Table of Contents

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the quarterly period ended May 27, 201626, 2017
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to
Commission File Number 1-13873

STEELCASE INC.
(Exact name of registrant as specified in its charter)
Michigan 38-0819050
(State or other jurisdiction
of incorporation or organization)
 (I.R.S. employer identification no.)
901 44th Street SE
Grand Rapids, Michigan
(Address of principal executive offices)
 
49508
(Zip Code) 

(Registrant’s telephone number, including area code) (616) 247-2710
None
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ     No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ     No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and, “smaller reporting company”company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
    
Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
Emerging growth company o
(Do not check if a smaller reporting company)
If an emerging growth company, indicate by a check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o     No þ
As of June 20, 2016,19, 2017, Steelcase Inc. had 87,653,49987,541,772 shares of Class A Common Stock and 31,536,15430,476,514 shares of Class B Common Stock outstanding.
 

STEELCASE INC.
FORM 10-Q


FOR THE QUARTERLY PERIOD ENDED May 27, 2016MAY 26, 2017

INDEX

  Page No. 
   
 
 
 
 
 
   


PART I. FINANCIAL INFORMATION

Item 1.Financial Statements:

STEELCASE INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in millions, except per share data)

STEELCASE INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in millions, except per share data)

STEELCASE INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in millions, except per share data)

Three Months EndedThree Months Ended
May 27,
2016
May 29,
2015
May 26,
2017
May 27,
2016
Revenue$718.8
 $705.5
 $735.1
 $718.8
 
Cost of sales484.8
 485.0
 492.3
 484.8
 
Restructuring costs4.2
 3.9
 
 4.2
 
Gross profit229.8
 216.6
 242.8
 229.8
 
Operating expenses196.1
 185.1
 212.9
 196.1
 
Restructuring costs (benefits)0.4
 (2.0) 
Restructuring costs
 0.4
 
Operating income33.3
 33.5
 29.9
 33.3
 
Interest expense(4.2) (4.4) (4.3) (4.2) 
Investment income0.5
 0.4
 0.4
 0.5
 
Other income, net2.1
 2.0
 2.4
 2.1
 
Income before income tax expense31.7
 31.5
 28.4
 31.7
 
Income tax expense12.3
 11.5
 10.3
 12.3
 
Net income$19.4
 $20.0
 $18.1
 $19.4
 
Earnings per share: 
  
  
  
 
Basic$0.16
 $0.16
 $0.15
 $0.16
 
Diluted$0.16
 $0.16
 $0.15
 $0.16
 
Dividends declared and paid per common share$0.1200
 $0.1125
 $0.1275
 $0.1200
 
    

See accompanying notes to the condensed consolidated financial statements.

STEELCASE INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(in millions)

Three Months EndedThree Months Ended
May 27,
2016
May 29,
2015
May 26,
2017
May 27,
2016
Net income$19.4
 $20.0
 $18.1
 $19.4
 
Other comprehensive income (loss), net:        
Unrealized gain (loss) on investments(0.1) 
 
 (0.1) 
Pension and other post-retirement liability adjustments(1.9) (1.1) 2.8
 (1.9) 
Foreign currency translation adjustments4.4
 (3.6) 11.5
 4.4
 
Total other comprehensive income (loss), net2.4
 (4.7) 14.3
 2.4
 
Comprehensive income$21.8
 $15.3
 $32.4
 $21.8
 

See accompanying notes to the condensed consolidated financial statements.


STEELCASE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
STEELCASE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
STEELCASE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
(Unaudited) (Unaudited) 
May 27,
2016
February 26,
2016
May 26,
2017
February 24,
2017
ASSETS
Current assets: 
  
 
  
Cash and cash equivalents$133.4
 $181.9
$143.9
 $197.1
Short-term investments18.4
 84.1
37.3
 73.4
Accounts receivable, net of allowances of $12.0 and $11.7327.2
 322.7
Accounts receivable, net of allowances of $11.5 and $11.2328.1
 307.6
Inventories156.9
 159.4
174.6
 163.1
Prepaid expenses19.5
 19.6
22.7
 19.1
Other current assets64.5
 56.2
44.3
 58.9
Total current assets719.9
 823.9
750.9
 819.2
Property, plant and equipment, net of accumulated depreciation of $948.2 and $936.8412.6
 411.6
Property, plant and equipment, net of accumulated depreciation of $982.7 and $959.6417.2
 408.1
Company-owned life insurance ("COLI")163.3
 160.4
167.4
 168.8
Deferred income taxes180.4
 211.6
182.7
 179.6
Goodwill106.8
 106.4
106.6
 106.7
Other intangible assets, net of accumulated amortization of $43.1 and $42.713.5
 13.7
Other intangible assets, net of accumulated amortization of $44.2 and $43.216.5
 16.8
Investments in unconsolidated affiliates52.0
 51.0
49.8
 50.5
Other assets27.4
 30.0
41.9
 42.3
Total assets$1,675.9
 $1,808.6
$1,733.0
 $1,792.0
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities: 
  
 
  
Accounts payable$205.1
 $209.6
$225.9
 $216.8
Short-term borrowings and current maturities of long-term debt2.9
 2.5
2.8
 2.8
Accrued expenses: 
  
 
  
Employee compensation72.3
 169.9
75.9
 154.3
Employee benefit plan obligations20.4
 36.5
17.6
 35.0
Accrued promotions19.1
 19.0
Customer deposits14.6
 18.6
24.3
 15.9
Product warranties24.8
 20.5
19.2
 20.4
Other95.4
 99.9
66.2
 59.2
Total current liabilities435.5
 557.5
451.0
 523.4
Long-term liabilities: 
  
 
  
Long-term debt less current maturities296.3
 296.6
294.0
 294.6
Employee benefit plan obligations139.3
 142.5
132.2
 134.3
Other long-term liabilities70.3
 75.1
66.4
 73.2
Total long-term liabilities505.9
 514.2
492.6
 502.1
Total liabilities941.4
 1,071.7
943.6
 1,025.5
Shareholders’ equity: 
  
 
  
Common stock
 

 
Additional paid-in capital
 
6.2
 
Accumulated other comprehensive loss(37.2) (39.6)(36.3) (50.6)
Retained earnings771.7
 776.5
819.5
 817.1
Total shareholders’ equity734.5
 736.9
789.4
 766.5
Total liabilities and shareholders’ equity$1,675.9
 $1,808.6
$1,733.0
 $1,792.0
See accompanying notes to the condensed consolidated financial statements.

STEELCASE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)

STEELCASE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)

STEELCASE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(in millions)

Three Months EndedThree Months Ended
May 27,
2016
May 29,
2015
May 26,
2017
May 27,
2016
OPERATING ACTIVITIES 
  
 
  
Net income$19.4
 $20.0
$18.1
 $19.4
Depreciation and amortization15.1
 16.2
15.4
 15.1
Deferred income taxes33.6
 24.8
(0.6) 33.6
Non-cash stock compensation9.1
 8.8
8.4
 9.1
Equity in income of unconsolidated affiliates(2.5) (3.3)(3.0) (2.5)
Dividends received from unconsolidated affiliates1.6
 3.2
4.2
 1.6
Other(3.4) (4.3)7.9
 (3.4)
Changes in operating assets and liabilities, net of acquisitions: 
  
Changes in operating assets and liabilities: 
  
Accounts receivable(1.2) (5.6)(16.5) (1.2)
Inventories3.3
 (15.2)(9.9) 3.3
Assets related to derivative instruments0.2
 22.5
VAT recoverable14.4
 0.4
8.3
 14.4
Other assets(23.1) (32.5)2.8
 (22.9)
Accounts payable(5.4) 7.7
7.4
 (5.4)
Employee compensation liabilities(103.4) (77.3)(85.5) (103.4)
Employee benefit obligations(21.5) (17.2)(21.7) (21.5)
Accrued expenses and other liabilities(1.9) 16.0
14.2
 (1.9)
Net cash used in operating activities(65.7) (35.8)(50.5) (65.7)
INVESTING ACTIVITIES 
  
 
  
Capital expenditures(14.3) (24.2)(16.8) (14.3)
Proceeds from disposal of fixed assets0.3
 4.1
Purchases of short-term investments(6.0) (6.9)
Liquidations of short-term investments71.8
 29.7
Acquisitions, net of cash acquired
 (6.6)
Purchases of investments(19.4) (6.0)
Liquidations of investments55.5
 71.8
Other1.1
 0.1
(0.6) 1.4
Net cash provided by (used in) investing activities52.9
 (3.8)
Net cash provided by investing activities18.7
 52.9
FINANCING ACTIVITIES 
  
 
  
Dividends paid(15.2) (15.1)(15.7) (15.2)
Common stock repurchases(20.9) (11.5)(5.8) (20.9)
Excess tax benefit from vesting of stock awards(0.3) 1.5

 (0.3)
Repayment of long-term debt
 (0.5)(0.7) 
Net cash used in financing activities(36.4)
(25.6)(22.2)
(36.4)
Effect of exchange rate changes on cash and cash equivalents0.7
 (0.8)0.8
 0.7
Net decrease in cash and cash equivalents(48.5) (66.0)
Net increase (decrease) in cash and cash equivalents(53.2) (48.5)
Cash and cash equivalents, beginning of period181.9
 176.5
197.1
 181.9
Cash and cash equivalents, end of period$133.4
 $110.5
$143.9
 $133.4

See accompanying notes to the condensed consolidated financial statements.


