption has increased, and growth in private nonresidential construction has been encouraging. Despite these positive signs, the near-term macro outlook remains anything but certain given the slowing rates of growth in the U.S. and China, and of course, the ongoing struggles in the Eurozone. Still, our accomplishments over this past year, both financial and strategic, confirm my optimism in the long-term potential of our business. We closed fiscal 2012 with net sales of over $1.7 billion, achieved 160 basis point improvement in adjusted operating margin and drove a 26% increase in adjusted earnings per share relative to last fiscal year. We also made meaningful progress advancing a number of important initiatives in our long-term growth strategy. I'll touch on just a few of these this morning. In April, we closed on our acquisition of POSH Office Systems. The addition of POSH to the Herman Miller family represents an important step in our emerging market growth strategy. It enhances our international product offer with a broad suite of well-designed products priced appropriately for the Asian market. It also significantly expands the reach of our distribution footprint throughout China while furthering our strategy of building regional operational capabilities in global and regional product platforms. We gained significant market traction during fiscal 2012 with a number of recently introduced products, including SAYL, Canvas, and our Thrive ergonomic solutions portfolio. Importantly, throughout the year, we've aggressively pursued the next generation of new products that, taken together, represent one of the broadest product development agendas in Herman Miller's history. We reached an important strategic milestone earlier this fiscal year with the introduction of the Herman Miller Collection, a dynamic product portfolio aimed at further articulating our unique heritage and contemporary value to architects, designers and consumers. The collection offers both classic and newly commissioned Herman Miller designs, along with a broad offering from both Magis and Mattiazzi, our Italian alliance partners. The combination of these products significantly expands our breadth of offer in the workplace, as well as in categories that serve hospitality, residential and public spaces. In May, we launched an ambitious demonstration of the Herman Miller Collection with the opening of a temporary 60-day pop-up shop in a 6,000 square feet of retail space in the heart of New York's SoHo district. The feedback we've received has been overwhelmingly positive. It's attracted heavy media attention, including high-profile print and online coverage from The New York Times' fast Company in multiple design and interior and consumer press. The collection was also represented -- also represented a major part of our NeoCon presentation earlier this month in Chicago, where we earned a total of 7 best of NeoCon awards, the most of any manufacturer across a range of product categories. In all, we believe the launch of the Herman Miller Collection gives us a unique platform to further link our brand between contract and retail customers, and ultimately capitalize on the growing consumer influence on corporate buying decisions. As you can see, it's been a productive year at Herman Miller, marked by a number of meaningful accomplishments. To be frank, we had a few setbacks along the way as well, including unanticipated delays in closing the POSH acquisition, an unacceptable increase in product warranty costs, and of course, the pullback in government healthcare demand. Before we cover our fourth quarter numbers in detail, I'd like to spend a few minutes sharing some of our thoughts on our future plans and expectations. In order for us to provide some context, I'll take you back to the dire economic picture we faced in the spring of 2009. At that time, we remained steadfast in our commitment to pursuing strategic investments to enhance our brand and position us for growth as the economy recovers. We also faced an immediate need to reduce cost and conserve cash in order to weather the downturn. To accomplish this, we implemented a series of action aimed at maintaining profitability and improving balance sheet flexibility. These actions were wide ranging and included a significant reduction in our dividend payout and a plan to reduce outstanding debt and unfunded pension obligations. We are aggressive in implementing these plans and the results have been dramatic. Today, we have a leaner balance sheet, with an outstanding debt balance 33% below the 2009 level. Last quarter, we outlined the details of a plan to fund and transition away from our defined benefit retirement programs. These retirement programs are now close to being fully funded on an accounting basis. In dollar terms, this is a nearly tenfold improvement over where we were in 2009 when the plans were collectively underfunded by $120 million. We remained profitable throughout the downturn, and the recovery in sales and operating margins since that time has been significant. Through it all, we were deliberate in conserving cash to fund acquisitions and new product development. Even after 3 years of significant investments in each of these areas, our cash balance remains healthy, and we're now well positioned to begin returning more of it to shareholders. Accordingly, we have announced an increase in our quarterly cash dividend, moving it to $0.09 per share beginning in October of this year. This represents an increase of over 300% from the current level and returns the annual cash payout to the prerecession level of $21 million. We are certainly encouraged by the progress we've made, but there's still much work to be done to achieve the goal we've established for the business over the next 3 years. Getting there will require us to make targeted investments in both capital assets and selling, general and administrative expenses across a range of initiatives. These initiatives include a range of new products planned for introduction in the summer and fall of 2013, including an array of products aimed at creating the office landscape of the future. As in many of our recent launches, these products will be global platforms. We also will launch a new seating platform and continue to expand the portfolio products in our Collection business. To effectively launch these products, we will increase our investment in R&D and marketing this next year. Our international manufacturing strategy includes targeted investments aimed at improving and boosting production capabilities and supporting growth plans within emerging markets. Specifically, we will be investing in new production facilities in the United Kingdom and China, both of these will consolidate current facilities, leading to more efficient operations and additional capacity. We will invest additional money in building a channel and sales structure that will better enable us to serve small business customers. We've been testing a model for reaching this segment over the past few years and have gained confidence that it can be a source of future growth. To get there, we will let the front and some investments in sales resources, marketing and channel capabilities. We will make targeted investments aimed at building the strength of the Herman Miller global brand. This will include investments in customer-facing facilities, digital marketing, e-commerce and knowledge-based services and marketing. We'll also make further investments within our technology infrastructure that will improve the experience of doing business with Herman Miller for our customers and dealers around the world. We believe these investments are necessary for our success in the long-term, but will place temporary pressure on our ability to drive operating leverage over the next 12 months. In addition, some of our growth this next year will come from the POSH acquisition. This will further dampen the operating leverage of the business. Over the next 12 months, we expect organic leverage at the operating earnings level of around 15% plus or minus 200 basis points. Including acquisitions, we would expect our leverage to be in the neighborhood of 12%. While fiscal 2013 will be an investment year for us, in the long-term, we expect these investments will enable us to grow and increase our operating leverage. To that end, I would like to take this opportunity to offer some specifics on the financial performance we're targeting over the next 3 years. I'm sure this is obvious to you all, but these targets assume normal economic activity. If we were to see some form of economic recession or crisis, the targets will remain the same, but it may take longer for us to achieve them. So here's the 3 points that we want to focus on. First, we intend to increase consolidated net sales to $2.2 billion by the end of fiscal 2015. This represents a compound annual growth rate of 8% over the -- from the fiscal 2012 level. Further, we expect to achieve operating margins above 10% of net sales in fiscal 2015. Last, with our balance sheet in good shape, we are confident in our ability to return cash to shareholders and fund additional investments in our strategy. These represent challenging goals, however, I am confident we have the right strategy in place to achieve them, all backed by a strong balance sheet and our industry's most talented people. With that introduction, I'll turn the call over to Greg to cover our fourth quarter results in more detail.

