 |  |  |  |  |  |  |  |  |
|
Steelcase Reports Earnings of $0.26 Per Share - 44% Increase Over Prior Year-North America and International Segments Continue Profit Expansion-
GRAND RAPIDS, Mich., Sept. 20 /PRNewswire-FirstCall/ -- Steelcase Inc. (NYSE: SCS) today reported revenue totaling $825.2 million for its second quarter of fiscal 2008. Revenue increased 4.5 percent compared to $789.7 million in the prior year quarter, ahead of company estimates. As compared to the prior year, second quarter revenue included a favorable impact of $11.5 million from currency translation effects and an unfavorable impact of $10.9 million related to dealer deconsolidations, net of acquisitions. Steelcase reported net income of $37.7 million, or $0.26 per share for the second quarter of fiscal 2008, ahead of company estimates, driven by strong performance in the North America and International segments. This compares to $26.6 million, or $0.18 per share in the same quarter of the prior year. Included in the second quarter results were net restructuring credits totaling $1.0 million after-tax primarily related to a pending real estate sale in the International segment. Net restructuring charges were $(2.8) million after-tax in the prior year quarter. "The improved results for the quarter are further evidence of the benefits resulting from the actions we have taken to improve our operations," said James P. Hackett, president and CEO. "This continued improvement in operating results is coupled with our focus on more aggressively implementing our growth strategies." Cost of sales, which does not include restructuring charges, was 66.5 percent of revenue, an improvement of 200 basis points over the prior year. Improved sales mix and pricing yield, benefits of prior restructuring actions and favorable adjustments related to product warranty accruals and contract contingency reserves contributed to the improvement. "The improved gross margin in the North America segment demonstrates the benefits of reducing fixed costs, implementing lean manufacturing and simplifying our product portfolio," said David C. Sylvester, vice president and CFO. "We continue to make significant progress toward achieving our longer-term financial targets." Operating expenses increased $20.8 million to 27.0 percent of revenue driven largely by increases in variable compensation, spending related to longer-term growth initiatives, adjustments related to self-insurance reserves and lease impairments, and currency translation effects. Reported operating income was $55.0 million, or 6.7 percent of revenue, and included a pre-tax restructuring credit of $1.7 million. Operating income excluding restructuring items was $53.3 million, or 6.5 percent of revenue, compared with 5.9 percent in the prior year. Other income, net increased to $10.8 million from $6.7 million in the prior year. The increase included non-operating gains resulting from dealer transitions and disposition of a long-term investment. The effective tax rate for the quarter increased to 39.0%. Income tax expense included charges totaling $3.0 million related to the repatriation of earnings from the company's Canadian subsidiary and the revaluation of deferred tax assets in Germany and the United Kingdom due to the enactment of lower tax rates. As a result of these items, the company now expects its effective tax rate to approximate 36% to 37% for the full fiscal year. Cash and short-term investments were $478.7 million, an increase of $28.8 million over the first quarter. During the quarter, the company repurchased 2.2 million shares under its share repurchase authorization at a total cost of $40.0 million and paid dividends of $21.6 million, or $0.15 per share. Outlook The company expects third quarter revenue to be 3% to 7% higher than the previous year, including a $25 to $30 million unfavorable impact of dealer deconsolidations, net of acquisitions. The company reported revenue of $802.0 million in the prior year third quarter. The company expects to report earnings between $0.27 and $0.32 per share in the third quarter. The company reported earnings of $0.22 per share in the third quarter of the prior year which included $(3.6) million of after-tax restructuring charges. Mr. Hackett concluded, "We have a positive outlook for the third quarter, and we are closely monitoring the recent uncertainty in the credit markets. At this point, however, we have not seen any significant change in our customers' plans to purchase our products and services."
