Exhibit 99.1
Steelcase Reports Results for First Quarter Fiscal 2004
GRAND RAPIDS, Mich.--(BUSINESS WIRE)--June 23, 2003--Steelcase
Inc. (NYSE:SCS) today reported that revenue for its first quarter
totaled $571.9 million, compared with $643.1 million in the same
quarter last year. These results were in line with company estimates
and reflect substantially lower sales in North America primarily due
to weak backlog at the beginning of the quarter. International sales
were higher, with most of the increase due to favorable currency
translation.
Steelcase reported a loss of $(13.4) million, or $(0.09) per share
for the first quarter. These results were consistent with the
company's previous estimate of a first quarter loss in the range of
$(0.05) to $(0.12) per share and compares with a loss of $(15.4)
million, or $(0.10) per share, before the cumulative effect of
adopting SFAS No. 142 in the first quarter of fiscal 2003. Net loss
for first quarter fiscal 2003 was $(245.3) million, or $(1.66) per
share including the cumulative effect of adopting SFAS No. 142.
Reported results included pre-tax charges of $(7.5) million for
restructuring and severance in the International segment, $(5.3)
million for severance in the North America segment and $(2.0) million
for severance in the Other category. Results also included a $5.8
million non-operating pre-tax gain on the sale of real estate and
leased assets. The total of these items is a net pre-tax charge of
$(9.0) million or $(5.6) million after-tax.
"Our first quarter results reflect the difficult economic
environment we anticipated, particularly in North America," said James
P. Keane, chief financial officer. "We responded to these challenges
with actions that reduced our costs in the short and long-term."
"Despite the challenging economic conditions, we've continued
making investments in initiatives key to our growth, such as new
product development and lean manufacturing and they are paying off,"
said James P. Hackett, president and chief executive officer. "I'm
pleased with the excellent progress we made on our strategic
objectives in the quarter. We are winning new customers and were
recently recognized with nine awards for the new architecture,
furniture and technology products we introduced at NeoCon, our
industry's largest North American trade show."
Business Segment Results
(in millions)
First Quarter Sequential Quarters
Three Months Ended Three Months Ended
------------------------- ----------------------------
(13 weeks) (14 weeks)
May 30, May 24, % Inc May 30, Feb. 28, % Inc
2003 2002 (Dec) 2003 2003(6) (Dec)
------- ------- ------ ------- ------- ------
Revenue
North
America(1) $296.2 $391.0 (24.2)% $296.2 $356.6 (16.9)%
Steelcase Design
Partnership(2) 67.0 68.7 (2.5)% 67.0 68.1 (1.6)%
International(3) 129.8 107.6 20.6% 129.8 137.1 (5.3)%
Other(4) 78.9 75.8 4.1% 78.9 76.0 3.8%
------- ------- ------- -------
Consolidated
Revenue $571.9 $643.1 (11.1)% $571.9 $637.8 (10.3)%
======= ======= ======= =======
Operating
Income(5)
North
America $(19.3) $(7.0) $(19.3) $17.7
Steelcase Design
Partnership 2.9 3.6 2.9 (1.4)
International (5.2) (9.8) (5.2) (5.7)
Other (1.3) (1.4) (1.3) (3.4)
------- ------- ------- -------
Consolidated
Operating
Income $(22.9) $(14.6) $(22.9) $7.2
======= ======= ======= =======
Operating Margin
Percent (4.0)% (2.3)% (4.0)% 1.1%
Outlook
Steelcase expects revenue in the second quarter of fiscal 2004 to
increase about 10 percent compared to the first quarter, driven by the
North America segment. North America has experienced higher order
levels since early in the first quarter and entered the second quarter
with a stronger backlog. International order rates are showing signs
of softening in certain markets.
"We are seeing a sustained higher order rate, and a growing
backlog in North America, which is consistent with recent increases in
broader economic metrics," said Mr. Keane. "It appears a gradual
industry recovery may now be underway in the North America segment of
our business."
The company expects breakeven results in the second quarter. This
estimate includes approximately $(5.0) million in pre-tax charges for
International restructuring activity. The company also anticipates
increased expenses for North America plant consolidation activity
already announced, higher workers compensation costs, and employee
wage increases. The company expects to be profitable on a reported
basis for fiscal year 2004.
"We are preparing for recovery and growth," said Mr. Hackett.
"Recent project wins reinforce we have the right portfolio of products
and services that are valued in the marketplace and the global
presence required to meet our customers' needs. By delivering
innovative solutions that help people in offices work more effectively
together with achieving the right level of cost, quality and speed
throughout our enterprise, we are poised for profitable growth."
