Steelcase Reports Third Quarter Results

Steelcase Reports Third Quarter Results

Americas Posts Double-Digit Organic Revenue Growth and Operating Margin

GRAND RAPIDS, Mich., Dec. 18, 2013 (GLOBE NEWSWIRE) -- Steelcase Inc.
(NYSE:SCS) today reported third quarter revenue of $784.8 million and net
income of $23.0 million, or $0.18 per share, including restructuring costs of
approximately $0.01 per share. Current quarter results included goodwill and
intangible asset impairment charges related to Asia Pacific, which had the
effect of reducing earnings by approximately $12.9 million, or $0.10 per
share. Steelcase reported $727.2 million of revenue and earnings of $0.19 per
share in the third quarter of the prior year, including restructuring costs of
approximately $0.03 per share.

Organic revenue growth over the prior year was 8 percent after adjusting for
$3.6 million of favorable currency translation effects and $1.5 million
related to a dealer divestiture, net of acquisitions.The Americas organic
revenue growth was 11 percent compared to the prior year and reflected a
higher mix of project business from some of the company's largest corporate
customers compared to the prior year. EMEA and Asia Pacific experienced small
organic revenue declines, which included higher levels of competitive
discounting compared to the prior year.

Current quarter operating income of $39.3 million compares to operating income
of $38.4 million in the prior year.Excluding goodwill and intangible asset
impairment charges and restructuring costs, third quarter adjusted operating
income of $53.9 million compares with $44.4 million in the prior year.The
improvement was driven by strength in the Americas, offset in part by
operating losses in EMEA and Asia Pacific compared to profitability in the
prior year.

"The strong performance in the Americas continues to illustrate our
competitive advantage related to helping our customers amplify organizational
performance through the modernization of their spaces. We expect the momentum
in the Americas to be further propelled by the launch of Gesture, which is now
shipping to customers, and other new products expected to begin shipping in
the fourth quarter and early next fiscal year," said James P. Hackett,
CEO."We recently announced changes in our EMEA manufacturing footprint as
part of our multi-year strategy to improve revenue and the fitness of our
business model in EMEA, and we continue to believe that EMEA and Asia Pacific
are key parts of our long-term global strategy."

Cost of sales increased 50 basis points to 69.0 percent of revenue in the
current quarter compared to 68.5 percent in the prior year.Year-over-year
improvement in the Americas was more than offset by higher costs of sales in
EMEA and Asia Pacific, which were primarily driven by higher competitive
discounting and adjustments to reserves for slow-moving inventory and sales
allowances.

Operating expenses in the third quarter were $189.8 million compared with
$184.8 million in the prior year.The increase was largely due to higher
spending on marketing, product development and other initiatives, offset in
part by lower variable compensation expense.

Other income, net of $3.0 million in the current quarter increased by $1.2
million compared to the prior year primarily due to higher equity in income of
unconsolidated ventures.

Income tax expense of $15.5 million in the current quarter reflects the
non-deductible nature of the goodwill and intangible asset impairment charges
and included $4.0 million of other net discrete tax benefits.

Cash, short-term investments and the cash surrender value of company-owned
life insurance totaled $449 million and total debt was $287 million at the end
of the third quarter.

The Board of Directors today declared a cash dividend of $0.10 per share, to
be paid on or before January 13, 2014 to shareholders of record as of December
30, 2013.

"Despite seasonal revenue improvement in EMEA compared to the second quarter,
we continued to post operating losses in this region," said David C.
Sylvester, senior vice president and CFO. "We expect the macro-economic
environment to remain challenging and result in quarterly operating losses for
the near term.Our focus remains on allocating resources to areas of potential
growth and reducing our cost structure wherever possible to improve the
long-term competitiveness of the business."

Outlook

In the Americas, third quarter order growth approximated 9% compared to the
prior year and customer order backlog at the end of the third quarter
increased approximately 15% compared to the prior year.EMEA third quarter
orders declined by approximately 10% compared to the prior year.The company
expects fourth quarter 2014 revenue to be in the range of $760 to $785
million.This estimate includes approximately $35 million associated with an
extra week in the Americas and Other category compared to the prior
year.Adjusted for this impact, the company projects fourth quarter organic
revenue growth in the range of 1 to 4 percent over the prior year.The company
reported revenue of $721.4 million in the fourth quarter of fiscal 2013.

