Consolidated Statements Of Cash Flows

(In Millions)                                           June 1, 2002    June 2, 2001    June 3, 2000
Cash Flows from Operating Activities:
     Net Earnings                                             $(56.0)         $140.6          $139.7
     Adjustments to reconcile net earnings
     to net cash provided by operating activities:
       Cumulative effect of a change in accounting
          principle for pensions, net of tax                    --               3.5            --
     Other                                                     110.6            67.7            62.4
                                                               -----            ----            ----
        Net Cash Provided by Operating Activities               54.6           211.8           202.1
                                                                ----           -----           -----
Cash Flows from Investing Activities:
     Notes receivable repayments                               341.3           639.4           486.7
     Notes receivable issued                                  (334.4)         (628.4)         (490.6)
     Short-term investment purchases                           (38.9)         (113.7)          (12.8)
     Short-term investment sales                                42.3           113.0            --
     Property and equipment additions                          (52.4)         (105.0)         (135.7)
     Proceeds from sales of property and equipment                .7              .1              .4
     Net cash paid for acquisitions                             --              --              (5.9)
     Surrender of COLI policies                                 14.0            --              --
     Other, net                                                  1.6            (5.5)           (5.8)
                                                                 ---            -----           -----
        Net Cash Used for Investing Activities                 (25.8)         (100.1)         (163.7)
                                                               ------         -------         -------
Cash Flows from Financing Activities:
     Short-term debt borrowings                                  1.8           499.9           782.3
     Short-term debt repayments                                 (2.4)         (618.9)         (710.8)
     Long-term debt borrowings                                     --          175.0            --
     Long-term debt repayments                                 (23.2)          (25.0)          (17.9)
     Dividends paid                                            (11.0)          (11.1)          (11.5)
     Common stock issued                                        11.9            20.9            15.4
     Common stock repurchased and retired                      (19.3)          (94.2)          (90.1)
                                                               ------          ------          -----
        Net Cash Used for Financing Activities                 (42.2)          (53.4)          (32.6)
                                                               ------          ------          -----
Effect of Exchange Rate Changes on Cash
  and Cash Equivalents                                           (.9)           (3.0)           (2.8)
                                                                 ----           -----           ----
        Net Increase (Decrease) in Cash and
        Cash Equivalents                                       (14.3)           55.3             3.0
Cash and Cash Equivalents, Beginning of Year                   138.3            83.0            80.0
                                                               -----            ----            ----
Cash and Cash Equivalents, End of Year                        $124.0          $138.3           $83.0
                                                              ======          ======           =====

The accompanying notes are an integral part of these statements.

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Notes To Consolidated Financial Statements

Significant Accounting and Reporting Policies
The following is a summary of significant accounting and reporting policies not reflected elsewhere in the accompanying financial statements.

Principles of Consolidation The consolidated financial statements include the accounts of Herman Miller, Inc., and its wholly owned domestic and foreign subsidiaries (the company). All significant intercompany accounts and transactions have been eliminated.

Description of Business The company researches, designs, manufactures and distributes interior furnishings and provides related services that support companies all over the world. The company’s products are sold primarily to or through independent contract office furniture dealers. Accordingly, accounts and notes receivable in the accompanying balance sheets are principally amounts due from the dealers.

Fiscal Year The company’s fiscal year ends on the Saturday closest to May 31. The years ended June 1, 2002, and June 2, 2001, each contained 52 weeks. The year ended June 3, 2000, contained 53 weeks.

Foreign Currency Translation The functional currency for foreign subsidiaries is the local currency. The cumulative effects of translating the balance sheet accounts from the functional currency into the United States dollar at current exchange rates and revenue and expense accounts using average exchange rates for the period are included as a separate component of shareholders’ equity. Gains or losses arising from remeasuring all foreign currency transactions into the appropriate currency are included in determining net earnings.

Cash Equivalents The company primarily utilizes money market and time deposit investments as part of its cash management function. Due to the relative short-term maturities and high liquidity of these securities, they are included in the accompanying consolidated balance sheets as cash equivalents at market value and totaled $97.9 million and $106.8 million as of June 1, 2002, and June 2, 2001, respectively. The company’s cash equivalents are considered “available-for-sale.” As of June 2, 2001, and June 3, 2000, the market value approximated the securities’ cost. All cash and cash equivalents are high-credit quality financial instruments, and the amount of credit exposure to any one financial institution or instrument is limited.

Short-Term Investments The company maintains a portfolio of short-term investments comprised of investment grade fixed-income and equity securities. These investments are held at 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) in the Consolidated Statements of Shareholders’ Equity. Net investment income recognized in the Consolidated Statements of Operations resulting from these investments totaled $.9 million for each of the years ended June 1, 2002, and June 2, 2001.

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The following is a summary of the carrying and market values of the company’s short-term investments as of June 1, 2002:

(In Millions)

                                                                                            Market
                                                                 Cost                       Value
                                                                 ----                       -----
U.S. Federal agency obligations                                $   3.2                     $  4.2
State & Municipal securities                                       5.1                        4.8
Corporate bonds                                                    1.9                        2.1
                                                                   ---                        ---
                                                                  10.2                       11.1
Unrealized gains                                                   0.9                         --
                                                                   ---                       ----
Total                                                            $11.1                     $ 11.1
                                                                 =====                     ======

Maturities of short-term investments as of June 1, 2002, are as follows:

(In Millions)

                                                                                            Market
                                                                 Cost                       Value
                                                                 ----                       -----
Due within one year                                            $   0.5                     $  0.5
Due after one year through five years                              8.5                        9.2
Due after five years                                               1.2                        1.4
                                                                   ---                        ---
Total                                                           $ 10.2                      $11.1
                                                                ======                      =====

Property, Equipment, and Depreciation Property and equipment are stated at cost. The cost is depreciated over the estimated useful lives of the assets, using the straight-line method. Estimated useful lives range from 3 to 10 years for machinery and equipment and do not exceed 40 years for buildings. Leasehold improvements are depreciated over the lesser of the lease term or 10 years.

The company capitalizes certain external and internal costs incurred in connection with the development, testing, and installation of software for internal use. Software for internal use is included in property and equipment and is depreciated over an estimated useful life of 5 years or less.

Notes Receivable The notes receivable are primarily from certain independent contract office furniture dealers. The notes are collateralized by the assets of the dealers and bear interest based on the prevailing prime rate. Interest income relating to these notes was $.8 million, $2.2 million, and $1.9 million in 2002, 2001, and 2000, respectively.

Long-Lived Assets The company assesses the recoverability of its long-lived assets whenever events or circumstances such as current and projected future operating losses or changes in the business climate indicate that the carrying amount may not be recoverable. Assets are grouped and evaluated at the lowest level for which there are independent and identifiable cash flows. The company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the estimated future cash flows (undiscounted and without interest charges) expected to result from the use of the asset. If the carrying amount of the asset exceeds the expected future cash flows, the company measures and records an impairment loss for the excess of the carrying value of the asset over its fair value. The estimation of fair value is made by discounting the expected future cash flows at the rate the company uses to evaluate similar potential investments based on the best information available at that time. If the assets being tested for recoverability were acquired in a purchase business combination, the goodwill that arose in that transaction is included in the asset group’s carrying values on a pro-rata basis using the relative fair values.

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In situations where goodwill and intangible balances remain after applying the impairment measurements to business unit asset groupings under Statement of Financial Accounting Standards (SFAS) No. 121, the company assesses the recoverability of the remaining balances at the enterprise level under the provisions of Accounting Principles Board (APB) Opinion 17. Applying these provisions, when the estimated undiscounted future operating earnings (before interest and amortization) for individual business units is not sufficient to recover the remaining carrying value over the remaining amortization period, the company recognizes an impairment loss for the excess.

Refer to “Special Charges” footnote for discussion on impairments recognized in fiscal 2002 in connection with the company’s restructuring activities. No significant impairments were provided for in 2001 or 2000.

