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Herman Miller Revises Second Quarter Expectations and Announces Cost Reduction Actions

Tuesday 11 November 2008

Company Now Expects Second Quarter Sales to be in the Range of $475 million to $495 million; Estimates Q2 EPS of $0.57 to $0.64

Company Targets $60 million in Reduced Fixed Overhead and Operating Expenses, including a reduction in Workforce

Herman Miller, Inc., today announced a series of actions intended to reduce the company\'s annual fixed overhead and operating expenses by approximately $60 million. Related charges are expected to total approximately $10 million, beginning in the third quarter. The actions come in response to a decline in orders during the current quarter and in anticipation of further global economic weakness through calendar 2009. The company noted that orders averaged $34 million per week in September and October, compared to $41 million per week in the first quarter. The company believes these actions will allow it to weather the current economic storm and enable it to sustain investments in key strategic growth areas.

\"Herman Miller is not immune to the current global economic slowdown,\" said Brian Walker, Chief Executive Officer. \"We\'ve experienced a decline in orders over the past few months as the credit market turmoil and declining corporate and consumer demand has accelerated. In response, we are acting early and carefully, as we have done in the past, to structure our costs in line with current and anticipated business conditions. At the same time, we will protect our ability to continue to invest in our future. In all these actions we will remain true to our values as a company and community, treating those impacted with respect and care.\"

The actions include workforce reductions among both salaried and manufacturing staff, including temporary labor, through a combination of enhanced voluntary separation agreements, job eliminations, and manufacturing layoffs. These steps are expected to be implemented through January 2009. While many of the positions impacted are in Michigan, they also include other domestic and international locations.

Commenting on the current quarter\'s outlook, Curt Pullen, Chief Financial Officer, noted, \"With the slower order pacing we\'ve experienced in recent weeks we are revising our current quarter revenue estimate to a range of $475 million to $495 million, with earnings per share estimated to be $0.57 - $0.64. The current quarter\'s guidance is only modestly lower because of the strong backlog we enjoyed coming into the quarter, and the existing strength of our operating model and ongoing cost reduction efforts announced earlier. With these new actions, our already strong balance sheet and ability to generate cash flow, Herman Miller remains a financially strong company.\"

Walker concluded, \"These are difficult times for any business, and particularly for a community like ours at Herman Miller. But one of our strengths is our ability to face challenge directly, and to act with decisive purpose. We are and will remain a resilient and agile company, serving our customers with great products and services and continuing to invest in key areas of opportunity, now and in the future.\"

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