STEELCASE INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1.BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions in Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and adjustments) considered necessary for a fair presentation of the condensed consolidated financial statements have been included. Results for interim periods should not be considered indicative of results to be expected for a full year. Reference should be made to the consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended February 26, 201624, 2017 (“Form 10-K”). The Condensed Consolidated Balance Sheet as of February 26, 201624, 2017 was derived from the audited Consolidated Balance Sheet included in our Form 10-K.
As used in this Quarterly Report on Form 10-Q (“Report”), unless otherwise expressly stated or the context otherwise requires, all references to “Steelcase,” “we,” “our,” “Company” and similar references are to Steelcase Inc. and its subsidiaries in which a controlling interest is maintained. Unless the context otherwise indicates, reference to a year relates to the fiscal year, ended in February of the year indicated, rather than a calendar year. Additionally, Q1, Q2, Q3 and Q4 reference the first, second, third and fourth quarter, respectively, of the fiscal year indicated. All amounts are in millions, except share and per share data, data presented as a percentage or as otherwise indicated.
2.
NEW ACCOUNTING STANDARDS
In June 2016,March 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-13,2017-07, Financial InstrumentsCompensation - Credit LossesRetirement Benefits (Topic 326)715), which replacesto improve the incurred loss impairment methodologypresentation of net periodic pension cost and net periodic post-retirement benefit cost. The amended guidance requires that an employer disaggregate the service cost component from the other components of net benefit cost, provides explicit guidance on how to present the service cost component and the other components of net benefit cost in current GAAP with a methodology that reflects expected credit losses. The update is intendedthe income statement, and allows only the service cost component of net benefit cost to provide financial statement users with more useful information about expected credit losses.be eligible for capitalization. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early2017. Early adoption is permitted forwithin the first interim period of a fiscal years, and interim periods within those fiscals years, beginning December 15, 2018.year. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements.
In October 2016, FASB issued ASU No. 2016-16, Income Taxes (Topic 740). The update is intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. We chose to early adopt this guidance in Q1 2018, which did not have a material impact on our consolidated financial statements.
In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718), which is part of the FASB'sFASB Simplification Initiative. The updated guidance simplifies several aspects of the accounting for share-based payment transactions. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, with early adoption permitted. We are currently evaluatingadopted this guidance in Q1 2018 and, as a result, the impactincome tax effects of our share-based compensation awards, which aggregated $0.6, were recognized as a component of Income tax expense on our Consolidated Statement of Income for the adoptionthree months ended May 26, 2017 instead of a component of Additional paid-in capital on our Consolidated Balance Sheet as of May 26, 2017. The remaining requirements of this standardnew accounting guidance did not have a material impact on our consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes a new lease accounting model for lessees. The updated guidance requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. We are currently evaluating the impact ofexpect the adoption of this standardguidance will result in a material increase in the assets and liabilities on our consolidated financial statements.Consolidated Balance Sheets.
In January 2016,May 2014, the FASB issued ASU No. 2016-01,2014-09, Financial Instruments - Overall (Subtopic 825-10)Revenue from Contracts with Customers (Topic 606), which updates the recognition and measurement of financial assets and financial liabilities. The updated guidance changes the accounting and disclosure of equity investments (except those that are consolidated or accounted for under the equity method). The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements.
In May 2014, the FASB issuedestablishes a new standard on revenue recognition. The new standard outlines a single comprehensive

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

those goods or services. The standard is designed to create greater comparability for financial statement users across industries and jurisdictions and also requires enhanced disclosures. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017, with early adoption permitted for fiscal years beginning after December 15, 2016. We are currentlyin the process of evaluating the impact that will result from adoption of the adoptionnew standard, but based on analysis performed as of this standardMay 26, 2017, we do not anticipate a significant impact on our consolidated financial statements. We currently plan to apply the new standard using the modified retrospective method beginning in 2019.
3.EARNINGS PER SHARE
Earnings per share is computed using the two-class method. The two-class method determines earnings per share for each class of common stock and participating securities according to dividends or dividend equivalents and their respective participation rights in undistributed earnings. Participating securities represent restricted stock units in which the participants have non-forfeitable rights to dividend equivalents during the performance period. Diluted earnings per share includes the effects of certain performance units in which the participants have forfeitable rights to dividend equivalents during the performance period.
Three Months EndedThree Months Ended
Computation of Earnings per ShareMay 27,
2016
 May 29,
2015
May 26,
2017
 May 27,
2016
Net income$19.4
 $20.0
 $18.1
 $19.4
 
Adjustment for earnings attributable to participating securities(0.4) (0.4) (0.3) (0.4) 
Net income used in calculating earnings per share$19.0
 $19.6
 $17.8
 $19.0
 
Weighted-average common shares outstanding including participating securities (in millions)121.7
 124.4
 120.0
 121.7
 
Adjustment for participating securities (in millions)(2.1) (2.4) (2.1) (2.1) 
Shares used in calculating basic earnings per share (in millions)119.6
 122.0
 117.9
 119.6
 
Effect of dilutive stock-based compensation (in millions)0.5
 0.9
 0.3
 0.5
 
Shares used in calculating diluted earnings per share (in millions)120.1
 122.9
 118.2
 120.1
 
Earnings per share: 
  
  
  
 
Basic$0.16
 $0.16
 $0.15
 $0.16
 
Diluted$0.16
 $0.16
 $0.15
 $0.16
 
Total common shares outstanding at period end (in millions)119.2
 122.2
 118.0
 119.2
 
        
Anti-dilutive performance units excluded from computation of diluted earnings per share (in millions)0.3
 0.1
 0.3
 0.3
 
4.ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended May 27, 201626, 2017:
Unrealized gain (loss) on investmentsPension and other post-retirement liability adjustmentsForeign currency translation adjustmentsTotalUnrealized gain (loss) on investmentsPension and other post-retirement liability adjustmentsForeign currency translation adjustmentsTotal
Balance as of February 26, 2016$0.6
 $10.7
 $(50.9) $(39.6) 
Balance as of February 24, 2017$(0.3) $13.0
 $(63.3) $(50.6) 
Other comprehensive income (loss) before reclassifications(0.1) (0.6) 4.4
 3.7
 
 (0.5) 11.5
 11.0
 
Amounts reclassified from accumulated other comprehensive income (loss)
 (1.3) 
 (1.3) 
 3.3
 
 3.3
 
Net current period other comprehensive income (loss)(0.1) (1.9) 4.4
 2.4
 
 2.8
 11.5
 14.3
 
Balance as of May 27, 2016$0.5
 $8.8
 $(46.5) $(37.2) 
Balance as of May 26, 2017$(0.3) $15.8
 $(51.8) $(36.3) 

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the three months ended May 26, 2017 and May 27, 2016 and May 29, 2015:2016:
Detail of Accumulated Other
Comprehensive Income (Loss) Components
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) Affected Line in the Condensed Consolidated Statements of IncomeAmounts Reclassified from Accumulated Other Comprehensive Income (Loss)Affected Line in the Condensed Consolidated Statements of Income
Three Months Ended
May 27,
2016
May 29,
2015
May 26,
2017
May 27,
2016
Amortization of pension and other post-retirement liability adjustments        
Actuarial losses (gains)(0.1) 0.1
 Cost of sales(0.4) (0.1) Cost of sales
Actuarial losses (gains)
 0.2
 Operating expenses(0.4) 
 Operating expenses
Prior service cost (credit)(1.0) (1.1) Cost of sales(0.8) (1.0) Cost of sales
Prior service cost (credit)(1.2) (1.2) Operating expenses(1.0) (1.2) Operating expenses
Settlements - Actuarial losses (gains)3.9
 
 Cost of sales
Settlements - Actuarial losses (gains)3.2
 
 Operating expenses
1.0
 0.8
 Income tax expense(1.2) 1.0
 Income tax expense
Total reclassifications$(1.3) $(1.2) Net income$3.3
 $(1.3) Net income

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5.FAIR VALUE
The carrying amounts for many of our financial instruments, including cash and cash equivalents, accounts and notes receivable, accounts and notes payable, short-term borrowings and certain other liabilities, approximate their fair value due to their relatively short maturities. Our short-term investments, foreign exchange forward contracts and long-term investments are measured at fair value on the Condensed Consolidated Balance Sheets.
Our total debt is carried at cost and was $299.2296.8 and $299.1297.4 as of May 27, 201626, 2017 and February 26, 201624, 2017, respectively. The fair value of our total debt is measured using a discounted cash flow analysis based on current market interest rates for similar types of instruments and was approximately $334$331 and $326330 as of May 27, 201626, 2017 and February 26, 201624, 2017, respectively. The estimation of the fair value of our total debt is based on Level 2 fair value measurements.
We periodically use derivative financial instruments to manage exposures to movements in foreign exchange rates and interest rates. The use of these financial instruments modifies the exposure of these risks with the intention to reduce our risk of short-term volatility. We do not use derivatives for speculative or trading purposes.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Assets and liabilities measured at fair value in our Consolidated Balance Sheets as of May 27, 201626, 2017 and February 26, 201624, 2017 are summarized below:
May 27, 2016May 26, 2017
Fair Value of Financial InstrumentsLevel 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets: 
  