Intangible assets included in other assets consist mainly of goodwill, patents, and other acquired intangibles, and are carried at cost, less applicable amortization of $28.6 million and $24.9 million in 2002 and 2001, respectively. These assets are amortized using the straight-line method over periods of 5 to 20 years.

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 is effective for the company’s fiscal year beginning June 2, 2002. Upon adoption of this standard, pre-existing goodwill is no longer subject to amortization; however, companies will be required to perform an annual fair-value-based analysis to determine whether the value of goodwill has been impaired. The company’s pre-tax goodwill amortization expense in fiscal 2002 totaled $3.1 million. All of the company’s other intangibles will continue to be amortized. The company does not believe adoption of SFAS 142 will result in the impairment of its goodwill assets which totaled $39.1 million at June 1, 2002.

Unfunded Checks As a result of maintaining a consolidated cash management system, the company utilizes controlled disbursement bank accounts. These accounts are funded as checks are presented for payment, not when checks are issued. The resulting book overdraft position is included in current liabilities as unfunded checks.

Self-Insurance The company is partially self-insured for general liability, workers’ compensation, and certain employee health benefits. The general and workers’ compensation liabilities are managed through a wholly owned insurance captive; the related liabilities are included in the accompanying consolidated financial statements. The company’s policy is to accrue amounts equal to the actuarially determined liabilities. The actuarial valuations are based on historical information along with certain assumptions about future events. Changes in assumptions for such matters as legal actions, medical costs, and changes in actual experience could cause these estimates to change in the near term.

Research, Development, Advertising, and Other Related Costs Research, development, advertising materials, pre-production and start-up costs are expensed as incurred. Research and development costs consist of expenditures incurred during the course of planned search and investigation aimed at discovery of new knowledge useful in developing new products or processes, or significantly enhancing existing products or production processes, and the implementation of such through design, testing of product alternatives, or construction of prototypes. Royalty payments made to designers of the company’s products as the products are sold are not included in research and development costs, as they are a variable cost based on product sales. Research and development costs, included in design and research expense in the accompanying consolidated statements of operations, were $33.9 million, $37.2 million, and $35.1 million in 2002, 2001, and 2000, respectively.

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Income Taxes Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse.

Earnings per Share Basic earnings per share (EPS) excludes the dilutive effect of common shares that could potentially be issued, due to the exercise of stock options, and is computed by dividing net earnings by the weighted-average number of common shares outstanding for the period. As the company reported a net loss for the year ended June 1, 2002, shares resulting from stock option plans would be anti-dilutive to EPS and, consequently, have not been included in determining diluted EPS. Diluted EPS for fiscal 2001 and 2000 was computed by dividing net earnings by the weighted-average number of shares outstanding, plus all dilutive shares that could potentially be issued.

Revenue Recognition Revenues are recorded when product is shipped, invoiced, and title passes to the customer, and when performance of services is complete.

Comprehensive Income/(Loss) The company’s comprehensive income/(loss) consists of net earnings, foreign currency translation adjustments, minimum pension liability, and unrealized holding gains or losses on available-for-sale investments. Refer to Consolidated Statements of Shareholders’ Equity for details of comprehensive income/(loss) for fiscal 2002, 2001, and 2000.

Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

New Accounting Standards In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”). The Statement establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability, measured at its fair value. The Statement requires that changes in the derivative’s fair value be recognized currently in earnings unless specific hedge accounting criteria are met. SFAS 133, as amended by SFAS Nos. 137 and 138, was effective for the company’s fiscal year 2002. The company adopted this statement for its fiscal year beginning June 3, 2001. Adoption of this Statement did not have a material impact on the company’s financial statements.

In September 2000, the Emerging Issues Task Force released its final consensus on Issue No. 00-10, “Accounting for Shipping and Handling Fees and Costs” (“EITF 00-10”). This consensus provides guidance on the classification of revenues and expenses related to shipping and handling activities. The company adopted EITF 00-10 effective in the fourth quarter 2001 and has restated prior periods to reflect the reclassification to cost of sales of certain shipping and handling related costs which were previously reported as components of net sales and operating expenses.

In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). This pronouncement supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of”, and the accounting and reporting provisions of Accounting Principles Board Opinion No. 30, “Reporting the Results of Operations”, for the disposal of a segment of a business. SFAS 144 is effective for the company in fiscal 2003. The company will adopt SFAS 144 as of the beginning of fiscal 2003 and does not expect that the adoption of this statement will have a material impact on the company’s consolidated financial statements.

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Reclassifications Certain prior year information has been reclassified to conform to the current year presentation.

Acquisitions and Divestitures
The company has made acquisitions during the past three years, all of which were recorded using the purchase method of accounting. Accordingly, the purchase price of these acquisitions has been allocated to the assets acquired and liabilities assumed based on the estimated fair values at the date of the acquisition. The cost of the acquisitions in excess of net identifiable assets acquired has been recorded as goodwill.

Effective July 30, 1999, the company acquired Geiger Group, Inc. (“Geiger”), a manufacturer of high-quality wood furnishings for the contract furniture industry, including casegoods, freestanding furniture, and seating. The acquisition was completed for $5.0 million in cash and the issuance of 1,312,187 shares of Herman Miller, Inc., stock to Geiger’s shareholders. The excess of purchase price over the estimated fair market value of net assets acquired of approximately $24.8 million was recorded as goodwill. The company was subject to a purchase price adjustment provision based on Geiger’s operating results over the three-year period ending July 18, 2002. Based on these results, no purchase price adjustment was required. The operating results of Geiger have been included in the consolidated financial statements of the company since the date of acquisition.

During the past three years, the company purchased and divested various privately owned North American dealers. The results of the transactions were not material to the company’s consolidated results of operations.

Special Charges
During the first quarter ended September 1, 2001, 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.

On September 19, 2001, the company’s Board of Directors approved a comprehensive operational and cost structure realignment & restructuring plan (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:

• Additional non-voluntary termination benefits for targeted work force reductions in both the U.S. and international operations.
• Consolidation of the Rocklin, California SCR operation into the West Michigan Greenhouse facility and sale of the Rocklin facility.
• Consolidation of three leased facilities in West Michigan into other existing West Michigan facilities.
• Outsourcing of certain dedicated production processes in connection with the company’s paint operations.
• Outsourcing of the over-the-road transportation fleet.

In connection with these activities, 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.

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On March 15, 2002, the company’s Board of Directors approved additional restructuring actions intended to further the goals of the Plan. These changes included the following key actions:

• Consolidation of the Holland, Michigan Chair Plant into the West Michigan Greenhouse facility. This action included preparing the Chair Plant for sale.
• Closure and elimination of the Herman Miller RED initiative.
• Phase-out of the SQA business model.
• Consolidation of two manufacturing facilities into one within the Geiger operation in Georgia.

The company recorded pretax special charges of $23.4 million during the fourth quarter ended June 1, 2002, in connection with these additional actions.

Special charges for the year ended June 1, 2002, include the following:

(In Millions)
Severance & Outplacement                                          $30.5
Asset Impairments                                                  28.0
Early Retirement Enhancement                                        8.1
Lease & Supplier Contract Terminations                              6.1
Facility Exit Costs & Other                                         8.9
                                                                    ---
Total                                                             $81.6
                                                                  =====

Including actions taken since the beginning of fiscal 2002, approximately 1,500 employees, across a wide range of job classifications, have been or will be terminated as a result of the restructuring plan. This includes approximately 225 employees from the company’s international operations.

Charges resulting from asset impairments in connection with the Plan have been accounted for in accordance with Statement of Financial Accounting Standards No. 121, “Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of” (“SFAS 121”). Asset impairments consist 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 have been written down to the lower of their carrying amounts or estimated fair values, less the cost to dispose. Fair value estimates have been determined by the company’s management, with the assistance of independent appraisers, and are based on estimated proceeds from sale and other relevant factors. These asset impairments have arisen only as a consequence of the company making the decision to exit these activities during the year.