Thanks, Brian. Consolidated net sales in the fourth quarter of $421 million were 5% lower than the same quarter last year. Orders in the period totaled $444 million, an amount 1% below the prior year level. Factoring in the effect of dealerships sold earlier in the fiscal year, pro forma sales in the fourth quarter decreased approximately 1% and new orders were up 3% compared to last year. On a sequential quarter basis, consolidated sales in Q4 increased 5% from the third quarter level, while orders in the fourth quarter improved 23% on a sequential period basis. This compares favorably to historic seasonal order increases, which over the past 5 years have averaged 16%. Sales in our North America reportable segment of $286 million were down 11% from the prior year. New orders in the fourth quarter totaled $321 million, reflecting a decrease of just under 4% from the same period last fiscal year. Adjusting for the impact of dealer deconsolidations, segment sales were down 6% and orders increased 1% relative to the fourth quarter of fiscal 2011. On a sequential basis, sales in the North America reportable segment increased 2% from the third quarter level, while segment orders were up almost 30%. Our non-North America reportable segment posted net sales of $97 million for the quarter. This represents a 17% increase from the same quarter last fiscal year. Segment orders were up 6.5% over last year, but reflected a contrasting regional demand pattern. In Continental Europe, which I'll remind, it represents less than 3% of our total business, order activity was down 27% from the fourth quarter of last year. However, this weakness was more than offset by continued order growth in the period across the balance of our international business, including the U.K. On a sequential quarter basis, non-North America segment sales and orders increased 25% and 7% respectively, from the third quarter levels. Within our specialty and consumer segment, net sales in the fourth quarter of $38 million were down roughly 1% from the same quarter last year. By contrast, segment orders were up 8% over the prior year. Relative to the third quarter of this fiscal year, segment sales in Q4 decreased 10% and new orders were up 13%. The drop in sales compared to last year and Q3 of this year was driven by our wood case good business, which in both prior year -- prior periods benefited from large project business that did not carry into the current quarter. The remainder of this segment, including our Retail and Collection businesses, posted solid year-on-year and sequential sales growth. We estimate the translation impact from the changes in currency exchange rates decreased our consolidated net sales and orders in the quarter by approximately $3 million relative to the fourth quarter of last year. This resulted from the general strengthening of the U.S. dollar against other major currencies compared to a year ago. I will now move on to gross margin, which was a clear highlight in the period. Our gross margin in the quarter of 35.7% represents a 270 basis point improvement over our performance in Q4 of last year. Approximately 20 points of this improvement resulted from the recognition of a pretax pension curtailment gain associated with the pension transition plan we outlined for you in March. The remaining year-on-year improvement was driven primarily by benefit capture from recent price increases, a relative decrease in employee bonus expenses and improved direct material costs, which includes a 30 basis point benefit from a LIFO reserve adjustment. Our consolidated gross margin improved 210 basis points relative to the third quarter of this fiscal year. This increase resulted largely from favorable product and channel mix in the fourth quarter, improved leverage from sequential period, increase in sales and production levels and the pension curtailment gain. I will now move on to operating expenses and earnings in the period. Operating expenses in the fourth quarter of $115 million were approximately $1 million higher than the year-ago period. Expenses in the current quarter reflect the addition of recently acquired POSH Office Systems and increased spending in the areas of marketing and new product development. These factors, which were partially offset in the quarter by the impact of dealer deconsolidation, which reduced the operating expenses relative to last year and a year-over-year reduction in incentive bonus expenses totaling $3 million. Expenses