  
  
 
  
  
  
Cash and cash equivalents$133.4
 $
 $
 $133.4
$143.9
 $
 $
 $143.9
Restricted cash2.5
 
 
 2.5
2.5
 
 
 2.5
Managed investment portfolio and other investments              
Corporate debt securities
 6.6
 
 6.6

 18.5
 
 18.5
U.S. agency debt securities
 5.3
 
 5.3

 10.1
 
 10.1
Asset backed securities
 4.4
 
 4.4

 5.4
 
 5.4
U.S. government debt securities1.8
 
 
 1.8
2.3
 
 
 2.3
Municipal debt securities
 0.3
 
 0.3

 1.0
 
 1.0
Foreign exchange forward contracts
 1.6
 
 1.6

 1.5
 
 1.5
Auction rate securities
 
 4.2
 4.2

 
 3.5
 3.5
Canadian asset-backed commercial paper restructuring notes
 3.2
 
 3.2
$137.7
 $21.4
 $4.2
 $163.3
$148.7
 $36.5
 $3.5
 $188.7
Liabilities       
Liabilities:       
Foreign exchange forward contracts
 (2.4) 
 (2.4)
 (0.5) 
 (0.5)
$
 $(2.4) $
 $(2.4)$
 $(0.5) $
 $(0.5)
              
              
              
February 26, 2016February 24, 2017
Fair Value of Financial InstrumentsLevel 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets: 
  
  
  
 
  
  
  
Cash and cash equivalents$181.9
 $
 $
 $181.9
$197.1
 $
 $
 $197.1
Restricted cash2.5
 
 
 2.5
2.5
 
 
 2.5
Managed investment portfolio and other investments              
Corporate debt securities
 31.7
 
 31.7

 33.6
 
 33.6
U.S. agency debt securities
 34.7
 
 34.7

 18.6
 
 18.6
Asset backed securities
 9.2
 
 9.2

 3.7
 
 3.7
U.S. government debt securities8.2
 
 
 8.2
2.4
 
 
 2.4
Municipal debt securities
 0.3
 
 0.3

 15.1
 
 15.1
Foreign exchange forward contracts
 1.8
 
 1.8

 3.5
 
 3.5
Auction rate securities
 
 4.4
 4.4

 
 3.5
 3.5
Canadian asset-backed commercial paper restructuring notes
 3.1
 
 3.1
$192.6
 $80.8
 $4.4
 $277.8
$202.0
 $74.5
 $3.5
 $280.0
Liabilities 
  
  
  
Liabilities: 
  
  
  
Foreign exchange forward contracts$
 $(3.3) $
 $(3.3)$
 $(0.9) $
 $(0.9)
$
 $(3.3) $
 $(3.3)$
 $(0.9) $
 $(0.9)


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Below is a roll-forward of assets and liabilities measured at fair value using Level 3 inputs for the three months ended May 27, 201626, 2017:
Roll-Forward of Fair Value Using Level 3 InputsAuction Rate SecuritiesAuction Rate Securities
Balance as of February 26, 2016$4.4
Balance as of February 24, 2017$3.5
Unrealized loss on investments(0.2)
Balance as of May 27, 2016$4.2
Balance as of May 26, 2017$3.5
6.INVENTORIES
InventoriesMay 27,
2016
February 26,
2016
May 26,
2017
February 24,
2017
Raw materials and work-in-process$80.0
 $80.4
$81.2
 $79.6
Finished goods94.8
 96.9
111.6
 101.7
174.8
 177.3
192.8
 181.3
Revaluation to LIFO17.9
 17.9
18.2
 18.2
$156.9
 $159.4
$174.6
 $163.1
The portion of inventories determined by the LIFO method was $66.776.0 and $76.3$77.9 as of May 27, 201626, 2017 and February 26, 201624, 2017, respectively.
7.SHARE-BASED COMPENSATION
Performance Units
In Q1 2017,2018, we awarded 189,800153,200 performance units ("PSUs") to our executive officers. The PSUs awarded are earned after a three-year performance period, from 20172018 through 2019,2020, based on achievement of certain total shareholder return results relative to a comparison group of companies, which is a market condition, and, if earned, will be issued in the form of shares of Class A Common Stock. The number of shares that may be earned can range from 0% to 200% of the target amount; therefore, the maximum number of shares that can be issued under these awards is 379,600306,400. These PSUs are expensed and recorded in Additional paid-in capital on the Condensed Consolidated Balance Sheets over the performance period. We used the Monte Carlo simulation model to calculate the fair value of these PSUs on the date of grant. The model resulted in a weighted average grant date fair value of $16.3321.76 per unit for these PSUs, compared to $24.1516.33 and $23.2524.15 per unit for similar PSUs granted in 20162017 and 2015,2016, respectively.
The weighted average grant date fair values were determined using the following assumptions:
2017 Awards2016 Awards2015 Awards2018 Awards2017 Awards2016 Awards
Three-year risk-free interest rate (1)0.9%0.8%0.7%1.4%0.9%0.8%
Expected term3 years
3 years
3 years
3 years
3 years
3 years
Estimated volatility (2)31.2%29.4%42.2%31.8%31.2%29.4%

(1)Based on the U.S. government bond benchmark on the grant date.
(2)Represents the historical price volatility of the Company’s common stock for the three-year period preceding the grant date.

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The total PSU expense and associated tax benefit for all outstanding awards for the three months ended May 27, 201626, 2017 and May 29, 201527, 2016 are as follows:
Three Months EndedThree Months Ended
Performance UnitsMay 27,
2016
May 29,
2015
May 26,
2017
May 27,
2016
Expense$2.2
 $2.5
 $1.6
 $2.2
 
Tax benefit0.8
 0.9
 0.6
 0.8
 
As of May 27, 201626, 2017, there was $8.45.5 of remaining unrecognized compensation cost related to nonvested PSUs, which is expected to be recognized over a remaining weighted-average period of 1.9 years.
The PSU activity for the three months ended May 27, 201626, 2017 is as follows:
Maximum Number of Shares That May Be Issued Under Nonvested UnitsTotal
Weighted-Average
Grant Date
Fair Value per Unit
Total
Weighted-Average
Grant Date
Fair Value per Unit
Nonvested as of February 26, 20161,147,844
$20.66
Nonvested as of February 24, 2017916,420
$19.31
Granted379,600
16.33
306,400
21.76
Nonvested as of May 27, 20161,527,444
$19.59
Nonvested as of May 26, 20171,222,820
$19.93
Restricted Stock Units
In Q1During the three months ended May 26, 2017, we awarded 832,663647,148 restricted stock units ("RSUs"), of which 168,200129,900 were awarded to our executive officers. These RSUs have restrictions on transfer which lapse three years after the date of grant, at which time the units will be issued as unrestricted shares of Class A Common Stock. RSUs are expensed and recorded in Additional paid-in capital on the Condensed Consolidated Balance Sheets over the requisite service period based on the value of the underlying shares on the date of grant.
The RSU expense and associated tax benefit for all outstanding awards for the three months ended May 27, 201626, 2017 and May 29, 201527, 2016 are as follows:
Three Months EndedThree Months Ended
Restricted Stock UnitsMay 27,
2016
May 29,
2015
May 26,
2017
May 27,
2016
Expense$6.7
 $6.1
 $6.5
 $6.7
 
Tax benefit2.4
 2.2
 2.4
 2.4
 
As of May 27, 201626, 2017, there was $14.213.3 of remaining unrecognized compensation cost related to nonvested RSUs, which is expected to be recognized over a weighted-average period of 2.1 years.
The RSU activity for the three months ended May 27, 201626, 2017 is as follows:
Nonvested UnitsTotal
Weighted-Average
Grant Date
Fair Value
per Unit
Total
Weighted-Average
Grant Date
Fair Value
per Unit
Nonvested as of February 26, 20161,638,888
$18.45
Nonvested as of February 24, 20171,731,507
$16.38
Granted832,663
14.80
647,148
16.74
Vested(1,250)18.32
(12,638)16.33
Forfeited(19,792)17.16
(6,673)16.65
Nonvested as of May 27, 20162,450,509
$16.56
Nonvested as of May 26, 20172,359,344
$16.48
8.REPORTABLE SEGMENTS
Our reportable segments consist of the Americas segment, the EMEA segment and the Other category. Unallocated corporate costs are reported as Corporate.