Certain assets for which impairment charges have been recognized as a result of the Plan have been written-down to their estimated fair values in anticipation of a future sale. These assets, and their associated adjusted carrying values at June 1, 2002, include the Rocklin, California operation ($16.2 million), the Holland, Michigan Chair Plant ($5.2 million), and the West Michigan Powder Coat Technology (PCT) painting facility ($2.6 million). Since it is the company’s belief that it could take in excess of one year to sell the Rocklin and Chair Plant assets, they are classified as long-term on the balance sheet as of June 1, 2002, under the caption “Net Property and Equipment.

Special charges also include certain estimated qualifying exit costs as 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.

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The following is a summary of restructuring activity during 2002:

(In Millions)
                                 Severance &          Lease & Supplier        Facility
                                 Outplacement         Contract                Exit Costs
                                 Costs                Terminations            and Other        Total
                                 ----------------     ------------            ---------        -----

Accrual Balance, June 2, 2001      $  --                 $ --                    $ --           $  --
Special Charges                     30.5                  6.1                     8.9            45.5
Cash Payments                      (24.5)                (2.6)                   (4.2)          (31.3)
                                  -------                -----                   -----          -----
Accrual Balance, June 1, 2002      $ 6.0                 $3.5                    $4.7           $14.2
                                   =====                 ====                    =====          =====

Charges associated with the early retirement enhancement and asset impairment actions are not considered in the restructuring activity summary as the related amounts have been recorded as accrued pension liability and reductions to property and equipment, respectively.

The charges also include costs associated with the movement of inventory and equipment, as well as employee relocation and training related to the consolidation of production processes. These costs are recognized as incurred, and are not included in the ending restructuring accrual at June 1, 2002.

In addition, during 2002, expenses totaling approximately $2.5 million for the write-off of inventory directly connected to the restructuring actions were incurred. This charge has been classified as a component of cost of sales in the consolidated statements of operations.

Change in Accounting Estimate
Fiscal 2002 operating expenses included $15.6 million of accelerated depreciation related to certain sales technology assets. This charge reduced earnings per share by $.13 in 2002. At the time the company made the decision to replace these assets, they had an estimated remaining useful life of approximately eighteen months. These assets were completely depreciated by June 1, 2002 at which time the replacement assets were placed in service. This change in service life constitutes a change in accounting estimate under Accounting Principles Board Opinion No. 20, “Accounting Changes”.

Inventories

(In Millions)                                                           2002                 2001
                                                                        ----                 ----
Finished products                                                      $16.6                $22.5
Work in process                                                          9.1                 11.1
Raw materials                                                           13.9                 22.3
                                                                        ----                 ----
                                                                       $39.6                $55.9
                                                                       =====                =====

Inventories are valued at the lower of cost or market and include material, labor, and overhead. The inventories of certain subsidiaries are valued using the last-in, first-out (LIFO) method. The inventories of all other subsidiaries are valued using the first-in, first-out method. Inventories valued using the LIFO method amounted to $12.3 million and $16.7 million at June 1, 2002, and June 2, 2001, respectively.

If all inventories had been valued using the first-in, first-out method, inventories would have been $9.8 million and $12.5 million higher than reported at June 1, 2002, and June 2, 2001, respectively.

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Prepaid Expenses and Other

(In Millions)                                                                      2002            2001
                                                                                   ----            ----
Current deferred income taxes                                                     $29.0           $21.5
Other                                                                              38.0            33.0
                                                                                   ----            ----
                                                                                  $67.0           $54.5
                                                                                  =====           =====
Accrued Liabilities
(In Millions)                                                                      2002            2001
                                                                                   ----            ----
Compensation and employee benefits                                                $37.5           $51.7
Restructuring                                                                      14.2              --
Income taxes                                                                        1.9            33.2
Unearned revenue                                                                   13.1            19.1
Warranty reserves                                                                  22.5            23.3
Other                                                                              32.0            39.1
                                                                                   ----            ----
                                                                                 $121.2          $166.4
                                                                                 ======          ======
Other Liabilities
(In Millions)                                                                      2002            2001
                                                                                   ----            ----
Pension benefits                                                                 $ 44.5          $ 47.9
Postretirement benefits                                                             8.8             9.3
Other                                                                              38.9            45.3
                                                                                   ----            ----
                                                                                 $ 92.2          $102.5
                                                                                 ======          ======
Notes Payable
(In Millions)                                                                      2002            2001
                                                                                   ----            ----
U.S. dollar currencies                                                           $   --          $   --
Non-U.S. dollar currencies                                                          2.7             3.1
                                                                                    ---             ---
                                                                                 $  2.7          $  3.1
                                                                                 ======          ======

The following information relates to notes payable:

                                                                               Domestic         Foreign
                                                                               --------         -------
Weighted-average interest rate at June 1, 2002                                      N/A            5.4%
Weighted-average interest rate at June 2, 2001                                      N/A            5.9%

The company has available an unsecured revolving credit facility that provides for $200 million. The facility permits borrowings in multiple currencies and matures on April 16, 2005. Outstanding borrowings bear interest, at the option of the company, at rates based on the prime rate, certificates of deposit, LIBOR, or negotiated rates. Interest is payable periodically throughout the period a borrowing is outstanding. During 2002 and 2001, the company borrowed at the LIBOR contractual rate or other negotiated rates.

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Long-Term Debt

(In Millions)                                                                      2002            2001
                                                                                   ----            ----
Series A senior notes, 6.37%, due March 5, 2006                                   $40.0           $50.0
Series C senior notes, 6.52%, due March 5, 2008                                    15.0            15.0
Debt securities, 7.13%, due March 15, 2011                                        175.0           175.0
Other                                                                               2.4            16.2
                                                                                    ---            ----
                                                                                  232.4           256.2
Less current portion                                                               10.6            23.3
                                                                                   ----            ----
                                                                                 $221.8          $232.9
                                                                                 ======          ======

The company has a private placement of $100.0 million of senior notes with seven insurance companies of which $55.0 million was outstanding at June 1, 2002. The Series C notes have interest-only payments until March 5, 2004.

Provisions of the senior notes and the unsecured senior revolving credit loan restrict, without prior consent, the company’s borrowings, long-term leases, and sale of certain assets. In addition, the company has agreed to maintain certain financial performance ratios, which are based on earnings before taxes, interest expense, depreciation and amortization. During the fourth quarter of fiscal 2002, the company negotiated a change to these provisions which allows for the exclusion of special charges associated with the company’s fiscal 2002 restructuring actions. This exclusion results in a revised earnings measure upon which the financial performance ratios are calculated. At June 1, 2002, the company was in compliance with all of these restrictions and performance ratios.

On May 5, 2000, the company filed a shelf registration on a form S-3 registration statement with the Securities and Exchange Commission (SEC), under file number 333-36442, for the sale of up to $300 million in debt securities. The form S-3 registration statement was declared effective on June 2, 2000. On March 6, 2001, debt securities totaling $175 million, of the $300 million registered, were sold. These notes mature on March 15, 2011, and bear an annual interest rate of 7.125 percent, with interest payments due semi-annually. The net proceeds from the sale of these securities were used for the repayment of outstanding domestic borrowings under the company’s revolving credit facility and for general corporate purposes.

Annual maturities of long-term debt for the five years subsequent to June 1, 2002 (in millions), are as follows: 2003–$10.6; 2004–$13.6; 2005–$13.6; 2006–$13.6; 2007–$3.0; thereafter–$178.0.

Operating Leases
The company leases real property and equipment under agreements that expire on various dates. Certain leases contain renewal provisions and generally require the company to pay utilities, insurance, taxes, and other operating expenses.