this quarter also included a pre-tax pension curtailment gain of $1 million. This gain was equally offset in the period by expenses resulting from adjustments to our contingent liabilities associated with the earn-out provisions of our 2010 acquisition of Colebrook Bosson Saunders. This earn-out adjustment reflects better than projected revenues from this acquired business. On a sequential quarter basis, operating expenses were $6 million above the level reported in the third quarter of this fiscal year. Expenses related to POSH and increased spending on marketing, product development and variable selling costs drove the majority of this sequential increase. During the fourth quarter, we recognized $5.4 million in pretax restructuring and impairment expenses associated with our healthcare furnishings business. Of this, $1.6 million related to the planned closure of the manufacturing facility located in Sioux Center, Iowa. When we acquired Nemschoff 3 years ago, we knew the long-term potential existed to improve manufacturing efficiencies, and ultimately, reduce the operational footprint of the business by implementing our lean manufacturing philosophy. These efforts began with the closure and consolidation of our branded manufacturing facility in 2010. And since that time, we've made significant additional progress in this area. Given these improvements and the recent softening in overall healthcare furniture demand, we've made the decision to accelerate this strategy by consolidating the Iowa operation into our Sheboygan-based seating plant. This move is scheduled to be completed in the second quarter of this fiscal year, and once fully implemented, is expected to result in annual pretax cost savings of approximately $2 million. This will be followed in the coming months by the closing and consolidation of our Sheboygan case goods facility, a move that will ultimately reduce the Nemschoff manufacturing footprint from 3 buildings to 1. Importantly, all of this will be done without significantly reducing capacity from the level we had when we initially acquired the business. We also recognize in the fourth quarter expenses totaling $4 million related to the impairment of intangible assets associated with our Brandrud and Foxxman healthcare trade names. In connection with our healthcare marketing strategy, these trade names are being phased out, and the associated products will be moved under the Nemschoff brand. As a result of this strategy, we were required under GAAP accounting rules to write down the value of the related intangible assets. We're confident the concentration of these trade names will enhance the market position of our lead -- industry-leading Nemschoff and Herman Miller for healthcare brands. Operating earnings in the quarter were $30 million or 7% of sales. Excluding restructuring expenses recognized in the period, the adjusted operating margin was 8.4%. This represents a 120 basis point improvement over our consolidated operating margin in Q4 of last fiscal year. The effective tax rate in the fourth quarter was 53.4%, compared with 36.4% in the same quarter last fiscal year. For the full year, the effective rate was 37.1% versus 30.9% in fiscal 2011. A lower than anticipated manufacturing deduction, expenses associated with contingent purchase consideration and other adjustments required to reconcile income tax expense with the return of a foreign subsidiary, all contributed to the increased rate this quarter. Despite the impact of these adjustments, our longer-term rate expectation remains between 33% and 35%. Further, pension settlement expenses, when recognized, will impact this range favorably. It is also worth pointing out that while our effective tax rate on a full-year was 37%, our cash tax rate in the prior was substantially lower than this, coming in approximately 25%. Finally, net earnings in the fourth quarter totaled $12 million or $0.20 per share on a diluted basis. Excluding restructuring and impairment charges recognized in the quarter, adjusted earnings per share totaled $0.28. On a full-year, we posted $1.29 in diluted earnings per share, or $1.37 on an adjusted basis. These amounts compared to prior year fourth quarter and full-year earnings per share of $0.30 and $1.06, respectively. Adjusted full year earnings per share in fiscal 2011 totaled $1.09, excluding restructure expenses. With that, I'll turn the call over to Jeff to give us an update on our cash flow and our balance sheet.