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The Americas segment serves customers in the U.S., Canada, the Caribbean Islands 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 and Turnstone brands.
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.
The Other category includes Asia Pacific, Designtex and PolyVision. Asia Pacific serves customers in Asia and Australia primarily under the Steelcase brand with an emphasis on freestanding furniture systems, storageseating and seatingstorage solutions. Designtex designs andprimarily sells surface materials including textiles, and wall coverings which areand surface imaging solutions specified by architects and designers directly to end-use customers through a direct sales force primarily in North America. PolyVision manufactures ceramic steel surfaces for use in multiplevarious applications but primarily for sale to third-party fabricators and distributors to createglobally, including static whiteboards and chalkboards sold inthrough third party fabricators and distributors to the primary and secondary education markets globally.and architectural panels and other special applications sold through general contractors for commercial and infrastructure projects.
Corporate costs include unallocated portions of shared service functions, such as information technology, corporate facilities, finance, human resources, research, legal and executive,customer aviation, plus deferred compensation expense and income or losses associated with COLI. Corporate assets consist primarily of unallocated cash, andshort term investment balances and the cash surrender value of COLI.COLI balances.
Revenue and operating income (loss) for the three months ended May 27, 201626, 2017 and May 29, 201527, 2016 and total assets as of May 27, 201626, 2017 and February 26, 201624, 2017 by segment are presented below:
Three Months EndedThree Months Ended
Reportable Segment Statement of Operations DataMay 27,
2016
May 29,
2015
May 26,
2017
May 27,
2016
Revenue 
  
  
  
 
Americas$520.4
 $519.7
 $535.0
 $520.4
 
EMEA125.3
 119.9
 113.1
 125.3
 
Other73.1
 65.9
 87.0
 73.1
 
$718.8
 $705.5
 $735.1
 $718.8
 
Operating income (loss) 
  
  
  
 
Americas$46.6
 $54.1
 $41.8
 $46.6
 
EMEA(6.2) (13.5) (8.6) (6.2) 
Other2.2
 0.9
 6.5
 2.2
 
Corporate(9.3) (8.0) (9.8) (9.3) 
$33.3
 $33.5
 $29.9
 $33.3
 

Reportable Segment Balance Sheet DataMay 27,
2016
February 26,
2016
Total assets 
  
 
Americas$982.8
 $981.1
 
EMEA304.1
 332.6
 
Other182.0
 179.9
 
Corporate207.0
 315.0
 
 $1,675.9
 $1,808.6
 
9.RESTRUCTURING ACTIVITIES
In Q1 2016, we announced restructuring actions in EMEA related to the establishment of a Learning + Innovation Center in Munich, Germany. In Q2 2016, we completed negotiations with the works councils related to these actions. We expect to incur approximately $11 of restructuring costs in connection with this project, including approximately $4 of costs associated with employee and equipment moves, retention compensation and consulting costs and approximately $7 of employee separation costs. We incurred $0.3 of employee separation costsin the

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

EMEA segment in connection with these actions during the three months ended May 27, 2016. We incurred $6.7 of employee separation costs and $1.9 of business exit and other related costs in the EMEA segment in connection with these actions during 2016.
In Q1 2015, we announced restructuring actions in the Americas to close a manufacturing facility in High Point, North Carolina. In connection with these actions, we incurred a total of $4.2 of business exit and other related costs in the Americas segment, including $2.6 during the three months ended May 27, 2016. We also incurred $3.1 of employee termination costs in the Americas segment which were recorded prior to 2017. These restructuring actions are substantially complete.
In Q3 2014, we announced restructuring actions in EMEA to close a manufacturing facility in Durlangen, Germany, and to establish a new manufacturing location in Stribro, Czech Republic. In connection with this project, we incurred a total of $8.8 related to business exit and other related costs in the EMEA segment, including $1.6 during the three months ended May 27, 2016. We also incurred $17.5 of employee termination costs which were recorded prior to 2017. These restructuring actions are substantially complete.
Restructuring costs (benefits) are summarized in the following table:
 Three Months Ended
Restructuring Costs (Benefits)May 27,
2016
May 29,
2015
Cost of sales 
  
 
Americas$2.6
 $0.8
 
EMEA1.6
 3.1
 
Other
 
 
 4.2
 3.9
 
Operating expenses 
  
 
Americas
 (2.8) 
EMEA0.4
 0.8
 
Other
 
 
 0.4
 (2.0) 
 Total$4.6
 $1.9
 
Below is a summary of the net additions, payments and adjustments to the restructuring reserve balance for the three months endedMay 27, 2016:
Restructuring Reserve
Employee
Termination Costs
Business Exits
and Related
Costs
Total
Reserve balance as of February 26, 2016$10.0
 $0.8
 $10.8
Additions0.4
 4.2
 4.6
Payments(1.1) (2.7) (3.8)
Adjustments(0.2) 
 (0.2)
Reserve balance as of May 27, 2016$9.1
 $2.3
 $11.4
The employee termination costs reserve balance as of May 27, 2016 primarily relates to restructuring actions in EMEA.
Reportable Segment Balance Sheet DataMay 26,
2017
February 24,
2017
Total assets 
  
 
Americas$942.0
 $960.7
 
EMEA308.7
 297.4
 
Other207.7
 191.1
 
Corporate274.6
 342.8
 
 $1,733.0
 $1,792.0
 

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations:
This management’s discussion and analysis of financial condition and results of operations should be read in conjunction with our Annual Report on Form 10-K for the fiscal year ended February 26, 201624, 2017. Reference to a year relates to the fiscal year, ended in February of the year indicated, rather than the calendar year, unless indicated by a specific date. Additionally, Q1, Q2, Q3 and Q4 reference the first, second, third and fourth quarter, respectively, of the fiscal year indicated. All amounts are in millions, except share and per share data, data presented as a percentage or as otherwise indicated.
Non-GAAP Financial Measures
This item 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 condensed consolidated statements of income, balance sheets or statements of cash flows of the company. Pursuant to the requirements of Regulation G, we have provided a reconciliation below of non-GAAP financial measures to the most directly comparable GAAP financial measure.
The non-GAAP financial measures used are: (1) organic revenue growth (decline), which represents the change in revenue excluding estimated currency translation effects and the impacts of acquisitions and divestitures, and (2) adjusted operating income (loss), which represents operating income (loss) excluding restructuring costs (benefits). 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.
Financial Summary

Our reportable segments consist of the Americas segment, the EMEA segment and the Other category. Unallocated corporate costs are reported as Corporate.
Results of Operations
Three Months EndedThree Months Ended
Statement of Operations DataMay 27,
2016
May 29,
2015
May 26,
2017
May 27,
2016
Revenue$718.8
 100.0 % $705.5
 100.0 % $735.1
 100.0 % $718.8
 100.0 % 
Cost of sales484.8
 67.4
 485.0
 68.7
 492.3
 67.0
 484.8
 67.4
 
Restructuring costs4.2
 0.6
 3.9
 0.6
 
 
 4.2
 0.6
 
Gross profit229.8
 32.0
 216.6
 30.7
 242.8
 33.0
 229.8
 32.0
 
Operating expenses196.1
 27.3
 185.1
 26.3
 212.9
 28.9
 196.1
 27.3
 
Restructuring costs (benefits)0.4
 0.1
 (2.0) (0.3) 
Restructuring costs
 
 0.4
 0.1
 
Operating income33.3
 4.6
 33.5
 4.7
 29.9
 4.1
 33.3
 4.6
 
Interest expense(4.2) (0.6) (4.4) (0.6) (4.3) (0.6) (4.2) (0.6) 
Investment income0.5
 0.1
 0.4
 
 0.4
 0.1
 0.5
 0.1
 
Other income, net2.1
 0.3
 2.0
 0.3
 2.4
 0.3
 2.1
 0.3
 
Income before income tax expense31.7
 4.4
 31.5
 4.4
 28.4
 3.9
 31.7
 4.4
 
Income tax expense12.3
 1.7
 11.5
 1.6
 10.3
 1.4
 12.3
 1.7
 
Net income$19.4
 2.7 % $20.0
 2.8 % $18.1
 2.5 % $19.4
 2.7 % 
Earnings per share: 
  
  
  
  
  
  
  
 
Basic$0.16
  
 $0.16
  
 $0.15
  
 $0.16
  
 
Diluted$0.16
  
 $0.16
  
 $0.15
  
 $0.16
  
 
Q1 2018 Organic Revenue Growth (Decline)AmericasEMEAOtherConsolidated
Q1 2017 revenue$520.4
 $125.3
 $73.1
 $718.8
 
Divestitures
 (0.8) 
 (0.8) 
Currency translation effects*(1.0) (6.1) (0.8) (7.9) 
   Q1 2017 revenue, adjusted519.4
 118.4
 72.3
 710.1
 
Q1 2018 revenue535.0
 113.1
 87.0
 735.1
 
Organic growth (decline) $$15.6
 $(5.3) $14.7
 $25.0
 
Organic growth (decline) %3% (4)% 20% 4% 
         
* Currency translation effects represent the estimated net effect of translating Q1 2017 foreign currency revenues using the average exchange rates during Q1 2018.


Q1 2017 Organic Revenue Growth (Decline)AmericasEMEAOtherConsolidated
Q1 2016 revenue$519.7
 $119.9
 $65.9
 $705.5
 
Currency translation effects*(1.7) 2.2
 (0.9) (0.4) 
   Q1 2016 revenue, adjusted518.0
 122.1
 65.0
 705.1
 
Q1 2017 revenue520.4
 125.3
 73.1
 718.8
 
Acquisition(6.8) 
 
 (6.8) 
   Q1 2017 revenue, adjusted513.6
 125.3
 73.1
 712.0
 
Organic growth (decline) $$(4.4) $3.2
 $8.1
 $6.9
 
Organic growth (decline) %(1)% 3% 12% 1% 
         
* Currency translation effects represent the estimated net effect of translating Q1 2016 foreign currency revenues using the average exchange rates during Q1 2017.

