The following is management's discussion and analysis of certain significant factors that affected the company's financial condition, earnings and cash flow during the periods included in the accompanying condensed consolidated financial statements and should be read in conjunction with the company's Annual Report on Form 10-K for the fiscal year ended June 2, 2012. References to "Notes" are to the footnote disclosures included in the condensed consolidated financial statements.

Discussion of Current Business Conditions The second quarter of fiscal 2013 and 2012 included 13 weeks of operations. Fiscal year 2013 year-to-date included 26 weeks of operations as compared to 27 weeks in the prior year period. The extra week in the prior year is required approximately every six years in order to re-align our fiscal reporting dates with the actual calendar months. This is a factor that should be considered when comparing our financial results to the prior year period.

The macro-economic backdrop to our business remained fairly consistent throughout the second quarter - with relative health in some measures being offset by continued weakness in others. While the United States economy has been tepid, it is growing. The U.S. housing market appears poised for a rebound, and employers are beginning to hire as productivity gains are nearly exhausted. Office vacancy rates remain high - a factor offering some companies a positive incentive to move, which typically leads to demand for our products and services. This relatively encouraging picture is offset by uncertainty surrounding the ongoing tax and spending policy debates within the U.S. federal government. While the fiscal policy debate is likely to impact other regions of the world, Asia continues to grow, albeit at a slower rate than the past few years. The European economy remains weak and there appears little prospect of recovery in the near term. While Europe will impact us, we do not have a significant presence on the continent and we leverage our capabilities in the UK to serve the Middle East and other countries in the region. Assuming U.S. policy makers can forge a meaningful, long-term fiscal resolution in the months ahead, we expect US office furniture will continue to grow in calendar 2013. A recovery in housing should help our consumer business, and we believe the long term demographics of U.S. healthcare and emerging economies of Brazil, Russia, India and China are positively aligned with our strategy.

The Business Institutional Furniture Manufacturers Association's ("BIFMA") most recent domestic industry forecast was released in November 2012. This forecast anticipates that orders and shipments for calendar 2012 will decrease approximately 1 percent each. BIFMA's outlook for calendar 2013 forecasts orders and shipments increasing approximately 4.5 and 3.4 percent, respectively.

Our consolidated net sales in the second quarter totaled $441.8 million, 0.9 percent lower than the same quarter last fiscal year. This sales performance also fell short of the $445 million to $465 million revenue range we were expecting coming into the period. We based this range on our beginning backlog, plus an expectation around order levels in the first six weeks of the quarter. While the level and pacing of new orders entered throughout the second quarter was in line with our expectations, weather-related delays on the East coast prevented us from recognizing revenue on some projects. We estimate this delayed between $5 million and $7 million in net sales that would have otherwise been recognized in the second quarter. While the storm did impact our ability to recognize revenue in the quarter, it did not have a long-term negative effect on our distribution resources in the region. Additionally, some of the orders taken in the second quarter were scheduled with longer than normal lead-times. This, too, contributed to the lower-than-expected sales performance in the quarter; as these orders will likely be recognized as revenue during the second half of the fiscal year.

While net sales in the quarter did not meet our expectations, we were encouraged by the order growth and level of activity across each of our reportable segments. Orders in the second quarter of $475.8 million were 8.1 percent higher than the second quarter of last fiscal year. We were also pleased to end the quarter in a strong backlog position, which at $314.2 million was up $33.4 million or 11.9 percent from the second quarter of fiscal 2012.

In our North American Furniture Solutions segment, revenue was down approximately 5 percent, while orders were up more than 7 percent from the second quarter of last fiscal year. This reflects real strength in commercial customers, offset, in part, by continued decline in orders and shipments to the U.S. government. The year-over-year order growth was driven by our investments in innovative design and expanding customer channels. This included gains in key office product categories, highlighted by growing momentum for our Canvas furniture systems. Our Thrive Portfolio of ergonomic tools and furnishings is another component of the North American reportable segment that continues to gain ground, both with our dealers and customers. Additionally, building on the successful sales model that we first established with Thrive, we recently introduced a new initiative focused on Small and Medium Business ("SMB") customers. The SMB team is now well underway, working in coordination with our dealer channel to provide great service in specification and delivery.

