UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
| X |
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For Quarter Ended November 30, 2002 | Commission File No. 0-5813 |
HERMAN MILLER, INC.
|
A Michigan Corporation 855 East Main Avenue, Zeeland, MI 49464-0302 Herman Miller, Inc. |
ID No. 38-0837640 Phone (616) 654 3000 |
| (1) | has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months |
Yes X No
| (2) | has been subject to such filing requirements for the past 90 days. |
Yes X No
Common Stock Outstanding at January 9, 2003 – 73,472,826 shares.
HERMAN MILLER, INC. FORM 10-Q
FOR THE QUARTER ENDED NOVEMBER 30, 2002
INDEX
| Page No. |
| Part I--Financial Information |
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| Item 1 | Condensed Consolidated Balance Sheets-- | ||
| November 30, 2002, and June 1, 2002 | 3 |
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| Condensed Consolidated Statements of Operations-- Three Months and Six Months Ended November 30, 2002, |
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| and December 1, 2001 | 4 |
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| Condensed Consolidated Statements of Cash Flows-- Six Months Ended November 30, 2002, |
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| and December 1, 2001 | 5 |
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| Notes to Condensed Consolidated Financial Statements | 6-13 |
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| Item 2 | Management's Discussion and Analysis of | ||
| Financial Condition and Results of Operations | 14-20 |
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| Item 3 | Quantitative and Qualitative Disclosures | ||
| About Market Risk | 21 |
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| Item 4 | Controls and Procedures | 21 |
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| Part II--Other Information |
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| Item 1 | Legal Proceedings | 22 |
|
|
Item 2 Item 3 Item 4 Item 5 |
Changes in Securities and Use of Proceeds--None Defaults Upon Senior Securities--None Submission of Matters to a Vote of Security Holders--None Other Items--None |
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| Item 6 | Exhibits and Reports on Form 8-K | 22 |
|
| Signatures | 23 |
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| Certifications | 24-25 |
||
2
HERMAN MILLER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
November 30, June 1, November 30, June 1,
2002 2002 2002 2002
----------- --------- ----------- ---------
(Unaudited) (Audited) (Unaudited) (Audited)
ASSETS LIABILITIES & SHAREHOLDERS' EQUITY
- ------ ----------------------------------
Current Assets: Current Liabilities:
Cash and cash equivalents $168.8 $124.0 Unfunded checks $10.8 $5.9
Short-term investments 11.2 11.1 Current portion of long-term debt 10.6 10.6
Accounts receivable, net 144.2 142.1 Notes payable -- 2.7
Inventories - Accounts payable 70.3 70.6
Finished goods 17.9 16.6 Accrued liabilities 160.0 121.2
Work in process 12.6 9.1 -------- --------
Raw materials 14.4 13.9 Total current liabilities 251.7 211.0
------- -------
Total inventories 44.9 39.6 Long-term Debt, less current portion 221.2 221.8
Assets held for sale -- 2.6
Prepaid expenses and other 60.3 67.0
------- -------
Total current assets 429.4 386.4
Other Liabilities 93.1 92.2
Property and Equipment, at cost 727.5 719.4
Less - accumulated depreciation 435.7 404.0 Shareholders' Equity:
------- -------
Net property and equipment 291.8 315.4 Common stock $.20 par value 14.7 15.2
Retained earnings 266.8 295.8
Other assets: Accumulated other comprehensive loss (32.1) (34.3)
Notes receivable, net 7.9 6.9 Key executive stock programs (13.0) (13.7)
Goodwill 39.1 39.1 --------- ---------
Intangible assets, net 7.5 8.5 Total Shareholders' Equity 236.4 263.0
Other noncurrent assets 26.7 31.7 -------- --------
------- -------
Total Assets $802.4 $788.0 Total Liabilities and
======= ======= Shareholders' Equity $802.4 $788.0
======== ========
See accompanying notes to condensed consolidated financial statements.
3
HERMAN MILLER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Millions, Except Per Share Data)
(Unaudited)
Three Months Ended Six Months Ended
November 30, December 1, November 30, December 1,
2002 2001 2002 2001
---- ---- ---- ----
Net Sales $357.3 $395.0 $704.2 $805.3
Cost of Sales 243.6 276.1 481.3 560.6
--------- --------- --------- ---------
Gross Margin 113.7 118.9 222.9 244.7
Operating Expenses 92.8 113.7 183.4 231.1
Special Charges -- 38.8 .3 48.4
--------- --------- --------- ---------
Operating Earnings 20.9 (33.6) 39.2 (34.8)
Other Expenses (Income):
Interest Expense 3.3 4.5 7.9 9.3
Other (Income) Expense, Net (.3) (1.9) (1.4) (4.1)
---------- ---------- ---------- ----------
Earnings Before Income Taxes 17.9 (36.2) 32.7 (40.0)
Income Tax Expense (Benefit) 6.1 (13.5) 11.1 (14.4)
========= ========== ========= ==========
Net Earnings $11.8 $(22.7) $21.6 $(25.6)
========= ========== ========= ==========
Earnings Per Share - Basic $.16 $(.30) $.29 $(.34)
========= ========== ========= ==========
Earnings Per Share - Diluted $.16 $(.30) $.29 $(.34)
========= ========== ========= ==========
Dividends Per Share $.03625 $.03625 $.0725 $.0725
See accompanying notes to condensed consolidated financial statements.
