<PAGE> 1
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 28, 1998 Commission File No. 0-5813
HERMAN MILLER, INC.
A Michigan Corporation ID No. 38-0837640
855 East Main Avenue, Zeeland, MI 49464-0302 Phone (616) 654 3000
Herman Miller, Inc.
(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 7, 1999--84,973,235 shares.
The Exhibit Index appears at page 18.
-1-
<PAGE> 2
HERMAN MILLER, INC. FORM 10-Q
FOR THE QUARTER ENDED NOVEMBER 28, 1998
INDEX
<TABLE>
<CAPTION>
Page No.
--------
Part I--Financial Information
<S> <C>
Condensed Consolidated Balance Sheets--
November 28, 1998, and May 30, 1998 3
Condensed Consolidated Statements of Income--
Three and Six Months Ended November 28, 1998,
and November 29, 1997 4
Condensed Consolidated Statements of Cash Flows--
Six Months Ended November 28, 1998,
and November 29, 1997 5
Notes to Condensed Consolidated Financial Statements 6-8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-15
Part II--Other Information
Exhibits and Reports on Form 8-K 16
Signatures 17
Exhibit Index 18
</TABLE>
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<PAGE> 3
HERMAN MILLER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Nov 28, May 30,
1998 1998
----------- --------
(unaudited) (audited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 97,310 $115,316
Accounts receivable, net 196,063 192,384
Inventories--
Finished goods 17,073 19,807
Work in process 9,224 8,844
Raw materials 17,760 19,006
-------- --------
Total inventories 44,057 47,657
-------- --------
Prepaid expenses and other 48,328 44,778
-------- --------
Total current assets 385,758 400,135
-------- --------
PROPERTY AND EQUIPMENT, AT COST: 614,903 595,872
Less-accumulated depreciation 318,904 305,208
-------- --------
Net property and equipment 295,999 290,664
-------- --------
OTHER ASSETS:
Notes receivable, net 25,340 27,522
Other noncurrent assets 60,885 66,025
-------- --------
Total assets $767,982 $784,346
======== ========
</TABLE>
<TABLE>
<CAPTION>
Nov. 28, May 30,
1998 1998
----------- ---------
(unaudited) (audited)
<S> <C> <C>
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Unfunded checks $ 17,509 $ 35,241
Current portion of long-term debt 146 10,203
Notes payable 11,193 19,542
Accounts payable 88,416 92,241
Accruals 226,221 221,105
-------- --------
Total current liabilities 343,485 378,332
-------- --------
LONG-TERM DEBT, less current portion 100,910 100,910
OTHER LIABILITIES 78,531 74,102
SHAREHOLDERS' EQUITY:
Common stock $.20 par value 16,988 17,397
Retained earnings 244,664 227,464
Cumulative translation adjustment (9,443) (9,360)
Key executive stock programs (7,153) (4,499)
-------- --------
Total shareholders' equity 245,056 231,002
-------- --------
Total liabilities and
shareholders' equity $767,982 $784,346
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-3-
<PAGE> 4
HERMAN MILLER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
Nov. 28, Nov. 29, Nov. 28, Nov. 29,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $464,818 $415,086 $912,321 $816,631
COST AND EXPENSES:
Cost of goods sold 288,706 263,443 565,997 517,987
Operating expenses (1) 115,797 102,758 231,083 204,858
Interest expense 2,390 1,843 4,666 4,032
Other income, net (6,938) (1,654) (10,043) (3,999)
-------- --------- -------- --------
399,955 366,390 791,703 722,878
-------- --------- -------- --------
INCOME BEFORE TAXES ON INCOME 64,863 48,696 120,618 93,753
PROVISION FOR TAXES ON INCOME 25,950 18,250 47,700 35,500
-------- --------- -------- --------
NET INCOME (1) $ 38,913 $ 30,446 $ 72,918 $ 58,253
======== ========= ======== ========
NET INCOME PER COMMON SHARE--BASIC (1) $ .46 $ .34 $ .85 $ .64
======== ========= ======== ========
NET INCOME PER COMMON SHARE--DILUTED (1) $ .45 $ .33 $ .84 $ .63
======== ========= ======== ========
DIVIDENDS PER SHARE OF
COMMON STOCK $ .03625 $ .03625 $ .0725 $ .0725
======== ========= ======== ========
</TABLE>
(1) Fiscal 1998 amounts have been restated for the adoption of
Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use."