Continuing within the North American segment, while sales to healthcare-related customers remain below our expectations, if we exclude the federal government, revenue appears to have stabilized. We are pleased with the progress the team is making in stabilizing the business and building for the future, and we're confident that the underlying demographics are there to make the healthcare sector a strong contributor to our future growth.

Our Specialty and Consumer segment also improved significantly in the second quarter, with sales and orders up 22 percent and 11 percent, respectively, from the same period last fiscal year. Sales and orders of retail and Herman Miller Collection products each posted double digit percentage growth relative to last year. Retailers have reported that sell through was good during the Christmas season and our semi-annual sale, so we expect good levels of restocking in the third quarter. We are also getting optimistic reports from our dealers and sales executives as to their success with the Herman Miller Collection with contract customers. Geiger also reported strong sales into executive and premium office environments this quarter.

With the addition of POSH, our Non-North American Furniture Solutions segment reported solid sales and order growth over the prior year. While customer demand in Europe was weaker than we expected this quarter, we continued to perform well in the Middle East and Asia. The highlight for the segment this quarter was our expanding momentum and presence in Asia, driving a substantial increase in sales and orders for the region. This was achieved not only through the addition of POSH, but also through organic sales growth in key markets including China, India, and Australia. The POSH integration continues, and the business generated approximately break-even operating earnings in the quarter. We know China and other fast developing markets in Asia and elsewhere are critical elements in our future and we will continue to strategically invest in those markets in order to build the teams, products, and operational infrastructure to grow with them.

As previously announced, in order to improve the predictability of cash flows and expenses associated with our employee benefit programs, we intend to terminate our U.S. defined benefit pension plans in favor of a new defined contribution retirement program. During the second quarter of fiscal 2013, we converted active employees to this new defined contribution program. Concurrent with this change, effective September 1, 2012, we ceased ongoing benefit accruals under the defined benefit pension plans that we plan to terminate in the future. We expect the termination process for the defined benefit pension plans to be completed during the second quarter of fiscal 2014. At the time of termination, we will be required to make additional contributions to the plans, which we currently estimate will total approximately $50 million.

Our results in the second quarter and six-months ended December 1, 2012 include expenses associated with the transition from (and planned termination of) the domestic defined benefit pension plans. These expenses, referred to as, "legacy pension costs" throughout this document, include settlements caused by the transition and net periodic benefit expenses, subsequent to September 1, 2012, related to the defined benefit plans in question. They also include incremental pension expenses in the first quarter of fiscal 2013 resulting from modifications we made to the investment strategy of our defined benefit plan assets in order to prepare for the termination process. We recognized legacy pension costs totaling $18.8 million and $20.5 million in the second quarter and six-months ended December 1, 2012, respectively. A large majority of these expenses are reflected within Operating Expenses in each period.

Earlier this fiscal year we announced an increase in our quarterly cash dividend
- moving it from $0.022 to $0.09 per share. The increase was driven by improvements we've made to our balance sheet in recent years, including reductions in outstanding debt levels and progress toward the termination of our domestic defined benefit pension plans. In total, cash dividends paid were $5.2 million in the second quarter of fiscal 2013 compared to $1.3 million in the second quarter of last fiscal year. Through the first six months of fiscal 2013, dividend payments totaled $6.5 million compared to $2.5 million in the same period last fiscal year.

The remaining sections within Item 2 include additional analysis of our second quarter and six months ended December 1, 2012, including discussion of significant variances compared to prior year periods.

Analysis of Second Quarter Results
The following table presents certain key highlights from the results of
operations for the periods indicated.

(In millions, except
per share data)                          Three Months Ended                                  Six Months Ended
                                                                     Percent     December 1,      December 3,     Percent
                         December 1, 2012       December 3, 2011      Change         2012             2011         Change
Net Sales              $            441.8     $            445.6      (0.9 )%   $      891.5     $      903.7      (1.4 )%
Gross Margin                        148.5                  152.1      (2.4 )           298.2            306.4      (2.7 )
Operating Expenses                  130.3                  111.4      17.0             245.2            223.9       9.5
Restructuring and
other related costs                   0.7                      -         -               1.2                -         -
Operating Earnings                   17.5                   40.7     (57.0 )            51.8             82.5     (37.2 )
Net Earnings                          8.4                   23.7     (64.6 )            28.3             48.3     (41.4 )
Earnings per share -
diluted                              0.14                   0.41     (65.9 )            0.48             0.83     (42.2 )
Orders                              475.8                  440.0       8.1      $      927.8     $      921.4       0.7  %
Backlog                $            314.2     $            280.8      11.9  %

The following table presents, for the periods indicated, the components of the company's Condensed Consolidated Statements of Operations and Comprehensive Income as a percentage of net sales.