Thanks, Greg. Good morning, everyone. Last quarter, we outlined for you the details of our plans to fund and ultimately terminate our defined benefit pension plans in favor of a defined contribution retirement structure. We made good progress in this regard during the fourth quarter, having contributed $45 million, net of immediate cash tax benefits to our employee pension plans. These contributions, reduced cash flows from operations in the quarter, which totaled $8 million on a consolidated basis. For the full fiscal year, operating cash flows were $90 million. Capital expenditures in the fourth quarter totaled $9 million, bringing our full year CapEx to just under $29 million. Dividend payments were $1.3 million in the quarter, and approximately $5 million for the full year. The closing of our acquisition of POSH in early April drove a net $47 million use of cash in the fourth quarter. We ended the fiscal year with total cash and equivalents of $172 million, an amount only $46 million below our Q3 ending level, despite the significant outflows in the period for pension and acquisition funding. Going forward, we do expect our rate of capital expenditures to increase given the planned investments Brian discussed in his opening remarks. We are anticipating total capital spending in fiscal 2013 of between $50 million and $60 million. We remain in compliance with all debt covenants, and as of quarter end, our gross debt to EBITDA ratio was approximately 1.4:1. The available capacity on our bank credit facility remains at $140 million, with the only usage being from outstanding letters of credit. Given our current cash balance, ongoing cash flows from operations and our total borrowing capacity, we're confident we can meet the financing needs of the business as we move forward. That's the balance sheet and liquidity overview for the quarter, and I'll now turn the call back to Greg to cover our Q1 sales and earnings guidance.