See accompanying notes to condensed consolidated financial statements.
-4-
<PAGE> 5
HERMAN MILLER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
----------------
Nov. 28, Nov. 29,
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (1) $ 72,918 $ 58,253
Depreciation and amortization 31,266 27,102
Changes in current assets and liabilities (19,422) 4,610
Other, net (41) 6,670
--------- ---------
Net cash provided by operating activities 84,721 96,635
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Notes receivable repayments 243,749 297,593
Notes receivable issued (239,464) (289,910)
Capital expenditures (1) (44,819) (23,919)
Proceeds from sale of fixed assets 20,485
Other, net (3,988) 4,184
--------- ---------
Net cash used for investing activities (24,037) (12,052)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net short-term debt repayments (8,820) 2,082
Net long-term debt repayments (10,055) (23)
Dividends paid (6,276) (6,668)
Capital lease repayment (38) (72)
Net common stock issued 10,417 18,265
Common stock purchased and retired (63,474) (93,302)
--------- ---------
Net cash used for financing activities (78,246) (79,718)
--------- ---------
EFFECT OF EXCHANGE RATE
CHANGES ON CASH (444) 359
--------- ---------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (18,006) 5,224
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 115,316 106,161
--------- ---------
CASH AND CASH EQUIVALENTS,
AT END OF PERIOD $ 97,310 $ 111,385
========= =========
</TABLE>
(1)Fiscal 1998 amounts have been restated for the adoption of Statement of
Position 98-1, "Accounting for the Costs of Computer Software Developed
or Obtained for Internal Use."
See accompanying notes to condensed consolidated financial statements.
-5-
<PAGE> 6
HERMAN MILLER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOOTNOTE DISCLOSURES
The condensed consolidated financial statements have been prepared by the
company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. The company believes that the disclosures made in this document are
adequate to make the information presented not misleading. It is suggested that
these condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the company's Annual Report on Form
10-K for the year ended May 30, 1998.
FISCAL YEAR
The company's fiscal year ends on the Saturday closest to May 31. The years
ended May 29, 1999, and May 30, 1998, contain 52 weeks.
NEW ACCOUNTING STANDARDS
In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." The company adopted this SOP during the
third quarter of fiscal 1998, retroactive to the beginning of the fiscal year.
The adoption of this SOP resulted in an increase in net income of $.8 million,
or $.01 in diluted earnings per share (EPS) for the quarter ended November 29,
1997, and an increase in net income of $1.3 million, or $.02 in diluted earnings
per share for the six months ended November 29, 1997. The company is also in
compliance with Emerging Issues Task Force (EITF) Issue 97-13, "Accounting for
Costs Incurred in Connection with a Consulting Contract that Combines Business
Process Reengineering and Information Technology Transformation."
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income," issued in June 1997, was adopted by the company during the three months
ended August 29, 1998. This statement requires the disclosure of comprehensive
income, which, for Herman Miller, includes net income and foreign currency
translation adjustments. Comprehensive income was approximately $38.7 million
and $30.8 million for the three months ended November 28, 1998, and November 29,
1997, respectively. During the six months ended November 28, 1998, and November
29, 1997, comprehensive income was approximately $72.8 million and $58.9
million, respectively.
