Steelcase Reports Third Quarter Results

Steelcase Reports Third Quarter Results

Momentum in the Americas Continues

GRAND RAPIDS, Mich., Dec. 19, 2012 (GLOBE NEWSWIRE) -- Steelcase Inc.
(NYSE:SCS) today reported third quarter revenue of $727.2 million and net
income of $23.6 million, or $0.19 per share. Excluding restructuring costs,
adjusted earnings were $0.22 per share. Revenue and earnings per share were
in-line with company estimates. Steelcase reported $719.4 million of revenue
and earnings of $0.17 per share in the third quarter of the prior year,
including restructuring costs of approximately $0.02 per share.

Steelcase Inc. Logo

Organic revenue growth in the third quarter was 1 percent after adjusting for
$8.2 million of unfavorable currency translation effects and a favorable
impact of $6.0 million from recent dealer acquisitions. The Americas posted 3
percent organic growth over the prior year while EMEA experienced a 1 percent
organic decline. Revenue continued to include a higher mix of project business
from some of the company's largest corporate customers as compared to prior
year.

"We were pleased that the Americas expanded their adjusted operating margin by
110 basis points in the third quarter compared to the prior year, despite
modest revenue growth," said James P. Hackett, president and CEO. "While
growth rates have moderated, we expect the fourth quarter will mark the
twelfth consecutive quarter of organic revenue growth in the Americas."

Current quarter operating income of $38.4 million compares to $38.2 million in
the prior year. Excluding restructuring costs, third quarter adjusted
operating income of $44.4 million compares with $42.0 million in the prior
year. Strength in the Americas was largely offset by lower profitability in
EMEA and the Other category.

"While EMEA was profitable this quarter, we remain focused on improving our
results in that segment, as demand patterns remain mixed and our results
continue to reflect a higher mix of lower-margin project business," said David
C. Sylvester, senior vice president and CFO. "In the Other category, we
continue to invest in our Asia strategies, as we believe that the recent
softening in demand is transient."

Cost of sales improved to 68.5 percent of revenue in the current quarter
compared to 69.0 percent in the prior year. Year-over-year benefits from
recent pricing adjustments (net of commodity cost changes) and restructuring
actions (net of related disruption costs) were partially offset by the impact
of a shift in business mix.

Operating expenses in the third quarter were $184.8 million compared with
$181.1 million in the prior year. The increase was largely due to higher
variable compensation expenses. The impact of recent acquisitions was largely
offset by favorable currency translation effects.

Investment income of $1.1 million in the current quarter compared to an
investment loss of $0.6 million in the prior year. The improvement was
primarily due to higher gains in the cash surrender value of variable life
company-owned life insurance (COLI).

Cash, short-term investments and the cash surrender value of variable life
COLI totaled $329.5 million and total debt was $289.8 million at the end of
the third quarter.

On December 7, 2012, the Board of Directors declared a cash dividend of $0.09
per share to be paid on or before December 28, 2012 to shareholders of record
as of December 17, 2012.

Outlook

Third quarter order growth in the Americas approximated 7 percent compared to
the prior year. EMEA orders in the third quarter declined by approximately 4
percent compared to the prior year but grew approximately 8 percent in
constant currency. The company expects fourth quarter fiscal 2013 revenue to
be in the range of $695 to $720 million. This estimate includes an assumption
of approximately $2 million from unfavorable currency translation effects
compared to the prior year and approximately $4 million from recent
acquisitions. Adjusting for these impacts, the company projects fourth quarter
organic revenue growth in the range of 0 to 4 percent over the prior year. The
company reported revenue of $690.2 million in the fourth quarter of fiscal
2012.

Steelcase expects to report earnings between $0.14 to $0.18 per share for the
fourth quarter of fiscal 2013, including restructuring costs of approximately
$0.02 per share. Steelcase reported earnings of $0.11 per share in the fourth
quarter of fiscal 2012, including restructuring costs of approximately $0.03
per share.

"We remain optimistic about the prospects for continued growth in the Americas
business, as customer visits, which center around the need for companies to
modernize their spaces, remained strong again in the third quarter," Mr.
Hackett said. "We are continuing to outpace the industry growth in the U.S.
and are investing in new ideas intended to sustain our momentum."