All right. As we indicated in our press release, we're expecting net sales from the first quarter between $440 million and $460 million. This implies flat to down 4% performance relative to Q1 of last year. However, keep in mind that the first quarter of fiscal 2012 included 14 weeks of operations. Earnings in the first quarter are expected to be between $0.37 and $0.41 per share on a diluted basis. This assumes an effective tax rate of between 33% and 35%, and pretax restructuring expenses of approximately $500,000. Also given where we are on the timeline for transitioning our employee retirement programs, we don't expect any pension settlement expenses in the first quarter. We're expecting our Q1 gross margin to range between 34.5% and 34.7% and our operating expenses to be in the range of $117 million to $119 million. Finally, while it won't have a direct impact on sales and profitability in Q1, I do want to update you on a pending change in our product pricing structure. Earlier this month, we announced to our sales and dealer community the details of a planned price increase scheduled to be effective on September 4, 2012. The changes will differ by individual product line with the majority of increases ranging between 3% and 4% of list price. We believe these price adjustments are necessary to remain competitive in the market while managing rising input costs, including those relating to employee benefits and certain material categories. It is also consistent with the recent pricing actions taken by our major competitors. With that, I'll now turn the call back over to the operator so we can take your questions.

[Operator Instructions] We have a question from David MacGregor of Longbow Research.

This is Josh Borstein, on for David MacGregor. You mentioned that orders, x government and healthcare, were up 15% in the quarter. I was hoping you can break out what you were seeing in those stronger end markets, and what performed particularly well?

Yes, sure, Josh. What performed particularly well, we saw nice increases on the tax side, we saw nice increases on the manufacturing side. And also, we had some nice business in oil and gas, as well.

Financial services actually were pretty good too.

Okay, great. And then could you give us a little more insight on what you're seeing in healthcare right now and just what you're projecting out for the next few months in that vertical?

Yes, healthcare continues to -- Brian, Josh. Healthcare continues to be softer than we would have predicted at this point. I will say, we did see it start to turn like the rest of the business. In the fourth quarter, it came back a bit, it didn't come back all the way. The forecasts right now that are out there for construction are quite strong. So we think as we get to -- into calendar 2013, that we'll start to see the volume levels pick back up now. Keep in mind that in our healthcare business, not only do we have government in the whole business, but government, particularly, for us as a company is really heavy on the government side. Particularly, we've had a lot of business over the last few years from some of the BRAC realignment. So that business has gotten quiet, because some of the BRAC work is done. But we think the more non-governmental health systems have a fair amount of construction to do. Right now, there has been a little bit of a rotation in capital good spending away from facilities and fixtures and those kind of things towards IT and more medical implement kind of things where they believe they can drive cost savings much quicker to get ready for some of the impending changes in healthcare legislation. But as we get to the balance of this year, we think we'll start to see a bump up in the construction side.

And then just lastly, can you talk a little bit about raw material cost inflation expectations for the quarter, if you anticipate materials to be higher or lower both sequentially and from a year-over-year standpoint?

You mean looking out, or you mean in fourth quarter?

In the current -- in 1Q here.

Right now, the trend on our major input still is downward. You got to be a little careful with that in how that impacts the results because at the beginning of the quarter, we saw the pressure being up relative to Q3, so we sold this up. We pay a higher price for about 3-month period of time. So we would think that by the time we get to the end of the first quarter, we would start to see commodity starts to come down somewhat based on current pricing.

Our next question is from Budd Bugatch of Raymond James.

Brian, Greg, Jeff, a couple of questions. Brian, you gave us a little bit of your crystal ball, I mean, going to the longer-term, at $2.2 billion by 2015, fiscal year 2015. Can you maybe parse that a little bit for us by segment, maybe by acquisition versus internal growth to get to that 8% compounded annual growth?

I don't know if I can give it to you by segment. I'm sitting here right now, Budd. We absolutely do have it by that, but I don't have it in front of me. I will tell you that acquisition -- the only acquisition we got built into there really is what we've already completed with POSH and things we've done in the past. So that's much more, I would say, organic growth after you get through next year. Next year, of course, we got a fair amount in there related to POSH, because we only had it for one quarter, actually a part of the quarter this year. So there is some next year. After that, we didn't really plan in acquisitions specifically in that number, because it's just so hard to predict. So we think acquisitions are what can push us sort of over the top.