-6-
<PAGE> 7
EARNINGS PER SHARE
The following table reconciles the numerators and denominators used in the
calculations of basic and diluted EPS:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
Nov. 28, Nov. 29, Nov. 28, Nov. 29,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Numerators:
Numerator for both basic and diluted EPS,
net income $ 38,913 30,446 $ 72,918 $ 58,253
=========== =========== =========== ===========
Denominators:
Denominator for basic EPS, weighted-
average common shares outstanding 85,421,269 90,723,276 85,949,817 91,386,152
Potentially dilutive shares resulting from 1,117,093 1,774,402 1,273,237 1,820,858
stock option plans ----------- ----------- ----------- -----------
Denominator for diluted EPS 86,538,362 92,497,678 87,223,054 93,207,010
=========== =========== =========== ===========
</TABLE>
The following exercisable stock options were not included in the computation of
year-to-date diluted EPS because the option prices were greater than average
market prices for the periods presented.
<TABLE>
<CAPTION>
Six Months Ended
----------------
Nov. 28, Nov. 29,
Exercise Price 1998 1997
---- ----
<C> <C> <C>
$28.41 13,000 13,000
$29.75 1,061,249
$31.00 7,950
$32.50 131,258
--------- ----------
1,213,457 13,000
========= ==========
</TABLE>
SUPPLEMENTAL CASH FLOW INFORMATION
Cash and cash equivalents include all highly liquid debt instruments purchased
as part of the company's cash management function. Due to the short maturities
of these items, the carrying amount approximates fair value.
-7-
<PAGE> 8
Cash payments for income taxes and interest (in thousands) were as follows:
<TABLE>
<CAPTION>
Six Months Ended
----------------
Nov. 28, Nov. 29,
1998 1997
--------- ------------
<S> <C> <C>
Interest paid $ 4,169 $ 4,425
Income taxes paid $31,499 $31,116
</TABLE>
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. 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 progress. Management has been notified that the GSA has referred
the audit of the 1988 contract to the Justice Department for consideration of a
potential civil False Claims Act case. Management does not expect resolution of
the audits to have a material adverse effect on the company's consolidated
financial statements. Management does not have information which would indicate
a substantive basis for a civil False Claims Act under the 1988 contract.
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 affect the
company's consolidated financial statements.
REPORT OF MANAGEMENT
In the opinion of the company, 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 28, 1998, and the results of its operations and cash
flows for the six months then ended. Interim results are not necessarily
indicative of results for a full year.
-8-
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the company's financial condition and earnings
during the periods included in the accompanying condensed consolidated financial
statements.
A. Financial Summary
A summary of the period-to-period changes is shown below. All amounts
are increases unless otherwise noted. Dollars are shown in thousands.
<TABLE>
<CAPTION>
Three Months Six Months
------------ ----------
$ % $ %
--- --- --- ---
<S> <C> <C> <C> <C>
NET SALES 49,732 12.0 95,690 11.7
COST OF GOODS SOLD 25,263 9.6 48,010 9.3
OPERATING EXPENSES 13,039 12.7 26,225 12.8
INTEREST EXPENSE 547 29.7 634 15.7
OTHER INCOME NET* (5,284) N/A (6,044) N/A
INCOME BEFORE TAXES ON INCOME 16,167 33.2 26,865 28.7
PROVISION FOR TAXES ON INCOME 7,700 42.2 12,200 34.4
NET INCOME 8,467 27.8 14,665 25.2
</TABLE>
*Represents an increase in other income. The increase in other income
net for the second quarter and six months is due to gains associated
with the disposal of our Grandville, Michigan, facility and the majority
of our Roswell, Georgia, facility.
-9-
<PAGE> 10
B. Results of Operations
Second Quarter FY 1999 versus Second Quarter FY 1998
Net Sales increased $49.7 million, or 12.0 percent, to $464.8 million
for the three months ended November 28, 1998. Our second quarter sales
were approximately 2-3 percent above our estimates which were in the
range of $450-455 million. For the first six months of fiscal 1999,
sales were $912.3 million compared to sales of $816.6 million in the
first six months of last year. This represents an increase of 11.7
percent. From a product segment viewpoint, once again our largest
percentage growth for the quarter was in the seating category. The most
significant growth came from our Aeron and Ambi chairs.