Business Segment                                                   
Results
(in millions)                                                      
                                                                  
                  (Unaudited)               (Unaudited)               
                  Three Months Ended        Nine Months Ended         
                  November  November  %      November 23, November 25, %
                   23, 2012  25, 2011  Change 2012         2011         Change
                                                                  
Revenue                                                            
Americas (1)       $503.2 $488.5 3.0 %  $1,522.2  $1,399.9  8.7 %
EMEA (2)           157.1   161.8   (2.9)% 426.3      453.2      (5.9)%
Other (3)          66.9    69.1    (3.2)% 198.8      206.2      (3.6)%
Consolidated       $727.2 $719.4 1.1 %  $2,147.3  $2,059.3  4.3 %
revenue
                                                                  
Operating income                                                   
(loss)
Americas           $42.1  $37.1        $134.0    $98.3     
EMEA               0.8     4.0           (12.4)      (10.7)      
Other              2.1     6.1           4.9        13.1       
Corporate (4)      (6.6)    (9.0)          (22.0)      (22.1)      
Consolidated       $38.4  $38.2        $104.5    $78.6     
operating income
                                                                  
Operating income   5.3 %     5.3 %           4.9 %        3.8 %        
percent
                                                                  
Revenue Mix                                                        
Americas (1)       69.2 %    67.9 %          70.9 %       68.0 %       
EMEA (2)           21.6 %    22.5 %          19.9 %       22.0 %       
Other (3)          9.2 %     9.6 %           9.3 %        10.0 %       

Business Segment Footnotes

As of November 23, 2012, we realigned portions of our reportable segments for
financial reporting purposes as a result of the integration of the PolyVision
global technology business into the Steelcase Education Solutions group. Prior
to this change, the PolyVision global technology business was combined with
the PolyVision surfaces business and was reported collectively as PolyVision
in the Other category along with Asia Pacific and Designtex.As a result of
these changes, the results of the PolyVision technology business are now
reported in the Americas and EMEA segments. The PolyVision surfaces business
remains in the Other category. Certain amounts in the prior years' financial
statements have been reclassified to conform to the new segment presentation.

1.The Americas segment serves customers in the U.S., Canada and Latin
    America with a portfolio of integrated architecture, furniture and
    technology products marketed to corporate, government, healthcare,
    education and retail customers through the Steelcase, Coalesse, Turnstone,
    Details and Nurture by Steelcase brands.
2.The EMEA segment serves customers in Europe, the Middle East and Africa
    primarily under the Steelcase brand, with an emphasis on freestanding
    furniture systems, storage and seating solutions.
3.The Other category includes Asia Pacific, PolyVision and Designtex.
4.Corporate expenses include unallocated portions of executive and shared
    services functions such as information technology, human resources,
    finance, legal, research and development and corporate facilities.


YEAR OVER YEAR ORGANIC REVENUE GROWTH BY SEGMENT
Q3 2013 vs. Q3 2012                                             
                      Steelcase Inc.    Americas      EMEA        Other
                                                                   category
                                                               
Q3 2012 revenue        $719.4         $488.5     $161.8   $69.1
Currency translation   (8.2)            0.7         (9.1)      0.2
effects*
Q3 2012 revenue,       711.2           489.2       152.7     69.3
adjusted
                                                               
Q3 2013 revenue        727.2           503.2       157.1     66.9
Dealer acquisitions    (6.0)            —            (6.0)      —
Q3 2013 revenue,       721.2           503.2       151.1     66.9
adjusted
Organic growth         $10.0          $14.0      $(1.6)    $(2.4)
(decline) $
Organic growth         1 %               3 %           (1)%        (3)%
(decline) %
                                                               
* Currency translation effects represent the estimated net effect of
translating Q3 2012 foreign currency revenues using the average exchange rates
during Q3 2013.
                                                               
                                                               
YEAR OVER YEAR ORGANIC REVENUE GROWTH
YTD Q3 2013 vs. YTD Q3                                          
2012
                      Steelcase Inc.    Americas      EMEA        Other
                                                                   category
                                                               