Business Segment Results
(in millions, except percentages)
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
Aug. 24, Aug. 25, % Aug. 24, Aug. 25, %
2007 2006 Increase 2007 2006 Increase
Revenue
North America (1) $504.2 $500.0 0.8% $991.1 $937.8 5.7%
International (2) 188.9 159.0 18.8% 384.8 326.4 17.9%
Other (3) 132.1 130.7 1.1% 257.7 252.8 1.9%
Consolidated
Revenue $825.2 $789.7 4.5% $1,633.6 $1,517.0 7.7%
Operating Income
North America $51.0 $42.0 $86.5 $69.2
International 5.9 (0.4) 19.0 4.2
Other 4.8 7.1 11.4 9.7
Corporate (4) (6.7) (6.3) (13.6) (12.7)
Consolidated
Operating
Income $55.0 $42.4 $103.3 $70.4
Operating Income
Percent 6.7% 5.4% 24.1% 6.3% 4.6% 37.0%
Business Segment Footnotes -
(1) The North America segment consists of the Steelcase Group, Turnstone,
and Nurture by Steelcase.
(2) The International segment includes all manufacturing and sales
operations outside the U.S. and Canada.
(3) The Other category includes the Design Group, PolyVision, IDEO and
Financial Services subsidiaries.
(4) Corporate expenses include the executive function and portions of
shared services functions such as human resources, finance, legal,
research and development and corporate facilities.
Steelcase Inc.
(Unaudited)
Three Months Ended
Aug. 24, 2007 Aug. 25, 2006
Revenue $825.2 100.0% $789.7 100.0%
Cost of sales 549.1 66.5 540.9 68.5
Restructuring charges (1.7) (0.2) 4.5 0.6
Gross profit 277.8 33.7 244.3 30.9
Operating expenses 222.8 27.0 202.0 25.5
Restructuring charges - - (0.1) -
Operating income $55.0 6.7% $42.4 5.4%
Gross Profit, as reported $277.8 33.7% $244.3 30.9%
Restructuring Charges (1.7) (0.2) 4.5 0.6
Gross Profit, excluding
restructuring charges $276.1 33.5% $248.8 31.5%
Operating Income, as reported $55.0 6.7% $42.4 5.4%
Restructuring Charges (1.7) (0.2) 4.4 0.6
Operating Income, excluding
restructuring charges $53.3 6.5% $46.8 5.9%
(Unaudited)
Six Months Ended
Aug. 24, 2007 Aug. 25, 2006
Revenue $1,633.6 100.0% $1,517.0 100.0%
Cost of sales 1,091.7 66.8 1,044.0 68.8
Restructuring charges - - 8.6 0.6
Gross profit 541.9 33.2 464.4 30.6
Operating expenses 438.6 26.9 393.9 26.0
Restructuring charges - - 0.1 -
Operating income $103.3 6.3% $70.4 4.6%
Gross Profit, as reported $541.9 33.2% $464.4 30.6%
Restructuring Charges - - 8.6 0.6
Gross Profit, excluding
restructuring charges $541.9 33.2% $473.0 31.2%
Operating Income, as reported $103.3 6.3% $70.4 4.6%
Restructuring Charges - - 8.7 0.6
Operating Income, excluding
restructuring charges $103.3 6.3% $79.1 5.2%
North America
(Unaudited)
Three Months Ended
Aug. 24, 2007 Aug. 25, 2006
Revenue $504.2 100.0% $500.0 100.0%
Cost of sales 338.0 67.0 349.0 69.8
Restructuring charges - - 3.6 0.7
Gross profit 166.2 33.0 147.4 29.5
Operating expenses 115.2 22.9 105.4 21.1
Operating income $51.0 10.1% $42.0 8.4%
Gross Profit, as reported $166.2 33.0% $147.4 29.5%
Restructuring Charges - - 3.6 0.7
Gross Profit, excluding
restructuring charges $166.2 33.0% $151.0 30.2%
Operating Income, as reported $51.0 10.1% $42.0 8.4%
Restructuring Charges - - 3.6 0.7
Operating Income, excluding
restructuring charges $51.0 10.1% $45.6 9.1%
North America
(Unaudited)
Six Months Ended
Aug. 24, 2007 Aug. 25, 2006
Revenue $991.1 100.0% $937.8 100.0%