4
HERMAN MILLER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Dollars in Millions)
(Unaudited)
Six Months Ended
----------------
November 30, December 1,
2002 2001
---- ----
Cash Flows from Operating Activities:
Net earnings $21.6 $(25.6)
Depreciation and amortization 36.9 50.7
Special charges (9.7) 37.4
Changes in current assets and liabilities 48.4 (24.5)
Impairment of equity investment 2.2 --
Other, net 6.0 5.4
-------- --------
Net Cash Provided by Operating Activities 105.4 43.4
Cash Flows from Investing Activities:
Notes receivable repayments/(issued), net (0.8) 4.0
Short-term investment purchases -- (24.4)
Short-term investment sales 0.2 26.8
Capital expenditures (12.3) (31.8)
Proceeds from sale of fixed assets 3.1 0.3
Other, net 2.6 1.7
-------- --------
Net Cash Used for Investing Activities (7.2) (23.4)
Cash Flows from Financing Activities:
Net short-term debt repayments (2.7) (0.7)
Net long-term debt repayments (0.6) (13.8)
Dividends paid (5.5) (5.5)
Common stock issued 2.0 3.8
Common stock repurchased and retired (47.8) (17.6)
--------- ---------
Net Cash Used for Financing Activities (54.6) (33.8)
Effect of Exchange Rate Changes on Cash and Cash Equivalents 1.2 (2.4)
-------- ---------
Net Increase (Decrease) in Cash and Cash Equivalents 44.8 (16.2)
Cash and Cash Equivalents, Beginning of Period (1) 124.0 138.3
-------- --------
Cash and Cash Equivalents, End of Period (1) $168.8 $122.1
======== ========
See accompanying notes to condensed consolidated financial statements.
(1) Amounts for December 1, 2001, have been restated to conform to current year presentation of short-term investments.
5
HERMAN MILLER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The condensed consolidated financial
statements have been prepared by Herman Miller, Inc. (“the company”), without
audit, in accordance with accounting principles generally accepted in the United States
for interim financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial statements.
Management believes that the disclosures made in this document are adequate so as not to
make the information presented misleading. Operating results for the six-month period
ended November 30, 2002, are not necessarily indicative of the results that may be
expected for the year ending May 31, 2003. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes thereto included
in the company’s Form 10-K for the year ended June 1, 2002.
Certain prior year information has been reclassified to conform to the current year presentation.
FISCAL YEAR
The company’s fiscal year ends
on the Saturday closest to May 31. Fiscal 2003, the year ending May 31, 2003, will contain
52 weeks as did fiscal 2002, the year ended June 1, 2002. Both three-month periods ended
November 30, 2002 and December 1, 2001, contained 13 weeks.
COMPREHENSIVE INCOME/(LOSS)
Comprehensive income/(loss) consists
of net earnings, foreign currency translation adjustments, minimum pension liability, and
unrealized holding gains or losses on “available-for-sale” securities.
Comprehensive income/(loss) was approximately $12.1 million and $(26.2) million for the
three months ended November 30, 2002, and December 1, 2001, respectively. For the six
months ended November 30, 2002, and December 1, 2001, comprehensive income/(loss) totaled
$23.8 million and $(27.6) million, respectively.
6
EARNINGS PER SHARE
The following table reconciles the
numerators and denominators used in the calculations of basic and diluted earnings per
share (EPS).
Three Months Ended Six Months Ended
------------------ ----------------
November 30 December 1, November 30 December 1,
2002 2001 2002 2001
---- ---- ---- ----
Numerators:
- ----------
Numerator for both basic and diluted $11.8 $(22.7) $21.6 $(25.6)
EPS, net earnings (In Millions) ===== ======= ===== =======
Denominators:
- ------------
Denominator for basic EPS, weighted-
average common shares 74,427,325 75,643,175 75,245,755 75,779,936
Outstanding
Potentially dilutive shares resulting 332,985 -- 344,173 --
from stock option plans ------- ---- ------- ----
Denominator for diluted EPS 74,760,310 75,643,175 75,589,928 75,779,936
========== ========== ========== ==========
As the company reported a net loss for the quarter and six months ended December 1, 2001, shares resulting from stock option plans would be anti-dilutive to earnings per share and, consequently, have not been included in diluted earnings per share.
Certain exercisable stock options were not included in the computation of diluted EPS at November 30, 2002, because the option prices were greater than the average market prices for the period. The number of stock options outstanding, which meet this criterion, and the range of exercise prices were 7,263,266 at $17.86 — $32.50 for the three-month period and 7,236,280 at $19.64 — $32.50 for the six-month period.
SPECIAL CHARGES
During the first quarter of fiscal
2002, the company recorded a $9.6 million pretax charge to operations, primarily related
to certain actions aimed at work force reductions. This charge was classified under the
caption “Special Charges” and represented costs associated with an
early-retirement offer and other non-voluntary termination benefits for targeted work
force reductions in West Michigan, Europe, Mexico, and South America. Approximately 274
positions were eliminated as a result of these combined actions, which affected a wide
range of job classifications across the company.
In addition, on September 19, 2001, the company’s Board of Directors approved a comprehensive operational and cost structure realignment & restructuring plan (together with the work force reductions mentioned in the previous paragraph, the “Plan”) which was intended to improve operating performance, ensure financial strength, and position the company as a more focused competitor. The Plan involved the key action items described below:
7
In connection with the Plan, the company recorded additional pretax charges under the caption “Special Charges” of $38.8 million and $9.8 million for the quarters ended December 1, 2001 and March 2, 2002, respectively.
On March 15, 2002, the company’s Board of Directors amended the Plan by approving additional restructuring actions. These changes included the following key actions:
The company recorded pretax special charges of $23.4 million during the fourth quarter of fiscal 2002, in connection with these additional actions.
The following table presents, for the periods indicated, special charges by category pursuant to the Plan.