Future minimum rental payments required under operating leases that have initial or remaining noncancellable lease terms in excess of one year as of June 1, 2002, are as follows (in millions): 2003–$19.9; 2004–$15.6; 2005–$12.1; 2006–$7.7; 2007–$4.5; thereafter–$3.5.

Total rental expense charged to operations was $36.2 million, $32.4 million, and $28.3 million in 2002, 2001, and 2000, respectively. Substantially all such rental expense represented the minimum rental payments under operating leases.

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Employee Benefit Plans
The company maintains plans which provide retirement benefits for substantially all employees.

Pension Plans The principal domestic plan is a defined-benefit plan with benefits determined by a cash-balance calculation. Benefits under this plan are based upon an employee’s years of service and earnings.

Post-Retirement Medical and Life Insurance The company provides healthcare and life insurance benefits for employees who retired from service on or before a qualifying date in 1998. Benefits under this plan are based on the employee’s years of service and age at the date of retirement.

In addition to the domestic plan and the retiree healthcare and life insurance plan, one of the company’s wholly owned foreign subsidiaries has a defined-benefit pension plan which is based upon an average final pay benefit calculation. The plan has not been amended and is included in the following information.

During fiscal year 2002, the company offered qualifying employees an early retirement opportunity in connection with its restructuring plan. As a result of this offer, the company recognized an increase in benefit obligation of approximately $6.5 million. The company also recognized a reduction to the benefit obligation of $.9 million as a result of the curtailment of future service years for employees involved in the workforce reduction actions arising from the restructuring plan. Refer to “Special Charges” footnote for further discussion on the fiscal 2002 restructuring plan.

As a result of the effects of early retirements and workforce reductions, as well as plan asset performance, the company was required to recognize an additional pretax minimum pension liability of $25.0 million in the 2002 Consolidated Balance Sheet. This has also been recorded, net of tax, as a component of accumulated other comprehensive loss in the Consolidated Statements of Shareholders’ Equity.

During the fourth quarter of 2001, the company changed its method of determining the market-related value of its plan assets from the fair-value method to a calculated-value method, which recognizes the changes in the fair value of the plan assets on a systematic basis over a five-year period. This new method provides for better matching of the value of plan assets and liabilities under the cash balance retirement plan. Additionally, this method is consistent with that being used by many other manufacturing companies. The impact of this change is reported as a change in accounting principle for pensions, with a cumulative, pre-tax charge of $5.4 million, recorded retroactively, to the beginning of fiscal year 2001.

                                                         Pension Benefits       Post-retirement Benefits
                                                       --------------------     ------------------------
(In Millions)                                             2002           2001        2002          2001
Change in benefit obligations:
Benefit obligations at beginning of year                $240.2         $231.0        $11.6        $10.4
Service cost                                              12.5           12.4           --           --
Interest cost                                             17.0           16.6           .9           .8
Amendments                                                 0.5           --             --           --
Early Retirement Window                                    6.5           --             --           --
Curtailments                                              (0.9)          --             --           --
Actuarial (gain) loss                                      5.5           (8.1)         1.6          1.5
Benefits paid                                            (39.5)         (11.7)        (1.3)        (1.1)
                                                         ------         ------        -----        -----
Benefit obligations at end of year                       241.8          240.2         12.8         11.6
                                                         -----          -----         ----         ----

Change in plan assets:
Fair value of plan assets at beginning of year           219.6          288.5           --           --
Actual return on plan assets                             (29.3)         (59.5)          --           --
Employer contribution                                     37.4            2.3          1.3          1.1
Benefits paid                                            (39.5)         (11.7)        (1.3)        (1.1)
                                                         ------         ------        -----        -----
Fair value of plan assets at end of year                 188.2          219.6           --           --
                                                         -----          -----         -----        -----

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Funded status                                            (53.6)         (20.6)       (12.8)       (11.6)
Unrecognized transition amount                              .1            (.4)          --           --
Change in unrecognized net loss from revaluation
of market-related value of assets                           --            5.4           --           --
Unrecognized net actuarial loss                           60.5            5.5          3.4          1.9
Unrecognized prior service cost                          (26.5)         (35.2)          .6           .6
                                                         ------         ------          --           --
Accrued benefit cost                                    $(19.5)        $(45.3)       $(8.8)       $(9.1)
                                                        =======        =======       ======       ======

Amounts recognized in the Balance Sheet at
the end of the year:

Prepaid benefit cost                                       2.9            2.4           --           --
Accrued benefit liability                                (47.4)         (47.7)        (8.8)        (9.1)
Minimum pension liability                                 25.0            --            --           --
                                                          ----         ------        -----        -----
Accrued benefit cost                                    $(19.5)        $(45.3)       $(8.8)       $(9.1)
                                                        =======        =======       ======       ======

Weighted average assumptions:
Discount rate                                            7.25%          7.25%        7.25%        7.25%
Expected return on plan assets                           9.50%          9.50%         N/A          N/A
Rate of compensation increase                            4.50%          4.50%         N/A          N/A

For measurement purposes related to post-retirement benefit calculations, a 9.55 percent annual rate of increase in the per capita cost of covered healthcare benefits was assumed for 2002. The rate was assumed to decrease gradually to 5.5 percent by 2010 and remain at that level thereafter.

                                               Pension Benefits              Post Retirement Benefits
                                          -------------------------         --------------------------
(In Millions)                              2002       2001         2000       2002       2001       2000
                                           ----       ----         ----       ----       ----       ----
Components of net periodic
benefit cost:
Service cost                              $12.5       $12.4        $10.8      $ --      $ --        $ --
Interest cost                              17.0        16.6         15.8        .9        .8          .7
Expected return on plan assets            (22.5)      (22.9)       (23.1)       --        --          --
Net amortization                           (3.6)       (4.4)        (3.0)       .2        .1          .1
                                           -----       -----        ----        --        --      ------
Net periodic benefit cost                  $3.4        $1.7        $  .5      $1.1       $.9       $  .8
                                           ====        ====        =====      ====       ===       =====

A one-percentage-point increase in assumed healthcare cost trend rates would have increased the accumulated post-retirement benefit obligation at June 1, 2002 by $.8 million. A one-percentage-point decrease would have decreased the accumulated post-retirement benefit obligation at June 1, 2002 by $.7 million.

Plan assets consist primarily of listed common stocks, mutual funds, and corporate obligations. Plan assets at June 1, 2002 and June 2, 2001 included 644,766 and 1,043,619 shares of Herman Miller, Inc., common stock, respectively.

Profit Sharing and 401(k) Plan Domestically, Herman Miller, Inc. has a trusteed profit sharing plan that includes substantially all employees. These employees are eligible to begin participating at the beginning of the quarter following their date of hire. The plan provides for discretionary contributions (payable in the company’s common stock) of not more than 6.0 percent of employees’ wages based on the company’s EVA performance. The company did not recognize any expense in 2002 related to the profit sharing plan. The cost of the plan charged against operations was $5.4 million and $5.6 million in 2001 and 2000, respectively.

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The company matches fifty percent of employee contributions to their 401(k) accounts up to 6.0 percent of their pay. The company’s contributions were approximately $6.6 million, $7.6 million, and $6.4 million in fiscal 2002, 2001, and 2000, respectively.

Common Stock and Per Share Information
The following table reconciles the numerators and denominators used in the calculations of basic and diluted EPS for each of the last three years:

(In Millions, Except Shares)                                      2002             2001             2000
Numerators:
    Numerators for both basic and diluted EPS, net
    earnings                                                   $(56.0)           $140.6           $139.7
                                                               =======           ======           ======
Denominators:
    Denominators for basic EPS,
    Weighted-average common shares outstanding              75,873,160       76,663,746       79,526,026

Potentially dilutive shares resulting from stock
    option plans1                                                   --          983,565        1,005,257
                                                             ---------          -------        ---------

Denominator for diluted EPS                                 75,873,160       77,647,311       80,531,283
                                                            ==========       ==========       ==========

¹As the company reported a net loss for the year ended June 1, 2002, shares resulting from stock option plans would be anti-dilutive to EPS, and consequently, have not been included in determining diluted EPS. The number of shares excluded totaled 567,234.