Steelcase expects to report earnings between $0.22 to $0.25 per share for the
fourth quarter of fiscal 2014, including net restructuring benefits of
approximately $0.07 per share primarily related to expected gains associated
with pending facility sales.In addition, the estimate for earnings includes
higher operating expenses as compared to the third quarter (including costs
associated with the extra week and incremental variable compensation expense
associated with the restructuring benefits) and an estimated effective tax
rate of approximately 42%. Steelcase reported a net loss of $0.22 per share in
the fourth quarter of fiscal 2013, including restructuring costs of
approximately $0.10 per share.In addition, fourth quarter of fiscal 2013
results included goodwill impairment charges, tax valuation allowance
adjustments, foreign tax credit benefits and environmental reserve
adjustments, which had the aggregate net effect of reducing earnings by
approximately $0.31 per share.

"For a large portion of my nearly 20 years as CEO, Steelcase has been
reinventing itself to keep pace with technology, globalization and other
changes in the world of work," said Mr. Hackett, who earlier this year
announced his intention to retire as CEO in February 2014. "I have great
confidence in our management team and our incoming CEO, Jim Keane, to build on
great performance in the Americas and continue Steelcase's transformation in
other regions of the world."


Business Segment Results
(in millions)
                                                                  
            (Unaudited)                     (Unaudited)               
            Three Months Ended              Nine Months Ended         
            November22, November23, %     November22, November23, 
             2013         2012         Change 2013         2012         %Change
                                                                  
Revenue                                                            
Americas (1) $558.5     $503.2     11.0%  $1,596.0   $1,522.2   4.8%
EMEA (2)     158.0        157.1        0.6%   417.1        426.3        (2.2)%
Other (3)    68.3         66.9         2.1%   196.4        198.8        (1.2)%
Consolidated $784.8     $ 727.2      7.9%   $2,209.5   2,147.3      2.9%
revenue
                                                                  
                                                                  
Operating
income                                                             
(loss)
Americas     $66.6      $42.1            $183.6     $134.0     
EMEA         (3.7)        0.8                (29.1)       (12.4)       
Other        (13.6)       2.1                (10.6)       4.9          
Corporate    (10.0)       (6.6)              (32.2)       (22.0)       
(4)
Consolidated
operating    $39.3      $38.4            $111.7     $104.5     
income
                                                                  
Operating
income       5.0%         5.3%               5.0%         4.9%         
percent
                                                                  
                                                                  
Revenue Mix                                                        
Americas (1) 71.2%        69.2%              72.2%        70.9%        
EMEA (2)     20.1%        21.6%              18.9%        19.8%        
Other (3)    8.7%         9.2%               8.9%         9.3%         
                                                                  
Business Segment Footnotes                                                   
                                                                  
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,
Details, Nurture by Steelcase and Turnstone brands.
2. The EMEA segment serves customers in Europe, the Middle East and
Africa primarily under the Steelcase and Coalesse brands, with an       
emphasis on freestanding furniture systems, storage and seating
solutions.
3. The Other category includes Asia Pacific, Designtex and PolyVision. 
4. Corporate expenses include unallocated portions of shared services
functions such as information technology, human resources, finance,     
executive, corporate facilities, legal and research.

                                                             
YEAR OVER YEAR ORGANIC REVENUE GROWTH (DECLINE) BY            
SEGMENT
Q3 2014 vs. Q3 2013                                         
                       Steelcase Inc.    Americas    EMEA     Other category
                                                           
Q3 2013 revenue         $ 727.2           $ 503.2     $ 157.1  $ 66.9
Dealer divestiture      (1.9)             —           (1.9)    —
Currency translation    3.6               (1.9)       6.2      (0.7)
effects*
Q3 2013 revenue,        728.9             501.3       161.4    66.2
adjusted
                                                           
Q3 2014 revenue         784.8             558.5       158.0    68.3
Dealer acquisitions     (0.4)             —           (0.4)    —
Q3 2014 revenue,        784.4             558.5       157.6    68.3
adjusted
Organic growth          $ 55.5            $ 57.2      $ (3.8)  $ 2.1
(decline) $
Organic growth          8%                11%         (2)%     3%
(decline) %
                                                           
* Currency translation effects represent the estimated net effect of
translating Q3 2013 foreign currency revenues using the average exchange rates
during Q3 2014.


PROJECTED ORGANIC REVENUE GROWTH
Q4 2014 vs. Q4 2013                 
                                   Steelcase Inc.
                                   