(In Millions)
Three Months Ended Six Months Ended
------------------ ----------------
November 30 December 1, November 30 December 1,
2002 2001 2002 2001
---- ---- ---- ----
Severance & Outplacement $ -- $14.8 $ -- $17.9
Asset Impairments 0.2 14.0 (1.5) 14.2
Early Retirement Enhancement -- 3.7 -- 9.9
Lease & Supplier Contract Terminations (0.2) 3.4 0.3 3.4
Facility Exist Costs & Other -- 2.9 1.5 3.0
------- --------- --------- ---------
Total $ -- $38.8 $ 0.3 $48.4
======= ========= ========= =========
Special charges for the second quarter ended November 30, 2002 included $0.2 million for the impairment of fixed assets related to the former SQA business. Credits totaling $0.2 million were recorded due to revisions to the expected sublease timing at certain West Michigan facilities.
In the first quarter of this year, special charges included the reversal of asset impairments previously recorded in connection with the restructuring of the Geiger operation. The assets associated are now being used in the normal course of business rather than being disposed of as originally planned. Also included in first quarter special charges were credits resulting from proceeds received in excess of the carrying value of the West Michigan Powder Coat Technology (PCT) painting facility. The carrying value of the PCT facility was previously recorded under the caption “Assets held for sale” on the June 1, 2002 balance sheet.
Including actions taken since the beginning of fiscal 2002, approximately 1,500 employees, across a wide range of job classifications, have been terminated as a result of the restructuring plan. This includes approximately 225 employees from the company’s international operations.
Charges taken during fiscal year 2002 resulting from asset impairments in connection with the Plan were accounted for in accordance with Statement of Financial Accounting Standards No. 121, “Accounting for the
8
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of” (“SFAS 121”). Asset impairments consisted of long-lived assets, including real estate, fixed assets and manufacturing equipment from the facilities the company intends to dispose of or discontinue. These assets were written down to the lower of their carrying amounts or estimated fair values, less the cost to dispose. Fair value estimates were determined by the company’s management, with the assistance of independent appraisers, and were based on estimated proceeds from sale and other relevant factors. These asset impairments resulted as a consequence of the company’s making the decision to exit these activities during the year.
Certain assets for which impairment charges were recognized as a result of the Plan have been written-down to their estimated fair values in anticipation of future sales. These assets, and their associated adjusted carrying values at November 30, 2002, include the Rocklin, California facility ($16.2 million) and the Holland, Michigan Chair Plant ($5.2 million). These assets are classified as long-term on the balance sheet as of November 30, 2002 and June 1, 2002, under the caption “Net Property and Equipment.”
Special charges also include certain estimated qualifying exit costs recorded in accordance with Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” These costs include lease and supplier contract terminations and certain facility exit costs.
The following is a summary of restructuring activity during the second quarter of fiscal 2003.
(In Millions)
Severance & Lease & Supplier Facility Exit
Outplacement Contract Costs and
Costs Terminations Other Total
----- ------------ ----- -----
Accrual Balance, August 31, 2002 $1.2 $2.9 $4.2 $8.3
Special Charges -- (0.2) -- (0.2)
Cash Payments (0.8) (0.5) (0.9) (2.2)
--------- --------- --------- ---------
Accrual Balance, November 30, 2002 $0.4 $2.2 $3.3 $5.9
======== ======== ======== ========
Cost associated with the movement of inventory and equipment, as well as employee relocation and training related to the consolidation of production processes are recognized as incurred, and are not included in the ending restructuring accrual at November 30, 2002.
SUPPLEMENTAL CASH FLOW INFORMATION
Cash equivalents are purchased as
part of the company’s cash management function and consist primarily of money market
and time deposit investments, which are of high credit quality. All cash equivalents are
considered “available-for-sale.” As of November 30, 2002 and June 1, 2002, the
costs of these securities approximated their respective market values.
Cash payments for income taxes and interest were as follows.
(In Millions)
Three Months Ended Six Months Ended
------------------ ----------------
November 30 December 1, November 30 December 1,
2002 2001 2002 2001
---- ---- ---- ----
Income taxes (refunded)/paid, net $6.4 $1.1 $(18.3) $6.3
Interest paid $8.5 $11.8 $8.6 $12.1
9
SHORT-TERM INVESTMENTS
The company maintains a portfolio of
short-term investments comprised of investment grade fixed-income securities. These
investments are held by the company’s wholly-owned insurance captive and are
considered “available-for-sale” as defined in Statement of Financial Accounting
Standards No. 115, “Accounting for Certain Investments in Debt and Equity
Securities.” Accordingly, they have been recorded at fair market value with the
resulting net unrealized holding gains reflected as a component of comprehensive
income/(loss). Net investment income recognized in the Condensed Consolidated Statements
of Operations resulting from these investments totaled $0.2 million and $0.3 million for
the quarters ended November 30, 2002 and December 1, 2001, respectively. For the six
months ended November 30, 2002, and December 1, 2001, these amounts totaled $0.3 million
and $0.5 million, respectively.
The following is a summary of the carrying and market values of the company’s short-term investments as of November 30, 2002 and June 1, 2002.
(In Millions)
November 30, 2002 June 1, 2002
Cost Market Value Cost Market Value
---- ------------ ---- ------------
Government & government agency issued
debt securities 1 8.3 9.3 8.3 9.0
Corporate bonds 1.7 1.9 1.9 2.1
--- --- --- ---
10.0 11.2 10.2 11.1
Unrealized gains 1.2 -- 0.9 --
--- -- --- --
Total $11.2 $11.2 $11.1 $11.1
===== ===== ===== =====
1 Include securities issued by both U.S. and foreign governments and government agencies. Some of these securities are development bonds issued by groups of member countries. All are U.S. dollar-denominated and are rated AA or above by Moody’s.
