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 ~~November 24, 2017~~May 25, 2018
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)

(616) 247-2710

(Registrant's telephone number, including area code)

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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting 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 ~~December~~June 18, ~~2017,~~2018, Steelcase Inc. had ~~85,669,629~~86,271,502 shares of Class A Common Stock and ~~30,466,915~~30,421,673 shares of Class B Common Stock outstanding.

STEELCASE INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED ~~November 24, 2017~~May 25, 2018 INDEX

		Page No.

PART I	Financial Information	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Statements of Income for the Three ~~and Nine~~ Months Ended ~~November 24,~~May 25, 2018 and May 26, 2017 ~~and November 25, 2016~~	1
	Condensed Consolidated Statements of Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~November 24,~~May 25, 2018 and May 26, 2017 ~~and November 25, 2016~~	2
	Condensed Consolidated Balance Sheets as of ~~November 24, 2017~~May 25, 2018 and February ~~24, 2017~~23, 2018	3
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~November 24,~~May 25, 2018 and May 26, 2017 ~~and November 25, 2016~~	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1417
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2425
Item 4.	Controls and Procedures	2425

PART II	Other Information	2526
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2526
Item 6.	Exhibits	2526
Signatures		2627
Exhibit Index		2728

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 Ended						Nine Months Ended						Three Months Ended
	November 24, 2017			November 25, 2016			November 24, 2017			November 25, 2016			May 25, 2018			May 26, 2017
Revenue	$	772.1		$	786.5		$	2,282.8		$	2,263.3		$	754.0		$	735.1
Cost of sales	520.3			524.6			1,529.8			1,504.3			516.1			490.0
Restructuring costs	—			—			—			4.2
Gross profit	251.8			261.9			753.0			754.8			237.9			245.1
Operating expenses	213.3			207.5			630.4			604.5			214.6			210.0
Restructuring costs (benefits)	—			(0.2		)	—			0.5
Operating income	38.5			54.6			122.6			149.8			23.3			35.1
Interest expense	(4.3		)	(4.3		)	(13.0		)	(12.9		)	(4.4		)	(4.3		)
Investment income	0.3			0.4			1.1			1.2			1.0			0.4
Other income, net	3.2			4.1			6.1			8.0
Other income (expense), net													3.3			(2.8		)
Income before income tax expense	37.7			54.8			116.8			146.1			23.2			28.4
Income tax expense	12.0			13.6			36.1			47.3			6.2			10.3
Net income	$	25.7		$	41.2		$	80.7		$	98.8		$	17.0		$	18.1
Earnings per share:
Basic	$	0.22		$	0.34		$	0.68		$	0.82		$	0.14		$	0.15
Diluted	$	0.22		$	0.34		$	0.67		$	0.81		$	0.14		$	0.15
Dividends declared and paid per common share	$	0.1275		$	0.1200		$	0.3825		$	0.3600		$	0.1350		$	0.1275

See accompanying notes to the condensed consolidated financial statements.

STEELCASE INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(in millions)


	Three Months Ended						Nine Months Ended						Three Months Ended
	November 24, 2017			November 25, 2016			November 24, 2017			November 25, 2016			May 25, 2018			May 26, 2017
Net income	$	25.7		$	41.2		$	80.7		$	98.8		$	17.0		$	18.1
Other comprehensive income (loss), net:
Unrealized gain (loss) on investments	—			(0.5		)	0.3			(0.6		)
Unrealized gain on investments													0.1			—
Pension and other post-retirement liability adjustments	(2.0		)	(0.7		)	(0.5		)	(3.2		)	(0.8		)	2.8
Foreign currency translation adjustments	6.3			(18.5		)	26.6			(15.2		)	(12.2		)	11.5
Total other comprehensive income (loss), net	4.3			(19.7		)	26.4			(19.0		)	(12.9		)	14.3
Comprehensive income	$	30.0		$	21.5		107.1			79.8			$	4.1		$	32.4

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)
	November 24, 2017			February 24, 2017			May 25, 2018			February 23, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	244.1		$	197.1		$	134.9		$	283.1
Short-term investments	—			73.4
Accounts receivable, net of allowances of $11.7 and $11.2	347.5			307.6
Accounts receivable, net of allowances of $11.2 and $11.1							336.8			300.3
Inventories	186.3			163.1			202.9			184.6
Prepaid expenses	21.5			19.1			21.7			19.2
Assets held for sale							13.4			13.4
Other current assets	47.7			58.9			51.4			53.3
Total current assets	847.1			819.2			761.1			853.9
Property, plant and equipment, net of accumulated depreciation of $1,011.0 and $959.6	430.4			408.1
Property, plant and equipment, net of accumulated depreciation of $993.9 and $998.1							431.4			435.1
Company-owned life insurance ("COLI")	170.5			168.8			165.7			172.2
Deferred income taxes	192.8			179.6			132.9			135.4
Goodwill	107.0			106.7			138.4			138.2
Other intangible assets, net of accumulated amortization of $44.4 and $43.2	16.3			16.8
Other intangible assets, net of accumulated amortization of $44.9 and $44.6							44.6			45.6
Investments in unconsolidated affiliates	53.7			50.5			49.6			48.4
Other assets	30.7			42.3			31.5			30.4
Total assets	$	1,848.5		$	1,792.0		$	1,755.2		$	1,859.2
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	247.1		$	216.8		$	242.1		$	223.1
Short-term borrowings and current maturities of long-term debt	2.8			2.8			2.8			2.8
Accrued expenses:
Employee compensation	114.5			154.3			74.6			145.0
Employee benefit plan obligations	29.9			35.0			21.2			39.2
Accrued promotions	29.6			19.0			24.2			25.5
Customer deposits	20.2			15.9			19.8			28.2
Product warranties	17.6			20.4			17.0			18.1
Other	74.0			59.2			71.4			72.8
Total current liabilities	535.7			523.4			473.1			554.7
Long-term liabilities:
Long-term debt less current maturities	292.8			294.6			291.5			292.2
Employee benefit plan obligations	138.9			134.3			121.0			130.8
Other long-term liabilities	67.8			73.2			60.5			68.2
Total long-term liabilities	499.5			502.1			473.0			491.2
Total liabilities	1,035.2			1,025.5			946.1			1,045.9
Shareholders’ equity:
Common stock	—			—			—			—
Additional paid-in capital	3.5			—			12.6			4.6
Accumulated other comprehensive loss	(24.2		)	(50.6		)	(23.2		)	(10.3		)
Retained earnings	834.0			817.1			819.7			819.0
Total shareholders’ equity	813.3			766.5			809.1			813.3
Total liabilities and shareholders’ equity	$	1,848.5		$	1,792.0		$	1,755.2		$	1,859.2

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)

	Nine Months Ended						Three Months Ended
	November 24, 2017			November 25, 2016			May 25, 2018			May 26, 2017
OPERATING ACTIVITIES
Net income	$	80.7		$	98.8		$	17.0		$	18.1
Depreciation and amortization	47.7			44.7			17.5			15.4
Deferred income taxes	(6.3		)	5.2
Non-cash stock compensation	15.5			16.6			9.2			8.4
Equity in income of unconsolidated affiliates	(10.4		)	(7.3		)	(3.3		)	(3.0		)
Dividends received from unconsolidated affiliates	7.5			7.4			1.7			4.2
Other	(7.5		)	(6.4		)	(2.9		)	7.3
Changes in operating assets and liabilities:
Accounts receivable	(35.8		)	(10.2		)	(42.2		)	(16.5		)
Inventories	(22.4		)	(14.8		)	(20.4		)	(9.9		)
VAT recoverable	8.2			19.3
Other assets	15.5			(12.8		)	(1.1		)	11.1
Accounts payable	26.1			15.1			21.8			7.4
Employee compensation liabilities	(44.2		)	(41.5		)	(75.4		)	(85.5		)
Employee benefit obligations	(6.2		)	(8.3		)	(26.6		)	(21.7		)
Accrued expenses and other liabilities	26.7			(1.8		)	(13.0		)	14.2
Net cash provided by operating activities	95.1			104.0
Net cash used in operating activities							(117.7		)	(50.5		)
INVESTING ACTIVITIES
Capital expenditures	(58.3		)	(40.4		)	(15.8		)	(16.8		)
Purchases of investments	(52.1		)	(94.3		)	—			(19.4		)
Liquidations of investments	125.6			82.6			—			55.5
Other	15.3			1.6			7.9			(0.6		)
Net cash provided by (used in) investing activities	30.5			(50.5		)	(7.9		)	18.7
FINANCING ACTIVITIES
Dividends paid	(45.9		)	(44.1		)	(16.3		)	(15.7		)
Common stock repurchases	(33.4		)	(48.3		)	(3.4		)	(5.8		)
Excess tax benefit from vesting of stock awards	—			(0.1		)
Repayment of long-term debt	(2.0		)	(1.6		)	(0.7		)	(0.7		)
Net cash used in financing activities	(81.3		)	(94.1		)	(20.4		)	(22.2		)
Effect of exchange rate changes on cash and cash equivalents	2.7			(2.2		)	(1.3		)	0.8
Net increase (decrease) in cash and cash equivalents	47.0			(42.8		)
Cash and cash equivalents, beginning of period	197.1			181.9
Cash and cash equivalents, end of period	$	244.1		$	139.1
Net decrease in cash, cash equivalents and restricted cash							(147.3		)	(53.2		)
Cash, cash equivalents and restricted cash, beginning of period (1)							285.6			199.6
Cash, cash equivalents and restricted cash, end of period (2)							$	138.3		$	146.4


(1)	These amounts include restricted cash of $2.5 as of February 23, 2018 and February 24, 2017, which primarily represents funds held in escrow for potential future workers’ compensation claims. The restricted cash balance is included as part of Other Assets in the Condensed Consolidated Balance Sheets.


(2)	These amounts include restricted cash of $3.4 and $2.5 as of May 25, 2018 and May 26, 2017, respectively, which primarily represents funds held in escrow for potential future workers’ compensation claims. The restricted cash balance is included as part of Other Assets in the Condensed Consolidated Balance Sheets.