Q4 2013 revenue                     $721
Dealer divestiture                  (1)
Currency translation effects*       1
Q4 2013 revenue, adjusted           721
                                   
Q4 2014 revenue, projected          760 - 785
Impact of additional week           35
Q4 2014 projected revenue, adjusted 725 - 750
Organic growth (decline) $          $4 - 29
Organic growth (decline) %          1% - 4%
                                   

* Currency translation effects
represent the estimated net effect of
translating Q4 2013 foreign currency                                           
revenues using the exchange rate at
the end of Q3 2014.
                                                                   
Steelcase                                                           
Inc.
             (Unaudited)                     (Unaudited)
             Three Months Ended              Nine Months Ended                   
             November22,    November23,    November22,      November23,
             2013            2012            2013              2012              
Revenue       $784.8 100.0% $727.2 100.0% $2,209.5 100.0% $2,147.3 100.0%
Cost of sales 541.1    69.0   498.0    68.5   1,511.70   68.5   1,485.5    69.2
Restructuring 0.9      0.1    3.3      0.4    1.0        —      11.8       0.5
costs
Gross profit  242.8    30.9   225.9    31.1   696.8      31.5   650.0      30.3
Operating     189.8    24.2   184.8    25.4   563.8      25.5   542.5      25.3
expenses
Goodwill and
intangible
asset         12.9     1.6    —        —      12.9       0.6    —          —
impairment
charges
Restructuring 0.8      0.1    2.7      0.4    8.4        0.4    3.0        0.1
costs
Operating     $39.3  5.0%   $38.4  5.3%   $111.7   5.0%   $104.5   4.9%
income
Interest
expense,
investment    (0.8)    (0.1)  (1.3)    (0.2)  (9.1)      (0.4)  (2.5)      (0.1)
income and
other income,
net
Income before
income tax    38.5     4.9    37.1     5.1    102.6      4.6    102.0      4.8
expense
Income tax    15.5     2.0    13.5     1.9    38.8       1.7    35.7       1.7
expense
Net income    $23.0  2.9%   $23.6  3.2%   $63.8    2.9%   $66.3    3.1%
                                                                   
Operating     $39.3  5.0%   $ 38.4   5.3%   $111.7   5.0%   $104.5   4.9%
income
Add: goodwill
and
intangible    12.9     1.6    —        —      12.9       0.6    —          —
asset
impairment
charges
Add:
restructuring 1.7      0.2    6.0      0.8    9.4        0.4    14.8       0.6
costs
Adjusted
operating     $53.9  6.8%   $44.4  6.1%   $134.0   6.0%   $119.3   5.5%
income
                                                                   
                                                                   
Americas                                                            
             (Unaudited)                     (Unaudited)
             Three Months Ended              Nine Months Ended
             November22,    November23,    November22,      November23,
             2013            2012           2013              2012              
Revenue       $558.5 100.0% $503.2 100.0% $1,596.0 100.0% $1,522.2 100.0%
Cost of sales 375.8    67.3   342.8    68.1   1,065.9    66.8   1,045.7    68.7
Restructuring (0.1)    —      3.2      0.7    —          —      11.4       0.7
costs
Gross profit  182.8    32.7   157.2    31.2   530.1      33.2   465.1      30.6
Operating     116.1    20.8   113.3    22.5   345.3      21.6   329.3      21.7
expenses
Goodwill and
intangible
asset         —        —      —        —      —          —      —          —
impairment
charges
Restructuring 0.1      —      1.8      0.3    1.2        0.1    1.8        0.1
costs
Operating     $66.6  11.9%  $42.1  8.4%   $183.6   11.5%  $134.0   8.8%
income
Add: goodwill
and
intangible    —        —      —        —      —          —      —          —
asset
impairment
charges
Add:
restructuring —        —      5.0      1.0    1.2        0.1    13.2       0.8
costs
Adjusted
operating     $66.6  11.9%  $47.1  9.4%   $184.8   11.6%  $147.2   9.6%
income