OPERATING SEGMENTS
In accordance with Statement of
Financial Accounting Standards No. 131, “Disclosures about Segments of an Enterprise
and Related Information,” management evaluates the company as one operating segment
in the office furniture industry. The company is engaged worldwide in the design,
manufacture, and sale of office furniture systems, products, and related services through
its wholly owned subsidiaries. Throughout the world the product offerings, the production
processes, the methods of distribution, and the customers serviced are consistent. The
product lines consist primarily of office furniture systems, seating, storage solutions,
freestanding furniture, and casegoods. The accounting policies of the operating segment
are the same as those described in the summary of significant accounting policies in the
company’s 10-K report for the year ended June 1, 2002.
NEW ACCOUNTING STANDARDS
In November 2002, the Financial
Accounting Standards Board issued Interpretation No. 45, “Guarantor’s Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
of Others” (“Interpretation”). The Interpretation requires certain
guarantees, including financial guarantees or indemnifications, performance guarantees and
indirect guarantees of debt, to be recorded at fair value. It also requires the guarantor
to disclose, among other things, the key terms and conditions of the guarantee. For
product warranties, the guarantor must disclose the accounting policy and methodology used
to determine the liability recorded, and a reconciliation of the changes in the liability
for the reporting period presented. The accounting provisions of the Interpretation are
effective for any guarantees issued or modified after December 31, 2002, while the
disclosure requirements are effective for interim and annual periods ending after December
15, 2002. The company is currently in the process of evaluating the impact of the
Interpretation on its financial statements.
10
In June 2002, the Financial Accounting Standards Board finalized Statement of Financial Accounting Standards No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (“SFAS 146”). SFAS 146 requires that a liability for a cost that is associated with an exit or disposal activity be recognized when the liability is incurred and at its fair value. In accordance with the statement, the company will adopt these new rules for restructuring activities, if any, that may occur after December 31, 2002.
In August 2001, the Financial Accounting Standards Board finalized Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). SFAS 144 supersedes Statement of Financial Accounting Standards No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of” (“SFAS 121”) and the accounting and reporting provisions of the Accounting Principles Board Opinion No. 30, “Reporting the Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual, and Infrequently Occurring Events and Transactions.” SFAS 144 also amends Accounting Research Bulletin No. 51, “Consolidated Financial Statements.” SFAS 144 retains the provisions of SFAS 121 for recognition and measurement of impairment of long-lived assets to be held and used, and measurement of long-lived assets to be disposed of by sale. Discontinued operations are no longer measured on a net realizable value basis, and future operating losses are no longer recognized before they occur. The company adopted SFAS 144 in the first quarter of fiscal year 2003. Adoption of this statement did not have a material impact on the company’s financial statements.
In June 2001, the Financial Accounting Standards Board finalized Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). This statement was effective for the company’s fiscal year that began June 2, 2002. Upon adoption of this standard, pre-existing goodwill is no longer subject to amortization; however, companies are required to perform an annual fair-value-based analysis to determine whether the value of goodwill has been impaired. Refer to the footnote entitled “Goodwill and Other Intangible Assets” for further discussion.
GOODWILL AND OTHER INTANGIBLE ASSETS
As discussed in the footnote entitled
“New Accounting Standards,” the company adopted SFAS 142 in the first quarter of
fiscal year 2003. As a result, the company did not record amortization expense on its
remaining goodwill assets for the quarter and six months ended November 30, 2002. Upon
adoption of SFAS 142, and annually thereafter unless a triggering event occurs, the
company is required to test the carrying value of goodwill for impairment at the
“reporting unit” level. For its initial adoption, the company performed this
impairment testing and has determined that the value of these assets is not impaired. In
the future, the company will perform an annual review for impairment beginning with the
fourth quarter of fiscal 2003.
The pro forma impact of no longer amortizing goodwill is presented below (in millions except per share data).
Three Months Ended Six Months Ended
------------------ ----------------
November 30, December 1, November 30, December 1,
2002 2001 2002 2001
---- ---- ---- ----
Reported net earnings $ 11.8 $ (22.7) $ 21.6 $ (25.6)
Add back goodwill amortization, net of tax -- .7 -- 1.4
------ -- ------ ---
Adjusted net earnings $ 11.8 $ (22.0) $ 21.6 $ (24.2)
Reported earnings per share - basic $ .16 $ (.30) $ .29 $ (.34)
Add back goodwill amortization, net of tax -- .01 -- .02
------ ------- ----- ---
Adjusted earnings per share - basic $ .16 $ (.29) $ .29 $ (.32)
======= ========= ======= =========
Reported earnings per share - diluted $ .16 $ (.30) $ .29 $ (.34)
Add back goodwill amortization, net of tax -- .01 -- .02
----- --- ----- ---
Adjusted earnings per share - diluted $ .16 $ (.29) $ .29 $ (.32)
======= ========= ======= =========
11
SFAS 142 also required the company to evaluate its other intangible assets to determine whether any have “indefinite useful lives.” Under this new accounting standard, intangible assets with indefinite useful lives, if any, are no longer subject to amortization. The company did not classify any of its other intangible assets as having indefinite useful lives, and accordingly, will continue to amortize them. Amortization expense related to other intangible assets totaled $0.5 million for the quarter ended November 30, 2002, and $1.2 million for the quarter ended December 1, 2001. For the six months ended November 30, 2002, and December 1, 2001, amortization expense related to other intangible assets totaled approximately $1.0 million and $1.7 million, respectively.
Intangible assets are comprised of patents and trademarks and had a combined gross carrying value and accumulated amortization of $12.2 million and $4.7 million, respectively, as of November 30, 2002. As of June 1, 2002, these amounts totaled $12.2 million and $3.7 million, respectively.
Estimated amortization expense for intangible assets as of November 30, 2002, for each of the succeeding fiscal years is as follows.