Certain exercisable stock options were not included in the computations of diluted EPS in fiscal years 2001 and 2000 because the option prices were greater than average quarterly market prices for the periods. The number of stock options outstanding at the end of fiscal 2001 and 2000 which were not included in the calculation of diluted EPS and the ranges of exercise prices were: 2,406,140 at $25.81--$32.50 in 2001; and 1,368,832 at $26.75--$32.50 in 2000.

Stock Plans
Under the terms of the company’s 1995 Employee Stock Purchase Plan, 4 million shares of authorized common stock were reserved for purchase by plan participants at 85.0 percent of the market price. At June 1, 2002, 2,736,972 shares remained available for purchase through the plan, and there were approximately 7,300 employees eligible to participate in the plan, of which 2,048, or approximately 28 percent, were participants. During 2002, 2001, and 2000, employees purchased 201,478 shares for the weighted-average fair value of $19.39; 204,223 shares for the weighted-average fair value of $22.84; and 214,307 shares for the weighted-average fair value of $20.51, respectively.

The company has stock option plans under which options are granted to employees and directors at a price not less than the market price of the company’s common stock on the date of grant. All options become exercisable between one year and four years from date of grant and expire five to ten years from date of grant. At June 1, 2002, there were 152 employees and 10 nonemployee officers and directors eligible. At June 1, 2002, there were 1,210,067 shares available for future options.

The company’s Long-Term Incentive Plan, along with the Nonemployee Officer and Director Stock Option Plan, authorizes reload options. Reload options provide for the purchase of shares equal to the number of shares delivered upon exercise of the original options plus the number of shares delivered to satisfy the minimum tax liability incurred in the exercise. The reload options retain the expiration date of the original options; however, the exercise price must equal the fair-market value on the date the reload options are granted. During fiscal 2002, 2001, and 2000, 51,340, 357,517, and 260,018 reload options, respectively, were automatically granted.

-39-

A summary of shares subject to options follows:

                                                    2002                          2001                          2000
                                               Weighted-                     Weighted-                     Weighted-
                                                 Average                       Average                       Average
                                  2002          Exercise           2001       Exercise           2000       Exercise
                                Shares            Prices         Shares         Prices         Shares         Prices
Outstanding at
beginning of year:            6,265,020           $22.78      5,238,504         $20.89      4,899,767         $19.67
  Granted                     2,964,416           $24.14      1,910,206         $26.17      1,344,900         $23.98
  Exercised                   (544,444)           $14.34       (782,357)        $17.95       (685,983)        $16.11
  Terminated                  (665,455)           $26.06       (101,333)        $26.10       (320,180)        $25.47
                         --------------           ------       ---------        ------       ---------        ------
Outstanding at
end of year:                  8,019,537           $23.55      6,265,020         $22.78      5,238,504         $20.89
                         --------------           ------      ---------         ------      ---------         ------
Exercisable at
end of year:                  4,212,217           $23.07      3,685,579         $21.11      3,279,665         $19.35
                         ==============           ======      =========         ======      =========         ======
Weighted-average
fair-market value
of options
granted                                            $7.29                         $9.96                         $8.86

A summary of stock options outstanding at June 1, 2002, follows:

                                                                                     Exercisable Stock
                                      Outstanding Stock Options                           Options
                                           Weighted-
                                            Average          Weighted-                           Weighted-
  Range of Exercise         Shares         Remaining          Average             Shares          Average
        Price                           Contractual Life   Exercise Price                      Exercise Price
$4.66-$23.80                3,984,584        5.13 years       $20.37              1,667,384       $16.00
$24.20-$27.36               2,957,866        8.20 years       $25.63              1,471,946       $26.33
$27.50-$32.50               1,077,087        5.57 years       $29.59              1,072,887       $29.60
                            ---------        ----------       ------              ---------       ------
Total                       8,019,537        6.32 years       $23.55              4,212,217       $23.07
                            =========                         ======              =========       ======

The company accounts for its employee stock purchase plan and its stock option plans under APB Opinion 25; therefore, no compensation costs are recognized when employees purchase stock or when stock options are granted or exercised. If compensation costs had been computed under SFAS No. 123, “Accounting for Stock-Based Compensation,” the company’s net earnings and earnings per share would have been reduced by approximately $6.7 million, or $.09 per share in 2002, $10.4 million, or $.13 per share in 2001, and $6.8 million, or $.08 per share in 2000.

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For purposes of computing compensation costs of stock options granted, the fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

                                                         2002                2001               2000
Risk-free interest rates                              3.63%--4.84%        4.46%--6.26%       5.50%-6.71%
Expected term of options                               3-4 years           3 years            3-4 years
Expected volatility                                     45%--46%            49%--50%           46%-50%
Dividend yield                                            .5%                 .5%                .5%

Black-Scholes is a widely accepted stock option pricing model; however, the ultimate value of stock options granted will be determined by the actual lives of options granted and future price levels of the company’s common stock.

Key Executive and Director Stock Programs
Restricted Stock Grants The company grants restricted common stock to certain key employees. Shares are awarded in the name of the employee, who has all rights of a shareholder, subject to certain restrictions on transferability and a risk of forfeiture. The forfeiture provisions on the awards expire annually, over a period not to exceed five years. During fiscal 2002, 195,898 shares were granted under the company’s long-term incentive plan, 1,935 shares were forfeited, and the forfeiture provisions expired on 56,462 shares. As of June 1, 2002, 208,680 shares remained subject to forfeiture provisions and restrictions on transferability. During fiscal 2001, 49,841 shares were granted, no shares were forfeited, and the forfeiture provisions expired on 19,306 shares. During fiscal 2000, 10,513 shares were granted, 1,980 shares were forfeited, and the forfeiture provisions expired on 63,894 shares.

The remaining shares subject to forfeiture provisions have been recorded as unearned stock grant compensation and are included as a separate component of shareholders’ equity under the caption Key Executive Stock Programs. The unearned compensation is being charged to selling, general, and administrative expense over the five-year vesting period and was $1.4 million, $1.1 million, and $.7 million in 2002, 2001, and 2000, respectively.

Key Executive Deferred Compensation Plan The company established the Herman Miller, Inc., Key Executive Deferred Compensation Plan, which allows certain executives to defer receipt of all or a portion of their EVA cash incentive. The company may make a matching contribution of 30 percent of the executive’s contribution up to 50 percent of the deferred EVA cash incentive. The company’s matching contribution vests at the rate of 33 1/3 percent annually. In accordance with the terms of the plan, the executive deferral and company matching contribution have been placed in a “Rabbi” trust, which invests solely in the company’s common stock. These Rabbi trust arrangements offer the executive a degree of assurance for ultimate payment of benefits without causing constructive receipt for income tax purposes. Distributions to the executive from the Rabbi trust can only be made in the form of the company’s common stock. The assets in the Rabbi trust remain subject to the claims of creditors of the company and are not the property of the executive and are, therefore, included as a separate component of shareholders’ equity under the caption Key Executive Stock Programs.

Key Executive Stock Purchase Assistance Plan The company previously adopted a key executive stock purchase assistance plan that was used to assist them in attaining their stock ownership requirements. Under the terms of this plan, loans were made to key executives for the purpose of purchasing company stock. All loans are full recourse loans. Each loan is evidenced by a promissory note from the participating executive and is secured by all or a portion of the shares purchased with the loan proceeds. The sale or transfer of shares is restricted for five years after the loan is fully paid. The plan provides for the key executives to earn repayment of a portion of the notes, including interest, based on meeting annual performance objectives as set forth by the Executive Compensation Committee of the Board of Directors. During the course of the loans, the plan prohibits participants from earning repayment of more than eighty percent of the original principal amount, plus accrued interest, prior to maturity of the loans.