Cost of sales 672.7 67.8 660.3 70.4
Restructuring charges 1.7 0.2 5.6 0.6
Gross profit 316.7 32.0 271.9 29.0
Operating expenses 230.2 23.3 202.7 21.6
Operating income $86.5 8.7% $69.2 7.4%
Gross Profit, as reported $316.7 32.0% $271.9 29.0%
Restructuring Charges 1.7 0.2 5.6 0.6
Gross Profit, excluding
restructuring charges $318.4 32.2% $277.5 29.6%
Operating Income, as reported $86.5 8.7% $69.2 7.4%
Restructuring Charges 1.7 0.2 5.6 0.6
Operating Income, excluding
restructuring charges $88.2 8.9% $74.8 8.0%
International
(Unaudited)
Three Months Ended
Aug. 24, 2007 Aug. 25, 2006
Revenue $188.9 100.0% $159.0 100.0%
Cost of sales 127.7 67.6 108.3 68.1
Restructuring charges (1.6) (0.8) 0.9 0.6
Gross profit 62.8 33.2 49.8 31.3
Operating expenses 56.9 30.1 50.2 31.6
Operating income $5.9 3.1% $(0.4) (0.3)%
Gross Profit, as reported $62.8 33.2% $49.8 31.3%
Restructuring Charges (1.6) (0.8) 0.9 0.6
Gross Profit, excluding
restructuring charges $61.2 32.4% $50.7 31.9%
Operating Income, as reported $5.9 3.1% $(0.4) (0.3)%
Restructuring Charges (1.6) (0.8) 0.9 0.6
Operating Income, excluding
restructuring charges $4.3 2.3% $0.5 0.3%
International
(Unaudited)
Six Months Ended
Aug. 24, 2007 Aug. 25, 2006
Revenue $384.8 100.0% $326.4 100.0%
Cost of sales 256.2 66.6 220.8 67.7
Restructuring charges (1.6) (0.4) 3.0 0.9
Gross profit 130.2 33.8 102.6 31.4
Operating expenses 111.2 28.9 98.4 30.1
Operating income $19.0 4.9% $4.2 1.3%
Gross Profit, as reported $130.2 33.8% $102.6 31.4%
Restructuring Charges (1.6) (0.4) 3.0 0.9
Gross Profit, excluding
restructuring charges $128.6 33.4% $105.6 32.3%
Operating Income, as reported $19.0 4.9% $4.2 1.3%
Restructuring Charges (1.6) (0.4) 3.0 0.9
Operating Income, excluding
restructuring charges $17.4 4.5% $7.2 2.2%
Other
(Unaudited)
Three Months Ended
Aug. 24, 2007 Aug. 25, 2006
Revenue $132.1 100.0% $130.7 100.0%
Cost of sales 83.4 63.2 83.6 64.0
Restructuring charges (0.1) (0.1) - -
Gross profit 48.8 36.9 47.1 36.0
Operating expenses 44.0 33.3 40.1 30.7
Restructuring charges - - (0.1) (0.1)
Operating income $4.8 3.6% $7.1 5.4%
Gross Profit, as reported $48.8 36.9% $47.1 36.0%
Restructuring Charges (0.1) (0.1) (0.1) (0.1)
Gross Profit, excluding
restructuring charges $48.7 36.9% $47.0 36.0%
Operating Income, as reported $4.8 3.6% $7.1 5.4%
Restructuring Charges (0.1) (0.1) (0.1) (0.1)
Operating Income, excluding
restructuring charges $4.7 3.5% $7.0 5.4%
Other
(Unaudited)
Six Months Ended
Aug. 24, 2007 Aug. 25, 2006
Revenue $257.7 100.0% $252.8 100.0%
Cost of sales 162.8 63.1 162.9 64.4
Restructuring charges (0.1) - - -
Gross profit 95.0 36.9 89.9 35.6
Operating expenses 83.6 32.5 80.1 31.8
Restructuring charges - - 0.1 -
Operating income $11.4 4.4% $9.7 3.8%
Gross Profit, as reported $95.0 36.9% $89.9 35.6%
Restructuring Charges (0.1) - 0.1 -
Gross Profit, excluding
restructuring charges $94.9 36.8% $90.0 35.6%
Operating Income, as reported $11.4 4.4% $9.7 3.8%
Restructuring Charges (0.1) - 0.1 -
Operating Income, excluding
restructuring charges $11.3 4.4% $9.8 3.8%
Corporate
(Unaudited)
Three Months Ended
Aug. 24, 2007 Aug. 25, 2006
Operating expenses $6.7 $6.3
(Unaudited)
Six Months Ended
Aug. 24, 2007 Aug. 25, 2006
Operating expenses $13.6 $12.7