(In Millions)
Remaining 2003 $0.9
2004 $1.4
2005 $1.0
2006 $0.9
2007 $0.9
INTEREST RATE SWAP
In May 2002, the company entered into
a fixed-to-floating interest rate swap agreement effectively converting $40 million of
fixed-rate private placement debt to a floating-rate basis. As of November 30, 2002, the
floating interest rate, which is based on the 90-day LIBOR, was approximately 4.17
percent. This fair-value hedge is considered “highly effective” and qualifies
for hedge-accounting treatment as well as the “short-cut” method under the
provisions of Statement of Financial Accounting Standards No. 133, “Accounting for
Derivative instruments and Hedging Activities.” Under this accounting treatment, the
change in the fair value of the interest rate swap is equal to the change in value of the
related hedged debt and, as a result, there is no net effect on earnings. This agreement,
which expires on March 6, 2006, requires the company to pay floating-rate interest
payments on a quarterly basis in return for receiving semi-annual fixed-rate interest
payments that coincide with the semi-annual payments to the private placement holders at
the same rate. The counterparty to this swap instrument is a large major financial
institution which the company believes is of high-quality creditworthiness. While the
company may be exposed to potential losses due to the credit risk of non-performance by
this counterparty, such losses are not anticipated. The fair value of this swap instrument
as of November 30, 2002, was approximately $1.0 million.
CONTINGENCIES
The company, for a number of years,
has sold various products to the United States Government under General Services
Administration (“GSA”) multiple award schedule contracts. Under the terms of
these contracts, the GSA is permitted to audit the company’s compliance with the GSA
contracts. At any point in time, a number of GSA audits are either scheduled or in
process. Management does not expect resolution of the audits to have a material adverse
effect on the company’s consolidated financial statements.
12
The company is also involved in legal proceedings and litigation arising in the ordinary course of business. In the opinion of management, the outcome of such proceedings and litigation currently pending will not materially effect the company’s consolidated financial statements.
REPORT OF MANAGEMENT
In the opinion of management, the
accompanying unaudited condensed consolidated financial statements, taken as a whole,
contain all adjustments which are of a normal recurring nature necessary to present fairly
the financial position of the company as of November 30, 2002, and the results of its
operations and cash flows for the interim periods presented. Interim results are not
necessarily indicative of results for a full year.
13
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations
The following is management’s discussion and analysis of certain significant factors that affected the company’s financial condition and earnings during the periods included in the accompanying condensed consolidated financial statements.
This quarter marked our second consecutive quarter of profitability following the completion of last year’s restructuring plan. Our second quarter financial performance improved over the first quarter both in sales and net earnings. Although net sales for the second quarter decreased almost $38 million or 9.5 percent from the same period last year, the significant reductions in our cost structure allowed us to dramatically improve our earnings. These improvements were accomplished against the backdrop of an economic environment that has continued to be tepid with respect to salaried employment increases and capital expansion – two major drivers of our industry’s growth.
In addition to weak economic conditions, a competitive pricing environment during the quarter further challenged our return to profitability. We experienced higher discounting for the period as compared to the second quarter last year as well as the first quarter of this year. While the pricing environment remains highly competitive, we have continued to focus our selling efforts on projects and customers that value our capabilities and knowledge regarding the application of furniture solutions in the workplace.
The general health of our independent dealer network continues to be closely monitored at the highest levels within our organization. While poor economic conditions have placed significant financial pressure on several of our dealers, we believe the risk of disruption to our distribution channel has been largely mitigated. We believe we have adequate reserves for the credit risks associated with our dealer financing arrangements. We also believe the action plans we have developed with respect to these arrangements coupled with our marketing and merchandising strategies have positioned our dealers to compete effectively in each of our key markets.
These action plans encompass our wholly owned dealerships as well. Subsequent to the end of the quarter, we announced the closure of our dealer subsidiary in Atlanta, Georgia. This closure was in response to the financial performance of the owned dealer as well as overlap in market coverage with a strong independent Herman Miller dealer located in the same area.
Although there continues to be a lack of significant improvement in industry growth indicators, we are cautiously optimistic that the worst is behind us. Orders for the second quarter were up slightly from first quarter levels. Additionally, the number of client visits during the second quarter increased to levels not seen since June of 2001. Although it is difficult to predict what percentage of these visits will actually translate into new business, it is an encouraging sign.
Our projection for the third quarter of fiscal 2003 is that we will experience a seasonal decline in revenue similar to that which we have experienced historically. Net sales for the third quarter are projected to be in a range of $310 million to $330 million with earnings per share of $0.03 to $0.07. Revenues for the full fiscal year are expected to be in a range of $1.37 billion to $1.42 billion with earnings per share of $0.52 to $0.61.
In summary, we feel we are effectively managing the things that are within our control and responding appropriately to the current business environment. We are now looking toward the future by focusing on those initiatives that will (1) generate revenue growth through new product developments that meet our customer’s traditional and immediate needs and (2) expand our market potential through creative innovation in the workplace. We will move forward with confidence that the tough choices and significant changes made over the past year have positioned us to increase sales, further improve profitability and enhance our market position in the near-term.
14
Consolidated Sales, Orders, and Backlog
Consolidated net sales for the second
quarter totaled $357.3 million. This is a decrease of approximately 9.5 percent from
$395.0 million for the same period last year. Compared to the first quarter of this year,
however, net sales increased approximately 3 percent. New orders for the quarter of $352.2
million were down 2.6 percent from $361.7 million last year but were up slightly from the
first quarter of this fiscal year. Weekly order trends for the second quarter showed
improvement throughout most of the quarter, but slipped in the final weeks of November as
we began to enter our traditional seasonal slow-down period. The backlog of unfilled
orders at the end of the quarter was $194.4 million, down 2.6 percent from the first
quarter level of $199.5 million.