Three Months EndedThree Months Ended
Reconciliation of Operating Income to
Adjusted Operating Income
May 27,
2016
May 29,
2015
May 26,
2017
May 27,
2016
Operating income$33.3
 4.6% $33.5
 4.7% $29.9
 4.1% $33.3
 4.6% 
Add: restructuring costs4.6
 0.7
 1.9
 0.3
 
 
 4.6
 0.7
 
Adjusted operating income$37.9
 5.3% $35.4
 5.0% $29.9
 4.1% $37.9
 5.3% 
Overview
In Q1 2017,2018, we posted modest2% revenue growth over the prior year, or 4% on an organic basis, driven by strong project business in the Americas and significant growth in Asia Pacific, EMEA and Designtex, while revenue in EMEA declined compared to the Americas was flatprior year. Despite the revenue growth and the completion of restructuring activities in the prior year, operating income declined slightly compared to the prior year primarily due to higher operating expenses and included benefits from a recent acquisition.  The organic revenue declinecosts associated with the annuitization of three smaller defined benefit plans. We have continued to invest in the Americas is consistent with or slightly better than recent trends in the U.S. industry.  EMEA experiencedproduct development, sales, marketing and information technology that support our strategies, and we intend to launch a significant reduction in disruption costs and inefficiencies compared to the prior year as the manufacturing footprint changes were substantially completed during the quarter.  Our gross margin continued to improve in the quarter and funded increased spending on sales and marketing and thenumber of new Learning + Innovation Center in Munich, Germany.products throughout 2018.
We recorded net income of $18.1 and diluted earnings per share of $0.15 in Q1 2018 compared to net income of $19.4 and diluted earnings per share of $0.16 in Q1 2017 compared to2017. The Q1 2018 results reflected the net incomeimpact of $20.0 andthe defined benefit plan annuitizations which reduced diluted earnings per share by approximately $0.03. Operating income of $0.16$29.9 in Q1 2016. Operating2018 compared to operating income of $33.3 in Q1 2017 represented a slight decrease compared to the prior year.2017. Revenue growth and lower cost of sales as a percent of revenue in Q1 20172018 were more than offset by higher operating expenses and higher restructuring costs compared to the prior year. Current quarter operating income was unfavorably impacted by $7.3 of charges related to the defined benefit plan annuitizations. After adjusting for the impact of restructuring costs in the prior year, operating income of $29.9 in Q1 2018 compared to adjusted operating income of $37.9 in Q1 20172017.
Revenue of $735.1 in Q1 2018 represented an increase of $2.5 (or 30 basis points as a percent of revenue)$16.3 or 2% compared to Q1 2016.
In Q1 2017, revenue increased $13.3 to $718.8 compared to Q1 2016.prior year. The increase in revenue was driven by strong growth in Asia Pacific and Designtex, modest growth in EMEA, and the impact of an acquisition in the Americas within the past twelve months. After adjusting for a $6.8 favorable impact of the acquisition in the Americas and $0.4 of unfavorable currency translation effects, organic revenue growth was $6.9 or 1%. Organic revenue growth of 12%19% in the Other category and 3% in EMEA wasthe Americas, partially offset by a decline of 1%10% in EMEA. After adjusting for $7.9 of unfavorable currency translation effects and a $0.8 unfavorable impact due to divestitures, organic revenue growth was $25.0 or 4% compared to prior year. Organic revenue growth of 20% in the Americas.Other category and 3% in the Americas was partially offset by an organic decline of 4% in EMEA.
Cost of sales as a percent of revenue decreased 130by 40 basis points to 67.4%67.0% of revenue in Q1 20172018 compared to Q1 2016.2017. The improvement was driven by a 480 basis point improvement in EMEA and a 70 basis pointstrong improvement in the Americas. The improvementOther category, partially offset by an increase in EMEA was driven by lower disruption costs and inefficienciesEMEA. Cost of sales also included charges of $3.4 associated with manufacturing footprint changes in EMEA and favorable business mix. Disruption costs and inefficiencies include labor premiums paid to employees during transition periods and labor inefficiencies caused by work stoppages or slowdowns resulting from restructuring activities. They also include incremental logistics costs caused by split shipments (linked to labor inefficiencies) and interim supply chains during production moves. Lastly, these costs include duplicate labor and overhead at the Czech Republic facility and other plants impacted by production moves. The improvementdefined benefit plan annuitizations recorded in the Americas was driven by lower material costs, favorable business mix, on-going cost reduction efforts and improvements in negotiated customer pricing, partially offset by higher warranty costs.segment.
Operating expenses of $196.1$212.9 in Q1 2017 increased by $11.02018 represented an increase of $16.8 or 100160 basis points as a percent of revenue compared to the prior year. The increase was primarily due to higherincreased spending in the current quarter included investments in product development, sales, marketing and marketing costs and the impact of an acquisitioninformation technology in the Americas and costssegment in support of our strategies. In addition, the higher spending included $3.9 of expense associated with the new Learning + Innovation centerdefined benefit plan annuitizations ($3.0 in Munich.the Other category and $0.9 in Corporate).

We recordedThere were no restructuring costs in Q1 2018 compared to restructuring costs of $4.6 in Q1 2017 compared to net restructuring costs of $1.9 in Q1 2016.2017. The Q1 2017 amount included costs associated with the closure of a manufacturing facility in High Point, North Carolina, the closure of a manufacturing facility in Durlangen, Germany and the establishment of the Learning + Innovation Center in Munich. The Q1 2016 amount included a $2.8 gain related to the sale of our Corporate Development Center that was closed as part of previously announced restructuring actions. See Note 9 to the condensed consolidated financial statements for additional information.Munich, Germany.
Our effective tax rate in Q1 20172018 was 38.8%36.3% compared to 36.5% in Q1 2016. Thea Q1 2017 effective tax rate was higher than the rate in the prior year due toof 38.8%, which included $1.0 of net unfavorable discrete tax items recorded in Q1 2017.items.
Interest Expense, Investment Income and Other Income, Net

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Three Months EndedThree Months Ended
Interest Expense, Investment Income and Other Income, NetMay 27,
2016
May 29,
2015
May 26,
2017
May 27,
2016
Interest expense$(4.2) $(4.4) $(4.3) $(4.2) 
Investment income0.5
 0.4
 0.4
 0.5
 
Other income (expense), net: 
  
  
  
 
Equity in income of unconsolidated affiliates2.5
 3.2
 3.0
 2.5
 
Foreign exchange gain (loss)0.5
 (0.6) 
Foreign exchange gains (losses)(2.0) 0.5
 
Miscellaneous, net(0.9) (0.6) 1.4
 (0.9) 
Total other income, net2.1
 2.0
 2.4
 2.1
 
Total interest expense, investment income and other income, net$(1.6) $(2.0) $(1.5) $(1.6) 
Business Segment Review
See Note 8 to the condensed consolidated financial statements for additional information regarding our business segments.
Americas
The Americas segment serves customers in the U.S., Canada, the Caribbean Islands 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 and Turnstone brands.
Three Months EndedThree Months Ended
Statement of Operations Data — AmericasMay 27,
2016
May 29,
2015
May 26,
2017
May 27,
2016
Revenue$520.4
 100.0% $519.7
 100.0 % $535.0
 100.0% $520.4
 100.0% 
Cost of sales342.7
 65.9
 346.3
 66.6
 353.1
 66.0
 342.7
 65.9
 
Restructuring costs2.6
 0.5
 0.8
 0.2
 
 
 2.6
 0.5
 
Gross profit175.1
 33.6
 172.6
 33.2
 181.9
 34.0
 175.1
 33.6
 
Operating expenses128.5
 24.6
 121.3
 23.4
 140.1
 26.2
 128.5
 24.6
 
Restructuring costs (benefits)
 
 (2.8) (0.6) 
Restructuring costs
 
 
 
 
Operating income$46.6
 9.0% $54.1
 10.4 % $41.8
 7.8% $46.6
 9.0% 

Three Months EndedThree Months Ended
Reconciliation of Operating Income to
Adjusted Operating Income — Americas
May 27,
2016
May 29,
2015
May 26,
2017
May 27,
2016
Operating income$46.6
 9.0% $54.1
 10.4 % $41.8
 7.8% $46.6
 9.0% 
Add: restructuring costs (benefits)2.6
 0.5
 (2.0) (0.4) 
Add: restructuring costs
 
 2.6
 0.5
 
Adjusted operating income$49.2
 9.5% $52.1
 10.0 % $41.8
 7.8% $49.2
 9.5% 
Operating income in the Americas decreased by $4.8 in Q1 2017 decreased by $7.52018 compared to the prior year. The decline in the quarter was driven by $6.0higher operating expenses, partially offset by higher sales volume, and the prior year included restructuring costs of higher warranty costs, and$2.6 compared to no restructuring costs in the current year compared to netyear. After adjusting for the impact of restructuring benefitscosts in the prior year. Adjustedyear, operating income decreasedof $41.8 in Q1 2018 compared to adjusted operating income of $49.2 in the prior year.
The Americas revenue represented 72.8% of consolidated revenue in Q1 2018. Revenue for Q1 2018 of $535.0 represented an increase of $14.6 or 2.8% compared to Q1 2017. The increase was driven by $2.9strong project business, including a very large project in the manufacturing sector. After adjusting for $1.0 of unfavorable currency translation effects, the organic revenue increase in Q1 2018 was $15.6 or 3% compared to prior year.
Cost of sales as a percent of revenue increased slightly in Q1 2018 compared to Q1 2017. The increase was driven by unfavorable shifts in business mix compared to the prior year to 9.5% of revenue in Q1 2017 primarily due to higher warranty costs.