Our domestic sales increased 13.4 percent for the first six months.
Excluding the impact of acquisitions, domestic sales grew 12.3 percent
during the second quarter. No new acquisitions were completed this
quarter.
New orders for the second quarter increased 2.2 percent to $475.2
million. Our second quarter orders were 7.0 percent higher than our
first quarter orders. For the first six months of fiscal 1999, new
orders were $918.9 million compared with new orders of $872.4 million in
the first six months of last year. The backlog of unfilled orders at
November 28, 1998 increased 4.6 percent to $235.7 million from the
$225.3 million reported at the end of the first quarter.
BIFMA has estimated industry sales increased 6.3 percent during the five
month period ended October 1998. Industry orders, on the other hand,
increased at a slower rate, 3.5 percent. BIFMA is currently estimating
industry sales will increase 7.5 percent for calendar 1998 and 5.0
percent for calendar 1999. Based on BIFMA's order and sales reporting,
we continued to gain market share. In additon, our order and net sales
growth rates for the quarter and six months exceeded the overall
industry growth rates as estimated by BIFMA.
Net sales of international operations and export sales from the United
States in the second quarter ended November 28, 1998, totaled $70.5
million compared with $67.3 million last year. This represents an
increase of 4.8 percent for the quarter. Year to date, net sales have
increased 2.4% compared to the first six months of last year. The entire
increase was generated by our European operations, in particular, the
UK. Results in the UK continue to be very good in terms of top line
growth and profitability. Our continental operations also had improved
operating results. We are still losing money in some operations, but the
actions taken over the past few years, coupled with modest growth, is
enabling us to approach break even.
-10-
<PAGE> 11
We continue to experience some weakness in demand throughout Asia and
Latin America. While these areas are only around 3 percent of our total
sales, they are a significant percentage of our international business.
While we are concerned with the economic outlook in Asia and Latin
America and the impact it has on revenue and profitability, we are very
pleased with the progress we have made in improving the profitability of
our total international business. For the quarter, net income from
international operations was $3.1 million compared with $2.3 million in
the same quarter of last year. This improvement is due to volume growth
and productivity improvements in the UK, as stated previously, and due
to cost reduction efforts implemented in Germany and Italy over the past
few years. Sustaining profitability will continue to be our primary
focus.
Gross margin, as a percent of sales, for the quarter and six months was
37.9 percent and 38.0 percent, respectively. This compares to 36.5
percent and 36.6 percent in the same periods of last year. The
improvements in gross margins are primarily due to a favorable product
mix, improved productivity, and value enhancement engineering projects.
In addition, we have had a slight improvement in per-unit material cost.
The improved productivity is due to our continued implementation of lean
manufacturing techniques throughout our facilities. While we have just
begun this process, we are beginning to see tangible benefits and
results. Our improvement in per-unit material cost is due in part to
material cost reductions obtained by increased efforts by our purchasing
organization. These favorable factors were partially offset by increases
in discounts given to customers. The year-to-date impact of increased
discounting is approximately $3 million or .3 percent of sales. Much of
this occurred in the second quarter of fiscal 1999. The increased
discounting has been in the systems product lines and/or product lines
that are longer in their life cycle. Going forward, we expect gross
margins to be in the range of 37.5 percent to 38.0 percent. We believe
we can continue to improve productivity and implement cost savings
measures; however, these improvements may be partially offset by
potential disruption costs associated with implementing our new ERP
(Enterprise Resource Planning) system and continued price pressures.
At the present time, our ERP Systems project schedule is being revised.