Year-to-date 2012      $2,059.3       $1,399.9   $453.2   $206.2
revenue
Divestiture            (8.6)            —            —          (8.6)
Currency translation   (35.8)           (1.1)        (35.1)     0.4
effects*
Year-to-date 2012      2,014.9         1,398.8     418.1     198.0
revenue, adjusted
                                                               
Year-to-date 2013      2,147.3         1,522.2     426.3     198.8
revenue
Dealer acquisitions    (17.2)           (10.5)       (6.7)      —
Year-to-date 2013      2,130.1         1,511.7     419.6     198.8
revenue, adjusted
Organic growth $       $115.2         $112.9     $1.5     $0.8
Organic growth %       6 %               8 %           —           —
                                                               
* Currency translation effects represent the estimated net effect of
translating Q3 2012, Q2 2012 and Q1 2012 foreign currency revenues using the
average exchange rates during Q3 2013, Q2 2013 and Q1 2013, respectively.
                                                               
                                                               
PROJECTED ORGANIC REVENUE GROWTH
Q4 2013 vs. Q4 2012                                             
                      Steelcase Inc.                            
                                                               
Q4 2012 revenue        $690                                   
Currency translation   (2)                                      
effects*
Q4 2012 revenue,       688                                     
adjusted
                                                               
Q4 2013 revenue,       695 - 720                                 
projected
Dealer acquisitions    (4)                                      
Q4 2013 projected      691 - 716                                 
revenue, adjusted
Organic growth $       $3 - 28                                 
Organic growth %       0% - 4%                                   
                                                               
* Currency translation effects represent the estimated net effect of
translating Q4 2012 foreign currency revenues using the exchange rate at the
end of Q3 2013.
                                                               
                                                               
STEELCASE INC.                                                  
ADJUSTED EARNINGS PER                                           
SHARE
                      Q3 2013                                   
Earnings per share     $ 0.19                                   
Restructuring costs    0.03                                     
per share, net of tax
Earnings per share,    $ 0.22                                   
adjusted

                                                                
                                                                
                                                                
Steelcase Inc.                                                   
              (Unaudited)                   (Unaudited)
              Three Months Ended            Nine Months Ended
              November 23,   November 25,   November 23,     November 25,
               2012           2011           2012             2011
                                                                
Revenue        $727.2 100.0 $719.4 100.0 $        100.0  $        100.0
                        %              %     2,147.3   %      2,059.3   %
Cost of sales  498.0   68.5  496.3   69.0  1,485.5  69.2   1,430.5  69.5
Restructuring  3.3     0.4   3.3     0.4   11.8     0.5    24.7     1.2
costs
Gross profit   225.9   31.1  219.8   30.6  650.0    30.3   604.1    29.3
Operating      184.8   25.4  181.1   25.2  542.5    25.3   524.2    25.4
expenses
Restructuring  2.7     0.4   0.5     0.1   3.0      0.1    1.3      0.1
costs
Operating      $38.4  5.3 % $38.2  5.3 % $104.5  4.9 %  $78.6   3.8 %
income
Interest
expense,
investment     (1.3)   (0.2) (3.6)   (0.5) (2.5)    (0.1)  (17.3)   (0.8)
income (loss)
and other
income, net
Income before
income tax     37.1    5.1   34.6    4.8   102.0    4.8    61.3     3.0
expense
Income tax     13.5    1.9   12.2    1.7   35.7     1.7    19.5     1.0
expense
Net income     $23.6  3.2 % $22.4  3.1 % $66.3   3.1 %  $41.8   2.0 %
                                                                
Operating      $38.4  5.3 % $38.2  5.3 % $104.5  4.9 %  $78.6   3.8 %
income
Add:
restructuring  6.0     0.8   3.8     0.5   14.8     0.6    26.0     1.3
costs
Adjusted
operating      $44.4  6.1 % $42.0  5.8 % $119.3  5.5 %  $104.6  5.1 %
income
                                                                
                                                                
Americas                                                         
              (Unaudited)                   (Unaudited)
              Three Months Ended            Nine Months Ended
              November 23,   November 25,   November 23,     November 25,
               2012           2011           2012             2011
                                                                