Webcast
Steelcase will webcast its conference call reviewing first quarter
fiscal 2004 financial results on Tuesday, June 24, 2003 at 11:00 a.m.
EDT. Details and links to the webcast are available at
www.steelcase.com. A replay of the webcast can be accessed on the site
after the call.
Other Events
The Steelcase annual meeting of shareholders will be held on June
26, 2003 at 11:00 a.m. EDT in the company's Town Hall located across
from company headquarters at 901 44th Street S.E. Grand Rapids,
Michigan. The company will host a live webcast of the meeting. Details
and links to the webcast are accessible at www.steelcase.com.
Business Segment Footnotes
(1) North America business segment includes the company's
Steelcase and Turnstone brands and consolidated dealers in the
U.S. and Canada.
(2) The Steelcase Design Partnership (SDP) business segment
includes Brayton, Designtex Group, Details, Metro and Vecta.
(3) International business segment includes all manufacturing and
sales operations outside the U.S. and Canada.
(4) Other includes Steelcase Financial Services, PolyVision, IDEO
and Attwood subsidiaries, other ventures and unallocated corporate
expenses. Steelcase Financial Services was a reporting segment in
fiscal 2003 and is now included in Other because revenue and
assets fall below the threshold required for segment reporting.
(5) Operating income percent comparisons are not provided because
they are not meaningful.
(6) Q4 FY03 included an extra shipping week.
About Steelcase Inc.
Steelcase Inc., a Fortune 500 company, helps individuals and
organizations around the world to work more effectively by providing
knowledge, products and services that enable customers and their
consultants to create work environments that integrate architecture,
furniture and technology. Founded in 1912 and headquartered in Grand
Rapids, Michigan, the company has led the global office furniture
industry in sales every year since 1974. Its product portfolio
includes interior architectural products, furniture systems,
technology products, seating, lighting, storage and related products
and services. Fiscal 2003 revenue was approximately $2.6 billion.
Steelcase Inc. and its subsidiaries have dealers in more than 900
locations, manufacturing facilities in over 50 locations and
approximately 16,000 employees around the world. The company's Class A
Common Stock trades on the NYSE under the symbol SCS.
Forward-looking Statements
From time to time, in written reports and oral statements, the
company discusses its expectations regarding future performance. For
example, certain portions of this release contains various
"forward-looking statements", including those relating to anticipated
revenue, industry recovery, earning/losses, profitability,
restructuring activity and costs. Such statements involve certain
risks and uncertainties that could cause actual results to vary. The
company's performance may differ materially from that contemplated by
forward-looking statements for a variety of reasons, including, but
not limited to: competitive and general economic
conditions/uncertainty domestically and internationally; delayed or
lost sales and other impacts related to acts of terrorism, acts of war
or governmental action; changes in domestic or international laws,
rules and regulations, including the impact of changed environmental
laws, rules or regulations; major disruptions at our key facilities or
in the supply of any key raw materials; competitive pricing pressure;
pricing changes by the company or its competitors; currency
fluctuations; changes in customer demand and order patterns; changes
in the financial stability of customers or dealers (including changes
in their ability to pay amounts owed to the company); changes in
relationships with customers, suppliers, employees and dealers;
product (sales) mix; the success (including product performance and
customer acceptance) of new products, current product innovations and
platform simplification, and their impact on the company's
manufacturing processes; the ability of the company to effectively
cull older products; the ability of the company to successfully
negotiate new credit facilities; possible acquisitions or divestitures
by the company; the company's ability to reduce costs, including
ramp-up costs associated with new products and to improve margins on
new products; the impact of workforce reductions (including
elimination of temporary workers, hourly layoffs, early retirement
programs and salaried workforce reductions); the company's success in
integrating acquired businesses, initiating and managing alliances and
increased global sourcing, transitioning production of products or
product components to other manufacturing facilities or to third
parties as a result of production rationalization, implementation of
technology initiatives or migration to a less vertically integrated
manufacturing model; changes in business strategies and decisions; and
other risks detailed in the company's 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.