And so as you look at the growth rates of North American Furniture Solutions, non-North American Solutions and the other, the consumer and specialty, how are the various growth rates break out between those 3?

Certainly, it's going to be higher in emerging markets. Asia, Latin America. We think those will be -- that will be the fastest-growing part of the business.

[indiscernible]?

[indiscernible], but I don't have those right in front me. I'll be willing to give them to you, but I don't have them right in front of me. Sorry.

Okay. And the consumer and specialty, that didn't grow very much in this quarter with some of the new stuff, new initiatives you've got going on. How do you see that growing over the long term?

We actually think that can be a good growth. The thing you got to remember in this fourth quarter, Greg hinted this in his comments, actually the consumer side of it, both the retail end as well as the contract piece of the collection actually grew quite well this past quarter. It was really offset by a lighter period in case goods, particularly Geiger. It was really a big project that just didn't repeat year-over-year. So the base of the stuff that we've invested in this year, that's grown quite well. And we think that's been a real opportunity for us to both expand in terms of products, but expand in terms of channel reach. I think the other place that, Budd, is going to be a key for the growth in sort of the core North American business is, you heard me talk in my comments about some of the investments we're making to reach the small to midsize businesses. Next year, we think we can grow that business, that segment. My guess is we won't see a big move in terms of the revenue line until we get probably out to fiscal 2014, as we get some of those capabilities fully in place. So we'll start next year. We are having a front end load, some of the investment really getting ready for 2014.

Okay. I got a few more questions on the longer-term issue. So let me kind of go there, because I think that's more strategic. You said an operating margin in excess of 10% by 2015, can you give us an idea of the composition of that gross margin versus OpEx or operating ratios?

Budd, this is Greg. We don't have it now, but we would expect, outside of POSH, we would intend to see our gross margin move the way it typically moves with volume increases. That being said, a lot of what we have in that Q is new products. So new products, obviously, are going to lever the way, existing products lever. So as always, we shoot for gross margins on new projects that are at or above our current margins. So new products margins, obviously, won't lever the same way as existing products. But you can count on a gross margin that's improving from the current levels to get to that 10%.

The net of it is though you're going to have to get a lot of the growth that's going to come probably not by ramping up gross margin percentages, but it's going to come from leveraging operating expenses. That's why this year, this next year ends up being a little bit less leveraged at the operating line, and as we move out through that 3-year cycle, it's going to be probably some push in gross margins, but a lot of it is going to come through getting growth and leveraging on the operating expense line.

So why -- as Greg said, gross margin was a highlight of this quarter. I think it was the highest gross margin since just before the turn of the decade, if I'm not mistaken. Am I correct?

Yes, and -- but a lot of that is going to have to do with what does the mix look like. We had a really good mix this past quarter. And if we can -- obviously, some of the investments we've made particularly around the ergonomic portfolio stuff we did with Thrive, where we've had new seating products, as well as the collection products. Those kinds of things tend to run a little bit higher in gross margin, so the mix tends towards that. And as you know, a lot of our mix in international, particularly in Asia and Latin America, tends towards higher profit mix because of the product lines that are in there. So as we skew towards that, that could help.

Okay. I'm sorry?

As we skew towards those being the growth engines, that will help.

Okay. Just a couple of other things. One, the cash to shareholders, that was the third point, I think, you made. How are you thinking about that, dividend versus share repurchase? I know dividend is obviously more important, but recently you've -- I think I know Greg's feelings about some of the share repurchases that have been done over the long past. How do you think about that now?