                                   Three Months Ended                         Six Months Ended
                          December 1, 2012     December 3, 2011     December 1, 2012     December 3, 2011
Net Sales                        100.0 %                100.0 %            100.0 %               100.0 %
Cost of Sales                     66.4                   65.9               66.6                  66.1
Gross Margin                      33.6                   34.1               33.4                  33.9
Operating Expenses                29.5                   25.0               27.5                  24.8
Restructuring and other
related costs                      0.2                      -                0.1                     -
Operating Margin                   4.0                    9.1                5.8                   9.1
Other Expense, net                 1.0                    1.1                1.0                   1.1
Earnings Before Income
Taxes                              2.9                    8.0                4.8                   8.0
Income Tax Expense                 1.0                    2.7                1.6                   2.7
Net Earnings                       1.9 %                  5.3 %              3.2 %                 5.3 %

Consolidated Sales
Net sales in the second quarter of fiscal 2013 were $441.8 million, a decrease of $3.8 million from the same period last year. Net sales were decreased by $3 million due to the sale of a dealer during the second quarter of fiscal 2012. While the fourth quarter fiscal 2012 acquisition of POSH contributed an additional $13 million in net sales in the current quarter, this was more than offset by an $18 million decrease in sales to the U.S. federal government. The remaining change in sales was due to increased volumes in the current period.

For the first six months of fiscal 2013, net sales were $891.5 million; a decrease of $12.2 million from the same period last year. The decrease in net sales was largely driven by the extra week of operations in the prior year period and the sale of a dealer during the second quarter of fiscal 2012. These items had the effect of decreasing net sales in the current period by approximately $32 million and $7 million, respectively. Foreign exchange rate changes also decreased net sales by approximately $6 million in the first six months of fiscal year 2013. These factors were partially offset by the fourth quarter fiscal 2012 acquisition of POSH, which accounted for approximately $27 million in net sales in the first half of fiscal 2013. Also, the capture of recent price increases (net of deeper discounting) increased net sales in the first half of fiscal 2013 by

approximately $6 million. The first six months of fiscal 2013 also experienced a $40 million decrease in sales to the U.S. federal government. The remaining change in sales was due to increased volumes in the first half of fiscal 2013.

Performance versus the Domestic Contract Furniture Industry We monitor the trade statistics reported by BIFMA, the trade association for the U.S. domestic office furniture industry, and consider them an indicator of industry-wide sales and order performance. BIFMA publishes statistical data for the contract segment and the office supply segment within the U.S. furniture market. The U.S. contract segment is primarily composed of large to mid-size corporations serviced by a network of dealers. The office supply segment is primarily made up of smaller customers serviced by wholesalers and retailers. We primarily participate in, and believe we are a leader in, the contract segment. While comparisons to BIFMA are important, we continue to pursue a strategy of revenue diversification that makes us less reliant on the drivers that impact BIFMA and lessens our dependence on the U.S. office furniture market.

We also use BIFMA statistical information as a benchmark for the performance of our domestic U.S. business (as defined by BIFMA) and also to that of our competitors. The timing of large project-based business may affect comparisons to this data. We remain cautious about reaching conclusions regarding changes in market share based on analysis of data on a short term basis. Instead, we believe such conclusions should only be reached by analyzing comparative data over several quarters.

While the sales and order data for our U.S. operations provide a relative comparison to BIFMA, it is not intended to be an exact comparison. The data we report to BIFMA is consistent with the BIFMA definition of office furniture "consumption." This definition differs slightly from the categorization we have presented in this report. Notwithstanding this difference, we believe our presentation provides the reader with a more relevant comparison.