Revenue        $503.2 100.0 $488.5 100.0 $        100.0  $        100.0
                        %              %     1,522.2   %      1,399.9   %
Cost of sales  342.8   68.1  340.5   69.7  1,045.7  68.7   975.8    69.7
Restructuring  3.2     0.7   2.9     0.6   11.4     0.7    15.4     1.1
costs
Gross profit   157.2   31.2  145.1   29.7  465.1    30.6   408.7    29.2
Operating      113.3   22.5  107.5   22.0  329.3    21.7   309.9    22.1
expenses
Restructuring  1.8     0.3   0.5     0.1   1.8      0.1    0.5      0.0
costs
Operating      $42.1  8.4 % $37.1  7.6 % $134.0  8.8 %  $98.3   7.0 %
income
Add:
restructuring  5.0     1.0   3.4     0.7   13.2     0.8    15.9     1.1
costs
Adjusted
operating      $47.1  9.4 % $40.5  8.3 % $147.2  9.6 %  $114.2  8.2 %
income
                                                                
                                                                
EMEA                                                             
              (Unaudited)                   (Unaudited)
              Three Months Ended            Nine Months Ended
              November 23,   November 25,   November 23,     November 25,
               2012           2011           2012             2011
                                                                
Revenue        $157.1 100.0 $161.8 100.0 $426.3  100.0  $453.2  100.0
                        %              %               %                %
Cost of sales  111.6   71.0  111.6   69.0  310.2    72.8   320.1    70.6
Restructuring  0.1     0.1   0.4     0.2   0.4      0.1    8.2      1.8
costs
Gross profit   45.4    28.9  49.8    30.8  115.7    27.1   124.9    27.6
Operating      44.2    28.2  45.6    28.2  127.7    29.9   134.6    29.7
expenses
Restructuring  0.4     0.2   0.2     0.1   0.4      0.1    1.0      0.2
costs
Operating      $0.8   0.5 % $4.0   2.5 % $(12.4) (2.9)% $(10.7) (2.3)%
income (loss)
Add:
restructuring  0.5     0.3   0.6     0.3   0.8      0.2    9.2      2.0
costs
Adjusted
operating      $1.3   0.8 % $4.6   2.8 % $(11.6) (2.7)% $(1.5)  (0.3)%
income (loss)
                                                                
                                                                
Other                                                            
              (Unaudited)                   (Unaudited)
              Three Months Ended            Nine Months Ended
              November 23,   November 25,   November 23,     November 25,
               2012           2011           2012             2011
                                                                
Revenue        $66.9  100.0 $69.1  100.0 $198.8  100.0  $206.2  100.0
                        %              %               %                %
Cost of sales  43.6    65.2  44.2    64.0  129.6    65.2   134.6    65.3
Restructuring  —       —     —       —     —        —      1.1      0.5
costs
Gross profit   23.3    34.8  24.9    36.0  69.2     34.8   70.5     34.2
Operating      20.7    31.0  19.0    27.5  63.5     31.9   57.6     27.9
expenses
Restructuring  0.5     0.7   (0.2)   (0.3) 0.8      0.4    (0.2)    (0.1)
costs
Operating      $2.1   3.1 % $6.1   8.8 % $4.9    2.5 %  $13.1   6.4 %
income
Add:
restructuring  0.5     0.7   (0.2)   (0.3) 0.8      0.4    0.9      0.4
costs
Adjusted
operating      $2.6   3.8 % $5.9   8.5 % $5.7    2.9 %  $14.0   6.8 %
income
                                                                
                                                                
Corporate                                                        
              (Unaudited)                   (Unaudited)
              Three Months Ended            Nine Months Ended
              November 23,   November 25,   November 23,     November 25,
               2012           2011           2012             2011
                                                                
Operating loss $(6.6)      $(9.0)      $(22.0)       $(22.1) 
Add:
restructuring  —            —            —              —        
costs
Adjusted       $(6.6)      $(9.0)      $(22.0)       $(22.1) 
operating loss

Webcast

Steelcase will discuss third quarter results and business outlook on a
conference call and webcast at 11:00 a.m. Eastern time tomorrow. Links to the
webcast are available at ir.steelcase.com. Related presentation slides will be
available on the company's website shortly after this press release is issued.