-41-

The notes bear interest at 7.0 percent per annum. Interest is payable annually and principal is due on various dates through September 1, 2008. As of June 1, 2002, the notes outstanding relating to the exercise of options were $.03 million. Notes outstanding related to open-market purchases were $1.45 million and are recorded in other assets. Compensation expense related to earned repayment was not material in 2002. In 2001 and 2000, this expense totaled $.2 million and $.4 million, respectively.

In fiscal 2002 the annual performance objectives related to the earned repayment provision of these loans were not attained resulting in payment obligations for current plan participants. The Executive Compensation Committee of the Board of Directors agreed to allow the participants to defer the fiscal 2002 payments to a future date without extending the maturities on the loans. In total, principal payments of $.2 million and interest payments of $.1 million were deferred for four executives. No new loans were made under the plan in the past two fiscal years.

Director Fees During fiscal 2000, the Board of Directors approved a plan that allows the Board members to elect to receive their director fees in one or more of the following forms: cash, deferred compensation in the form of shares, unrestricted company stock at the market value at the date of election, or stock options that vest in one year and expire in ten years. The stock options are granted at a price not less than the market price of the company’s common stock on the date of grant. Under the plan, the Board members received 47,020 options and 11,266 shares through the deferred compensation program during fiscal 2002. In fiscal 2001, Board members received 42,150 options, 7,710 unrestricted shares, and 11,243 shares through the deferred compensation program.

Income Taxes
The components of earnings from continuing operations before income taxes and cumulative effect of change in accounting are as follows:

(In Millions)                                                2002              2001             2000
                                                             ----              ----             ----
Domestic                                                   $(80.9)           $204.8           $198.7
Foreign                                                     (10.1)             20.3             23.1
                                                            ------             ----           ------

                                                           $(91.0)           $225.1           $221.8
                                                           =======           ======           ======

The provision (benefit) for income taxes consisted of the following:

(In Millions)                                                2002              2001             2000
                                                             ----              ----             ----
Current:  Domestic--Federal                                $(14.0)            $68.0            $67.6
          Domestic--State                                    (8.1)              4.5              3.6
          Foreign                                            (2.6)              7.2              8.9
                                                             -----              ---              ---
                                                            (24.7)             79.7             80.1
                                                            ------             ----             ----
Deferred:  Domestic--Federal                                (10.8)               .7              1.9
           Domestic--State                                     .7                .3               .2
           Foreign                                            (.2)               .3              (.1)
                                                              ----               --              ---
                                                            (10.3)              1.3              2.0
                                                            ------              ---              ---
Total income tax (benefit) provision                       $(35.0)            $81.0            $82.1
                                                           =======            =====            =====

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The following table represents a reconciliation of income taxes at the United States statutory rate with the effective tax rate as follows:

(In Millions)                                                2002              2001             2000
                                                             ----              ----             ----
Income taxes computed at the United
   States statutory rate of 35%                            $(31.9)            $78.8            $77.6
Increase (decrease) in taxes resulting from:
   Corporate-owned life insurance                             3.3               --               --
   State taxes, net                                          (4.8)              3.1              2.5
   Other, net                                                (1.6)              (.9)             2.0
                                                              ----              ----             ---
                                                           $(35.0)            $81.0            $82.1
                                                           =======            =====            =====

The tax effects and types of temporary differences that give rise to significant components of the deferred tax assets and liabilities at June 1, 2002, and June 2, 2001, are presented below:

(In Millions)                                                                  2002             2001
                                                                               ----             ----
Deferred tax assets:
  Book over tax loss on sale of fixed assets                                   $2.3             $6.6
  Compensation-related accruals                                                10.1             12.6
  Accrued pension and postretirement benefit obligations                       19.7             20.2
  Reserves for inventory                                                        3.1              3.3
  Reserves for uncollectible accounts and notes receivable                      3.7              5.4
  Restructuring                                                                 8.2              --
  Other                                                                        25.7             25.4
                                                                               ----             ----

                                                                              $72.8            $73.5
                                                                              =====            =====
Deferred tax liabilities:
  Book basis in property in excess of tax basis                               $(6.1)          $(12.5)
  Capitalized software costs                                                  (17.8)           (23.0)
  Prepaid employee benefits                                                    (3.9)            (3.4)
  Other                                                                        (9.5)            (9.4)
                                                                               -----            -----

                                                                             $(37.3)          $(48.3)
                                                                             =======          =======

The company has not provided for United States income taxes on undistributed earnings of foreign subsidiaries totaling $62.5 million. Recording of deferred income taxes on these undistributed earnings is not required, since these earnings have been permanently reinvested. These amounts would be subject to possible U.S. taxation only if remitted as dividends. The determination of the hypothetical amount of unrecognized deferred U.S. taxes on undistributed earnings of foreign entities is not practicable.

During fiscal 2002, the company entered into a settlement agreement with the Internal Revenue Service (“IRS”) primarily related to the disallowance of deductions for its corporate owned life insurance (“COLI”) policy loan interest and administrative fees for all years of the insurance programs since its inception in fiscal 1994. The IRS has been pursuing an adverse position regarding similar COLI programs of a considerable number of corporations. The IRS position is supported by judicial rulings in a limited number of court proceedings unrelated to the company, with no favorable decisions to the taxpayers.

-43-

The company’s settlement with the IRS provided for the surrender of its COLI program policies. As a result of the COLI settlement, the company canceled the related life insurance policies resulting in a $1.8 million pretax charge to earnings. Additionally, the company will be required to pay taxes and interest related to the disallowance of the deductions for the tax years between 1994 and 1999. These payments, which are net of $14.0 million cash received during fiscal 2001 for the net cash surrender value of the related policies, will total approximately $9.5 million and are expected to be substantially completed by the end of fiscal 2003. As the company had previously reserved for the disallowance of these deductions, there will be no additional impact on earnings.

Fair Value of Financial Instruments
The carrying amount of the company’s financial instruments included in current assets and current liabilities approximates fair value due to their short-term nature. The fair value of the notes receivable is estimated by discounting expected future cash flows using current interest rates at which similar loans would be made to borrowers with similar credit ratings and remaining maturities. As of June 1, 2002, and June 2, 2001, the fair value of the notes receivable approximated the carrying value. The company intends to hold these notes to maturity and has recorded allowances to reflect the terms negotiated for carrying value purposes. As of June 1, 2002, the carrying value of the company’s long-term debt including current maturities was $232.4 million with a corresponding fair market value of $233.7 million. At June 2, 2001, the carrying value and fair market value was $256.2 million and $252.2 million, respectively.

Financial Instruments with Off-Balance-Sheet Risk
The company has periodically utilized financial instruments to manage its foreign currency volatility at the transactional level as well as its exposure to interest rate fluctuations.

Foreign Currency Contracts The majority of the foreign currency contracts relate to major currencies such as the Japanese yen, the Australian dollar, and the British pound. The exposure to credit risk from these currency contracts is minimal, because the counterparties are major financial institutions. The market risk exposure is essentially limited to currency rate movements. The gains or losses arising from these financial instruments are applied to offset exchange gains or losses on the related hedged exposures. Realized gains or losses in 2002, 2001, and 2000 were not material to the company’s results of operations. At June 1, 2002 and June 2, 2001, the company had no outstanding derivative financial instruments resulting from foreign currency hedge contracts.

Interest Rate Swap On May 21, 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 June 1, 2002, the floating interest rate, which is based on the 90-day LIBOR, was approximately 4.27 percent. This fair-value hedge is “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 effect of this transaction on net interest expense was not material for fiscal year 2002. The fair value of this swap instrument at June 1, 2002, was approximately $.2 million. The company had no interest rate swap contracts outstanding as of June 2, 2001.