For the three-month period ended December 1, 2012, the company's domestic U.S. shipments, as defined by BIFMA, decreased 1.8 percent year-over-year, while the company's domestic orders increased 3.3 percent. BIFMA reported an estimated year-over-year decrease in shipments of 0.2 percent and an increase in orders of 0.8 percent for the comparable period.

Consolidated Gross Margin
Consolidated gross margin in the second quarter was 33.6 percent of net sales; a decrease of 50 basis points compared to the second quarter last year.

Direct material costs were 43.0 percent of net sales, an increase of 30 basis points from the second quarter last year. The material costs as a percent of net sales was impacted by approximately a 60 basis point increase related to the acquisition of POSH. Partially offsetting these increases were favorable impacts from lower commodity costs (primarily steel and steel components) of 30 basis points.

Direct labor was 6.7 percent of net sales for the second quarter, an increase of 10 basis points from the second quarter of last year. The increase is primarily related to a shift in net sales of products with a higher labor content.

Manufacturing overhead was 10.5 percent of net sales for the second quarter; decreasing 30 basis points from the prior year period. Overhead costs in the second quarter of fiscal 2013 included approximately $0.8 million of incremental employee benefit costs related to the transition from (and planned termination of) the domestic defined benefit pension plans. These incremental costs account for a 20 basis point increase in overhead as a percent of net sales. This increase was offset by an approximate 10 basis point decrease in manufacturing overhead percent due to the dealer divestiture in the second quarter of fiscal 2012. Overhead costs were also decreased by approximately 10 basis points due to lower incentive costs. The remaining decrease in manufacturing overhead percent was due to increased absorption of overhead costs.

Freight costs were 4.5 percent of net sales for the second quarter; increasing 30 basis points compared to the same period last year. This was driven primarily by increased diesel costs as well as the impact of changes in the product and channel mix compared to the prior year period.

Net sales, cost of sales and resulting gross margin are affected by changes in foreign currency exchange rates. During the second quarter the estimated impact was a decrease to gross margin of $0.2 million relative to the prior year period.

For the first six months of fiscal 2013 consolidated gross margin was 33.4 percent of net sales; a decrease of 50 basis points from the gross margin reported in the same period last year. The impact of incremental employee benefit costs accounted for a 20 basis point decrease in the gross margin percent for the first six months of fiscal 2013. The second quarter fiscal 2013 year-to-date gross margin was favorably impacted by 70 basis points related to net pricing increases. Lower commodity costs contributed an additional 30 basis points of improvement. The remaining decrease in the year-to-date gross margin was due to a shift in product mix and lower volumes driving lower leverage from production.

Operating Expenses and Operating Earnings Second quarter operating expenses (including restructuring related expenses) were $131.0 million, or 29.7 percent of net sales, which is an increase of $19.6 million from the second quarter of fiscal 2012. The increase in operating expenses primarily relates to legacy pension costs of $18.0 million. The acquisition of POSH contributed an additional $3.0 million of operating expenses in the quarter. In addition, research and

development and marketing expenses increased $1.7 million and $1.1 million, respectively. The 2012 Plan to consolidate the Nemschoff manufacturing operations resulted in a $0.7 million increase in restructuring expenses. Warranty expenses for the period were lower by approximately $2.0 million due primarily to lower customer specific claims in the period compared to the prior year period. The remaining change was related to decreases in various other operating expenses compared to the prior year period.

Operating expenses are also impacted by changes in foreign currency exchange rates. During the second quarter of fiscal 2013 the estimated impact to operating expenses was an increase of approximately $0.1 million relative to the prior year period.

For the first six months of fiscal 2013 operating expenses (including restructuring related expenses) were $246.4 million compared to $223.9 million in the prior year period; an increase of $22.5 million. The increase in operating expenses primarily relates to the legacy pension costs of $18.9 million. The acquisition of POSH contributed an additional $5.8 million of operating expenses. In addition, research and development expenses increased $3.0 million. The 2012 Plan to consolidate the Nemschoff manufacturing operations resulted in a $1.2 million increase in expenses for the first six months of fiscal 2013. The extra week of operations in the prior year included approximately $3.0 million in additional compensation expense. The company also recorded $2.0 million less employee incentive expense compared to the prior year period. Warranty expenses for the period were lower by approximately $3.0 million due primarily to lower customer specific claims in the period compared to the prior year period. The remaining change was due to decreases in various other operating expenses compared to the prior year period.