                                                                
EMEA                                                             
                 (Unaudited)                    (Unaudited)
                 Three Months Ended             Nine Months Ended
                 November22,     November23,  November22,   November23,
                 2013             2012          2013           2012
Revenue           $ 158.0  100.0%  $      100.0% $ 417.1 100.0% $ 426.3 100.0%
                                   157.1
Cost of sales     118.6    75.1    111.6  71.0   314.5   75.4   310.2   72.8
Restructuring     1.0      0.6     0.1    0.1    1.0     0.2    0.4     0.1
costs
Gross profit      38.4     24.3    45.4   28.9   101.6   24.4   115.7   27.1
Operating         41.6     26.3    44.2   28.2   123.7   29.7   127.7   29.9
expenses
Goodwill and
intangible asset  —        —       —      —      —       —      —       —
impairment
charges
Restructuring     0.5      0.3     0.4    0.2    7.0     1.7    0.4     0.1
costs
Operating income  $ (3.7)  (2.3)%  $ 0.8  0.5%   $       (7.0)% $       (2.9)%
(loss)                                           (29.1)         (12.4)
Add: goodwill and
intangible asset  —        —       —      —      —       —      —       —
impairment
charges
Add:
restructuring     1.5      0.9     0.5    0.3    8.0     1.9    0.8     0.2
costs
Adjusted                                         $              $
operating income  $ (2.2)  (1.4)%  $ 1.3  0.8%   (21.1)  (5.1)% (11.6)  (2.7)%
(loss)
                                                                
Other category                                                   
                 (Unaudited)                    (Unaudited)
                 Three Months Ended             Nine Months Ended
                 November22,     November23,  November22,   November23,
                 2013             2012          2013           2012
Revenue           $ 68.3   100.0%  $ 66.9 100.0% $ 196.4 100.0% $ 198.8 100.0%
Cost of sales     46.7     68.4    43.6   65.2   131.3   66.9   129.6   65.2
Restructuring     —        —       —      —      —       —      —       —
costs
Gross profit      21.6     31.6    23.3   34.8   65.1    33.1   69.2    34.8
Operating         22.1     32.3    20.7   31.0   62.6    31.8   63.5    31.9
expenses
Goodwill and
intangible asset  12.9     18.9    —      —      12.9    6.6    —       —
impairment
charges
Restructuring     0.2      0.3     0.5    0.7    0.2     0.1    0.8     0.4
costs
Operating income  $ (13.6) (19.9)% $ 2.1  3.1%   $       (5.4)% $ 4.9   2.5%
(loss)                                           (10.6)
Add: goodwill and
intangible asset  12.9     18.9    —      —      12.9    6.6    —       —
impairment
charges
Add:
restructuring     0.2      0.3     0.5    0.7    0.2     0.1    0.8     0.4
costs
Adjusted
operating income  $ (0.5)  (0.7)%  $ 2.6  3.8%   $ 2.5   1.3%   $ 5.7   2.9%
(loss)
                                                                

Corporate                                                      
                          (Unaudited)               (Unaudited)
                          Three Months Ended        Nine Months Ended
                          November22, November23, November22, November23,
                          2013         2012         2013         2012
Operating loss             $ (10.0)     $ (6.6)      $ (32.2)     $ (22.0)
Add: goodwill and
intangible assets          —            —            —            —
impairment charges
Add: restructuring costs   —            —            —            —
Adjusted operating loss    $ (10.0)     $ (6.6)      $ (32.2)     $ (22.0)

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, the impacts of acquisitions
and divestitures and an extra week of revenue; and (2) adjusted operating
income (loss), which represents operating income (loss), excluding
restructuring costs and goodwill and intangible asset impairment
charges.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 over 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®, Details®, Designtex®,
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 670 dealers.
Steelcase is a global, industry-leading and publicly traded company with
fiscal 2013 revenue of $2.9 billion.


STEELCASE INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in millions, except per share data)
                                                              
                          Three Months Ended        Nine Months Ended
                          November22, November23, November22, November23,
                          2013         2012         2013         2012
Revenue                    $784.8     $727.2     $2,209.5   $2,147.3
Cost of sales              541.1        498.0        1,511.7      1,485.5
Restructuring costs        0.9          3.3          1.0          11.8
Gross profit               242.8        225.9        696.8        650.0
Operating expenses         189.8        184.8        563.8        542.5
Goodwill and intangible    12.9         —            12.9         —
asset impairment charges
Restructuring costs        0.8          2.7          8.4          3.0
Operating income           39.3         38.4         111.7        104.5
Interest expense           (4.4)        (4.2)        (13.3)       (13.3)
Investment income (loss)   0.6          1.1          (0.6)        3.5
Other income, net          3.0          1.8          4.8          7.3
Income before income tax   38.5         37.1         102.6        102.0
expense
Income tax expense         15.5         13.5         38.8         35.7
Net income                 $23.0      $23.6      $63.8      $66.3
                                                              