Domestic Operations
Domestic sales and new orders for the
second quarter decreased 8.3 percent and 2.0 percent, respectively, from the same period
last year. As mentioned, discounting pressure increased in comparison to last year,
resulting in a reduction to net sales of approximately $6 million for the quarter. We
anticipate this pattern to continue and we intend to focus on differentiation through
product features and other incentives to limit this impact.
U.S. office furniture shipments, as reported by The Business and Institutional Furniture Manufacturer’s Association (BIFMA), declined approximately 10.7 percent for the three-month period ended November 2002. We are encouraged by our sales performance relative to that reported by the industry as a whole during the quarter.
International Operations
Our international operations for the
second quarter continued to experience larger sales and order declines than on the
domestic front. Sales for the quarter totaled $50.8 million as compared to $60.9 million
in the prior year, representing a decline of 16.6 percent. Orders for the quarter
decreased 6.4 percent from the last year to $51.5 million.
The decrease in sales and orders is largely attributable to our move from a direct-sales structure to a dealer-based business model in parts of Asia and Latin America. This change was undertaken during fiscal 2002 as part of our overall restructuring plan.
On a positive note, international sales for the second quarter increased 3.3 percent from the first quarter of this year and new orders increased 12.4 percent. Additionally, the profitability of our international operations, both in pure dollars and percent of sales, has improved dramatically on a year-over-year basis despite the decline in sales.
Restructuring Activities
During the second quarter additional
special charges totaling approximately $0.2 million were recorded for the impairment of
fixed assets related to our former SQA brand. This charge was offset by credits resulting
from revisions to expected sublease timing at certain leased West Michigan facilities.
Special charges recorded during the second quarter of last year totaled $38.8 million.
Cash outflows associated with the implementation of last year’s restructuring plan totaled $2.2 million for the quarter ended November 30, 2002. The majority of these outflows were associated with previously accrued severance & outplacement and facility exit costs. The remaining restructuring accrual at the end of the quarter totaled $5.9 million.
15
As reported last quarter, we completed the sale of our West Michigan Powder Coat Technology painting facility. These assets were classified as “Assets held for sale” on the June 1, 2002 balance sheet. Two additional properties remain for sale as a result of our restructuring activities. These include the Rocklin, California facility and the Holland, Michigan Chair Plant. These assets remain classified as part of “Net property and equipment” on the balance sheet as of November 30, 2002. Currently, the Rocklin facility is under contract to be sold although there are remaining contingencies which must be cleared before a closing can be scheduled.
Financial Summary
The following table presents, for the
periods indicated, the components of the company’s condensed consolidated statements
of operations as a percentage of net sales.
Three Months Ended Six Months Ended
------------------ ----------------
November 30 December 1, November 30 December 1,
2002 2001 2002(1) 2001
---- ---- ---- ----
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Sales 68.2 69.9 68.3 69.6
---- ---- ---- ----
Gross Margin 31.8 30.1 31.7 30.4
Operating Expenses 26.0 28.8 26.0 28.7
Special Charges - 9.8 - 6.0
- --- - ---
Operating Margin 5.8 (8.5) 5.6 (4.3)
Other Expense 0.8 0.7 0.9 0.7
--- --- --- ---
Earnings Before Taxes 5.0 (9.2) 4.7 (5.0)
Income Tax Expense (Benefit) 1.7 (3.4) 1.6 (1.8)
--- ----- --- -----
Net Earnings 3.3% (5.8)% 3.1% (3.2)%
==== ===== ==== ======
(1)Percentages do not foot due to rounding.
Consolidated Gross Margin
Gross margin for the quarter, as a
percent of sales, was 31.8 percent versus 30.1 percent last year. This performance is
especially encouraging to us given the ongoing challenges of the current pricing
environment and the fact that our second quarter Cost of Sales includes $2.7 million in
incremental variable compensation expense.
The results for the quarter again showed improvement in all areas of Cost of Sales when compared to the prior year. Most notable were improvements in manufacturing overhead and direct material spending. On a dollar basis, overhead expenses declined $8.5 million compared to the second quarter last year. This decline of 10.8 percent is greater than the relative decline in sales over the same period.
16
Direct material as a percent of sales improved to 37.5 percent from 38.3 percent last year. Our procurement and supply-chain teams are continuing their pursuit of numerous initiatives to further improve our material pricing. Several of these programs are specifically targeted at offsetting the increase in steel pricing resulting from the government-imposed tariff. This tariff is expected to result in steel price increases in the range of $3 million to $3.5 million during the second half of this fiscal year.
The consolidation and rationalization of our supplier-base continues to be an important component of our overall procurement strategy in response to the economic downturn. This effort, in connection with our overall lean manufacturing program, has resulted in improved efficiency, costs, and reliability. Despite the benefits received, this strategy does increase the risks associated with supplier transitions and dependence upon fewer suppliers. We will continue to seek financially strong suppliers interested in long-term business relationships in order to minimize the risk of interruption to our business.
In addition to material and overhead expense improvements, direct labor, freight, and product distribution expenses were all down as a percent of sales as compared to the second quarter of last year.
Operating Expenses and Operating Earnings
Operating expenses for the second
quarter totaled $92.8 million as compared to $113.7 million last year (excluding special
charges). This is a reduction of $20.9 million or 18.4 percent on a year-over-year basis.
As with Cost of Sales, we are especially pleased with our results in this area given the
fact that operating expenses for the quarter included incremental variable compensation
expenses of $3.1 million. The major drivers of this decrease were lower overall
compensation, employee benefit, and depreciation & amortization expenses.
At the beginning of the first quarter of this year, we adopted Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (SFAS 142). This new accounting rule required us to evaluate our existing goodwill and other intangible assets for impairment. It also eliminated the amortization of goodwill. Adoption of SFAS 142 did not result in the impairment of our goodwill or other intangible assets. Pretax goodwill amortization expense for the second quarter of last year totaled approximately $0.7 million or $(.01) per share net of taxes.