The Americas revenue represented 72.4% of consolidated revenue in Q1 2017. Revenue for Q1 2017 was $520.4 compared to $519.7 in Q1 2016 and reflected $1.7 of unfavorable currency translation effects and a $6.8 favorablethe impact of an acquisition within$3.4 of charges associated with the last twelve months. The revenue comparison also included lower volume offset in part by approximately $3 from improvements in negotiated customer pricing. Revenue growth in Q1 2017 is categorized as follows:
Product categories — Four out of seven categories grew in Q1 2017, led by Seating and Turnstone. Furniture, Health and Technology declined compared to the prior year.

Vertical markets — Technical & Professional and Healthcare experienced double-digit percentage growth rates, while Insurance, Energy and Federal Government declined significantly year-over-year.

Geographic regions — The West Business Group posted strong growth while the East and South Business Groups declined.

Contract type — Continuing business grew, while project business and marketing programs declined year-over-year.
Organic revenue decline was $4.4 or 1% compared to the prior year.
Cost of sales decreased 70 basis points to 65.9% of revenue in Q1 2017 compared to 66.6% of revenue in Q1 2016. The improvement in the Americas was driven by approximately $8 of lower material costs, favorable business mix, on-going cost reduction efforts and approximately $3 from improvements in negotiated customer pricing,defined benefit plan annuitizations, partially offset by $6.0$6.4 of higherlower warranty costs.costs compared to prior year.

Operating expenses in Q1 20172018 increased by $7.2,$11.6, or 120160 basis points as a percent of revenue, compared to the prior year primarily duedriven by approximately $9 of higher investments in product development, sales, marketing and information technology that support our strategies.
There were no restructuring costs recorded in the Americas in Q1 2018 compared to increased sales and marketing costs of $4.5 and $1.8 related to an acquisition within the last twelve months.
Restructuringrestructuring costs of $2.6 in Q1 2017 were associated with the closure of the manufacturingHigh Point facility in High Point. Net restructuring benefits of $2.0which was completed in Q1 2016 included a $2.8 gain related to the sale of a facility, partially offset by costs associated with the closure of the manufacturing facility in High Point. See Note 9 to the condensed consolidated financial statements for additional information.2017.
EMEA
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, seating and storage solutions.
Three Months EndedThree Months Ended
Statement of Operations Data — EMEAMay 27,
2016
May 29,
2015
May 26,
2017
May 27,
2016
Revenue$125.3
 100.0 % $119.9
 100.0 % $113.1
 100.0 % $125.3
 100.0 % 
Cost of sales93.3
 74.5
 95.1
 79.3
 84.6
 74.8
 93.3
 74.5
 
Restructuring costs1.6
 1.2
 3.1
 2.6
 
 
 1.6
 1.2
 
Gross profit30.4
 24.3
 21.7
 18.1
 28.5
 25.2
 30.4
 24.3
 
Operating expenses36.2
 28.9
 34.4
 28.7
 37.1
 32.8
 36.2
 28.9
 
Restructuring costs0.4
 0.3
 0.8
 0.7
 
 
 0.4
 0.3
 
Operating loss$(6.2) (4.9)% $(13.5) (11.3)% $(8.6) (7.6)% $(6.2) (4.9)% 

Reconciliation of Operating Loss to Adjusted Operating Loss — EMEAThree Months Ended
May 27,
2016
May 29,
2015
Reconciliation of Operating Income (Loss) to Adjusted Operating Income (Loss) — EMEAThree Months Ended
May 26,
2017
May 27,
2016
Operating loss$(6.2) (4.9)% $(13.5) (11.3)% $(8.6) (7.6)% $(6.2) (4.9)% 
Add: restructuring costs2.0
 1.5
 3.9
 3.3
 
 
 2.0
 1.5
 
Adjusted operating loss$(4.2) (3.4)% $(9.6) (8.0)% $(8.6) (7.6)% $(4.2) (3.4)% 
Operating results in EMEA fordeclined in Q1 2017 improved significantly2018 compared to the prior year. The improvement wasyear primarily due to revenue growth, a significant decreaselower sales volume, unfavorable shifts in business mix and higher operating expenses, partially offset by the impact of cost of sales as a percent of revenue and lower restructuring costs compared to the prior year.

reduction efforts.
EMEA revenue represented 17.4%15.4% of consolidated revenue in Q1 2017.2018. Revenue for Q1 20172018 was $125.3$113.1 compared to $119.9$125.3 in Q1 2016 and reflected $2.2 of favorable currency translation effects.2017. The remaining increase10% decline in revenue was driven by strong growthlower volume in most of WesternGermany and Central Europe, partially offset by significant declinesrevenue growth in the United Kingdom, Middle East and Africa. OrganicAfter adjusting for $6.1 of unfavorable currency translation effects, the organic revenue growthdecline was $3.2$5.3 or 3%4%.
Cost of sales as a percent of revenue decreased by 480 basis pointsincreased slightly in Q1 20172018 compared to the prior year. The improvementincrease in cost of sales was driven by a $5lower absorption of fixed costs and unfavorable shifts in business mix, partially offset by cost reduction inefforts, the elimination of disruption costs and inefficiencies associated with manufacturing footprint changes and favorable business mix.lower warranty costs in the current year.
Operating expenses in Q1 20172018 increased by $1.8$0.9 compared to the prior yearyear. The increase was primarily driven by higher product development and reflected $1.7 of highermarketing costs.
There were no restructuring costs associated with our new Learning + Innovation Center in Munich. As a percent of revenue, operating expensesEMEA in Q1 2017 increased 20 basis points2018 compared to the prior year.
Restructuringrestructuring costs of $2.0 in Q1 2017 were related toassociated with the closure of a manufacturingthe Durlangen facility in Durlangen and the establishment of the Learning + Innovation Center in Munich. Restructuring costs of $3.9 in Q1 2016 were primarily related to costs associated with the exit of the manufacturing facility in Wisches and the closure of the manufacturing facility in Durlangen. See Note 9 to the condensed consolidated financial statements for additional information.
Other
The Other category includes Asia Pacific, Designtex and PolyVision. Asia Pacific serves customers in Asia and Australia primarily under the Steelcase brand with an emphasis on freestanding furniture systems, storageseating and seatingstorage solutions. Designtex designs andprimarily sells surface materials including textiles, and wall coverings which areand surface imaging solutions specified by architects and designers directly to end-use customers through a direct sales force primarily in North America. PolyVision manufactures ceramic steel surfaces for use in multiplevarious applications but primarily for sale to third-party fabricators and distributors to createglobally, including static whiteboards and chalkboards sold inthrough third party fabricators and distributors to the primary and secondary education markets globally.
 Three Months Ended
Statement of Operations Data — OtherMay 27,
2016
May 29,
2015
Revenue$73.1
 100.0% $65.9
 100.0% 
Cost of sales48.8
 66.8
 43.6
 66.2
 
Restructuring costs
 
 
 
 
Gross profit24.3
 33.2
 22.3
 33.8
 
Operating expenses22.1
 30.2
 21.4
 32.4
 
Restructuring costs
 
 
 
 
Operating income$2.2
 3.0% $0.9
 1.4% 
and architectural panels and other special applications sold through general contractors for commercial and infrastructure projects.

 Three Months Ended
Reconciliation of Operating Income to Adjusted Operating Income — OtherMay 27,
2016
May 29,
2015
Operating income$2.2
 3.0% $0.9
 1.4% 
Add: restructuring costs
 
 
 
 
Adjusted operating income$2.2
 3.0% $0.9
 1.4% 
 Three Months Ended
Statement of Operations Data — OtherMay 26,
2017
May 27,
2016
Revenue$87.0
 100.0% $73.1
 100.0% 
Cost of sales54.6
 62.8
 48.8
 66.8
 
Restructuring costs
 
 
 
 
Gross profit32.4
 37.2
 24.3
 33.2
 
Operating expenses25.9
 29.7
 22.1
 30.2
 
Restructuring costs
 
 
 
 
Operating income$6.5
 7.5% $2.2
 3.0% 

 Three Months Ended
Reconciliation of Operating Income to Adjusted Operating Income — OtherMay 26,
2017
May 27,
2016
Operating income$6.5
 7.5% $2.2
 3.0% 
Add: restructuring costs
 
 
 
 
Adjusted operating income$6.5
 7.5% $2.2
 3.0% 
Revenue in the Other category represented 11.8% of consolidated revenue in Q1 2018. Revenue in Q1 2018 increased $13.9 or 19% compared to the prior year and was driven by strong growth in Asia Pacific.
Operating results in the Other category improved significantly in Q1 20172018 compared to the prior year. Improved operating performanceyear driven by an increase of $6.5 in Asia Pacific andPacific's operating income. Operating expenses at Designtex more than offset lower operating performance at PolyVision comparedincluded $3.0 related to the prior year.defined benefit plan annuitizations.
Revenue in the Other category represented 10.2% of consolidated revenue in Q1 2017. Revenue in Q1 2017 increased by $7.2 to $73.1 compared to revenue of $65.9 in Q1 2016. The increase was driven by strong growth in Asia Pacific and Designtex partially offset by lower volume at PolyVision.