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 ~~24, 2017~~23, 2018 (“Form 10-K”). The Condensed Consolidated Balance Sheet as of February ~~24, 2017~~23, 2018 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 ~~March 2017,~~February 2018, the Financial Accounting Standards Board ("FASB"), issued Accounting Standards Update ("ASU") No. ~~2017-07,~~2018-02, Income Statement - Reporting Comprehensive Income (Topic 220), to address the impact of the U.S. Tax Cuts and Jobs Act (the "Tax Act") on tax effects presented in other comprehensive income. The amended guidance allows a reclassification from accumulated other comprehensive income to retained earnings for the tax effects of items within accumulated other comprehensive income resulting from the Tax Act. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. The amendments may be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-07,Compensation - Retirement Benefits (Topic 715), to improve the presentation 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 the income statement, and allows only the service cost component of net benefit cost to be eligible for capitalization. We adopted the amended guidance in Q1 2019 using the practical expedient which allows entities to use information previously disclosed in their pension and other post-retirement benefit plans footnote as the basis to apply the retrospective presentation requirements.

The adoption of this ASU resulted in the following reclassifications in our 2018 Condensed Consolidated Statements of Income:



	Three Months Ended								Year Ended
	May 26, 2017		August 25, 2017		November 24, 2017		February 23, 2018		February 23, 2018
Cost of sales	(2.3	)	1.1		1.0		1.1		0.9
Operating expenses	(2.9	)	0.9		1.0		0.9		(0.1	)
Operating income	5.2		(2.0	)	(2.0	)	(2.0	)	(0.8	)
Other income (expense), net	(5.2	)	2.0		2.0		2.0		0.8
Income before income tax expense	—		—		—		—		—

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The amounts reclassified in Q1 2018 include $7.1 of charges related to annuitizing three of the Company's smaller defined benefit plans. There was no impact to Net income on our Condensed Consolidated Statements of Income as a result of this accounting change.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326), which replaces the incurred loss impairment methodology in current U.S. GAAP with a methodology that reflects expected credit losses. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, ~~2017. Early~~2019, with early adoption is permitted for the fiscal years, and interim periods within ~~the first interim period of a~~those fiscal ~~year.~~years, beginning after December 15, 2018. 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. In Q1 2018, we chose to early adopt this guidance, 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 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 adopted this guidance in Q1 2018 and, as a result, the income tax effects of our share-based compensation awards, which aggregated $0.7, were recognized as a component of ~~Income tax expense~~ ~~on our Consolidated Statement of Income for the nine months ended November 24, 2017 instead of a component of~~ ~~Additional paid-in capital~~ ~~on our Consolidated Balance Sheet as of November 24, 2017. The remaining requirements of this new 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 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 expect the adoption of this guidance will result in an increase in the assets and liabilities on our Consolidated Balance Sheets, and we are currently evaluating the extent of this increase.

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~~STEELCASE INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which establishes a new standard on revenue recognition. The new standard outlines a single comprehensive 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 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~~We adopted the updated 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~~ in the process of evaluating the impact that will result from adoption of the new standard, but based on analysis performed as of November 24, 2017, we do not anticipate a significant impact on our consolidated financial statements. We currently plan to apply the new standardQ1 2019 using the modified retrospective method, ~~beginning in 2019.~~which did not have a material impact on the consolidated financial statements. See Note 3 for additional information.


3.	REVENUE

We implemented ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), in Q1 2019 using the modified-retrospective method, which required the new guidance to be applied retrospectively to revenue transactions completed on or after the effective date. The adoption of the new revenue standard did not have an impact on our consolidated financial statements except for enhanced disclosures. All necessary changes required by the new standard, including those related to our accounting policies, controls and disclosures, have been identified and implemented as of the beginning of 2019.

Accounting Policies

Our revenue consists substantially of product sales and related service revenue. Product sales are reported net of discounts and are recognized when control passes to the purchaser, which is when the rights and obligations associated with the product or service have transferred to the purchaser. For sales to our dealers, this typically occurs when product is shipped. In cases where we sell directly to customers, control of the product is often transferred upon delivery. The performance obligation from services is considered satisfied when the services have been rendered.

For shipping and handling activities, we have elected to apply the accounting policy election permitted in ASC 606-10-25-18B, which allows an entity to account for shipping and handling activities as fulfillment activities rather than a promised good or service when the activities are performed even if those activities are performed after the control of the good has been transferred. We expense shipping and handling costs at the time revenue is recognized, which is in accordance with the policy election.

For sales tax, we elected to apply the accounting policy election permitted in ASC 606-10-32-2A, which allows an entity to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer, including sales, use, excise, value-added, and franchise taxes (collectively referred to as sales taxes). This allows us to present revenue net of these certain types of taxes.

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Disaggregation of Revenue

The following table provides information about disaggregated revenue by product category for each of our reportable segments:



Product Category Data	Three Months Ended
Product Category Data	May 25, 2018		May 26, 2017
Americas
Systems and storage	$	258.0	$	264.5
Seating	157.9		152.7
Other (1)	119.9		117.8
EMEA
Systems and storage	62.8		52.3
Seating	44.2		37.3
Other (1)	30.4		23.5
Other
Systems and storage	7.7		14.3
Seating	11.2		13.5
Other (1)	61.9		59.2
	$	754.0	$	735.1


(1)	The Other product category data by segment consists primarily of consolidated dealers, textiles and surface materials, worktools, architecture, technology, other uncategorized product lines and services.

Reportable geographic information is as follows:



Reportable Geographic Revenue	Three Months Ended
Reportable Geographic Revenue	May 25, 2018		May 26, 2017
United States	$	471.3	$	467.0
Foreign locations	282.7		268.1
	$	754.0	$	735.1

Contract Balances

We have contract assets which are reported as Accounts receivable in the Condensed Consolidated Balance Sheets. These assets represent the amount of consideration to which we are entitled in exchange for the goods or services rendered to our customers.

At times, we receive deposits from customers before revenue is recognized, resulting in the recognition of a contract liability (Customer deposits) presented in the Condensed Consolidated Balance Sheets.

Changes in the Customer deposits balance during the three months ended May 25, 2018 are as follows:



	Customer Deposits
Balance as of February 23, 2018	$	28.2
Increases due to deposits received, net of other adjustments	12.5
Revenue recognized	(20.9		)
Balance as of May 25, 2018	$	19.8

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Practical Expedients Elected

For incremental costs of obtaining a contract, we have elected the practical expedient permitted in ASC 340-40-25-4, which permits an entity to recognize incremental costs to obtain a contract as an expense when incurred if the amortization period will be less than one year. This election had no effect on our financial statements.

For significant financing components, we have elected the practical expedient permitted in ASC 606-10-32-18, which allows an entity to recognize the promised amount of consideration without adjusting for the effects of a significant financing component if the contract has a duration of one year or less. As our contracts typically are less than one year in length and do not have significant financing components, consideration is not adjusted.


4.	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 Ended						Nine Months Ended						Three Months Ended
Computation of Earnings per Share	November 24, 2017			November 25, 2016			November 24, 2017			November 25, 2016			May 25, 2018			May 26, 2017
Net income	$	25.7		$	41.2		$	80.7		$	98.8		$	17.0		$	18.1
Adjustment for earnings attributable to participating securities	(0.6		)	(0.8		)	(1.6		)	(1.9		)	(0.3		)	(0.3		)
Net income used in calculating earnings per share	$	25.1		$	40.4		$	79.1		$	96.9		$	16.7		$	17.8
Weighted-average common shares outstanding including participating securities (in millions)	118.4			120.4			119.4			121.1			118.7			120.0
Adjustment for participating securities (in millions)	(2.4		)	(2.4		)	(2.3		)	(2.4		)	(2.1		)	(2.1		)
Shares used in calculating basic earnings per share (in millions)	116.0			118.0			117.1			118.7			116.6			117.9
Effect of dilutive stock-based compensation (in millions)	0.2			0.4			0.2			0.5			—			0.3
Shares used in calculating diluted earnings per share (in millions)	116.2			118.4			117.3			119.2			116.6			118.2
Earnings per share:
Basic	$	0.22		$	0.34		$	0.68		$	0.82		$	0.14		$	0.15
Diluted	$	0.22		$	0.34		$	0.67		$	0.81		$	0.14		$	0.15
Total common shares outstanding at period end (in millions)	116.1			117.3			116.1			117.3			116.7			118.0

Anti-dilutive performance units excluded from the computation of diluted earnings per share (in millions)	0.5			0.3			0.5			0.3			0.4			0.3

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


4.5.	ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the three months ended ~~November 24, 2017~~May 25, 2018:

Unrealized gain (loss) on investments Pension and other post-retirement liability adjustments Foreign currency translation adjustments Total
Balance as of August 25, 2017 $ —
$ 14.5
$ (43.0 ) $ (28.5 )
Other comprehensive income (loss) before reclassifications —
(0.5 ) 6.3
5.8

Amounts reclassified from accumulated other comprehensive income (loss) —
(1.5 ) —
(1.5 )
Net current period other comprehensive income (loss) —
(2.0 ) 6.3
4.3

Balance as of November 24, 2017 $ —
$ 12.5
$ (36.7 ) $ (24.2 )

~~The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for the nine months ended November 24, 2017:~~


	Unrealized gain (loss) on investments			Pension and other post-retirement liability adjustments			Foreign currency translation adjustments			Total			Unrealized gain (loss) on investments			Pension and other post-retirement liability adjustments			Foreign currency translation adjustments			Total
Balance as of February 24, 2017	$	(0.3	)	$	13.0		$	(63.3	)	$	(50.6	)
Balance as of February 23, 2018													$	(0.3	)	$	14.7		$	(24.7	)	$	(10.3	)
Other comprehensive income (loss) before reclassifications	0.3			(0.7		)	26.6			26.2			0.1			0.4			(12.2		)	(11.7		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			0.2			—			0.2			—			(1.2		)	—			(1.2		)
Net current period other comprehensive income (loss)	0.3			(0.5		)	26.6			26.4			0.1			(0.8		)	(12.2		)	(12.9		)
Balance as of November 24, 2017	$	—		$	12.5		$	(36.7	)	$	(24.2	)
Balance as of May 25, 2018													$	(0.2	)	$	13.9		$	(36.9	)	$	(23.2	)