Non-GAAP Financial Measures

This earnings release contains certain non-GAAP financial measures.A
"non-GAAP financial measure" is defined as a numerical measure of a company's
financial performance that excludes or includes amounts so as to be different
than the most directly comparable measure calculated and presented in
accordance with GAAP in the statements of income, balance sheets or statements
of cash flow of the company.Pursuant to the requirements of Regulation G, the
company has provided a reconciliation above of non-GAAP financial measures to
the most directly comparable GAAP financial measure.

The non-GAAP financial measures used within the company's earnings release
are: (1) organic revenue growth (decline), which represents the change in
revenue excluding currency translation effects and the impacts of acquisitions
and divestitures; (2) adjusted operating income (loss), which represents
operating income (loss), excluding restructuring costs; and (3) adjusted
earnings per share, which represents earnings per share, excluding
restructuring costs, net of tax. These measures are presented because
management uses this information to monitor and evaluate financial results and
trends. Therefore, management believes this information is also useful for
investors.

Forward-looking Statements

From time to time, in written and oral statements, the company discusses its
expectations regarding future events and its plans and objectives for future
operations. These forward-looking statements generally are accompanied by
words such as "anticipate," "believe," "could," "estimate," "expect,"
"forecast," "intend," "may," "possible," "potential," "predict," "project," or
other similar words, phrases or expressions. Forward-looking statements
involve a number of risks and uncertainties that could cause actual results to
vary from the company's expectations because of factors such as, but not
limited to, competitive and general economic conditions domestically and
internationally; acts of terrorism, war, governmental action, natural
disasters and other Force Majeure events; changes in the legal and regulatory
environment; restructuring activities; changes in raw materials and commodity
costs; currency fluctuations; changes in customer demands; and the other risks
and contingencies detailed in the company's most recent Annual Report on Form
10-K and its other filings with the Securities and Exchange Commission.
Steelcase undertakes no obligation to update, amend or clarify forward-looking
statements, whether as a result of new information, future events or
otherwise.

About Steelcase Inc.

For 100 years, Steelcase Inc. has helped create great experiences for the
world's leading organizations- wherever work happens. Steelcase and our
family of brands- including Steelcase®, Coalesse®, Designtex®, Details®,
Nurture®, PolyVision®, and Turnstone®- offer a comprehensive portfolio of
furnishings, products and services designed to unlock human promise and
support social, economic, and environmental sustainability. We are globally
accessible through a network of channels, including approximately 650 dealers.
Steelcase is a global, industry-leading, and publicly traded company with
fiscal 2012 revenue of $2.75 billion.

The Steelcase Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=4484


STEELCASE INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in millions, except per share data)
                                                              
                          Three Months Ended        Nine Months Ended
                          November 23, November 25, November 23, November 25,
                           2012         2011         2012         2011
Revenue                    $727.2     $719.4     $2,147.3   $2,059.3
Cost of sales              498.0       496.3       1,485.5     1,430.5
Restructuring costs        3.3         3.3         11.8        24.7
Gross profit               225.9       219.8       650.0       604.1
Operating expenses         184.8       181.1       542.5       524.2
Restructuring costs        2.7         0.5         3.0         1.3
Operating income           38.4        38.2        104.5       78.6
Interest expense           (4.2)       (4.1)       (13.3)      (20.1)
Investment income (loss)   1.1         (0.6)       3.5         (0.3)
Other income, net          1.8         1.1         7.3         3.1
Income before income tax   37.1        34.6        102.0       61.3
expense
Income tax expense         13.5        12.2        35.7        19.5
Net income                 $23.6      $22.4      $66.3      $41.8
                                                              
Earnings per share:                                            
Basic                      $0.19      $0.17      $0.52      $0.31
Diluted                    $0.18      $0.17      $0.52      $0.31
Weighted average shares    126.9       131.3       127.6       132.8
outstanding - basic
Weighted average shares    128.1       131.3       128.7       132.8
outstanding - diluted
Dividends declared and     $ 0.09       $ 0.06       $ 0.27       $ 0.18
paid per common share




STEELCASE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in millions)
                                                       