STEELCASE INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data)
(Unaudited)
Three Months Ended
May 30, May 24,
2003 2002
-------- ---------
Revenue $ 571.9 $ 643.1
Cost of sales 410.1 457.5
Restructuring and impairment costs 10.2 3.6
-------- ---------
Gross profit 151.6 182.0
Operating expenses 169.8 192.4
Restructuring and impairment costs 4.7 4.2
-------- ---------
Operating loss (22.9) (14.6)
Interest expense (4.8) (5.1)
Other income (expense), net 6.3 (4.9)
-------- ---------
Pre-tax loss (21.4) (24.6)
Income tax benefit (8.0) (9.2)
-------- ---------
Loss after taxes (13.4) (15.4)
-------- ---------
Loss before cumulative effect of
accounting change (13.4) (15.4)
Cumulative effect of accounting change -- (229.9)
-------- ---------
Net loss $ (13.4) $ (245.3)
-------- ---------
Loss per share before cumulative effect of
accounting change $ (0.09) $ (0.10)
Cumulative effect of accounting change per share -- (1.56)
-------- ---------
Loss per share $ (0.09) $ (1.66)
-------- ---------
Dividends declared per common share $ 0.06 $ 0.06
-------- ---------
Weighted Average Shares Outstanding -
Basic 147.6 147.4
Diluted 147.6 147.4
STEELCASE INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
(Unaudited)
May 30, Feb. 28,
2003 2003
------------ -----------
ASSETS
Current assets:
Cash and cash equivalents $ 91.8 $ 128.9
Accounts receivable, net 399.3 367.2
Notes receivable and leased assets, net 62.0 84.9
Inventories 134.9 129.8
Other current assets 114.5 103.3
------------ -----------
Total current assets 802.5 814.1
Property and equipment, net 761.9 774.0
Notes receivable and leased assets, net 120.5 125.9
Goodwill and other intangible assets, net 303.6 306.0
Other assets 311.8 322.2
------------ -----------
Total assets $ 2,300.3 $ 2,342.2
------------ -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 128.4 $ 145.4
Short-term borrowings and current portion
of long-term debt 39.4 30.0
Accrued expenses:
Employee compensation 81.8 90.9
Employee benefit plan obligations 25.2 39.6
Other 212.5 196.6
------------ -----------
Total current liabilities 487.3 502.5
------------ -----------
Long-term liabilities:
Long-term debt 290.7 294.2
Employee benefit plan obligations 238.1 237.8
Other long-term liabilities 43.5 52.6
------------ -----------
Total long-term liabilities 572.3 584.6
------------ -----------
Total liabilities 1,059.6 1,087.1
------------ -----------
Shareholders' equity:
Common stock 288.1 286.1
Accumulated other comprehensive income
(loss) (42.4) (50.1)
Deferred compensation (1.8) --
Retained earnings 996.8 1,019.1
------------ -----------
Total shareholders' equity 1,240.7 1,255.1
------------ -----------
Total liabilities and
shareholders' equity $ 2,300.3 $ 2,342.2
------------ -----------
STEELCASE INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(Unaudited)
Three Months Ended
May 30, May 24,
2003 2002
---------- ----------
OPERATING ACTIVITIES
Net income (loss) $ (13.4) $ (245.3)
Depreciation and amortization 37.6 39.0
Cumulative effect of accounting change -- 229.9
Non-cash stock compensation 0.2 --
Restructuring charges (payments), net (2.7) (0.6)
Changes in operating assets and liabilities, net
of corporate acquisitions (75.4) (29.1)
Other, net (3.9) (4.1)
---------- ----------
Net cash used in operating activities (57.6) (10.2)
---------- ----------
INVESTING ACTIVITIES
Capital expenditures (14.4) (20.5)
Proceeds from the disposal of fixed assets 4.6 --
Proceeds from the sale of leased assets 38.0 170.2
Net (increase) decrease in notes receivable and
leased assets (4.7) 8.8
Other, net 0.7 8.9
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Net cash provided by investing activities 24.2 167.4
---------- ----------
FINANCING ACTIVITIES
Long-term debt issuance (repayments), net (4.8) (106.1)
Short-term borrowings (repayments), net 8.5 (89.7)
Common stock issuance -- 3.6
Dividends paid (8.9) (8.8)
---------- ----------
Net cash used in financing activities (5.2) (201.0)
---------- ----------
Effect of exchange rate changes on cash and cash
equivalents 1.5 0.8
---------- ----------
Net decrease in cash and cash equivalents (37.1) (43.0)
Cash and cash equivalents, beginning of period 128.9 69.4
---------- ----------
Cash and cash equivalents, end of period $ 91.8 $ 26.4
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CONTACT: Steelcase Inc.
Investor Contact:
Raj Mehan, 616/698-4734
or
Media Contact:
Lisa Kerr, 616/698-4487