18

Table of Contents
STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Corporate
Corporate costs include unallocated portions of shared service functions, such as information technology, corporate facilities, finance, human resources, research, legal and executive,customer aviation, plus deferred compensation expense and income or losses associated with COLI.
 Three Months Ended
Statement of Operations Data — CorporateMay 27,
2016
May 29,
2015
Operating expenses$9.3
 $8.0
 

The increase in operating expenses in Q1 2017 was primarily due to higher deferred compensation expense, partially offset by higher COLI income.
 Three Months Ended
Statement of Operations Data — CorporateMay 26,
2017
May 27,
2016
Operating expenses$9.8
 $9.3
 
Liquidity and Capital Resources
Based on current business conditions, we target a minimumrange of $75 to $150 in cash and cash equivalents and short-term investments to fund day-to-day operations, including seasonal disbursements, particularly the annual payment of accrued variable compensation and retirement plan contributions in Q1 of each fiscal year. In addition, we may carry additional liquidity for potential investments in strategic initiatives and as a cushion against economic volatility.
Liquidity SourcesMay 27,
2016
February 26,
2016
May 26,
2017
February 24,
2017
Cash and cash equivalents$133.4
 $181.9
$143.9
 $197.1
Short-term investments18.4
 84.1
37.3
 73.4
Company-owned life insurance163.3
 160.4
167.4
 168.8
Availability under credit facilities152.0
 151.7
155.0
 150.3
Total liquidity$467.1
 $578.1
$503.6
 $589.6
As of May 27, 201626, 2017, we held a total of $151.8181.2 in cash and cash equivalents and short-term investments. The majority of our short-term investments are located in the U.S. Of our total $133.4143.9 in cash and cash equivalents, approximately 62%66% was located in the U.S. and the remaining 38%34% was located outside of the U.S., primarily in Canada, Mexico, Spain, France and Hong Kong.China. The majority of amounts located outside the U.S. would be taxable if repatriated to the U.S. as dividends. Such amounts are considered available to repay intercompany debt, available to meet local working capital requirements or permanently reinvested in foreign subsidiaries.

subsidiaries. The majority of our short-term investments are located in the U.S. and maintained in a managed investment portfolio, which primarily consists of corporate debt securities and U.S. agency debt securities.
Our investments in COLI policies are intended to be utilized as a long-term funding source for long-term employee benefit obligations. However, COLI can be used as a source of liquidity if needed.liquidity. We believe the financial strength of the issuing insurance companies associated with our COLI policies is sufficient to meet their obligations. COLI investments are recorded at their net cash surrender value.
Availability under credit facilities may be reduced by the use of cash and cash equivalents and short-term investments for purposes other than the repayment of debt as a result of constraints related to our maximum leverage ratio covenant.compliance with applicable covenants. SeeLiquidity Facilitiesfor more information.information

.
The following table summarizes our condensed consolidated statements of cash flows for the three months ended May 27, 201626, 2017 and May 29, 2015:27, 2016:
Three Months EndedThree Months Ended
Cash Flow DataMay 27,
2016
May 29,
2015
May 26,
2017
May 27,
2016
Net cash provided by (used in): 
  
 
  
Operating activities$(65.7) $(35.8)$(50.5) $(65.7)
Investing activities52.9
 (3.8)18.7
 52.9
Financing activities(36.4) (25.6)(22.2) (36.4)
Effect of exchange rate changes on cash and cash equivalents0.7
 (0.8)0.8
 0.7
Net decrease in cash and cash equivalents(48.5) (66.0)
Net increase (decrease) in cash and cash equivalents(53.2) (48.5)
Cash and cash equivalents, beginning of period181.9
 176.5
197.1
 181.9
Cash and cash equivalents, end of period$133.4
 $110.5
$143.9
 $133.4
Cash provided by operating activities
Three Months EndedThree Months Ended
Cash Flow Data — Operating ActivitiesMay 27,
2016
May 29,
2015
May 26,
2017
May 27,
2016
Net income$19.4
 $20.0
$18.1
 $19.4
Depreciation and amortization15.1
 16.2
15.4
 15.1
Deferred income taxes33.6
 24.8
Non-cash stock compensation9.1
 8.8
8.4
 9.1
Other(4.3) (4.4)9.1
 (4.3)
Changes in accounts receivable, inventories and accounts payable(3.3) (13.1)(19.0) (3.3)
Changes in assets related to derivative instruments0.2
 22.5
Changes in VAT recoverable14.4
 0.4
8.3
 14.4
Changes in employee compensation liabilities(103.4) (77.3)(85.5) (103.4)
Changes in other operating assets and liabilities(46.5) (33.7)
Changes in other operating assets and liabilities and deferred income taxes(5.3) (12.7)
Net cash used in operating activities$(65.7) $(35.8)$(50.5) $(65.7)
The increasedecrease in cash used inby operating activities in Q1 2017 was primarily driven by higher variable compensation payments2018 compared to Q1 2016, partially2017 was driven by lower variable compensation and increased customer deposits, offset in part by a reduction inincreased working capital and the timing of VAT recoverable and improved working capital. In addition, Q1 2016 included higher proceeds from the settlement of foreign exchange forward contracts.recoveries.

Cash used in investing activities
 Three Months Ended
Cash Flow Data — Investing ActivitiesMay 27,
2016
May 29,
2015
Capital expenditures$(14.3) $(24.2)
Proceeds from disposal of fixed assets0.3
 4.1
Purchases of short-term investments(6.0) (6.9)
Liquidations of short-term investments71.8
 29.7
Acquisition, net of cash acquired
 (6.6)
Other1.1
 0.1
Net cash provided by (used in) investing activities$52.9
 $(3.8)
 Three Months Ended
Cash Flow Data — Investing ActivitiesMay 26,
2017
May 27,
2016
Capital expenditures$(16.8) $(14.3)
Purchases of investments(19.4) (6.0)
Liquidations of investments55.5
 71.8
Other(0.6) 1.4
Net cash provided by investing activities$18.7
 $52.9
Capital expenditures in Q1 20172018 included investments in our global manufacturing operations, product development and the new Learning + Innovation Center in Munich. In addition, a $3 payment was made in Q1 2017 in connection with the delivery of a new aircraft compared to a $10 progress payment in Q1 2016.
Liquidations of short-term investments was higherwere lower in Q1 2017 in order2018 due to fund higherlower variable compensation payments and other liquidity needs.

in the current quarter compared to Q1 2017.
Cash used in financing activities
Three Months EndedThree Months Ended
Cash Flow Data — Financing ActivitiesMay 27,
2016
May 29,
2015
May 26,
2017
May 27,
2016
Dividends paid$(15.2) $(15.1)$(15.7) $(15.2)
Common stock repurchases(20.9) (11.5)(5.8) (20.9)
Excess tax benefit from vesting of stock awards(0.3) 1.5

 (0.3)
Repayment of long-term debt
 (0.5)
Repayments of debt(0.7) 
Net cash used in financing activities$(36.4) $(25.6)$(22.2) $(36.4)
We paid dividends of $0.12$0.1275 per common share during Q1 2017in the first quarter of 2018 and $0.1125$0.12 per share duringin the first quarter of 2017.
In Q1 2016.
2018, we made common stock repurchases of 358,431 shares, all of which were made to satisfy participants' tax withholding obligations upon the vesting of equity awards, pursuant to the terms of the Incentive Compensation Plan. In Q1 2017, we made common stock repurchases of 1,448,461 shares, 448,461 of which were made to satisfy participants' tax withholding obligations upon the vesting of equity awards, pursuant to the terms of the Incentive Compensation Plan. awards.
As of the end of Q1 2017,2018, we had $153.2$126.5 of remaining availability under the $250 and $150 share repurchase programsprogram approved by our Board of Directors in Q4 2008 and Q4 2016, respectively.2016.
Off-Balance Sheet Arrangements
During Q1 20172018, no material change in our off-balance sheet arrangements occurred.
Contractual Obligations
During Q1 2017,2018, no material change in our contractual obligations occurred.
Liquidity Facilities
Our total liquidity facilities as of May 27, 201626, 2017 were:
Liquidity FacilitiesMay 27,
2016
May 26,
2017
Global committed bank facility$125.0
$125.0
Various uncommitted lines27.0
30.0
Total credit lines available152.0
155.0
Less: Borrowings outstanding