Earnings per share:                                            
Basic                      $0.18      $0.19      $0.51      $0.52
Diluted                    $0.18      $0.18      $0.50      $0.52
Weighted average shares    125.9        126.9        126.1        127.6
outstanding - basic
Weighted average shares    127.7        128.1        127.8        128.7
outstanding - diluted
                                                              
Dividends declared and     $0.10      $0.09      $0.30      $0.27
paid per common share


STEELCASE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
                                                    (Unaudited)
                                                    November22, February22,
                                                    2013         2013
ASSETS                                                           
Current assets:                                                  
Cash and cash equivalents                            $149.1     $150.4
Short-term investments                               147.9        100.5
Accounts receivable, net                             359.9        287.3
Inventories                                          161.1        137.5
Deferred income taxes                                63.5         56.2
Other current assets                                 63.5         46.7
Total current assets                                 945.0        778.6
                                                                
Property, plant and equipment, net                   356.1        353.2
Company-owned life insurance                         152.1        225.8
Deferred income taxes                                98.8         101.7
Goodwill                                             108.7        121.4
Other intangible assets, net                         17.0         19.2
Other assets                                         98.1         89.7
Total assets                                         $1,775.8   $1,689.6
                                                                
LIABILITIES AND SHAREHOLDERS' EQUITY                             
Current liabilities:                                             
Accounts payable                                     $235.5     $198.6
Short-term borrowings and current portion of         2.5          2.6
long-term debt
Accrued expenses:                                                
Employee compensation                                142.4        129.4
Employee benefit plan obligations                    21.7         23.8
Other                                                178.4        130.4
Total current liabilities                            580.5        484.8
                                                                
Long-term liabilities:                                           
Long-term debt less current maturities               284.6        286.4
Employee benefit plan obligations                    159.6        158.0
Other long-term liabilities                          77.3         92.4
Total long-term liabilities                          521.5        536.8
Total liabilities                                    1,102.0      1,021.6
                                                                
Shareholders' equity:                                            
Common stock                                         —            —
Additional paid-in capital                           8.3          27.2
Accumulated other comprehensive loss                 (5.7)        (4.2)
Retained earnings                                    671.2        645.0
Total shareholders' equity                           673.8        668.0
Total liabilities and shareholders' equity           $1,775.8   $1,689.6


STEELCASE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
(in millions)
                                                                
                                                    Nine Months Ended
                                                    November22, November23,
                                                    2013         2012
OPERATING ACTIVITIES                                             
Net income                                           $63.8      $66.3
Depreciation and amortization                        43.8         42.5
Changes in cash surrender value of company-owned     (0.8)        (3.7)
life insurance (COLI)
Deferred income taxes                                (2.7)        15.3)
Goodwill and intangible asset impairment charges     12.9         —
Restructuring costs                                  9.4          14.8
Non-cash stock compensation                          14.7         7.8
Changes in operating assets and liabilities, net of acquisitions  
and divestiture:
Accounts receivable, inventories and accounts        (57.4)       (29.7)
payable
Employee compensation liabilities                    (3.7)        5.4
Other assets and liabilities                         21.2         11.5
Other                                                (4.2)        (0.4)
Net cash provided by operating activities            97.0         129.8
                                                                
INVESTING ACTIVITIES                                             
Capital expenditures                                 (51.9)       (49.9)
Proceeds from disposal of fixed assets               2.1          14.1
Purchases of investments                             (128.0)      (45.3)
Liquidations of investments                          80.4         47.5
Liquidations of COLI investments                     74.5         —
Other                                                (2.0)        (16.1)
Net cash used in investing activities                (24.9)       (49.7)
                                                                
FINANCING ACTIVITIES                                             
Dividends paid                                       (37.6)       (34.4)
Common stock repurchases                             (32.8)       (19.9)
Other                                                (2.7)        (1.3)
Net cash used in financing activities                (73.1)       (55.6)
                                                                
Effect of exchange rate changes on cash and cash     (0.3)        (0.6)
equivalents
                                                                
Net increase (decrease) in cash and cash equivalents (1.3)        23.9
Cash and cash equivalents, beginning of period       150.4        112.1
Cash and cash equivalents, end of period             $149.1     $136.0

CONTACT: Investor Contact:
         Raj Mehan
         Investor Relations
         (616) 246-4251

         Media Contact:
         Laura VanSlyke
         Corporate Communications
         (616) 247-2747

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