The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for the three ~~and nine~~ months ended ~~November 24, 2017~~May 25, 2018 and ~~November 25, 2016:~~May 26, 2017:

Detail of Accumulated Other
Comprehensive Income (Loss) Components Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) Affected Line in the Condensed Consolidated Statements of Income
Three Months Ended Nine Months Ended
November 24,
2017 November 25,
2016 November 24, 2017 November 25, 2016
Amortization of pension and other post-retirement liability adjustments
Actuarial losses (gains) (0.4 ) (0.1 ) (1.3 ) (0.2 ) Cost of sales
Actuarial losses (gains) (0.3 ) —
(1.1 ) 0.1
Operating expenses
Prior service cost (credit) (0.8 ) (1.0 ) (2.4 ) (3.0 ) Cost of sales
Prior service cost (credit) (1.0 ) (1.2 ) (2.9 ) (3.5 ) Operating expenses
Settlements - Actuarial losses (gains) —
—
3.9
—
Cost of sales
Settlements - Actuarial losses (gains) —
—
3.2
—
Operating expenses
1.0
0.8
0.8
2.4
Income tax expense
Total reclassifications $ (1.5 ) $ (1.5 ) $ 0.2
$ (4.2 ) Net income



Detail of Accumulated Other Comprehensive Income (Loss) Components	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)						Affected Line in the Condensed Consolidated Statements of Income
	Three Months Ended
	May 25, 2018			May 26, 2017
Amortization of pension and other post-retirement liability adjustments
Actuarial losses (gains) (1)	(0.9		)	(0.8		)	Other income (expense), net
Prior service cost (credit) (1)	(0.6		)	(1.8		)	Other income (expense), net
Settlements - Actuarial losses (gains) (1)	—			7.1			Other income (expense), net
	0.3			(1.2		)	Income tax expense
Total reclassifications	$	(1.2	)	$	3.3		Net income


(1)	Reclassified from Cost of sales and Operating expenses to Other income (expense), net as a result of the adoption of ASU 2017-07.

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


5.6.	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 $~~295.6~~294.3 and $~~297.4~~295.0 as of ~~November 24, 2017~~May 25, 2018 and February ~~24, 2017~~23, 2018, 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 ~~$325~~$313 and $~~330~~316 as of ~~November 24, 2017~~May 25, 2018 and February ~~24, 2017~~23, 2018, 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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~~STEELCASE INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Assets and liabilities measured at fair value in our Consolidated Balance Sheets as of ~~November 24, 2017~~May 25, 2018 and February ~~24, 2017~~23, 2018 are summarized below:


	November 24, 2017										May 25, 2018
Fair Value of Financial Instruments	Level 1		Level 2			Level 3		Total			Level 1		Level 2			Level 3		Total
Assets:
Cash and cash equivalents	$	244.1	$	—		$	—	$	244.1		$	134.9	$	—		$	—	$	134.9
Restricted cash	2.5		—			—		2.5			3.4		—			—		3.4
Foreign exchange forward contracts	—		0.9			—		0.9			—		2.4			—		2.4
Auction rate securities	—		—			3.9		3.9			—		—			3.6		3.6
	$	246.6	$	0.9		$	3.9	$	251.4		$	138.3	$	2.4		$	3.6	$	144.3
Liabilities:
Foreign exchange forward contracts	—		(1.6		)	—		(1.6		)	—		(0.6		)	—		(0.6		)
	$	—	$	(1.6	)	$	—	$	(1.6	)	$	—	$	(0.6	)	$	—	$	(0.6	)



	February 24, 2017										February 23, 2018
Fair Value of Financial Instruments	Level 1		Level 2			Level 3		Total			Level 1		Level 2			Level 3		Total
Assets:
Cash and cash equivalents	$	197.1	$	—		$	—	$	197.1		$	283.1	$	—		$	—	$	283.1
Restricted cash	2.5		—			—		2.5			2.5		—			—		2.5
Managed investment portfolio and other investments
Corporate debt securities	—		33.6			—		33.6
U.S. agency debt securities	—		18.6			—		18.6
Asset backed securities	—		3.7			—		3.7
U.S. government debt securities	2.4		—			—		2.4
Municipal debt securities	—		15.1			—		15.1
Foreign exchange forward contracts	—		3.5			—		3.5			—		2.1			—		2.1
Auction rate securities	—		—			3.5		3.5			—		—			3.5		3.5
	$	202.0	$	74.5		$	3.5	$	280.0		$	285.6	$	2.1		$	3.5	$	291.2
Liabilities:
Foreign exchange forward contracts	$	—	$	(0.9	)	$	—	$	(0.9	)	$	—	$	(1.4	)	$	—	$	(1.4	)
	$	—	$	(0.9	)	$	—	$	(0.9	)	$	—	$	(1.4	)	$	—	$	(1.4	)

910

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STEELCASE INC.

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 ~~nine~~three months ended ~~November 24, 2017~~May 25, 2018:


Roll-Forward of Fair Value Using Level 3 Inputs	Auction Rate Securities		Auction Rate Securities
Balance as of February 24, 2017	$	3.5
Balance as of February 23, 2018			$	3.5
Unrealized gain on investments	0.4		0.1
Balance as of November 24, 2017	$	3.9
Balance as of May 25, 2018			$	3.6


6.7.	INVENTORIES


Inventories	November 24, 2017		February 24, 2017		May 25, 2018		February 23, 2018
Raw materials and work-in-process	$	87.8	$	79.6	$	105.1	$	98.3
Finished goods	117.4		101.7		117.0		105.3
	205.2		181.3		222.1		203.6
Revaluation to LIFO	18.9		18.2		19.2		19.0
	$	186.3	$	163.1	$	202.9	$	184.6

The portion of inventories determined by the LIFO method was $~~84.5~~80.4 and ~~$77.9~~$76.3 as of ~~November 24, 2017~~May 25, 2018 and February ~~24, 2017~~23, 2018, respectively.


7.8.	INCOME TAXES

In Q4 2018, the U.S. government enacted the Tax Act, which was effective January 1, 2018. The Tax Act makes broad and complex changes to the U.S. tax code that affect 2018 and future periods. The following is a summary of the key corporate income tax provisions of the Tax Act:

reduced the U.S. federal corporate income tax rate from 35% to 21%,

implemented a one-time tax on the deemed repatriation of undistributed non-U.S. subsidiary earnings and generally eliminated the U.S. federal corporate income taxes on dividends from foreign subsidiaries,

included global intangible low-taxed income ("GILTI") provisions, which impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations, and

included base-erosion and anti-abuse tax provisions, which eliminate the deduction of certain base-erosion payments made to related foreign corporations, and imposed a minimum tax if greater than regular tax.

As of May 25, 2018, the amounts we have recorded for the Tax Act remain provisional for the deemed repatriation tax, the remeasurement of deferred taxes, our reassessment of permanently reinvested earnings, uncertain tax positions and valuation allowances. These amounts may be impacted by further analysis and future clarification and guidance regarding available tax accounting methods and elections, earnings and profits computations, state tax conformity to federal tax changes and the impact of the GILTI provisions.

As of May 25, 2018, we were unable to reasonably estimate, and therefore have not recorded, deferred taxes with respect to the GILTI provisions. We have not yet determined our policy election with respect to whether to record deferred taxes on basis differences that are expected to affect the amount of GILTI inclusions upon reversal or to record the impact of the GILTI tax in the period in which that tax is incurred.

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


9.	SHARE-BASED COMPENSATION

Performance Units

~~During the nine months ended November 24, 2017,~~In Q1 2019, we awarded ~~154,500~~183,900 performance units ("PSUs") to ~~our executive officers.~~certain key employees. The PSUs awarded are earned after a three-year performance period, from ~~2018~~2019 through ~~2020,~~2021, 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 ~~309,000~~367,800. 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 $~~21.77~~18.02 per unit for these PSUs, compared to $~~16.33~~21.76 and $~~24.15~~16.33 per unit for similar PSUs granted in ~~2017~~2018 and ~~2016,~~2017, respectively.

The weighted average grant date fair values were determined using the following assumptions:


	2018 Awards		2017 Awards		2016 Awards		2019 Awards		2018 Awards		2017 Awards
Three-year risk-free interest rate (1)	1.4	%	0.9	%	0.8	%	2.6	%	1.4	%	0.9	%
Expected term	3 years		3 years		3 years		3 years		3 years		3 years
Estimated volatility (2)	31.8	%	31.2	%	29.4	%	33.8	%	31.8	%	31.2	%


(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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~~STEELCASE INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

The total PSU expense and associated tax benefit for all outstanding awards for the three ~~and nine~~ months ended ~~November 24, 2017~~May 25, 2018 and ~~November 25, 2016~~May 26, 2017 are as follows:


	Three Months Ended				Nine Months Ended				Three Months Ended
Performance Units	November 24, 2017		November 25, 2016		November 24, 2017		November 25, 2016		May 25, 2018		May 26, 2017
Expense	$	1.3	$	1.5	$	3.8	$	4.7	$	2.3	$	1.6
Tax benefit	0.5		0.5		1.4		1.7		0.6		0.6

As of ~~November 24, 2017~~May 25, 2018, there was $~~3.0~~2.9 of remaining unrecognized compensation cost related to nonvested PSUs, which is expected to be recognized over a remaining weighted-average period of ~~1.6~~2.2 years.

The PSU activity for the ~~nine~~three months ended ~~November 24, 2017~~May 25, 2018 is as follows:


Maximum Number of Shares That May Be Issued Under Nonvested Units	Total	Weighted-Average Grant Date Fair Value per Unit		Total	Weighted-Average Grant Date Fair Value per Unit
Nonvested as of February 24, 2017	916,420	$	19.31
Nonvested as of February 23, 2018				688,600	$	18.77
Granted	309,000	21.77		367,800	18.02
Nonvested as of November 24, 2017	1,225,420	$	19.93
Nonvested as of May 25, 2018				1,056,400	$	18.50

Restricted Stock Units

~~During the nine months ended November 24, 2017,~~In Q1 2019, we awarded ~~780,321~~698,668 restricted stock units ("RSUs")~~, of which~~ ~~131,200~~ ~~were awarded~~ to ~~our executive officers.~~certain employees. 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.