Available capacity$152.0
$155.0

We have a $125 global committed five-year unsecured revolving syndicated credit facility. Thebank facility requires us to satisfy financial covenants including a maximum leverage ratio covenant and a minimum interest coverage ratio covenant. Additionally, the facility requires us to comply with certain other terms and conditions, including a restricted payment covenant which establishes a maximum level of dividends and/or other equity-related distributions or payments (such as share repurchases) we may makewas entered into in any fiscal year.Q3 2017. As of May 27, 2016,26, 2017, there were no borrowings outstanding under the facility, our availability was not limited, and we were in compliance with all covenants under the facility.
The various uncommitted lines may be changed or canceled by the banks at any time. There were no outstanding borrowings under the uncommitted facilities as of May 27, 2016.26, 2017.
In addition, we have credit agreements of $37.9$40.1 which can be utilized to support letters of credit, bank guarantees or foreign exchange contracts; letters of credit and bank guarantees of $14.1$11.6 were outstanding under such facilities as of May 27, 2016.26, 2017. There were no draws on our standby letters of credit during Q1 2017.2018.
Total consolidated debt as of May 27, 201626, 2017 was $299.2.$296.8. Our debt primarily consists of $248.4$248.9 in term notes due in 2021 with an effective interest rate of 6.6%. In addition, we have a term loan with a balance as of May 27, 201626, 2017 of $50.$47.4. This term loan has a floating interest rate based on 30-day LIBOR plus 1.20% and is due in Q1 2024. The term notes are unsecured and the term loan is secured by two aircraft. The term notes and the term loan do not contain financial covenants and are not cross-defaulted to our other debt facilities.

Liquidity Outlook
Our current cash and cash equivalents and short-term investment balances, funds available under our credit facilities, funds available from COLI and cash generated from future operations are expected to be sufficient to finance our known or foreseeable liquidity needs. We continue to maintain a conservative approach to liquidity and maintainhave flexibility over significant uses of cash including our capital expenditures and discretionary operating expenses.
Our significant funding requirements include operating expenses, non-cancelable operating lease obligations, capital expenditures, variable compensation and retirement plan contributions, share repurchases, dividend payments and debt service obligations.
We currently expect capital expenditures to approximate $75$80 to $85$90 in 20172018 compared to $93$61 in 2016.2017. This estimateamount includes investments in our global manufacturing operations, product development and the new Learning + Innovation Center in Munich. We closely manage capital spending to ensure we are making investments that we believe will sustain our business and preserve our ability to introduce innovative new products.
On June 22, 2016,21, 2017, we announced a quarterly dividend on our common stock of $0.12$0.1275 per share, or approximately $14.6,$15.3, to be paid in Q2 2017.2018. Future dividends will be subject to approval by our Board of Directors and compliance with the restricted payment covenant of our credit facilities.Directors.
Critical Accounting Estimates
During Q1 2017,2018, there have been no changes in the items that we have identified as critical accounting estimates.
Recently Issued Accounting Standards
See Note 2 to the condensed consolidated financial statements.
Forward-looking Statements
From time to time, in written and oral statements, we discuss our expectations regarding future events and our plans and objectives for future operations. These forward-looking statements discuss goals, intentions and expectations as to future trends, plans, events, results of operations or financial condition, or state other information relating to us, based on current beliefs of management as well as assumptions made by, and information currently available to, us. 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. Although we believe these forward-looking statements are reasonable, they are based upon a number of assumptions concerning future conditions, any or all of which may ultimately prove to be inaccurate. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to vary from our 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; our restructuring activities; changes in raw materials and commodity costs; currency fluctuations; changes in customer demand; and the other risks and contingencies detailed in this Report, our most recent Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. We undertake no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise.
Item 3.Quantitative and Qualitative Disclosures About Market Risk:
The nature of market risks (i.e., the risk of loss arising from adverse changes in market rates and prices) faced by us as of May 27, 201626, 2017 is the same as disclosed in our Annual Report on Form 10-K for the year ended February 26, 201624, 2017. We are exposed to market risks from foreign currency exchange, interest rates, commodity prices and fixed income and equity prices, which could affect our operating results, financial position and cash flows.
Foreign Exchange Risk
During Q1 20172018, no material change in foreign exchange risk occurred.

Interest Rate Risk
During Q1 20172018, no material change in interest rate risk occurred.

Commodity Price Risk
During Q1 20172018, no material change in commodity price risk occurred.
Fixed Income and Equity Price Risk
During Q1 20172018, no material change in fixed income and equity price risk occurred.
Item 4.Controls and Procedures:
(a) Disclosure Controls and Procedures.  Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of May 27, 201626, 2017. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of May 27, 201626, 2017, our disclosure controls and procedures were effective in (1) recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and (2) ensuring that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
(b) Internal Control Over Financial Reporting.  There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during our first fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION
Item 1A.Risk Factors:
We may be adversely affected by changes in raw material and commodity costs.
We procure raw materials (including steel, petroleum-based products, aluminum, other metals, wood and particleboard) from a significant number of sources globally. These raw materials are not rare or unique to our industry. The costs of these commodities, as well as fuel and energy costs, can fluctuate due to changes in global supply and demand, larger currency movements and changes in import tariffs and trade barriers, which can also cause supply interruptions. In the short-term, rapid increases in raw material and commodity costs can be very difficult to offset with price increases because of existing contractual commitments with our customers, and it is difficult to find effective financial instruments to hedge against such changes. As a result, our gross margins can be adversely affected by short-term increases in these costs. If we are not successful in passing along higher raw material and commodity costs to our customers over the longer-term because of competitive pressures, our profitability could be negatively impacted.
In March 2016, the U.S. Department of Commerce published a preliminary determination in its antidumping investigations involving Japanese producers of cold-rolled steel, which resulted in dumping duties of 71.35% being applied to the specialized flat steel that PolyVision uses in the manufacture of porcelain-enameled writing surfaces, with the duties applying to imports dating back to December 2015. On June 22, 2016, the International Trade Commission affirmed the determination as to the dumping margin but overturned the retroactive application of the duties for the period from December 2015 to March 2016.  As a result of these proceedings, PolyVision's profitability in 2017 could be negatively impacted by up to $4 in costs associated with these actions, including duties for raw materials previously imported or for which PolyVision has already entered into binding purchase commitments and costs associated with evaluating alternative sources of raw materials.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds:
Issuer Purchases of Equity Securities
The following is a summary of share repurchase activity during Q1 20172018:
Period
(a)
Total Number of
Shares Purchased
(b)
Average Price
Paid per Share
(c)
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs (1)
(d)
Approximate Dollar
Value of Shares
that May Yet be
Purchased
Under the Plans
or Programs (1)
(in millions)
02/27/2016 - 04/01/2016523,261
$13.74
74,800
$166.9
04/02/2016 - 04/29/2016856,100
$14.83
856,100
$154.2
04/30/2016 - 05/27/201669,100
$14.97
69,100
$153.2
Total1,448,461
(2)1,000,000
 
Period
(a)
Total Number of
Shares Purchased
(b)
Average Price
Paid per Share
(c)
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans
or Programs (1)
(d)
Approximate Dollar
Value of Shares
that May Yet be
Purchased
Under the Plans
or Programs (1)
(in millions)
02/25/2017 - 03/31/2017357,950
$16.13

$126.5
04/01/2017 - 04/28/2017481
$16.10

$126.5
04/29/2017 - 05/26/2017
$

$126.5
Total358,431
(2)
 

(1)In December 2007, our Board of Directors approved a share repurchase program permitting the repurchase of up to $250 of shares of our common stock, and in January 2016, the Board of Directors approved an additionala share repurchase program permitting the repurchase of up to $150 of shares of our common stock. These programs haveThis program has no specific expiration dates.date. On October 10, 2016, we entered into a stock repurchase agreement with a third party broker under which the broker was authorized to repurchase up to 5 million shares of our common stock on our behalf during the period from October 11, 2016 through March 23, 2017, subject to certain price, market and volume constraints specified in the agreement. A similar agreement with a broker was entered into on April 18, 2017, under which the broker is authorized to repurchase up to 4 million shares of our common stock during the period from April 18, 2017 through September 21, 2017. These agreements were established in accordance with Rule 10b5-1 of the Exchange Act. Shares purchased under the agreements are part of the Company's share repurchase program approved in January 2016.
(2)448,461All of these shares were repurchased to satisfy participants’ tax withholding obligations upon the vesting of equity awards, pursuant to the terms of our Incentive Compensation Plan.
Item 6.Exhibits:
See Exhibit Index.

SIGNATURES
Pursuant to the requirements 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.
STEELCASE INC. 


By: /s/  Mark T. Mossing
 Mark T. Mossing
Corporate Controller and
Chief Accounting Officer
(Duly Authorized Officer and
Principal Accounting Officer)
Date: June 23, 20162017

Exhibit Index
Exhibit
No.
Description
  
10.1Agreement dated November 19, 2013 between Steelcase Inc. and Eddy Schmitt
31.1Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INSXBRL Instance Document
101.SCHXBRL Schema Document
101.CALXBRL Calculation Linkbase Document
101.LABXBRL Labels Linkbase Document
101.PREXBRL Presentation Linkbase Document
101.DEFXBRL Definition Linkbase Document




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