Webcast Steelcase will discuss second quarter fiscal 2008 results and its business outlook on a conference call and webcast at 11:00 a.m. EDT today. Links to the webcast are available at www.steelcase.com/ir. Supporting presentation slides will be available on the company's website prior to the conference call. Non-GAAP Financial Measures This earnings release contains certain non-GAAP financial measures. A "non-GAAP financial measure" is defined as a numerical measure of a company's financial performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with GAAP in the statement of income, balance sheet or statement of cash flows of the company. Pursuant to the requirements of Regulation G, the company has provided a reconciliation above of non-GAAP financial measures to the most directly comparable GAAP financial measure. The non-GAAP financial measures used within the company's earnings release are: second quarter and six months year-to-date gross profit, excluding restructuring charges for the current and prior year in dollars and as a percentage of revenue and second quarter and six months year-to-date operating income, excluding restructuring charges, for the current and prior year in dollars and as a percentage of revenue, on a consolidated basis and for each business segment. These measures are presented because management uses this information to monitor and evaluate financial results and trends. Therefore, management believes this information is also useful for investors. Forward-looking Statements From time to time, in written and oral statements, the company discusses its expectations regarding future events and its plans and objectives for future operations. These forward-looking statements generally are accompanied by words such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "intend," "may," "possible," "potential," "predict," "project," or other similar words, phrases or expressions. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to vary from the company's expectations because of factors such as, but not limited to, competitive and general economic conditions domestically and internationally; acts of terrorism, war, governmental action, natural disasters and other Force Majeure events; changes in the legal and regulatory environment; restructuring activities; currency fluctuations; changes in customer demands; and the other risks and contingencies detailed in the company's most recent Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission. Steelcase undertakes no obligation to update, amend, or clarify forward-looking statements, whether as a result of new information, future events, or otherwise. About Steelcase Inc. Steelcase, the global leader in the office furniture industry, helps people have a better work experience by providing products, services and insights into the ways people work. The company designs and manufactures architecture, furniture and technology products. Founded in 1912 and headquartered in Grand Rapids, Michigan, Steelcase (NYSE: SCS) serves customers through a network of over 600 independent dealers and approximately 13,000 employees worldwide. Fiscal 2007 revenue was $3.1 billion. Learn more at www.steelcase.com.