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The RSU expense and associated tax benefit for all outstanding awards for the three ~~and nine~~ months ended ~~November 24, 2017~~May 25, 2018 and ~~November 25, 2016~~May 26, 2017 are as follows:


	Three Months Ended				Nine Months Ended				Three Months Ended
Restricted Stock Units	November 24, 2017		November 25, 2016		November 24, 2017		November 25, 2016		May 25, 2018		May 26, 2017
Expense	$	2.3	$	2.5	$	11.1	$	11.4	$	6.7	$	6.5
Tax benefit	0.8		0.9		4.0		4.1		1.8		2.4

As of ~~November 24, 2017~~May 25, 2018, there was $~~10.4~~11.2 of remaining unrecognized compensation cost related to nonvested RSUs, which is expected to be recognized over a weighted-average period of ~~1.9~~2.1 years.

The RSU activity for the ~~nine~~three months ended ~~November 24, 2017~~May 25, 2018 is as follows:


Nonvested Units	Total		Weighted-Average Grant Date Fair Value per Unit		Total		Weighted-Average Grant Date Fair Value per Unit
Nonvested as of February 24, 2017	1,731,507		$	16.38
Nonvested as of February 23, 2018					1,789,775		$	15.75
Granted	780,321		16.51		698,668		14.28
Vested	(132,238	)	16.94		(20,428	)	18.24
Forfeited	(32,088	)	16.22		(12,367	)	16.32
Nonvested as of November 24, 2017	2,347,502		$	16.39
Nonvested as of May 25, 2018					2,455,648		$	15.30

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


8.10.	ACQUISITIONS

On December 26, 2017, we acquired AMQ Solutions ("AMQ"), a California-based provider of height-adjustable desking, benching and seating for workstations in the open plan, collaborative environments and training rooms. In addition, we acquired certain assets of an affiliated company, Tricom Vision Limited. The total purchase price for the acquisition was $69.9, which was primarily funded by the liquidation of short-term investments. Up to an additional $5.0 is payable to the sellers contingent upon certain performance obligations being met over a two year period. This acquisition is expected to strengthen our reach within the industry by broadening our portfolio at lower price points. The goodwill resulting from the acquisition consists largely of economies of scale expected from integrating AMQ into our existing dealer network.

Tangible assets and liabilities were valued as of the acquisition date using a market analysis and intangible assets were valued using a discounted cash flow analysis, which represents a Level 3 measurement. We have recorded $30.1 related to identifiable intangible assets, $31.5 to goodwill and approximately $12.5 related to working capital items such as accounts receivable, inventories and accounts payable. The entire amount recorded to goodwill is recorded in the Americas segment and is deductible for U.S. income tax purposes. Intangibles are principally related to dealer relationships which will be amortized over 11 years.

In Q1 2019, we recorded measurement period adjustments of $0.5 related to a decrease in net working capital and a decrease of $0.2 to the contingent liability payable to the sellers for certain liabilities existing prior to the opening balance sheet date. These adjustments increased goodwill by $0.3, and all amounts referenced above are inclusive of these measurement period adjustments.


11.	REPORTABLE SEGMENTS

Our reportable segments consist of the Americas segment, the EMEA segment and the Other category. Unallocated corporate costs are reported as Corporate.

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, Turnstone and ~~Turnstone~~AMQ 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, seating and storage solutions. Designtex primarily sells textiles, wall coverings and 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 various applications globally, including static whiteboards and chalkboards sold through third party fabricators and distributors to the primary and secondary education markets and architectural panels and other special applications sold through general contractors for commercial and infrastructure projects.

We primarily review and evaluate operating income by segment in both our internal review processes and for our external financial reporting. We also allocate resources primarily based on operating income. Total assets by segment include manufacturing and other assets associated with each segment.

Corporate costs include unallocated portions of shared service functions, such as information technology, corporate facilities, finance, human resources, research, legal and customer aviation, plus deferred compensation expense and income or losses associated with COLI. Corporate assets consist primarily of unallocated cash ~~short-term investments~~ and COLI.

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STEELCASE INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Revenue and operating income (loss) for the three ~~and nine~~ months ended ~~November 24, 2017~~May 25, 2018 and ~~November 25, 2016~~May 26, 2017 and total assets as of ~~November 24, 2017~~May 25, 2018 and February ~~24, 2017~~23, 2018 by segment are presented below:


	Three Months Ended						Nine Months Ended						Three Months Ended
Reportable Segment Statement of Operations Data	November 24, 2017			November 25, 2016			November 24, 2017			November 25, 2016			May 25, 2018			May 26, 2017
Revenue
Americas	$	552.8		$	576.7		$	1,656.3		$	1,668.1		$	535.8		$	535.0
EMEA	141.1			135.5			372.4			373.6			137.4			113.1
Other	78.2			74.3			254.1			221.6			80.8			87.0
	$	772.1		$	786.5		$	2,282.8		$	2,263.3		$	754.0		$	735.1
Operating income (loss)
Americas	$	47.6		$	59.7		$	147.1		$	184.3		$	29.7		$	42.9
EMEA	(3.3		)	2.7			(15.5		)	(14.9		)	(1.7		)	(8.6		)
Other	2.6			3.1			15.9			8.8			1.6			9.5
Corporate	(8.4		)	(10.9		)	(24.9		)	(28.4		)	(6.3		)	(8.7		)
	$	38.5		$	54.6		$	122.6		$	149.8		$	23.3		$	35.1


Reportable Segment Balance Sheet Data	November 24, 2017		February 24, 2017		May 25, 2018		February 23, 2018
Total assets
Americas	$	1,016.4	$	960.7	$	986.1	$	943.2
EMEA	303.2		297.4		295.1		300.3
Other	211.2		191.1		207.1		209.1
Corporate	317.7		342.8		266.9		406.6
	$	1,848.5	$	1,792.0	$	1,755.2	$	1,859.2

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


9.12.	SUBSEQUENT EVENT

On ~~November 28, 2017, the Company~~June 8, 2018, we announced the pending acquisition of ~~AMQ Solutions,~~Smith System Manufacturing Company (“Smith System”), a ~~California-based provider~~Texas-based manufacturer of ~~height adjustable desking, benching and seating~~high quality furniture for ~~workstations in~~ the ~~open plan, collaborative environments and training rooms.~~preK-12 education market. The proposed transaction includes the purchase of all of the outstanding ~~membership interests~~capital stock of ~~AMQ and certain assets of~~Smith System for approximately $140 plus an ~~affiliated company~~adjustment for working capital in an ~~all~~all-cash transaction. An additional $5 will be funded to an escrow account, which is payable to the seller at the end of two years based on continued employment. We intend to fund the acquisition through a combination of domestic cash ~~transaction.~~on hand and borrowings under our credit facility. The acquisition is expected to be completed during ~~the Company's fourth quarter of 2018,~~Q2 2019, subject to customary closing conditions and regulatory approvals.


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 ~~24, 2017~~23, 2018. 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~~Measure

This item contains ~~certain~~a non-GAAP financial ~~measures.~~measure. 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 the non-GAAP financial ~~measures~~measure to the most directly comparable GAAP financial measure.

The non-GAAP financial ~~measures~~measure used ~~are: (1)~~is 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~~divestitures. This measure is 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 Ended										Nine Months Ended										Three Months Ended
Statement of Operations Data	November 24, 2017					November 25, 2016					November 24, 2017					November 25, 2016					May 25, 2018					May 26, 2017
Revenue	$	772.1		100.0	%	$	786.5		100.0	%	$	2,282.8		100.0	%	$	2,263.3		100.0	%	$	754.0		100.0	%	$	735.1		100.0	%
Cost of sales	520.3			67.4		524.6			66.7		1,529.8			67.0		1,504.3			66.5		516.1			68.4		490.0			66.7
Restructuring costs	—			—		—			—		—			—		4.2			0.2
Gross profit	251.8			32.6		261.9			33.3		753.0			33.0		754.8			33.3		237.9			31.6		245.1			33.3
Operating expenses	213.3			27.6		207.5			26.4		630.4			27.6		604.5			26.7		214.6			28.5		210.0			28.5
Restructuring costs (benefits)	—			—		(0.2		)	—		—			—		0.5			—
Operating income	38.5			5.0		54.6			6.9		122.6			5.4		149.8			6.6		23.3			3.1		35.1			4.8
Interest expense	(4.3		)	(0.6	)	(4.3		)	(0.6	)	(13.0		)	(0.6	)	(12.9		)	(0.6	)	(4.4		)	(0.5	)	(4.3		)	(0.6	)
Investment income	0.3			—		0.4			0.1		1.1			—		1.2			0.1		1.0			0.1		0.4			0.1
Other income, net	3.2			0.5		4.1			0.5		6.1			0.3		8.0			0.4
Other income (expense), net																					3.3			0.4		(2.8		)	(0.4	)
Income before income tax expense	37.7			4.9		54.8			6.9		116.8			5.1		146.1			6.5		23.2			3.1		28.4			3.9
Income tax expense	12.0			1.6		13.6			1.7		36.1			1.6		47.3			2.1		6.2			0.8		10.3			1.4
Net income	$	25.7		3.3	%	$	41.2		5.2	%	$	80.7		3.5	%	$	98.8		4.4	%	$	17.0		2.3	%	$	18.1		2.5	%
Earnings per share:
Basic	$	0.22				$	0.34				$	0.68				$	0.82				$	0.14				$	0.15
Diluted	$	0.22				$	0.34				$	0.67				$	0.81				$	0.14				$	0.15

Q3 2018 Organic Revenue Growth (Decline) Americas EMEA Other Consolidated
Q3 2017 revenue $ 576.7
$ 135.5
$ 74.3
$ 786.5

Divestitures (3.3 ) (1.1 ) —
(4.4 )
Currency translation effects* 1.5
8.8
1.0
11.3

Q3 2017 revenue, adjusted 574.9
143.2
75.3
793.4

Q3 2018 revenue 552.8
141.1
78.2
772.1

Organic growth (decline) $ $ (22.1 ) $ (2.1 ) $ 2.9
$ (21.3 )
Organic growth (decline) % (4 )% (1 )% 4 % (3 )%

* Currency translation effects represent the estimated net effect of translating Q3 2017 foreign currency revenues using the average exchange rates during Q3 2018.