Our continued focus on managing cash flow and maintaining spending patterns at levels appropriate for the current business environment has resulted in a dramatic reduction in operating expense spending. Our intent is to continue the close scrutiny and monitoring of our spending in order to maintain financial flexibility. As always, this will be done without putting at risk those programs that we believe are critical to product innovation and future growth. This may result in an increase in operating expenses during the remainder of fiscal 2003 in comparison to the first half.
Operating earnings for the quarter totaled $20.9 million or 5.8 percent of net sales as compared to $(33.6) million or (8.5) percent in the prior year. Before considering special charges in the prior year, operating earnings were $5.2 million or 1.3 percent of net sales.
Other Income/Expenses, Net Income, and Earnings Per Share
Interest expense for the second
quarter totaled $3.3 million compared to $4.5 million in the prior year. The reduction in
interest expense from the prior year is attributable to lower debt levels as well as
savings from our interest rate swap arrangement. Additionally, interest expense for the
quarter was reduced by a reclassification of interest income related to the swap totaling
approximately $0.6 million. This interest income was reported in the first quarter of this
year as Other Income/Expense on the consolidated statements of operations.
17
Our interest rate swap arrangement resulted in net pretax interest savings of approximately $0.2 million during the second quarter. These savings resulted from swapping $40 million of our fixed rate private placement debt to a floating-rate basis in May 2002.
The amount recorded under the caption “Other Income/Expense, net” for the quarter totaled $0.3 million income as compared to $1.9 million income in the prior year. Included in the amount for the current quarter is pretax interest income of $1.8 million related to interest received from prior year tax audits. Also included in other expenses for the second quarter is a $2.2 million pretax charge, or $.02 per share net of tax, related to the impairment of an equity investment in our Philadelphia-based dealership joint venture. The amount for the prior year includes income of $1.3 million related to a state tax refund.
The effective tax rate for the second quarter was 34 percent. The reduction in this rate from fiscal 2002 is driven primarily by the change in amortization of goodwill related to the adoption of SFAS 142, the effect of changes in international and state tax provisions, and the size of permanent deductible items relative to our earnings. Our effective rate for the remainder of the fiscal year is not expected to change materially from this level.
Net earnings for the quarter totaled $11.8 million. This compares to $1.7 million last year before considering pretax special charges of $38.8 million. Diluted earnings per share for the quarter were $.16 compared to $.02 before special charges in the prior year.
Prior to giving consideration to special charges, earnings before interest, taxes, depreciation & amortization (EBITDA) for the quarter totaled $39.0 million versus $33.1 million last year. Including special charges, these amounts totaled $39.0 million and $(5.7) million, respectively.
The following table presents, for the periods indicated, the calculation of EBITDA, including special charges (in millions):
Three Months Ended Six Months Ended
------------------ ----------------
November 30 December 1, November 30 December 1,
2002 2001 2002 2001
---- ---- ---- ----
Earnings Before Taxes $17.9 $(36.2) $32.7 $(40.0)
Interest Expense 3.3 4.5 7.9 9.3
Depreciation & Amortization Expense 17.8 26.0 36.9 50.7
---- ---- ---- ----
EBITDA $39.0 $(5.7) $77.5 $20.0
===== ====== ===== =====
Financial Condition, Liquidity, and Capital Resources
We ended the quarter with cash &
equivalents of $168.8 million compared to $124.0 million at the end of the fourth quarter
last year. Cash flow from operating activities was $30.6 million for the second quarter
compared to $16.0 million in the prior year.
On a year to date basis, cash flow from operating activities was $105.4 million compared to $43.4 million last year. During the first quarter of this year, we received a federal tax refund totaling $35.9 million related to prior net operating losses. Also during the first quarter, we paid cash of $13.6 million relating to the fiscal 2002 settlement with the IRS concerning our COLI program. Excluding these one-time cash transactions, cash flow from operating activities for the six months ended November 30, 2002 totaled $83.1 million.
18
Future cash outflows related to our restructuring plan are expected to total approximately $6 million. We also expect future cash inflows of approximately $23 million from the sale of our Rocklin, California and Holland, Michigan Chair Plant facilities, although we cannot be certain as to the exact amount or timing of these transactions.
Days sales outstanding (DSO) in accounts receivable and inventory of 52.5 improved from 53.5 in the first quarter of this year. Our ending net accounts receivable balance of $144.2 million is up slightly from $142.1 million at the end of last fiscal year. Collections on accounts receivable remain relatively strong and we have improved our aging over 90 days in each of the past 3 quarters. We believe the valuation allowance associated with our accounts receivable as of the end of the quarter is adequate to cover the risk of potential bad debts.
Capital expenditures for the quarter totaled $6.7 million compared to $12.3 million for the same period last year. For the entire year, capital expenditures are now expected to be in a range of $35 million to $45 million. As of the end of the quarter, the company had commitments for future capital expenditures of approximately $7.2 million.
Total interest-bearing debt totaled $231.8 million at the end of the second quarter. This compares to $235.1 million at the end of fiscal 2002. The reduction is primarily the result of paying off bank debt associated with our former Australian business unit. Trailing twelve-month EBITDA to interest expense ratio was 7.8 as of quarter end. This ratio evaluates our ability to cover debt service costs and is one of the covenants under the terms of our debt agreements. These agreements require this ratio to be greater than 4.0. In addition, we were in full compliance with all other debt covenants as of the end of the quarter. Late in fiscal 2002, we amended our debt covenants to exclude the impact of special charges on EBITDA. We are encouraged that our financial performance for the second quarter brought us into compliance with these covenants even without the benefit of this amendment.