After experiencing the difficulty of getting one plant up and running,
we have elongated
-11-
<PAGE> 12
the schedule. This will enable us to fine tune before going to the next
site and ensure our internal experts are well versed in the system to
support future sites. The next plant is scheduled to go live at the end
of fiscal 1999 and we expect the manufacturing part of the project to be
completed by May 2000. We are still developing the revised plan for the
development and implementation of the order management phase of the
project. We are confident of the long-term benefits expected to be
obtained from this project.
Operating expenses, as a percent of net sales, increased for both the
quarter and six months. For the quarter, operating expenses, as a
percent of net sales were 24.9 percent compared with 24.8 percent in the
prior year. Likewise, the six months stood at 25.3 percent versus 25.1
percent last year. The total percentage increase is unfavorable,
however, we are doing a good job of containing general overheads while
increasing our spending in support of our strategy. During the quarter
and six months, we have made significant investments in three areas.
First, we have been investing in our ERP Systems project. For the
quarter and six months, $2.4 million and $4.7 million was included in
operating expense, respectively. Secondly, we continue to expand our
capabilities on our electronic selling platform. The incremental
investment here was approximately $2.4 million for the quarter and $4.4
million for the six months. Our third area of investment is the
continued development of new and enhanced products for our customers.
Related spending increased $2.4 million for the quarter compared to the
same quarter of last year and $5.0 million year-to-date.
Interest expense of $4.7 million was comparable to the first six months
of fiscal 1998. Total interest-bearing debt was $112.2 million at the
end of the second quarter of fiscal 1999, compared with $130.7 million
at May 30, 1998, and $129.5 million at November 29, 1997.
The effective tax rate for the second quarter was 40.0 percent compared
with 37.5 percent in the same period of last year. We expect the tax
rate to remain in the 38.0 to 40.0 percent range.
Net income increased 25.2 percent to $72.9 million in the first six
months of fiscal 1999, compared to $58.3 million for the same period
last year. The faster growth rate in net income compared with sales
reflects our continued improvement in operating margins.
Included in the results for the quarter are gains from disposing of both
our Grandville, Michigan facility and the majority of our Roswell,
Georgia facility. Net of other captial losses, these gains had the
after-tax effect of increasing net income for the quarter by $3.4
million.
-12-
<PAGE> 13
Year 2000 READINESS DISCLOSURE
This Year 2000 readiness disclosure is the most current information
available and replaces all previous disclosures made by the Company in
its filings on form 10-Q and form 10-K, and in its annual report to
shareholders.
During fiscal year 1998, the company performed an analysis of the work
necessary to assure that its existing information systems and
manufacturing equipment for both domestic and international operations
will be able to address the issues surrounding the advent of the year
2000.
Company's State of Readiness:
Herman Miller has a comprehensive, written plan, which is regularly
updated and monitored by technical personnel and company management, and
reported to senior management and the Board of Directors.
As of December 1998, our domestic locations are all substantially year
2000 compliant. For international locations, the company presently
believes that all remediation and testing will be completed prior to any
year 2000 issues having an adverse material impact on its operations.
The Company is also in the process of verifying year 2000 conversion
plans with its significant vendors and independent dealers. If any
significant vendors or dealers are identified which do not have
appropriate or timely year 2000 conversion plans, the company will
immediately begin to make contingency plans in order to minimize
potential adverse effects on business operations.
Costs to Address the Company's Year 2000 Issues:
To date, the Company has spent approximately $5.0 million on year 2000
renovations. These are renovations to existing systems and are exclusive
of the implementation of our new ERP system. The company does not
separately track the internal costs incurred for the year 2000 project,
and such costs incurred are principally related to payroll costs for
employees involved with the project.
Based on costs incurred to date, the Company does not believe the
expenses related to year 2000 compliance will be material to the results
of its operations, financial position or cash flows.
The Company expects to spend an additional $.5 - $1.0 million to
complete the renovation. The majority of the renovation is expected to
be completed by May 1999.