Year-to-Date 2018 Organic Revenue Growth (Decline) Americas EMEA Other Consolidated
Year-to-date 2017 revenue $ 1,668.1
$ 373.6
$ 221.6
$ 2,263.3

Divestitures (3.3 ) (2.9 ) —
(6.2 )
Currency translation effects* 0.8
4.7
0.6
6.1

Year-to-date 2017 revenue, adjusted 1,665.6
375.4
222.2
2,263.2

Year-to-date 2018 revenue 1,656.3
372.4
254.1
2,282.8

Organic growth (decline) $ $ (9.3 ) $ (3.0 ) $ 31.9
$ 19.6

Organic growth (decline) % (1 )% (1 )% 14 % 1 %

* Currency translation effects represent the estimated net effect of translating year-to-date 2017 foreign currency revenues using the average exchange rates during year-to-date 2018.

Three Months Ended Nine Months Ended
Reconciliation of Operating Income to
Adjusted Operating Income
November 24,
2017 November 25,
2016 November 24,
2017 November 25,
2016
Operating income $ 38.5
5.0 % $ 54.6
6.9 % $ 122.6
5.4 % $ 149.8
6.6 %
Add: restructuring costs (benefits) —
—
(0.2 ) —
—
—
4.7
0.2
Adjusted operating income $ 38.5
5.0 % $ 54.4
6.9 % $ 122.6
5.4 % $ 154.5
6.8 %



Q1 2019 Organic Revenue Growth (Decline)	Americas			EMEA			Other			Consolidated
Q1 2018 revenue	$	535.0		$	113.1		$	87.0		$	735.1
Divestitures	(4.7		)	(0.8		)	—			(5.5		)
Acquisition	8.8			—			—			8.8
Currency translation effects*	1.9			14.4			2.1			18.4
Q1 2018 revenue, adjusted	541.0			126.7			89.1			756.8
Q1 2019 revenue	535.8			137.4			80.8			754.0
Organic growth (decline) $	$	(5.2	)	$	10.7		$	(8.3	)	$	(2.8	)
Organic growth (decline) %	(1		)%	8		%	(9		)%	—		%

* Currency translation effects represent the estimated net effect of translating Q1 2018 foreign currency revenues using the average exchange rates during Q1 2019.

Overview

In ~~Q3 2018,~~Q1 2019, we posted ~~a 2%~~3% revenue ~~decline~~growth compared to the prior year, driven by ~~a 4% decline~~21% growth in ~~the Americas,~~EMEA, partially offset by ~~4% growth in EMEA and 5% growth~~a decline of 7% in the Other ~~category. Revenue~~category compared to a strong prior year, while revenue in the Americas was ~~negatively impacted by continued declines in legacy furniture applications and reduced demand for day-to-day business. Orders for day-to-day business in the Americas were~~ flat ~~in November~~ compared to the prior year ~~following significant declines earlier~~which included $20 from a very large project. Despite the revenue growth, operating income declined, primarily due to higher commodity costs globally, lower pricing and unfavorable shifts in business mix in the quarter. We have been receiving positive feedback from our customers and dealers from our new product introductions, partnership offerings and the pending acquisition of AMQ Solutions, and the number of large project opportunities and our project win rates have been increasing.Americas.

Operating income declined compared to the prior year due to lower sales volume, increases in cost of sales as a percentage of revenue and higher operating expenses. The increase in operating expenses reflected continued investments in product development, sales, marketing and information technology that support our strategies, including developing new products, enhancements and applications, expanding ancillary offerings and marketing partnerships, addressing product gaps and pursuing other areas for growth.

~~Q3 2018 Compared to Q3 2017~~

We recorded net income of ~~$25.7~~$17.0 and diluted earnings per share of ~~$0.22~~$0.14 in ~~Q3 2018~~Q1 2019 compared to net income of ~~$41.2~~$18.1 and diluted earnings per share of ~~$0.34~~$0.15 in ~~Q3 2017.~~Q1 2018. The ~~Q3 2017~~Q1 2018 results ~~included a~~reflected the net impact of annuitizing three small defined benefit ~~related to the outcome of a tax audit in EMEA that had a favorable impact on~~plans which reduced diluted earnings per share ofby approximately $0.03. Operating income of ~~$38.5~~$23.3 in ~~Q3 2018~~Q1 2019 compared to operating income of ~~$54.6~~$35.1 in ~~Q3 2017.~~Q1 2018. The ~~Q3 2018 results were~~Q1 2019 decline was driven by ~~lower revenue in the Americas,~~ higher cost of sales as a percentage of revenue in ~~EMEA,~~the Americas and the Other category, and higher operating expenses ~~globally. After adjusting for the impact of restructuring benefits~~ in the ~~prior year, operating income~~Other category, partially offset by higher volume and lower cost of ~~$38.5~~sales as a percentage of revenue in ~~Q3 2018 compared to adjusted operating income of $54.4 in Q3 2017.~~

EMEA.

Revenue of ~~$772.1~~$754.0 in ~~Q3 2018~~Q1 2019 represented ~~a decrease~~an increase of ~~$14.4 or 2%~~$18.9 compared to the prior year. ~~The decrease in revenue was driven by lower revenue in the Americas, partially offset by growth of 4% in EMEA and 5% in the Other category.~~ After adjusting for ~~$11.3~~$18.4 of favorable currency translation effects, an $8.8 impact of an acquisition and a ~~$4.4~~$5.5 unfavorable impact due to divestitures, the organic revenue decline was ~~$21.3~~$2.8 or 3%approximately flat as a percentage of revenue compared to the prior year. On an organic basis, revenue in EMEA increased by 8%, while the Americas ~~declined by 4%, revenue in EMEA~~and the Other category declined by 1% and ~~revenue in the Other category grew by 4%~~9%, respectively, compared to the prior year.

Cost of sales as a percentage of revenue increased by 70170 basis points to ~~67.4%~~68.4% of revenue in ~~Q3 2018~~Q1 2019 compared to ~~Q3 2017.~~Q1 2018. The increase was driven primarily by a 40230 basis point increase in the Americas, ~~and~~partially offset by a ~~210~~250 basis point ~~increase~~decrease in EMEA. The increase in the Americas was driven by ~~the impacts of~~higher commodity costs, lower pricing and unfavorable shifts in business ~~mix, lower volume and approximately $1~~mix. The decrease in EMEA was driven by higher absorption of ~~higher commodity~~fixed costs, ~~partially offset by~~ benefits associated with cost reduction ~~efforts. The increase~~efforts and positive effects of changes in EMEA was driven by unfavorable out-of-period accounting adjustments in the current quarter compared to favorable items in the prior year; benefits from gross margin improvement initiatives were offset by various operational inefficiencies and higher commodity costs.foreign currencies.

Operating expenses of ~~$213.3~~$214.6 in ~~Q3 2018~~Q1 2019 represented an increase of ~~$5.8~~$4.6, or ~~120 basis points~~flat as a percentage of revenue, compared to the prior year. The ~~increased spending compared~~increase was due to ~~the prior year reflected investments in product development, sales, marketing~~$4.9 of currency translation effects and ~~information technology in support~~$2.2 from an acquisition, net of ~~our strategies,~~divestitures, partially offset by $8lower expenses in a variety of ~~lower variable compensation expense.~~areas.

Our effective tax rate in ~~Q3 2018~~Q1 2019 was ~~31.8%~~26.7% compared to a ~~Q3 2017~~Q1 2018 effective tax rate of ~~24.8%~~36.3%. The Q3Q1 2019 rate was lower than the Q1 2018 rate ~~was below~~due to impacts from the U.S. federal statutory tax rate of 35% primarily due to favorable tax adjustments recorded in connection with filing our 2017 U.S. tax return. The Q3 2017 rate was below the U.S. federal statutory tax rate primarily due to a benefit related to the outcome of a tax audit in EMEA.

~~Year-to-Date 2018 Compared to Year-to-Date 2017~~

~~We recorded year-to-date 2018 net income of $80.7 compared to year-to-date 2017 net income of $98.8. The decline was driven by higher cost of sales as a percentage of revenue~~Tax Cuts and higher operating expenses, partially offset by higher sales volume in the Other category. The year-to-date 2018 results reflected the net impact of the sale of property in Rosenheim, Germany and a favorable tax adjustment recorded in Q2 2018 which together increased diluted earnings per share by approximately $0.05, partially offset by the defined benefit plan annuitizations recorded in Q1 2018 which decreased diluted earnings per share by approximately $0.03.

Year-to-date 2018 revenue of $2,282.8 represented an increase of $19.5 or 1% compared to year-to-date 2017. The increase in revenue was driven by higher volume in the Other category, partially offset by lower volume in the Americas. After adjusting for $6.1 of favorable currency translation effects and a $6.2 unfavorable impact due to divestitures, the organic revenue increase was $19.6 or 1%Jobs Act (the "Tax Act"). ~~On an organic basis, revenue increased by 14% in the Other category, while the Americas and EMEA each declined 1% compared to the prior year.~~

Cost of sales increased by 50 basis points to 67.0% of revenue in year-to-date 2018 compared to year-to-date 2017. The increase was due to a 100 basis point increase in the Americas, partially offset by an improvement of 150 basis points in the Other category. The increase in the Americas was driven by approximately $6 of higher commodity costs, investments in support of product development and manufacturing agility, unfavorable shifts in business mix and $3.4 of charges associated with the defined benefit plan annuitizations recorded in Q1 2018, partially offset by benefits associated with ongoing cost reduction efforts and $6.0 of lower warranty costs compared to the prior year. The improvement in the Other category was driven by the impact of higher sales volume.