We significantly increased our share repurchase activity during the second quarter buying back 2.46 million shares for $42.6 million. This approximates an average price of $17.31 per share. During the same period last year, share repurchases totaled approximately 0.2 million shares at an average price of $20.91 per share. We currently have $65.8 million remaining on our share repurchase authorization. We expect to continue our share repurchases in the near future and will balance the level of these repurchases with our cash flow, our desire to reinvest in the business, and our mandate to maintain a high degree of financial flexibility.
Cash outflows for dividends during the quarter of $2.8 million compares to $2.7 million in the same period last year.
Our unsecured revolving credit facility provides for borrowings of up to $200 million. There were no borrowings on this facility as of the end of the quarter.
We believe that cash on hand, cash generated from operations, and availability on our credit facilities will provide adequate liquidity to fund future operations and capital additions of the company.
19
Safe Harbor Provisions
Certain statements in this filing are
not historical facts but are “forward-looking statements” as defined under the
Private Securities Litigation Reform Act of 1995. These statements are not guarantees of
future performance and involve certain risks, uncertainties, and assumptions that are
difficult to predict with regard to timing, extent, likelihood, and degree of occurrence.
Therefore, actual results and outcomes may materially differ from what may be expressed or
forecasted in such forward-looking statements. Furthermore, Herman Miller, Inc.,
undertakes no obligation to update, amend, or clarify forward-looking statements, whether
as a result of new information, future events, or otherwise. Forward-looking statements
include, but are not limited to, statements concerning the outcome of GSA audits, dealer
network health, supplier risk, future sales and earnings levels, future gross margin
expectations, future operating expense ratios, future cash flows, future share
repurchases, future capital expenditures, and future tax rates.
20
Item 3: Quantitative and Qualitative Disclosures About Market Risk
During the first six months of fiscal 2003, there was no material change in foreign exchange risk or material impact of interest rates.
Item 4: Controls and Procedures
| (a) | Evaluation of Disclosure Controls and Procedures. The company’s Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c) as of a date within 90 days of the filing date of this Form 10-Q Quarterly Report (the “Evaluation Date”), have concluded that as of the Evaluation Date, the company’s disclosure controls and procedures were adequate and effective to ensure that material information relating to the company would be made known to them by others within the company, particularly during the period in which this Form 10-Q Quarterly Report was being prepared. |
| (b) | Changes in Internal Controls. There were no significant changes in the company’s internal controls or in other factors that could significantly affect internal controls subsequent to the date of the most recent evaluation, nor any significant deficiencies or material weaknesses in such internal controls requiring corrective actions. As a result, no corrective actions were taken. |
21
HERMAN MILLER, INC.
PART II--OTHER INFORMATION
| Item 1: | Legal Proceedings Referred to in Notes to Condensed Consolidated Financial Statements |
| Item 6: | (a) The following exhibits (listed by number corresponding to the Exhibit
table as Item 601 in Regulation S-K) are filed with this Report: 99.1 Certificate of the Chief Executive Officer of Herman Miller, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). 99.2 Certificate of the Chief Financial Officer of Herman Miller, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). |
22
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 hereto duly authorized.
|
HERMAN MILLER, INC. |
||
| January 13, 2003 |
/s/ Michael A. Volkema
Michael A. Volkema Chief Executive Officer |
|
| January 13, 2003 |
/s/ Elizabeth A. Nickels
Elizabeth A. Nickels Chief Financial Officer |
23
CERTIFICATIONS
I, Michael A. Volkema, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Herman Miller, Inc:
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
a) designed such disclosure controls and procedures to ensure that material information relating to the
registration, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrants' disclosure controls and procedures as of a date within
90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to
the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal controls which could adversely
affect the registrant's ability to record, process, summarize and report financial data and have identified for
the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether there
were significant changes in internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: January 13, 2003
/s/ Michael A. Volkema
Michael A. Volkema
Chief Executive Officer
24
CERTIFICATIONS
I, Elizabeth A. Nickels, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Herman Miller, Inc:
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registration, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrants’ disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and
6. The registrant’s other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: January 13, 2003
/s/ Elizabeth A. Nickels
Elizabeth A. Nickels
Chief Financial Officer
25
EXHIBIT 99.1
Certificate of the
Chief Executive Officer of
HERMAN MILLER, INC.
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.1350):
I, Michael A. Volkema, Chief Executive Officer of Herman Miller, Inc., certify that to the best of my knowledge and belief, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) that:
(1) The quarterly report on Form 10-Q for the quarterly period ended November 30, 2002, which this statement accompanies, fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and;
(2) The information contained in this quarterly report on Form 10-Q for the quarterly period ended November 30, 2002, fairly represents, in all material respects, the financial condition and results of operations of Herman Miller, Inc.
| HERMAN MILLER, INC. |
| Date: January 13, 2003 | By: |
/s/ Michael A. Volkema
Michael A. Volkema |
|
| Its: | Chief Executive Officer |
26
EXHIBIT 99.2
Certificate of the
Chief Financial Officer of
HERMAN MILLER, INC.
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.1350):
I, Elizabeth A. Nickels, Chief Financial Officer of Herman Miller, Inc., certify that to the best of my knowledge and belief, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) that:
(1) The quarterly report on Form 10-Q for the quarterly period ended November 30, 2002, which this statement accompanies, fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and;
(2) The information contained in this quarterly report on Form 10-Q for the quarterly period ended November 30, 2002, fairly represents, in all material respects, the financial condition and results of operations of Herman Miller, Inc.
| HERMAN MILLER, INC. |
| Date: January 13, 2003 | By: |
/s/ Elizabeth A. Nickels
Elizabeth A. Nickels |
|
| Its: | Chief Financial Officer |
27