                                  November 23, 2012     February 24, 2012
ASSETS
Current assets:                                         
Cash and cash equivalents          $136.0              $112.1
Short-term investments             77.4                 79.1
Accounts receivable, net           313.8                271.4
Inventories                        155.9                139.5
Deferred income taxes              45.8                 42.4
Other current assets               50.2                 57.6
Total current assets               779.1                702.1
                                                       
Property, plant and equipment, net 354.1                346.9
Company-owned life insurance       231.3                227.6
Deferred income taxes              100.9                120.0 *
Goodwill                           180.1                176.6
Other intangible assets, net       19.8                 18.8
Other assets                       101.4                96.5
Total assets                       $1,766.7            $1,688.5
                                                       
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:                                    
Accounts payable                   $222.9              $191.3
Short-term borrowings and current  2.6                  2.6
portion of long-term debt
Accrued expenses                   296.9                268.0
Total current liabilities          522.4                461.9
                                                       
Long-term liabilities:                                  
Long-term debt less current        287.2                288.9
maturities
Employee benefit plan obligations  161.8                161.1
Other long-term liabilities        86.4                 80.5
Total long-term liabilities        535.4                530.5
Total liabilities                  1,057.8              992.4
                                                       
Shareholders' equity:                                   
Common stock                       —                    1.1
Additional paid-in capital         22.3                 32.6
Accumulated other comprehensive    (6.9)                0.8
income (loss)
Retained earnings                  693.5                661.6 *
Total shareholders' equity         708.9                696.1
Total liabilities and              $1,766.7            $1,688.5
shareholders' equity
                                                       
* In Q2 2013, the company identified errors in its accounting for deferred
income taxes which relate to periods prior to fiscal year 2010. Management
believes the errors are not material to any prior period financial
statements. The correction of the errors had the effect of reducing long-term
deferred income taxes and retained earnings by $12.5 million. The condensed
consolidated balance sheet as of February 24, 2012 has been restated to
reflect this correction. The errors and correction were also discussed in the
company's Form 10-Q for the quarter ended August 24, 2012 filed with the
Securities and Exchange Commission.



STEELCASE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
(in millions)
                                                           
                                          Nine Months Ended
                                          November 23, 2012 November 25, 2011
OPERATING ACTIVITIES                                        
Net income                                 $66.3           $41.8
Depreciation and amortization              42.5             41.7
Changes in cash surrender value of         (3.7)            0.9
company-owned life insurance
Changes in deferred income taxes           15.3             3.8
Restructuring charges                      14.8             26.0
Non-cash stock compensation                7.8              10.1
Changes in operating assets and
liabilities, net of acquisitions and                        
divestiture:
Accounts receivable, inventories and       (29.7)           (47.4)
accounts payable
Employee compensation liabilities          5.4              (24.2)
Other assets and liabilities               11.5             (7.1)
Other                                      (0.4)            2.3
Net cash provided by operating activities  129.8            47.9
                                                           
INVESTING ACTIVITIES                                        
Capital expenditures                       (49.9)           (49.0)
Proceeds from disposal of fixed assets     14.1             8.1
Purchases of short-term investments        (45.3)           (161.8)
Liquidations of short-term investments     47.5             460.2
Acquisition, net of cash acquired          (6.1)            (20.5)
Other                                      (10.0)           9.8
Net cash provided by (used in) investing   (49.7)           246.8
activities
                                                           
FINANCING ACTIVITIES                                        
Repayments of long-term debt               (2.0)            (255.5)
Dividends paid                             (34.4)           (23.9)
Common stock repurchases                   (19.9)           (41.0)
Other                                      0.7              0.3
Net cash used in financing activities      (55.6)           (320.1)
                                                           
Effect of exchange rate changes on cash    (0.6)            (1.9)
and cash equivalents
                                                           
Net increase (decrease) in cash and cash   23.9             (27.3)
equivalents
Cash and cash equivalents, beginning of    112.1            142.2
period
Cash and cash equivalents, end of period   $136.0          $114.9

CONTACT: Investor Contact:
         Raj Mehan
         Investor Relations
         (616) 247-2200
        
         Media Contact:
         Lauren Begley
         Public Relations
         (212) 931-6143

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