-44-

Supplemental Disclosures of Cash Flow Information
The following table presents the adjustments to reconcile net earnings to net cash provided by operating activities:

(In Millions)                                                2002              2001             2000
                                                             ----              ----             ----
Depreciation                                               $105.7             $87.3            $72.4
Amortization                                                  7.2               5.3              4.7
Provision for losses on accounts
   and notes receivable                                       2.9               6.6              3.2
Special charges                                              49.9                --               --
Loss on sales of property and equipment                       8.8               5.4              5.0
Deferred taxes                                              (10.3)              1.3              2.0
Other liabilities                                           (26.1)              4.9             (5.7)
Stock grants earned                                           1.4               1.1               .7
Changes in current assets and liabilities:
     Decrease (increase) in assets:
         Accounts receivable                                 66.9              10.6            (24.6)
Inventories                                                  16.3              (2.0)           (14.8)
         Prepaid expenses and other                          (5.1)             (5.7)            (2.3)
     Increase (decrease) in liabilities:
         Accounts payable                                   (25.0)            (19.3)            25.4
         Accrued liabilities                                (82.0)            (27.8)            (3.6)
                                                            -----             ------            ----
Total changes in current assets and liabilities             (28.9)            (44.2)           (19.9)
                                                            ------            ------           -----
     Total adjustments                                     $110.6             $67.7            $62.4
                                                            =====             =====            =====

Cash payments for interest and income taxes were as follows:

(In Millions)                                                2002              2001             2000
                                                             ----              ----             ----
Interest paid                                               $21.1             $13.5            $12.0
Income taxes paid                                            $7.7             $80.1            $75.8

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 does not expect resolution of the audits to have a material adverse effect on the company’s consolidated financial statements.

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.

Operating Segments
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, and casegoods. Management evaluates the company as one operating segment in the office furniture industry.

Sales to customers are attributed to the geographic areas based on the location of the customer. Long-lived assets consist of property and equipment. Geographic information is as follows:

(In Millions)                                                2002              2001             2000
                                                             ----              ----             ----
Net sales:
         United States                                   $1,249.2          $1,889.2         $1,723.6
         International                                      219.5             347.0            286.6
                                                           ------             -----            -----
                                                         $1,468.7          $2,236.2         $2,010.2
                                                         ========          ========         ========

Long-lived assets:
         United States                                   $  304.4          $  396.8         $  386.9
         International                                       11.0              12.2             11.8
                                                             ----              ----             ----
                                                         $  315.4          $  409.0         $  398.7
                                                         ========          ========         ========

-45-

Report Of Independent Auditors

To the Shareholders and Board of Directors of Herman Miller, Inc.

        We have audited the accompanying consolidated balance sheet of Herman Miller, Inc. and subsidiaries as of June 1, 2002, and the related consolidated statements of operations, shareholders’ equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of other auditors provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Herman Miller, Inc. and subsidiaries at June 1, 2002, and the consolidated results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States.

/s/ Ernst & Young LLP
Grand Rapids, Michigan
June 26, 2002

-46-

COPY

Report Of Independent Public Accountants (1)

To the Shareholders and Board of Directors
of Herman Miller, Inc.:

We have audited the accompanying consolidated balance sheets of Herman Miller, Inc., (a Michigan Corporation) and subsidiaries as of June 2, 2001, and June 3, 2000, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended June 2, 2001. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Herman Miller, Inc., and subsidiaries as of June 2, 2001 and June 3, 2000, and the results of their operations and their cash flows for each of the three years in the period ended June 2, 2001, in conformity with accounting principles generally accepted in the United States.

As explained in the Employee Benefit Plans note to the consolidated financial statements, effective June 4, 2000, Herman Miller, Inc. changed its method of accounting for pensions.

Arthur Andersen LLP
Grand Rapids, Michigan,

June 25, 2001

(1) The company has not been able to obtain, after reasonable efforts, the re-issued report of Arthur Andersen LLP related to the 2001 and 2000 consolidated financial statements. Therefore, we have included a copy of their previously issued report. See Item 9 and Exhibit 23(b) for further information.

-47-

Management’s Report On Financial Statements

The consolidated financial statements of Herman Miller, Inc., and subsidiaries were prepared by, and are the responsibility of, management. The statements have been prepared in conformity with accounting principles generally accepted in the United States appropriate in the circumstances and include amounts that are based on management’s best estimates and judgments.

The company maintains systems of internal accounting controls designed to provide reasonable assurance that all transactions are properly recorded in the company’s books and records, that policies and procedures are adhered to, and that assets are protected from unauthorized use. The systems of internal accounting controls are supported by written policies and guidelines and are complemented by a staff of internal auditors and by the selection, training, and development of professional financial managers.

The consolidated financial statements for the fiscal year ending June 1, 2002 have been audited by the independent auditing firm Ernst & Young, LLP, whose appointment is ratified annually by shareholders at the annual shareholders’ meeting. The independent auditors conduct a review of internal accounting controls to the extent required by auditing standards generally accepted in the United States and perform such tests and related procedures as they deem necessary to arrive at an opinion on the fairness of the financial statements.

The Audit Committee of the Board of Directors, composed solely of directors from outside the company, regularly meets with the independent auditors, management, and the internal auditors to satisfy itself that they are properly discharging their responsibilities. The independent auditors have unrestricted access to the Audit Committee, without management present, to discuss the results of their audit and the quality of financial reporting and internal accounting controls.

Michael A. Volkema, Chairman, President, and Chief Executive Officer
Elizabeth A. Nickels, Chief Financial Officer
June 26, 2002

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Item 9  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

Herman Miller, Inc. (the “Company”) determined, for itself and on behalf of its subsidiaries, to dismiss its independent auditors, Arthur Andersen LLP (“Arthur Andersen”) and to engage the services of Ernst & Young LLP (“Ernst & Young”) as its new independent auditors. The change in auditors was approved by the Board of Directors of the Company; the change was effective as of May 6, 2002. As a result, Ernst & Young audited the consolidated financial statements of the Company and its subsidiaries for the fiscal year ended June 1, 2002.

Arthur Andersen’s reports on the Company’s consolidated financial statements for the fiscal years ended June 2, 2001, and June 3, 2000 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended June 2, 2001, and June 3, 2000, and through May 6, 2002 (the “Relevant Period”), (1) there were no disagreements with Arthur Andersen on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to Arthur Andersen’s satisfaction, would have caused Arthur Andersen to make reference to the subject matter of the disagreement(s) in connection with its reports on the Company’s consolidated financial statements for such years; and (2) there were no reportable events as described in Item 304(a)(1)(v) (“Reportable Events”) of the Commission’s Regulation S-K.

The Company has provided a copy of the foregoing statements to Arthur Andersen. Attached as Exhibit 16 is a copy of Arthur Andersen’s letter to the Commission, dated May 10, 2002, stating its agreement with such statements.

During the Relevant Period, neither the Company nor anyone acting on its behalf consulted with Ernst & Young regarding (i) the application of accounting principles to a specified transaction, completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, or (ii) any matters or reportable events as set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.

The company has not been able to obtain, after reasonable efforts, the re-issued reports or consent of Arthur Andersen related to the 2001 and 2000 consolidated financial statements and financial statement schedule. Therefore, we have included a copy of their previously issued report. See Exhibit 23(b) for further information concerning Arthur Andersen’s consent.

PART III

Item 10  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors of Registrant

Information relating to directors and director nominees of the registrant is contained under the caption “Director and Executive Officer Information” in the company’s definitive Proxy Statement, dated August 29, 2002, relating to the company’s 2002 Annual Meeting of Shareholders, and the information within that section is incorporated by reference. Information relating to Executive Officers of the company is included in Part I hereof entitled “Executive Officers of the Registrant.”

There are no family relationships between or among the above-named executive officers. There are no arrangements or understandings between any of the above-named officers pursuant to which any of them was named an officer.