-13-
<PAGE> 14
Risks of the Company's Year 2000 Issues: The Company expects to have
completed its year 2000 remediation plan prior to any year 2000 issues
having an adverse impact on its operations. However, due to the
uncertain and unprecedented nature of the year 2000 issue, and
especially the uncertainty surrounding the readiness of third party
suppliers and customers, there may be possible business consequences of
the year 2000 dating issue. These possible business consequences
include, but are not limited to, higher than expected costs of
remediation, a temporary inability to manufacture or ship product;
process transactions; communicate with customers, suppliers, subsidiary
locations and employees; or conduct other similar corporate activities
in a normal business environment.
Company's Contingency Plans:
Contingency planning will be initiated at which point the Company
identifies those circumstances that would require development of a
contingency plan. The Company expects to begin contingency planning
activities in early calendar 1999 and expects this planning to continue
throughout 1999.
Safe Harbor Provision
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; future gross margin
expectations; expected CORO investments; future debt-to-capital ratios;
the ERP systems project; future tax rates; the Company's ability to
implement its year 2000 project in accordance with estimated timetables
and costs; and the consequences of potential year 2000 business
interruptions.
-14-
<PAGE> 15
C. Financial Condition, Liquidity, and Capital Resources
Second Quarter FY 1999 versus Second Quarter FY 1998
1. Cash flow from operating activities was $84.7 million versus
$96.6 million in the first six months
of fiscal 1998.
2. Days sales in accounts receivable plus days sales in inventory
decreased to 53.4 days versus 60.3
days on November 29, 1997, and 56.2 days on May 30, 1998.
3. Total interest-bearing debt decreased to $112.2 million compared
to $130.7 million at May 30, 1998. Debt-to-total capital now
stands at 31.4 percent versus 36.1 percent on May 30, 1998. Going
forward, we expect to be in the range of 30 to 35 percent for the
debt-to-total capital ratio.
4. Capital expenditures for the first six months of fiscal 1999 were
$44.8 million versus $23.9 million for the first six months of
fiscal 1998. Much of the increase was related to the
implementation of our enterprise-wide information system,
continued implementation of our electronic selling platform, and
new product development. We also expect to spend $20 million
for the continued development of the Coro network.
5. During the first six months of fiscal 1999, the company
repurchased 2.4 million shares of common stock for $63.5 million.
-15-
<PAGE> 16
Part II
Item 6: Exhibits and Reports on Form 8-K
1. Exhibits
See Exhibit Index.
2. Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
November 28, 1998.
-16-
<PAGE> 17
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 12, 1998 /s/ Michael A. Volkema
-----------------------------------
Michael A. Volkema
(President and
Chief Executive Officer)
January 12, 1998 /s/ Brian C. Walker
-----------------------------------
Brian C. Walker
(Chief Financial Officer)
-17-
<PAGE> 18
Exhibit Index
(27) Financial Data Schedule (Exhibit available upon request)
-18-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-29-1999
<PERIOD-START> MAY-31-1998
<PERIOD-END> NOV-28-1998
<CASH> 97,310
<SECURITIES> 0
<RECEIVABLES> 211,832
<ALLOWANCES> 15,769
<INVENTORY> 44,057
<CURRENT-ASSETS> 385,758
<PP&E> 614,903
<DEPRECIATION> 318,904
<TOTAL-ASSETS> 767,982
<CURRENT-LIABILITIES> 343,485
<BONDS> 0
0
0
<COMMON> 16,988
<OTHER-SE> 228,068
<TOTAL-LIABILITY-AND-EQUITY> 767,982
<SALES> 912,321
<TOTAL-REVENUES> 912,321
<CGS> 565,997
<TOTAL-COSTS> 565,997
<OTHER-EXPENSES> 221,040
<LOSS-PROVISION> 3,039
<INTEREST-EXPENSE> 4,666
<INCOME-PRETAX> 120,618
<INCOME-TAX> 47,700
<INCOME-CONTINUING> 72,918
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72,918
<EPS-PRIMARY> .85
<EPS-DILUTED> .84
</TABLE>