Operating earnings in the second quarter were $17.5 million, a decrease of $23.2 million compared to the same period last year. This decrease primarily relates to legacy pension costs of $18.8 million. The year-to-date operating earnings were $51.8 million compared to the year-to-date operating earnings of $82.5 million for fiscal 2012. The largest contributor of this decrease was the legacy pension costs of $20.5 million.

Other Income/Expense and Income Taxes
Net other expense of $4.6 million in the second quarter of fiscal 2013 was $0.5 million lower compared to the prior year period. The decrease in the current period was due to lower currency loss of $0.2 million and higher investment income in the second quarter of fiscal 2013 compared to the prior year period.

Net other expense for fiscal 2013 year-to-date was $8.9 million, a $1.2 million decrease compared to the prior year period. The decrease was due to the same factors that impacted the second quarter variances.

The effective tax rates for the three months ended December 1, 2012 and December 3, 2011 were 34.9 percent and 33.4 percent, respectively. The effective tax rates for the six months ended December 1, 2012 and December 3, 2011 were 33.9 percent and 33.3 percent, respectively. The effective rate in the current year and the prior year are below the statutory rate primarily due to the manufacturing deduction under the American Jobs Creation Act of 2004. The rate increase in the current quarter in relationship to the prior year's quarter relates primarily to differences in the mix of earnings across the company's domestic and international entities. Subsequent to the end of the second quarter, the U.S. Congress adopted legislation extending the Research & Development Tax Credit for a two year period. The extension applies retroactively from December 31, 2011 and will be effective through December 31, 2013. The company will begin recognizing the benefit of this credit in the third quarter of fiscal 2013, and expects its third quarter effective tax rate to be in the range of 27.5 percent and 29.5 percent.

Reportable Operating Segments
The business is comprised of various operating segments as defined by generally accepted accounting principles in the United States. These operating segments are determined on the basis of how the company internally reports and evaluates financial information used to make operating decisions. For external reporting purposes, the company has identified the following reportable segments:

? North American Furniture Solutions - Includes the operations associated with the design, manufacture, and sale of furniture products for work-related settings, including office, education, and healthcare environments, throughout the United States and Canada. The business associated with the company's owned contract furniture dealers is also included in the North American Furniture Solutions segment. In addition, the Healing operating segment has been aggregated with the North American Furniture Solutions segment.

? Non-North American Furniture Solutions - Includes the operations associated with the design, manufacture, and sale of furniture products, primarily for work-related settings, for Mexico and outside of North America as well as the company's Non-North America consumer retail business.

? Specialty and Consumer - Includes the operations associated with the design, manufacture, and sale of high-end furniture products including Geiger wood products, Herman Miller Collection products and the company's North American consumer retail business.

The company also reports a corporate category consisting primarily of startup business and unallocated corporate expenses including restructuring and other related expenses (including impairment expenses).

The current quarter and prior year period segment results are as follows:

(In millions)                 Three Months Ended                                     Six Months Ended
                     December 1, 2012     December 3, 2011     Change      December 1, 2012     December 3, 2011     Change
Net Sales:
North American
Furniture Solutions $         304.7      $          321.7     $ (17.0 )   $         625.0      $          652.2     $ (27.2 )
Non-North American
Furniture Solutions            92.8                  87.5         5.3               187.4                 172.4        15.0
Specialty and
Consumer                       44.3                  36.4         7.9                79.1                  79.1           -
Corporate                         -                     -           -                   -                     -           -
Total               $         441.8      $          445.6                 $         891.5      $          903.7

Operating Earnings
(Loss):
North American
Furniture Solutions $           9.7      $           28.5     $ (18.8 )   $          36.6      $           56.8     $ (20.2 )
Non-North American
Furniture Solutions             4.6                   8.8        (4.2 )              10.1                  18.4        (8.3 )
Specialty and
Consumer                        3.9                   3.6         0.3                 6.3                   7.8        (1.5 )
Corporate                      (0.7 )                (0.2 )      (0.5 )              (1.2 )                (0.5 )      (0.7 )
Total               $          17.5      $           40.7                 $          51.8      $           82.5

. . .