Well, I think we're still in sort of the same mode. I think what you're getting right now is a good signal from the board and from management that we believe that we had ample cash left and flexibility to do what we need to do strategically, and we can restart to ramp up the cash return to shareholders. And the board will continue to look at it. We look at it at a couple of 2, 3 times a year, and ask where we're at in that curve. We certainly want to know that we got the money that we need to be able to do the strategic things we want to do first. We got to the point that we saw that the stock didn't look like it was responding that way. We may come back and look at that, but right now, we believe a better plan for us is to make sure that we got a good solid return for shareholders through the dividend and continue to grow the business on the other side.

If the tax rate on dividends increases, does that change your thought process?

I think you know us well enough to say we'll look at all factors, and we'll decide what's the best thing to do in the environment we're in at that time.

Okay. And my final question was on that 15% contribution margin for this year. You talked about the additional investments. Can you quantify for us those investments, and how that would play out over the year? And finally, does that 15% contribution margin just pertain to fiscal 2013 or does that split into fiscal 2014?

Well first, let me say, primarily we were talking about 2013. Obviously, what we're talking about is a little bit of a step up in both marketing, R&D and some of the other, including, by the way, I'll mention, whenever we go into some of these construction, particularly showrooms and that, you end up with a fairly heavy expense load around doing some of those things. So I don't know if I can break it up by piece, but I would tell you I don't think that leverage will be the same in '14 to '15, because we couldn't get to the 10% goal if we did that. So we'll be down a little bit next year. We think that after that, we'll get the growth from some of those initiatives, and those initiatives won't need another step up after 2015, particular things like the small business, we were front end loading it. My gut is we're going to see that the expenses will be higher as we get to the kind of second quarter and beyond. I think you can see that in the pattern that Greg gave for the operating expense forecast for the first quarter. It doesn't take a big step up. It will be more, probably, as we get into the second and third quarters.

[Operator Instructions] Your next question is from Todd Schwartzman of Sidoti & Company.

Can you talk a little bit about fourth quarter mix in North America by project versus day to day, kind of give a sense of the relative health of each on a year-over-year basis in Q4?

Todd, this is Jeff. I'll take that one. So as we look at the -- as we define the project mix, we were at 47% project business in Q4. And as you recall, that's up a few points from last quarter, I think we were around 44% on that measure. And I'd say in general, the project business that we saw in North America actually this quarter weighted a little heavier toward larger projects than what we've seen it here over the last few quarters, which was a positive. But beyond that, I mean I think it was kind of a rising tide, both on the project and the day-to-day side. So the project upticks just slightly.

And what was that 47% number a year ago, Jeff?

The same.

Okay. Could you also quantify hopefully and just maybe talk a bit about the specific direct material cost where you saw a reduction year-over-year?

Yes, sure, hang on one second, Todd, we'll pull that up. One thing affecting direct material in total is, obviously, the LIFO adjustment that we talked about, which ran through the material line.

So Todd, year-on-year, we saw increases across a number of categories on the commodity side of the business. So we did see on some of the -- on certain types of metals and some of the finishes, we saw cost down versus a year ago. And then -- and I think beyond that, in the material category, we had what we called VADE [ph] savings on the engineering side, where we just had kind of ongoing cost-reduction efforts. We had some sourcing decisions that resulted in -- sourcing changes that resulted in cost savings relative to last year, as well as just some improved pricing on certain purchase complete products on the manufacturing side.

Okay. And in total, for the quarter for Q4, what was the dollar impact benefit of pricing?

Year-over-year, Todd?

Yes, year-over-year on reported sales.

It was about $3 million better.

Did that bleed into Q1?

A little bit of it does, Todd. If you think about our price increases last year, we did one in May, we did one in September. So as you know, they kind of roll in over a 12-month period. The one in September wasn't as big as the one in May, so there will be a little trickle effect into Q1 of continued benefit.

Yes. But I just want to tag on to that, Todd, keep in mind, if the trend that we saw towards some of the larger project sizes were to continue moving forward, of course, that's going to affect the discounting pressure that you feel as well. That's just the natural kind of part of how the pricing dynamic works. So that will certainly be a factor.