STEELCASE INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(in millions, except per share data)
Three Months Ended Six Months Ended
Aug. 24, Aug. 25, Aug. 24, Aug. 25,
2007 2006 2007 2006
Revenue $825.2 $789.7 $1,633.6 $1,517.0
Cost of sales 549.1 540.9 1,091.7 1,044.0
Restructuring costs (1.7) 4.5 - 8.6
Gross profit 277.8 244.3 541.9 464.4
Operating expenses 222.8 202.0 438.6 393.9
Restructuring costs - (0.1) - 0.1
Operating income 55.0 42.4 103.3 70.4
Interest expense (4.0) (5.1) (8.3) (9.2)
Other income, net 10.8 6.7 18.2 11.6
Income before income taxes 61.8 44.0 113.2 72.8
Income tax expense 24.1 17.4 41.9 28.0
Net income $37.7 $26.6 $71.3 $44.8
Basic and diluted per
share data:
Basic earnings per share $0.26 $0.18 $0.50 $0.30
Diluted earnings per share $0.26 $0.18 $0.49 $0.30
Dividends declared and paid
per common share $0.15 $0.10 $0.30 $0.20
Weighted average shares
outstanding -- basic 143.1 149.0 143.6 149.2
Weighted average shares
outstanding -- diluted 144.3 150.0 144.8 150.6
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
(Unaudited)
Aug. 24, Feb. 23,
ASSETS 2007 2007
Current assets:
Cash and cash equivalents 409.9 $527.2
Short-term investments 68.8 33.1
Accounts receivable, net 391.8 352.6
Inventories 158.5 144.0
Other current assets 144.6 172.7
Total current assets 1,173.6 1,229.6
Property and equipment, net 471.7 477.1
Company owned life insurance 209.2 209.2
Goodwill and other intangible assets,
net 275.5 278.0
Other assets 200.2 205.5
Total assets $2,330.2 $2,399.4
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $232.2 $222.0
Short-term borrowings and current
portion of long-term debt 6.6 5.1
Accrued expenses:
Employee compensation 144.8 162.7
Employee benefit plan obligations 27.4 34.2
Other 203.7 220.1
Total current liabilities 614.7 644.1
Long-term liabilities:
Long-term debt less current
maturities 249.9 250.0
Employee benefit plan obligations 191.8 191.1
Other long-term liabilities 88.9 76.3
Total long-term liabilities 530.6 517.4
Total liabilities 1,145.3 1,161.5
Shareholders' equity:
Common stock 173.4 259.4
Additional paid in capital 4.0 6.3
Accumulated other comprehensive
income (loss) 9.1 (1.3)
Retained earnings 998.4 973.5
Total shareholders' equity 1,184.9 1,237.9
Total liabilities and shareholders'
equity $2,330.2 $2,399.4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
(in millions)
Six Months Ended
Aug. 24, Aug. 25,
2007 2006
OPERATING ACTIVITIES
Net income $71.3 $44.8
Depreciation and amortization 44.7 52.0
Changes in operating assets
and liabilities (59.4) (30.9)
Other, net 5.8 16.7
Net cash provided by operating
activities 62.4 82.6
INVESTING ACTIVITIES
Capital expenditures (31.2) (22.0)
Acquisitions of short-term
investments, net (35.7) -
Proceeds from the disposal of
fixed assets 14.8 4.6
Other, net 6.3 9.6
Net cash used in investing
activities (45.8) (7.8)
FINANCING ACTIVITIES
Issuance of long-term debt,
net 7.5 249.3
Dividends paid (43.7) (30.0)
Common stock repurchases (109.8) (22.4)
Common stock issuances 10.5 11.0
Other, net (3.6) (5.9)
Net cash (used in) provided
by financing activities (139.1) 202.0
Effect of exchange rate
changes on cash and cash
equivalents 5.2 6.4
Net (decrease) increase
in cash and cash
equivalents (117.3) 283.2
Cash and cash equivalents,
beginning of period 527.2 423.8
Cash and cash equivalents, end
of period 409.9 707.0
Website: http://www.steelcase.com/ |
Issuers of news releases and not PR Newswire are solely responsible for the accuracy of the content.
Terms and conditions, including restrictions on
redistribution, apply.
Copyright © 1996-2007 PR Newswire Association LLC.
All Rights Reserved.
A United Business Media company.