Operating expenses of $630.4 in year-to-date 2018 represented an increase of $25.9 or 90 basis points as a percentage of revenue compared to the prior year. The increased spending compared to the prior year reflected investments in product development, sales, marketing and information technology, partially offset by approximately $10 of lower variable compensation expense.

There were no restructuring costs in year-to-date 2018 compared to net restructuring costs of $4.7 in year-to-date 2017. The year-to-date 2017 amount included costs related to 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, Germany.

Our year-to-date 2018 effective tax rate was 30.9% compared to a year-to-date 2017 effective tax rate of 32.4%. The year-to-date 2018 rate was below the U.S. federal statutory tax rate of 35% primarily due to favorable tax adjustments recorded in year-to-date 2018. The year-to-date 2017 rate was below the U.S. federal statutory tax rate of 35% due to the same factor as the quarter.

~~Table of Contents~~

~~STEELCASE INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Interest Expense, Investment Income and Other Income, Net


	Three Months Ended						Nine Months Ended						Three Months Ended
Interest Expense, Investment Income and Other Income, Net	November 24, 2017			November 25, 2016			November 24, 2017			November 25, 2016			May 25, 2018			May 26, 2017
Interest expense	$	(4.3	)	$	(4.3	)	$	(13.0	)	$	(12.9	)	$	(4.4	)	$	(4.3	)
Investment income	0.3			0.4			1.1			1.2			1.0			0.4
Other income (expense), net:
Equity in income of unconsolidated affiliates	4.7			2.7			10.3			7.4			3.4			3.0
Foreign exchange gains (losses)	(0.8		)	2.1			(3.0		)	2.8			0.1			(2.0		)
Net periodic pension and post-retirement credit (expense), excluding service cost													0.9			(5.2		)
Miscellaneous, net	(0.7		)	(0.7		)	(1.2		)	(2.2		)	(1.1		)	1.4
Total other income, net	3.2			4.1			6.1			8.0			3.3			(2.8		)
Total interest expense, investment income and other income, net	$	(0.8	)	$	0.2		$	(5.8	)	$	(3.7	)	$	(0.1	)	$	(6.7	)

Net periodic pension and post-retirement credit (expense), excluding service cost in Q1 2018 includes charges related to the annuitization of three small defined benefit plans.

Business Segment Review

See Note 89 to the condensed consolidated financial statements for additional information regarding our business segments.

Americas

Three Months Ended Nine Months Ended
Statement of Operations Data — Americas November 24,
2017 November 25,
2016 November 24,
2017 November 25,
2016
Revenue $ 552.8
100.0 % $ 576.7
100.0 % $ 1,656.3
100.0 % $ 1,668.1
100.0 %
Cost of sales 367.8
66.5
381.3
66.1
1,093.6
66.0
1,084.5
65.0
Restructuring costs —
—
—
—
—
—
2.6
0.2
Gross profit 185.0
33.5
195.4
33.9
562.7
34.0
581.0
34.8
Operating expenses 137.4
24.9
135.7
23.5
415.6
25.1
396.7
23.8
Restructuring costs —
—
—
—
—
—
—
—
Operating income $ 47.6
8.6 % $ 59.7
10.4 % $ 147.1
8.9 % $ 184.3
11.0 %

Three Months Ended Nine Months Ended
Reconciliation of Operating Income to
Adjusted Operating Income — Americas
November 24,
2017 November 25,
2016 November 24,
2017 November 25,
2016
Operating income $ 47.6
8.6 % $ 59.7
10.4 % $ 147.1
8.9 % $ 184.3
11.0 %
Add: restructuring costs —
—
—
—
—
—
2.6
0.2
Adjusted operating income $ 47.6
8.6 % $ 59.7
10.4 % $ 147.1
8.9 % $ 186.9
11.2 %



	Three Months Ended
Statement of Operations Data — Americas	May 25, 2018				May 26, 2017
Revenue	$	535.8	100.0	%	$	535.0	100.0	%
Cost of sales	363.6		67.9		350.8		65.6
Gross profit	172.2		32.1		184.2		34.4
Operating expenses	142.5		26.6		141.3		26.4
Operating income	$	29.7	5.5	%	$	42.9	8.0	%

Operating income in the Americas decreased by ~~$12.1 and $37.2, respectively,~~$13.2 in ~~Q3 2018 and year-to-date 2018~~Q1 2019 compared to the prior year. The decline ~~in the quarter~~ was driven by ~~lower volume and higher operating expenses. The year-to-date results were driven by the same factors as the quarter, as well as~~ higher cost of sales as a percentage of revenue. After adjusting for the impact of restructuring costs in the prior year, operating income of $47.6 and $147.1 in Q3 2018 and year-to-date 2018, respectively, compared to adjusted operating income of $59.7 and $186.9 in the prior year.

The Americas revenue represented ~~71.6%~~71.1% of consolidated revenue in ~~Q3 2018.~~Q1 2019. Revenue for ~~Q3 2018~~Q1 2019 was ~~$552.8~~$535.8 compared to ~~$576.7~~$535.0 in ~~Q3 2017. The 4% decrease~~Q1 2018. Growth in ~~revenue~~continuing and marketing business was ~~driven~~offset by ~~continued~~ declines in ~~revenue associated with legacy furniture applications and reduced demand for day-to-day business.~~project business, which included $20 from a very large project in Q1 2018. After adjusting for ~~$1.5~~$1.9 of favorable currency translation effects, an $8.8 impact of an acquisition and a ~~$3.3~~$4.7 unfavorable impact due to a divestiture, the organic revenue ~~decrease~~decline in ~~Q3 2018~~Q1 2019 was ~~$22.1 or 4% compared to the prior year.~~

Year-to-date 2018 revenue of $1,656.3 represented a decrease of $11.8 compared to year-to-date 2017. The 1% decrease was driven by the same factors as the quarter. After adjusting for $0.8 of favorable currency translation effects and a $3.3 unfavorable impact due to a divestiture, the year-to-date 2018 organic revenue decrease was $9.3$5.2 or 1% compared to the prior year.

Cost of sales as a percentage of revenue increased 40230 basis points in ~~Q3 2018~~Q1 2019 compared to ~~Q3 2017.~~Q1 2018. The increase ~~in the Americas~~ was driven by ~~the impacts~~approximately $5 of higher commodity costs, lower pricing and unfavorable shifts in business ~~mix, lower volume~~mix. In response to rapid increases in steel prices and ~~approximately $1 of higher~~other commodity costs, ~~partially offset by~~we have implemented two list price adjustments over the past four months, but the benefits ~~associated with cost reduction efforts. Year-to-date 2018 cost of sales represented an increase of 100 basis points compared to the prior year~~from such adjustments will be realized over time as we fulfill project business won at earlier levels and ~~was driven by approximately $6 of higher commodity costs, higher investments~~negotiate price increases in support of product development and manufacturing agility, unfavorable shifts in business mix, and $3.4 of charges associated with the defined benefit plan annuitizations, partially offset by benefits associated with ongoing cost reduction efforts and $6.0 of lower warranty costs compared to the prior year.customer agreements.

Operating expenses in ~~Q3 2018~~Q1 2019 increased by ~~$1.7,~~$1.2, or ~~140~~20 basis points as a percentage of revenue, compared to the prior ~~year primarily~~year. The increase was due to ~~approximately $11~~$2.4 from an acquisition, net of ~~higher investments in product development, sales, marketing and information technology that support our product development and growth strategies,~~divestitures, partially offset by ~~approximately $7~~lower expenses in a variety of lower variable compensation expense and an approximately $2 favorable impact from a divestiture. Operating expenses increased by $18.9, or 130 basis points as a percentage of revenue, in year-to-date 2018 compared to the prior year and was driven by the same factors as the quarter.areas.

There were no restructuring costs recorded in the Americas in Q3 2018 or Q3 2017. There were no restructuring costs recorded in the Americas in year-to-date 2018 compared to restructuring costs of $2.6 in year-to-date 2017 associated with the closure of the High Point manufacturing facility.

EMEA

Three Months Ended Nine Months Ended
Statement of Operations Data — EMEA November 24,
2017 November 25,
2016 November 24,
2017 November 25,
2016
Revenue $ 141.1
100.0 % $ 135.5
100.0 % $ 372.4
100.0 % $ 373.6
100.0 %
Cost of sales 101.9
72.2
95.0
70.1
273.3
73.4
274.3
73.4
Restructuring costs —
—
—
—
—
—
1.6
0.4
Gross profit 39.2
27.8
40.5
29.9
99.1
26.6
97.7
26.2
Operating expenses 42.5
30.1
38.0
28.1
114.6
30.8
112.1
30.0
Restructuring costs (benefits) —
—
(0.2 ) —
—
—
0.5
0.2
Operating income (loss) $ (3.3 ) (2.3 )% $ 2.7
1.8 % $ (15.5 ) (4.2 )% $ (14.9 ) (4.0 )%

Reconciliation of Operating Income (Loss) to Adjusted Operating Income (Loss) — EMEA Three Months Ended Nine Months Ended
November 24,
2017 November 25,
2016 November 24,
2017 November 25,
2016
Operating income (loss) $ (3.3 ) (2.3 )% $ 2.7
1.8 % $ (15.5 ) (4.2 )% $ (14.9 ) (4.0 )%
Add: restructuring costs (benefits) —
—
(0.2 ) —
—
—
2.1
0.6
Adjusted operating income (loss) $ (3.3 ) (2.3 )% $ 2.5
1.8 % $ (15.5 ) (4.2 )% $ (12.8 ) (3.4 )%



	Three Months Ended
Statement of Operations Data — EMEA	May 25, 2018					May 26, 2017
Revenue	$	137.4		100.0	%	$	113.1		100.0	%
Cost of sales	99.3			72.3		84.6			74.8
Gross profit	38.1			27.7		28.5			25.2
Operating expenses	39.8			28.9		37.1			32.8
Operating loss	$	(1.7	)	(1.2	)%	$	(8.6	)	(7.6	)%

Operating results in EMEA ~~declined~~improved significantly in ~~Q3 2018 and year-to-date 2018~~Q1 2019 compared to the prior year. The ~~decline in Q3 2018~~improvement was driven by higher revenue and lower cost of sales as a percentage of ~~revenue and higher operating expenses. The year-to-date decline was driven by higher operating expenses, which included a $4.0 gain on the sale of the Rosenheim property recorded in Q2 2018.~~

revenue.