And with regards to large project activity, I know that you folks were contemplating or had some visibility into some activity regarding large campus headquarters type work for some Fortune 100 ,200 type companies. Is there anything there in the pipeline or is there anything that you could comment on or kind of give a little color to?

Yes. I mean there's a lot of activity around major corporate headquarters across the country, and you guys have seen some of these in the headlines. Apple is working on some stuff, Facebook has been talking about it. I don't know if we can talk specifically about any particular customer here, because to be frank, they probably would rather we didn't. Obviously, that's pretty deep competitive information. A lot of that work -- everybody's going to be a dogfight between all the major competitors, and everybody's going to try to grab a piece of it. We feel confident we'll get some of it. It's hard to tell when those decisions all get made, though.

And what about M&A activity? Is that something -- I know a lot of people think that M&A typically actually helps drive demand for new furniture. What's your take on that? What does the pipeline look like? What's been, over the last 6 months, or so the trend in that type of activity for you guys?

You mean in terms of us seeing customers do M&A activity therefore driving demand that redo their facilities?

Correct.

I don't know that there has been -- I mean, to be honest, I don't know what the most recent statistics that are out there on M&A activity. I don't think it's been maybe as robust as some people may have thought, considering the amount of cash that's around. So my guess is that's still one of those drivers that if we start to see the confidence level go up, then in fact, the economy is going to remain strong, with interest rates where they are, my guess is that's what you'll see as another derivative if we get through some of the headline risk that's out there with Europe and others.

Okay. And on POSH, what's your best take right now as to which quarter POSH turns accretive to EPS?

Todd, this is Greg. It most likely is going to be in the second quarter.

Your next question is from Jack Stimac of BB&T Capital Markets.

Let me start by saying I've had some phone issues, so I apologize if I'm repeating anything. But I just want to get your take on -- so if you look at the business forecast for the second half of calendar year '12, it looks like it's calling for about 7% growth, and I know you didn't really parse out the details of the CAGR of 8%. But maybe you can just talk a little bit about how that compares. I mean, obviously, your North American orders numbers are very strong. Do you think that, that forecast will come to fruition, and maybe how do you guys see yourself playing out over the next 6 months?

Well, I think one of the questions, Jack, is you always look at that forecast and you got to take your own spin at it. I think right now our gut is it maybe a little bit heavy. If that happens, I think we'll actually see some upside in our numbers. Right now, we -- actually when we did our planning for the year, we had dipped more in the kind of 3% range, rather than the 6% to 7% range that they recently published. I think we still believe there's enough going on around nervousness in the economy, we just don't see it being that strong. Now we had, as you know, good strength in sort of the non-government side. If that continues like we saw in the fourth quarter, we would actually probably have some upside than what we got out here in the forecast right now. Remember we came into this quarter not really expecting that level. I know we had the mix between the government piece. That's the other wildcard, as the dip does include the government side. And I think there's a real question about what happens after the election is over. So we try to make sure that we build our plans with a level that we thought we could manage our way through in sort of this murky economy that's out there right now.

And then I think you kind of talk about this a little bit with an earlier question, but just with the gross margin that's in your guidance and maybe as we kind of look at a normalized rate, so this quarter sounds like you had a few addbacks including the bonus accruals. So maybe as we look into the next quarter and into the next year, what's a good run rate? I mean, how much of an impact do the bonuses have, and is that kind of 34.5, is that a good run rate going forward or there are more things that will kind of play into that a little bit?

Yes, this is Greg. I think that 34.5 right now, at those kind of volumes, is a good run rate. Obviously, there's a bunch of moving parts. But right now, that's kind of how we try to parse every bit of good and bad news back that happened in the fourth quarter, with how it compares from the third quarter, and then gave the best shot of what we think that kind of run rate is going forward.

I'm showing no further questions at this time. I would like to turn the call over to management for any closing remarks.

First of all, thank you, all, for joining us for this quarter's conference call. We appreciate your questions and your interest in Herman Miller. And we look forward to talking to you in the fall. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Have a wonderful day.