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Item 11  EXECUTIVE COMPENSATION

Information relating to management remuneration is contained under the caption “Summary Compensation Table” in the company’s definitive Proxy Statement, dated August 29, 2002, relating to the company’s 2002 Annual Meeting of Shareholders, and the information within this section is incorporated by reference. However, the information under the captions “Executive Compensation Committee Report” and “Shareholder Return Performance Graph” are specifically excluded.

Item 12  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The sections entitled “Voting Securities and Principal Shareholders” and “Director and Executive Officer Information” and “Equity Compensation Plan Information” in the definitive Proxy Statement, dated August 29, 2002, relating to the company’s 2002 Annual Meeting of Shareholders and the information within those sections are incorporated by reference.

Item 13  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information concerning certain relationships and related transactions contained under the captions “Director and Executive Officer Information” and “Compensation of Board Members and Non-Employee Officers” in the definitive Proxy Statement, dated August 29, 2002, relating to the company’s 2002 Annual Meeting of Shareholders is incorporated by reference.

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PART IV

Item 14  EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K

51

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS ON FINANCIAL STATEMENT SCHEDULE

To the Shareholders and Board of Directors of Herman Miller, Inc.:

We have audited the consolidated financial statements of Herman Miller, Inc. and subsidiaries as of June 1, 2002 and for the year then ended and have issued our report thereon dated June 26, 2002 (included elsewhere in this Form 10-K). Our audit also included the financial statement schedule listed at Item 14(a)2 of this Form 10-K. This schedule is the responsibility of the company’s management. Our responsibility is to express an opinion based on our audit.

In our opinion, the financial statement schedule as of June 1, 2002, and for the year then ended, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP
Grand Rapids, Michigan
June 26, 2002

52

COPY

REPORT OF ARTHUR ANDERSEN LLP, INDEPENDENT PUBLIC ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE DATED JUNE 25, 2001 (1)

To the Shareholders and Board of Directors of Herman Miller, Inc.:

We have audited in accordance with auditing standards generally accepted in the United States, the consolidated financial statements of Herman Miller, Inc., and subsidiaries included in this Form 10-K, and have issued our report thereon dated June 25, 2001. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed at Item 14(a)2 above is the responsibility of the Company’s management and is presented for purposes of complying with the Securities and Exchange Commission’s rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.

/s/ Arthur Andersen LLP
Grand Rapids, Michigan
June 25, 2001

(1) The company has not been able to obtain, after reasonable efforts, the re-issued report of Arthur Andersen LLP related to the 2001 and 2000 financial statement schedule. Therefore, we have included a copy of their previously issued report. See Item 9 and Exhibit 23(b) for further information.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on August 26, 2002, by the following persons on behalf of the Registrant in the capacities indicated. Each Director of the Registrant, whose signature appears below, hereby appoints Michael A. Volkema as his attorney-in-fact, to sign in his or her name and on his or her behalf, as a Director of the Registrant, and to file with the Commission any and all amendments to this Report on Form 10-K.

54

HERMAN MILLER, INC., AND SUBSIDIARIES

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
(In Millions)

Column A                                       Column B                       Column C                                             Column D                           Column E
- --------                                       --------         ---------------------------------------           ---------------------------------------------       --------
                                                              Additions
                                               Balance at     charged to                                       Uncollectible      Deducted from
                                               beginning      costs and      Acquired      Increased net       accounts written   costs                               Balance at
Description                                    of period      expenses       reserves      operating losses    off (net)1         and expenses     Losses utilized2   end of period
- -----------                                    ---------      --------       --------      ----------------    ---------          ------------     ----------------   -------------
Year ended June 1, 2002:
     Allowance for possible losses on
     accounts receivable                           $19.1         $ 2.4          $  --           $  --             $5.2                $ --              $ --              $16.3

     Allowance for possible losses on notes
     receivable                                    $2.6          $  .5          $  --           $  --             $1.1                $ --              $ --              $ 2.0

Year ended June 2, 2001:
     Allowance for possible losses on              $17.7         $ 6.6          $  .1           $  --             $5.3                $ --              $ --              $19.1
     accounts receivable

     Allowance for possible losses on notes        $ 4.2         $  --          $  --           $  --             $ --                $1.6              $ --              $ 2.6
     receivable

     Valuation allowance for deferred tax          $  .8         $  --          $  --           $  --             $ --                $ --              $ .8              $  --
     asset

Year ended June 3, 2000:
     Allowance for possible losses on              $14.1         $ 3.2          $  .7           $  --             $ .3                $ --              $ --              $17.7
     accounts receivable

     Allowance for possible losses on notes        $ 5.5         $  --          $  --           $  --             $ --                $1.3              $ --              $ 4.2
     receivable

     Valuation allowance for deferred tax          $ 1.1         $  --          $  --           $  --             $ --                $ --              $ .3              $  .8
     asset

¹ Includes effects of foreign currency translation.
² Includes utilization of capital and net operating losses.

55

HERMAN MILLER, INC., AND SUBSIDIARIES

Exhibit Index

56

Exhibit Index (continued)

57

Exhibit Index (continued)

58

EXHIBIT 21
HERMAN MILLER, INC., SUBSIDIARIES

Subsidiaries

The Company's principal subsidiaries are as follows.

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EXHIBIT 23(a)

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statements (Form S-8 nos. 33-5810, 33-43234, 33-45812, 2-84202, 33-04369, 333-04367, 333-04365, and 333-42506, and Form S-3 nos. 333-86027 and 333-36442) of Herman Miller, Inc. of our report dated June 26, 2002, with respect to the consolidated financial statements of Herman Miller, Inc. and subsidiaries as of June 1, 2002, and for the year then ended included in the Annual Report on Form 10-K for the year ended June 1, 2002.

/s/ Ernst & Young LLP
Grand Rapids, Michigan
August 26, 2002

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EXHIBIT 23(b)

Information Concerning Consent of Arthur Andersen LLP

We have not been able to obtain, after reasonable efforts, the re-issued report or consent of Arthur Andersen LLP related to the 2001 and 2000 financial statements included in this report on Form 10-K. Therefore, we have included a copy of their previously issued report. Additionally, certain 2001 and 2000 amounts have been reclassified to conform to the 2002 presentation. Such reclassifications have not been reviewed or evaluated by the predecessor auditor, Arthur Andersen LLP.

Because we have been unable to obtain the above-referenced consent of Arthur Andersen LLP, we are required to disclose any resulting limitations on recovery by investors. Section 11(a) of the Securities Act of 1933 allows, under certain circumstances, a person acquiring a security to assert a claim against, among others, an accountant who has consented to be named as having prepared any report for use in connection with the registration statement if part of a registration statement at the time it becomes effective contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading. Because Arthur Andersen LLP has not consented to being named in this Form 10-K, it will not be liable under section 11(a) of the Securities Act for any untrue statements or omissions of material fact contained in the financial statements audited by Arthur Andersen LLP.

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Exhibit 99[a]

CERTIFICATE OF THE CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
OF HERMAN MILLER, INC. (THE "COMPANY")

        Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.ss.1350):

        I, Michael A. Volkema, Chairman of the Board and Chief Executive Officer of the Company, certify to the best of my knowledge and belief pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C.ss.1350) that:

        (1)        The Annual Report on Form 10-K for the period ended June 1, 2002, which this statement accompanies, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

        (2)        The information contained in the Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and result of operations of the Company.

62

Exhibit 99[b]

CERTIFICATE OF THE CHIEF FINANCIAL OFFICER
OF HERMAN MILLER, INC. (THE "COMPANY")

        Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.ss.1350):

        I, Elizabeth A. Nickels, Chief Financial Officer of the Company, certify to the best of my knowledge and belief pursuant to Section 906 of Sarbanes-Oxley Act of 2002 (18 U.S.C.ss.1350) that:

        (1)        The Annual Report on Form 10-K for the period ended June 1, 2002, which this statement accompanies, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

        (2)        The information contained in the Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and result of operations of the Company.

63