EMEA revenue represented ~~18.3%~~18.2% of consolidated revenue in ~~Q3 2018.~~Q1 2019. Revenue for ~~Q3 2018~~Q1 2019 was ~~$141.1~~$137.4 compared to ~~$135.5~~$113.1 in ~~Q3 2017.~~Q1 2018. The increase in revenue was driven ~~primarily~~ by $14.4 of favorable currency translation effects and higher revenue in Germany, Iberia and the United Kingdom, partially offset by a decline in the ~~United Kingdom~~Middle East and ~~the Middle East.~~France. After adjusting for ~~$8.8 of~~the favorable currency translation effects and a ~~$1.1~~$0.8 unfavorable impact due to divestitures, the organic revenue ~~decline~~growth was ~~$2.1~~$10.7 or 1%8%. ~~For year-to-date 2018, revenue declined slightly compared to the prior year as growth in Eastern Europe and the Middle East was more than offset by lower volume in Germany, Central Europe and France.~~

Cost of sales as a percentage of revenue ~~increased 210~~decreased 250 basis points to ~~72.2%~~72.3% of revenue in ~~Q3 2018~~Q1 2019 compared to the prior year. The decrease was driven by higher absorption of fixed costs, benefits associated with cost reduction efforts and positive effects of changes in foreign currencies.

Operating expenses in Q1 2019 increased by $2.7 compared to the prior year. The increase ~~in EMEA~~ was driven primarily by $4.3 of unfavorable ~~out-of-period accounting adjustments in the current quarter compared to favorable items in the prior year. Benefits from gross margin improvement initiatives were~~currency translation effects, partially offset by ~~various operational inefficiencies and higher commodity costs. Year-to-date 2018 cost~~approximately $1 of ~~sales~~lower variable compensation expense. Spending was ~~73.4% of revenue which is consistent with the prior year.~~

~~Operating expenses in Q3 2018 and year-to-date 2018 increased by $4.5 and $2.5, respectively,~~otherwise relatively flat compared to the prior year. The increase in Q3 2018 reflected higher costs related to a sales and dealer conference, product development, our new Learning + Innovation Center in Munich, and severance. The year-to-date 2018 increase was driven by the same factors as the quarter, partially offset by a $4.0 gain on the sale of the Rosenheim property.

There were no restructuring costs in EMEA in Q3 2018 compared to restructuring benefits of $0.2 in Q3 2017. The restructuring benefits in Q3 2017 represented favorable adjustments to employee separation costs relating to the establishment of the Learning + Innovation Center in Munich. There were no restructuring costs in EMEA in year-to-date 2018 compared to restructuring costs of $2.1 in year-to-date 2017. The restructuring costs in year-to-date 2017 were associated with the closure of the Durlangen manufacturing facility and the establishment of the Learning + Innovation Center in Munich.

Other

Three Months Ended Nine Months Ended
Statement of Operations Data — Other November 24,
2017 November 25,
2016 November 24,
2017 November 25,
2016
Revenue $ 78.2
100.0 % $ 74.3
100.0 % $ 254.1
100.0 % $ 221.6
100.0 %
Cost of sales 50.6
64.7
48.3
64.9
162.9
64.1
145.5
65.6
Restructuring costs —
—
—
—
—
—
—
—
Gross profit 27.6
35.3
26.0
35.1
91.2
35.9
76.1
34.4
Operating expenses 25.0
32.0
22.9
30.8
75.3
29.6
67.3
30.4
Restructuring costs —
—
—
—
—
—
—
—
Operating income $ 2.6
3.3 % $ 3.1
4.3 % $ 15.9
6.3 % $ 8.8
4.0 %

Three Months Ended Nine Months Ended
Reconciliation of Operating Income to Adjusted Operating Income — Other November 24,
2017 November 25,
2016 November 24,
2017 November 25,
2016
Operating income $ 2.6
3.3 % $ 3.1
4.3 % $ 15.9
6.3 % $ 8.8
4.0 %
Add: restructuring costs —
—
—
—
—
—
—
—
Adjusted operating income $ 2.6
3.3 % $ 3.1
4.3 % $ 15.9
6.3 % $ 8.8
4.0 %

Revenue in the Other category represented 10.1% of consolidated revenue in Q3 2018. Revenue in Q3 2018 increased $3.9 or 5% compared to the prior year and reflected growth from all three businesses. Year-to-date 2018 revenue of $254.1 represented an increase of $32.5 or 15% compared to the prior year. The increase included growth from all three businesses, with particular strength coming from Asia Pacific (led by India and China).



	Three Months Ended
Statement of Operations Data — Other	May 25, 2018				May 26, 2017
Revenue	$	80.8	100.0	%	$	87.0	100.0	%
Cost of sales	53.2		65.8		54.6		62.8
Gross profit	27.6		34.2		32.4		37.2
Operating expenses	26.0		32.2		22.9		26.3
Operating income	$	1.6	2.0	%	$	9.5	10.9	%

Operating results in the Other category declined ~~slightly~~significantly in ~~Q3 2018~~Q1 2019 compared to the prior year driven by Asia Pacific. Asia Pacific's operating results reflected lower revenue, the negative effects of foreign currency fluctuations, higher operating expenses as a result of continued investment in the region and an inventory reserve of approximately $0.8 in connection with a cancelled order.

Revenue in the Other category represented 10.7% of consolidated revenue in Q1 2019. Revenue in Q1 2019 decreased $6.2 or 7% compared to the prior year. ~~Lower operating performance~~The decrease was driven by a decline in Asia Pacific, ~~was~~which posted strong results in the prior year, partially offset by ~~improved operating performance~~growth at PolyVision. Operating results in year-to-date 2018 were driven by strong performance in Asia Pacific, partially offset by lower income at Designtex which included $3.0 of charges related to the defined benefit plan annuitizations in Q1 2018.PolyVision and Designtex.

Corporate


	Three Months Ended				Nine Months Ended				Three Months Ended
Statement of Operations Data — Corporate	November 24, 2017		November 25, 2016		November 24, 2017		November 25, 2016		May 25, 2018		May 26, 2017
Operating expenses	$	8.4	$	10.9	$	24.9	$	28.4	$	6.3	$	8.7

The decrease in operating expenses in ~~Q3 2018~~Q1 2019 compared to the prior year was ~~primarily due to higher COLI income, partially offset by higher deferred compensation expense. The decrease in year-to-date 2018 operating expenses was primarily~~ due to lower deferred compensation ~~expense and higher COLI income compared to the prior year.~~expense.

Liquidity and Capital Resources

Based on current business conditions, we target a range of $75 to ~~$150~~$175 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 Sources	November 24, 2017		February 24, 2017		May 25, 2018		February 23, 2018
Cash and cash equivalents	$	244.1	$	197.1	$	134.9	$	283.1
Short-term investments	—		73.4
Company-owned life insurance	170.5		168.8		165.7		172.2
Availability under credit facilities	152.1		150.3		$	151.2	$	152.2
Total liquidity	$	566.7	$	589.6	$	451.8	$	607.5

As of ~~November 24, 2017~~May 25, 2018, we held a total of $~~244.1~~134.9 in cash and cash ~~equivalents and no short-term investments. The short-term investments we held at the end of Q2 2018 were converted to cash and cash equivalents in Q3 2018 primarily to fund a pending acquisition.~~equivalents. Of ~~our~~that total, ~~$244.1 in cash and cash equivalents,~~ approximately ~~76%~~56% was located in the U.S. and the remaining ~~24%~~44% was located outside of the U.S., primarily in ~~Hong Kong, France,~~ Mexico, China, the United Kingdom and ~~China.~~France. The ~~majority of amounts located outside the~~Tax Act imposes a mandatory transition tax on accumulated foreign earnings and eliminates U.S. ~~would be taxable if repatriated~~taxes on foreign subsidiary distributions. As a result, earnings in foreign jurisdictions are available for distribution to the U.S. ~~as dividends. However, such amounts~~without incremental U.S. taxes.

COLI investments are ~~considered available to repay intercompany debt, available to meet local working capital requirements or permanently reinvested in foreign subsidiaries.~~

~~Our~~recorded at their net cash surrender value. A portion of 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 also be used as a source of ~~liquidity for other purposes.~~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 related to compliance with applicable covenants. See Liquidity Facilities for more information.

The following table summarizes our condensed consolidated statements of cash flows for the ~~nine~~three months ended ~~November 24, 2017~~May 25, 2018 and ~~November 25, 2016:~~May 26, 2017:


	Nine Months Ended						Three Months Ended
Cash Flow Data	November 24, 2017			November 25, 2016			May 25, 2018			May 26, 2017
Net cash provided by (used in):
Operating activities	$	95.1		$	104.0		$	(117.7	)	$	(50.5	)
Investing activities	30.5			(50.5		)	(7.9		)	18.7
Financing activities	(81.3		)	(94.1		)	(20.4		)	(22.2		)
Effect of exchange rate changes on cash and cash equivalents	2.7			(2.2		)	(1.3		)	0.8
Net increase (decrease) in cash and cash equivalents	47.0			(42.8		)
Cash and cash equivalents, beginning of period	197.1			181.9
Cash and cash equivalents, end of period	$	244.1		$	139.1
Net decrease in cash, cash equivalents and restricted cash							(147.3		)	(53.2		)
Cash, cash equivalents and restricted cash, beginning of period							285.6			199.6
Cash, cash equivalents and restricted cash, end of period							$	138.3		$	146.4

Cash ~~provided by~~used in operating activities


	Nine Months Ended						Three Months Ended
Cash Flow Data — Operating Activities	November 24, 2017			November 25, 2016			May 25, 2018			May 26, 2017
Net income	$	80.7		$	98.8		$	17.0		$	18.1
Depreciation and amortization	47.7			44.7			17.5			15.4
Deferred income taxes	(6.3		)	5.2
Non-cash stock compensation	15.5			16.6			9.2			8.4
Other	(10.4		)	(6.3		)	(4.5		)	8.5
Changes in accounts receivable, inventories and accounts payable	(32.1		)	(9.9		)	(40.8		)	(19.0		)
Changes in VAT recoverable	8.2			19.3
Changes in employee compensation liabilities	(44.2		)	(41.5		)	(75.4		)	(85.5		)
Employee benefit obligations							(26.6		)	(21.7		)
Changes in other operating assets and liabilities	36.0			(22.9		)	(14.1		)	25.3
Net cash provided by operating activities	$	95.1		$	104.0
Net cash used in operating activities							$	(117.7	)	$	(50.5	)

The increased use of working capital ~~in the current period~~ was driven primarily by increases in accounts receivable ~~from direct sell~~due to increased revenue and a mix shift to direct-sell customers which have longer payment ~~terms and increases in inventory~~terms. Inventory also increased to support a significant number of new product launches, ~~and ensure continuity~~some of ~~supply.~~which include long distance supply chains. Changes in other operating assets and liabilities ~~and deferred income taxes~~ were primarily driven by the timing of ~~payments~~customer deposits for project business (which decreased in the current year compared to an increase in the prior year) and ~~collections related to various tax accounts and accrued expenses.~~VAT recoveries recorded in Q1 2018.

Cash provided by (used in) investing activities


	Nine Months Ended						Three Months Ended
Cash Flow Data — Investing Activities	November 24, 2017			November 25, 2016			May 25, 2018			May 26, 2017
Capital expenditures	$	(58.3	)	$	(40.4	)	$	(15.8	)	$	(16.8	)
Purchases of investments	(52.1		)	(94.3		)	—			(19.4		)
Liquidations of investments	125.6			82.6			—			55.5
Other	15.3			1.6			7.9			(0.6		)
Net cash provided by (used in) investing activities	$	30.5		$	(50.5	)	$	(7.9	)	$	18.7

Capital expenditures in ~~year-to-date 2018~~Q1 2019 included investments in our global manufacturing operations, showrooms and product ~~development and the new Learning + Innovation Center in Munich.~~development.

~~Liquidations of~~In Q1 2019, we did not hold any short-term ~~investments were higher in year-to-date 2018 due to the conversion of short-term investments to~~investments. Other cash ~~and cash equivalents in Q3 2018 primarily to fund a pending acquisition.~~

~~Other~~provided by investing activities in ~~year-to-date 2018 included~~Q1 2019 includes proceeds ~~from a divestiture in Q3 2018 and fixed asset disposals in Q2 2018.~~for death benefits under our COLI policies.

Cash used in financing activities


	Nine Months Ended						Three Months Ended
Cash Flow Data — Financing Activities	November 24, 2017			November 25, 2016			May 25, 2018			May 26, 2017
Dividends paid	$	(45.9	)	$	(44.1	)	$	(16.3	)	$	(15.7	)
Common stock repurchases	(33.4		)	(48.3		)	(3.4		)	(5.8		)
Excess tax benefit from vesting of stock awards	—			(0.1		)
Repayments of debt	(2.0		)	(1.6		)
Net borrowings and repayments of debt							(0.7		)	(0.7		)
Net cash used in financing activities	$	(81.3	)	$	(94.1	)	$	(20.4	)	$	(22.2	)

We paid dividends of $0.135 per common share in Q1 2019 and $0.1275 per common share in ~~each of~~ Q1 ~~2018, Q2 2018 and Q3 2018 and $0.12 per share in Q1 2017, Q2 2017 and Q3 2017.~~2018.

~~In year-to-date 2018, we~~We made common stock repurchases of ~~2,393,969 shares, 393,969~~236,102 and 358,431 in Q1 2019 and Q1 2018, respectively, 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 year-to-date 2017, we made common stock repurchases of 3,506,661 shares, 506,661 of which were made to satisfy participants' tax withholding obligations upon the vesting of equity awards.~~

As of the end of ~~Q3 2018,~~Q1 2019, we had $99.2 of remaining availability under the $150 share repurchase program approved by our Board of Directors in Q4 2016.

Off-Balance Sheet Arrangements

During ~~Q3 2018~~Q1 2019, no material change in our off-balance sheet arrangements occurred.

Contractual Obligations

During ~~Q3 2018,~~Q1 2019, no material change in our contractual obligations occurred.

Liquidity Facilities

Our total liquidity facilities as of ~~November 24, 2017~~May 25, 2018 were:


Liquidity Facilities	November 24, 2017		May 25, 2018
Global committed bank facility	$	125.0	$	125.0
Various uncommitted lines	27.1		26.2
Total credit lines available	152.1		151.2
Less: Borrowings outstanding	—		—
Available capacity	$	152.1	$	151.2

We have a $125 global committed five-year bank facility which was entered into in Q3 2017. As of ~~November 24, 2017,~~May 25, 2018, 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 ~~November 24, 2017.~~May 25, 2018.

In addition, we have credit agreements totaling ~~$46.0~~$37.4 which can be utilized to support letters of credit, bank guarantees or foreign exchange contracts; letters of credit and bank guarantees totaling ~~$11.3~~$6.8 were outstanding under such facilities as of ~~November 24, 2017.~~May 25, 2018. There were no draws on our standby letters of credit during ~~Q3 2018.~~Q1 2019.

Total consolidated debt as of ~~November 24, 2017~~May 25, 2018 was ~~$295.6.~~$294.3. Our debt primarily consists of ~~$249.0~~$249.1 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 ~~November 24, 2017~~May 25, 2018 of ~~$46.0.~~$44.7. 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 of our corporate 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~~In addition, we have flexibility over significant uses of cash including our capital expenditures, growth strategies and discretionary operating expenses.

Our significant funding requirements include a pending acquisition, operating expenses, non-cancelable operating lease obligations, capital expenditures, variable compensation and retirement plan contributions, dividend payments and debt service obligations. We intend to fund the pending acquisition of Smith System Manufacturing Company for approximately $145, plus an adjustment for working capital, through a combination of domestic cash on hand and borrowings under our credit facility.

We currently expect capital expenditures to approximate $80 to $90 in ~~2018~~2019 compared to ~~$61~~$88 in ~~2017.~~2018. This amount includes investments in ~~our global~~ manufacturing operations, product development and ~~the new Learning + Innovation Center in Munich.~~our customer-facing facilities. 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 ~~December 19, 2017,~~June 20, 2018, we announced a quarterly dividend on our common stock of ~~$0.1275~~$0.135 per share, or approximately ~~$15.1,~~$16.1, to be paid in ~~Q4 2018.~~Q2 2019. Future dividends will be subject to approval by our Board of Directors.

Critical Accounting Estimates

During ~~Q3 2018,~~Q1 2019, 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; 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 ~~November 24, 2017~~May 25, 2018 is the same as disclosed in our Annual Report on Form 10-K for the year ended February ~~24, 2017~~23, 2018. 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 ~~Q3 2018~~Q1 2019, no material change in foreign exchange risk occurred.

Interest Rate Risk

During ~~Q3 2018~~Q1 2019, no material change in interest rate risk occurred.

Commodity Price Risk

During ~~Q3 2018~~Q1 2019, no material change in commodity price risk occurred.

Fixed Income and Equity Price Risk

During ~~Q3 2018~~Q1 2019, 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 ~~November 24, 2017~~May 25, 2018. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of ~~November 24, 2017~~May 25, 2018, 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 ~~third~~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 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 ~~Q3 2018~~Q1 2019:

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)
8/26/2017 - 9/29/2017 —
$ —
—
$ 99.2
9/30/2017 - 10/27/2017 31,450
$ 14.82
—
$ 99.2
10/28/2017 - 11/24/2017 3,805
$ 14.37
—
$ 99.2
Total 35,255
(2) —



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)
2/24/2018 - 3/30/2018	235,582	$	14.49	—	$	99.2
3/31/2018 - 4/27/2018	—	$	—	—	$	99.2
4/28/2018 - 5/25/2018	520	$	13.50	—	$	99.2
Total	236,102	(2)		—

(1)

In January 2016, the Board of Directors approved a share repurchase program permitting the repurchase of up to $150 of shares of our common stock. This program has no specific expiration date. On October 27, 2017, we entered into a stock repurchase agreement with a third party broker under which the broker was authorized to repurchase up to 2 million shares of our common stock on our behalf during the period from from October 27, 2017 through March 22, 2018. The agreement was established in accordance with Rule 10b5-1 of the Exchange Act. Shares purchased under the agreement are part of the Company's share repurchase program approved in January 2016.


(2)	All 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~~David C. Sylvester
	~~Mark T. Mossing~~ David C. Sylvester ~~Corporate Controller and~~ Senior Vice President, Chief ~~Accounting~~Financial Officer (Duly Authorized Officer and Principal ~~Accounting~~Financial Officer)

Date: ~~December 20, 2017~~June 22, 2018

Exhibit Index



Exhibit No.	Description

31.1	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.LAB	XBRL Labels Linkbase Document
101.PRE	XBRL Presentation Linkbase Document
101.DEF	XBRL Definition Linkbase Document

2728



	Three Months Ended									Nine Months Ended
Reconciliation of Operating Income to Adjusted Operating Income	November 24, 2017				November 25, 2016					November 24, 2017				November 25, 2016
Operating income	$	38.5	5.0	%	$	54.6		6.9	%	$	122.6	5.4	%	$	149.8	6.6	%
Add: restructuring costs (benefits)	—		—		(0.2		)	—		—		—		4.7		0.2
Adjusted operating income	$	38.5	5.0	%	$	54.4		6.9	%	$	122.6	5.4	%	$	154.5	6.8	%



	Three Months Ended								Nine Months Ended
Reconciliation of Operating Income to Adjusted Operating Income — Other	November 24, 2017				November 25, 2016				November 24, 2017				November 25, 2016
Operating income	$	2.6	3.3	%	$	3.1	4.3	%	$	15.9	6.3	%	$	8.8	4.0	%
Add: restructuring costs	—		—		—		—		—		—		—		—
Adjusted operating income	$	2.6	3.3	%	$	3.1	4.3	%	$	15.9	6.3	%	$	8.8	4.0	%